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« Quack! Quack! it walks like a top, talks like a top ... | Main | Mother of All Margin Calls »

Tuesday, June 12, 2007


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May be this time it is real coz EWI is not coming out with a free week to celeberate the occasion.

Free Week

Always GO LONG when EWI gives free weeks.


Well, what can I say? They did it again with a bearish call at the bottom! Another huge up day.

Yes maybe it is a zig-zag up to ES 1537 but if it does not stop there you know what happens next . . . The Black Swan will have a duck dinner.

Werner Merthens

Looks like a 5 wave impulse down isn't what it used to be. Today's action in the market casts doubt on the bearish case. Also bonds acted very well today.
Are the price movements in bonds and stocks correlated? If wave counts do not reveal the answer, you can check here for another view:


The SPX rally out of June 8 low was rather impulsive, and today's action was a "legitimate" matching leg. Wave 2 (or B) zigzag in progress from June 8 low is a good possibility. Can't rule out a run to new highs -- but neither is there any evidence that the decline is over.

The C of the (putative) zigzag would be equal A near 1521 - which is a touch higher that a 62% retracement of the original decline.


I thought there would be input from the many bright and thoughtful people on this board... but there nothing since last night. So, let me try again.

The C of that (putative) SPX zigzag starting at the June 8 low will be equal 127% of A near 1530. I find that this is a fairly common relationship between A's and C's, and, of course, 1's and 3's.

Near 1530 is also the 78.6% retracement level of the original decline early this month. Is it worth taking a shot from the short side near that level? Maybe. A more conservative approach would be to wait for evidence of a reversal, and for a a break under 1515 - the top of that presumptive zigzag.


Sorry - the last line should read "the top of *A* of that presumptive zigzag"


The STU has two counts: we are about to end a little ii wave, and then turn downwards sharply; or we are in a 5th wave to new highs. This alt count means we were still in wave 4 since the peak in May, not yet into wave 5, when we had the sharp drop in early June. The slightly higher high in June was a B wave of an irregular flat. This now puts us in wave 5, and we should then see hew highs this summer. This count explains why the sharp drop was a 5 wave - it was a wave C of a 3-3-5 flat. It also explains why we had an impulse up - it was not a zigzag 5-3-5 correction but the beginning of a wave 5. Neely says 'when in doubt, stay out' so has closed out its short position.


I considered, of course, that the decline may still have been a consolidation, a likely 4th of the impulse since the March low. For now, on the hourly, we have a "5-3-(evolving)5" rally off the recent low. I do not follow Neely's work, but it looks like he was wise to step aside - this is simply not a setup which would suggest good probabilities one way or another.

The COT situation is adding to the puzzle. Large traders have been shorting the rally, while the commercials kept increasing their long positions. This - on the face of it - is bullish, but also very strange and unusual. Later today they are supposed to publish the latest data.


Hihi The EWI worms confuse again a wawe 3 up with a wave 2 up in a five wave down (the problem hey have is, that wave 3,4,5 down never come W h e n they predict.

They have the same problem with waves ones and twos down (their counting) when in fact it always was a sequence of ones and twos UP.

When I see a count of them 1 and 2 down - I just scream laughing - rund and buy futures.

Also YELNIck: they always have 2 counts: the bearish "basic" count - and the not so bearish count that alowws some further going up (but their wave twisting is a joke).

Rather recommend: look what the market is doing and following it with good money management and no view. It can go a lot higher - or also a lot lower than one believes. As somebody said. If it goes up I buy it. How high? - If it goes up I buy it to the "moon". If it is going down I sell it - if need down to zero (or almost). After these moves are over it is easy to count Elliottwaves: I must admit, I am the MASTER of counting waves after the move, and so is everybody else - but for trading - be serious. Ciao

Charles Bukowski

Let me know when you are putting that yacht up for sale to pay margin calls!!!


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