Planet Yelnick

Santa Rally Rides Its Slope Of Ho Ho Hope

We actually have had a pretty good Santa Rally so far, but most of it came in the first few days after Nov20.  What we have had since has morphed (as corrections oft do) from a double zigzag into a triangle B wave in the form of a rising wedge (flat tops, higher bottoms).  See chart, courtesy of Daneric40.  Friday's STU has this wedge as the prime count (although they start the a leg of the wedge earlier), and given that rising wedges are bullish, expects the next two weeks to be a C wave rise on light volume up to SP950-70.  This would all be part of larger wave 4 triangle.  Tony Caldero provides a good perspective of where we are, and the two prime possibilities: SP741 is the bottom, and we are part ways up a 50% big retracement (the Obama Hope Rally), or a retest lies ahead before the big rally. 

DOG Days: Dollar Oil Gold Tango

Dollar/Euro went in reverse, and Dollar seems back in a rally despite the Fed's best efforts to reflate.  Bigger news is in oil: Options Expiration Funky Friday and Oil drops hugely in just three days - hitting below $33.50 today. Apparently a lot of investment firms are still long oil (I have read 1.8x the refinery / demand side), and now they need to liquidate.  January futures being sold off as well - we have a supply glut for a while.  Lots of tankers floating towards markets; whom is OPEC trying to kid with their so-called big cuts?  Look for $28 oil soon.  Question was asked: is there any good Elliott guidance on oil?  It busted through the normal retracement levels and the 'fourth of a third' level.  I went over to Club EWI and found the answer (worthwhile to join, it is free):

Santa Rally Needs Poor Rudolph

We seem to already be in the holiday trading season - lighter volume and a meandering market.  Where is Rudolph!  We are lost on the fog!  A special STU tonight suggests we are on edge of losing the wave 4 triangle count, which means Santa has already come and gone and we retest the Nov21 lows.  Yet despite the size of the drop today, the volume was light, so we wait to see what tomorrow brings.  It needs to rally at the open strongly to keep the Santa Rally alive.

Instead, look elsewhere for guidance.  The Fed seems determined to turn a credit crisis into a currency crisis - check out this chart.  This may be what Gold was signaling when it went into backwardation on Dec2.  Oil has broken $38 and may just plummet to $28 due to an estimated 1.8x the demand being still held in hedge funds and other speculators, all expecting a bounce back to $100.  The market may force them out of their positions before the bounce comes. 

Dow Predator Update

Another guestblog today from Dow Predator, who gave his bullish count a few days ago. 

He continues with his bullish view, albeit with a pullback expected.  If we run up strongly tomorrow, he sees his very bullish count in play. 

His analysis below the fold. 

As always with a guestblog, his views are his own.  Enjoy! 

Bearish Expanding Triangle?

Today was generally down albeit on modest volume.  Tomorrow is the FOMC announcement of yet another rate cut, and probably the last one simply because they cannot go below zero.  The market may be volatile.  Tonight's STU is still watching whether there is a break of the SP850 (Dow8350) level.  Volatility may give us a momentary break and a bounce, but if we do break and hold below that level across all three major US markets, their count goes negative to the final wave 5 down, which they expect to test and go below the Nov21 lows (SP741, Dow7449).  Despite this scenario, they still remain short term bullish, expecting a Santa Rally to SP950 (Dow9200) first. 

Tony Cherniawski is one of the most astute and independent e-wave commentators, and his weekly Market Update and frequent video commentary are well worth attending to.  Below the fold he lays out his current count and why a number of pundits may be calling this market backwards right now.  He gives a range: if we don't break SP920, then a devastating wave down to levels not considered possible is ahead.  As with any guestblogger, his views are his own, and I am providing this as a service to my readers.  Enjoy!

Santa Rally Coming To Town

Since the Nov-May period is the seasonal good time for stocks, we usually get some sort of Santa Rally about now, even in bad markets - in 2002 we rallied up from Oct10 to late Dec, and in 2007 after we fell off the top in Oct we rallied into early Jan.  Sy Harding, the keeper of the seasonal season stats, is firming up in his conviction that Nov20 (daily) and Nov21 (intraday) was the start of the seasonal up rally.  You can check out my Nov20 post When To Go In for why the wave count was calling for a rally to start, which it did. 

Dow Predator also sports this view. His charts here and below the fold, along with his analysis.

DOG Days: Dollar Oil Gold Dance UPDATED

Curious activity in the Dollar Oil Gold (DOG) Complex this week.  (Since 1973 we have been in effect on an Oil Standard rather than a Gold Standard.) Oil breaks my target of $42 (set over a year ago in a bet when oil was running up above $130) and bounces, up a lot today ($4, or 10%).  Dollar/Euro have been hovering in a dance which both Prechter and Neely count as a triangle.  The STU thought it would break UP with the Euro dropping below $1.20; Neely thought it would break DOWN with the Euro rising towards $1.40.  It broke someone's count today, with the Euro up to $1.33 and the Dollar Index down below the Nov25 low of 84.71.  Kudos to Neely!   Now focus on two odd situations: gold in backwardation and oil in steep contango.

Choppy Waves, Rally Coming UPDATED

Lots of focus on the next week in the punditsphere, but let's sit back and ponder the next few months.  If you peruse my prior post, it tries to square the length of this bear market (at least another 5 years) with the rapidity of the recent drop, and poses two possible patterns developing: a large triangle from 2000 - 2014, which would need to be bottoming right now; and a large double flat with an X wave in between, which would also need to be bottoming about now.  There is, however, a third and more dreadful possibility which Prechter's monthly Financial Forecast made clear this weekend: the drop since Oct07 is merely wave 1 down of a big C wave, and we have a lot more downside to go.