Investment Crossroads for Yasi

Yasi went long despite my Roadmap post.  Now she faces a decision.  Neely is confident we are in a final spurt up, over this week and maybe next.  Could get to SP1K in futures (unlikely to get that high in cash ie. daily market).  Yasi will feel emboldened when she should take profits and ride the drop.  Tonight's STU in contrast expects the market to rollover and drop tomorrow, perhaps after a short "squirt" to the upside.  Yasi will get anxious, but they see this as but a correction within a general uptrend of wave [2] towards Dow10K.  That correction most likely will play out as a trading range between the May8 high and around Dow8K, marking an X wave before a final zigzag up.  Yasi will be ok with that.  It might instead drop into Dow7K range, even down to the high 6000s, marking a larger B wave in a flat wave [2]; but if so should make a fairly sharp move downwards.  Yasi will be very anxious.  The good news is that this week should tell which it is: a final spurt, a trading range, or a nerve-racking drop.  Stay tuned. 

Comments

[Taz]

Over here in OZ, our small cap stocks appear to have a nice set of 5 waves down and have made it back to prior wave 4 of lesser degree suggesting US stocks have nil/marginal upside.

Volume off the top has been good for all market.

99% of market participants here believe the bottom is in. I was able to find a 4th Aussie this morning who thought we would go to new lows.

Taz

[RNB]

Yelnik,

"Could get to SP1K in futures (unlikely to get that high in cash ie. daily market)"

Actually I read that and realized that Neely made a mistake here. With interest rates less than the dividend yield, the ES futures are actually at a discount to SPX cash (fair value).

[cribrange]

DG,

The track record of Neely you provided since October of last year is very useful. Would you per chance have data further back?

Regards,

Cribrange

[gambler]

Here is something some of you probably figured out:

All time high in Cash S&P 500 = 1576.09
August 1982 low = 102.2
1982-2007 points = 1576.09 - 102.2 = 1473.89
61.8% retracement of 1982-2007 move = 1576.09 - 61.8% x 1473.89 = 665.23
March 2009 low = 666.79 a difference of 0.23% from the 61.8% retracement level

Perhaps that was a sheer coincidence!

[gambler]

Neely has posted his Cash S&P 500 count at http://www.traders-talk.com/mb2/index.php?act=attach&type=post&id=11041 . I think it is more likely that the formation following his wave (E) is (X)-(A)-(B)-(C)-(D)-(E) with wave (D) of an expanding triangle in progress. This will have (E) undercut the March low and conclude the bear market that began in 2007. Here are my reasons for this alternative count:

1. The primary reason is that move to 400-500 would pretty much wipe out all of the extended 5th wave of the larger 1982-2000 move. As per NeoWave that can't happen. Post-wave completion rules are important and can't be ignored.
   
2. The (X) wave that Neely has labeled is too complex when compared to the wave that preceded it.
   
3. We hit an important Fibonacci level in March that represented a 61.8% retracement of the 1982-2007 move. See my previous post for details.
   
4. Many sentiment and breadth measures went to extreme in March.
   
5. My alternative count only requires a local change to Neely's count.
   

I think when we undercut the March 2009 low and conclude the bear market, the new lows wont be confirmed by lower sentiment measurements setting the stage for a new bull market.

I have corresponded with Neely proposing my count and he believes it to be plausible. To quote his response, "Very interesting idea. It would still produce a cataclysmic decline, but not as large and wouldn't last as long. The only concern I have, which I have not spent time studying yet, is the short time of wave-X. It must be reasonable in relation to prior patterns, so I will take a look at that later when I have some free time."

[Mamma Boom Boom]

Has anyone noticed how Neely's long term position is very similar to mine? http://www.bushongbusiness.com/opinion.html

We must be related. I'll have to call hit up and invite him over for chicken. Unless we're both wrong, then it will be crow! (He..he)

[Rob]

I don't believe that the March lows will only be undercut by a slight margin and the bear market will then be declared over.

There remains $1.8 trillion in toxic assets in the US financial system. Alt-A mortgage resets are slated to ramp up exponentially starting the 2nd half of 2009 and into 2012. The commercial real estate market is set to implode.

The bank stress tests were predicated on lax standards and didn't take into account the grief to be experiended in 2011.

We will not see a 4-year cycle low until late 2010/early 2011 at the earliest and the SPX will be quite a bit lower than 666/667 at that time.

With the US consumer increasing savings rates, how will the consumer stimulate the economy?

The Fed has shot their wad and quantitative easing isn't going to work.

[DG]

Jayanth,

That's a more radical revision of Neely's count than what I've been considering. It is true that this X-wave is getting very complex, although it is still shorter in time than the preceding wave.

I also have some questions about the viability of an "Expanding Triangle-X-wave-Expanding Triangle" complex correction, which virtually eliminates any alternation. I actually have that same problem with Neely's current count and I am still of the opinion that the triple three is the one in play, despite going above 875.

I have not seen Neely's chart labeling from 1982 to 2000. Where in price would we have to stop to avoid wiping out all of the gains from 1982 to 2000?

[Mamma Boom Boom]

'BIG-MO' trying to turn up. Oh what a difference 2 days make.

[Upstart]

Again, I ask you much more experienced folks, can that be an ending diagonal in the XAU, poised to top about the time general stocks do (an a-b-c from the October low, where c is an ending diagonal)?

[Rich S]

Jayanth,

That interpretation was discussed here a few weeks ago and is still viable. I also find it preferable to Neely's in several respects.

[DG]

cribrange,

Sorry, no hard data on the prior track record. At a high-level, I've noted the fact that since May 2006, Neely has sent out a handful of "Emergency Bulletins" to notify the people on his mailing list of pending market turns. Of the 6 he has sent, 5 turned out to be accurate within a fairly small time window from the time he sent it out and the time the market turned in the direction he was forecasting. One time he did turn out wrong and it took him a bit of time to get back in synch with the market. That was February 2007 and he was looking for a big move up, but there was a quick, sharp move down over a couple of weeks instead, then a steady climb, as you probably remember.

[gambler]

DG,

The bifurcation point that marked the start of the 5th wave of the 1982-2000 move in the Cash S&P 500 weekly chart was 12/12/1994 at 445.62. A fall below that level would invalidate the count unless Neely is going to rewrite NeoWave rules.

The line joining the closing 1972 high and the 1987 crash low on a semi-log quarterly chart will I think provide worst case support. This is the "L3" Dynamic Gann Level. For the next few months, that level is approximately 482 which was roughly the 1994 top.

[DG]

Jayanth,

Thanks for the info.

[DG]

Jayanth,

I meant to add that I hope Neely doesn't change the rules because I would immediately stop subscribing. I doubt he will, since those are his main contribution to technical analysis.

[DG]

Upstart,

Rather than an ending diagonal, I would propose that the XAU count off of the October low counts as an ABC flat, x-wave and then a diametric now nearing the end of its wave g. The diametric could turn into a symmetrical formation, but the a-wave of it is a bit longer than the other waves, which might make it unlikely to become a symmetrical.

If it were an ending diagonal, or in Neely's terms, a terminal impulse, the retracement of wave 1 by wave 2 would be much deeper.

[Tom]

Jayanth, interesting count. Are you suggesting that we barely break the March lows during the final Wave E down and not go too far from that point, thus preserving the 61.8% retracement of the 1982-2007 move? I thought Wave E of an expanding triangle should be related to either A or C by 1.618. If that's the case, then the minimal termination point for Wave E would at 500 assuming a 930 top for Wave D. Any overshoot of the expanding triangle would place it right within Neely's targeted range, would it not?

Also, do you happen to know where I can find his 1982-2000 count?

[Mark]

Yeah now the reality is dawning on non-wavers.non-waver was wrong on his 100000 call on the upside and now he is going to be wrong on the downside as well.So it is time for you non-wavers to return to your roots.
By the way after all these bizzrreeee looking triangles and multilegged millipede diametric formations what new rules and formations do you non-wavers expect Neely to discover?

[Mark]

cribrange even if you use a simple sma you will beat Neely hands down in his own dan .

[vipul garg]

Jayanth/DG , which rule that says that extended 5th wave cannot be retraced ?

[cribrange]

DG,

Many thanks for that. I have been following the guy for a while but didn't have any hard data. I wonder if he supplies this himself? Surely he must keep a track record, especially seeing as it appears he trades his signals? Anyhow, stellar performance since last October.

Mark, if you don't consider his analysis, then why bother posting here? I can respect that you prefer a simple moving average to him, but then what is the point in heckling? If you really think that, why are you attempting to sway our opinion? This is after all a zero sum game and if I were you, I would be willing us all on into our certain financial collapse.

Glenn Loser Neely. You are priceless. You subscribe to Neely and continue to bash him with your attempt at reverse psychology. You must be frightfully clever.

Yelnick, love the blog, would be even better without the hecklers.

Sincerely,

Cribrange

[Mark]

Mark, if you don't consider his analysis, then why bother posting here?

You think it is a non-waver forum? More than that elliott wave posts are found here.Yves is here.Tony caldaro is here.Elliott fractals are here.Zoran is here and many more.

[Trader_pro_FTW]

What about a non-continuation-triangle?
I.E.: A trending triple three with a triangle "final three" due.,
You can see a count of it here: http://traderpro.wordpress.com/
Honestly, I just don't like the term "squirt"... but the count is more in the vein of MEW than EWP.

[Glenn Loser Neely.]

Is Yasi single?

I am interested in dating her.She seems to be a "smart" woman!
Yelnick, could you please talk her about me and my neo garbage model?
Tell her how "smart" I am, and also tell her how I "speak" to the waves while I am in the toilet.

This would be appreciated beause I haven't dated a woman since I wrote my neo garbage book 25 years ago!

Glenn Loser Neely

[DG]

vipul,

On page 11-4 of MEW, Neely writes that "A 5th wave Extension cannot be completely retraced unless it is the c-wave of a correction or is the end of a larger 5th wave Extension."

Since Neely views the top in 2000 as the top of a wave 3, neither of those conditions would apply to that extended 5th wave from 1982 to 2000. At least that's what I think, but I haven't studied that long-term labeling in detail.

[gambler]

The NeoWave rule cited by DG does apply to the current situation since the large 3rd wave from 1982 to 2000 had its 5th wave extended. When the 5th wave of a 3rd wave extends, the 5th wave must be retraced at least 61.8% but can't be completely retraced.

[gambler]

Tom,

As per NeoWave, expanding triangles often have no Fibonacci relationships between the legs of the triangle.

[vipul garg]

Jayanth,so as per neely this x5 of 3 starts from 445..?

from what i gather a 5 extended wave cannot be retraced fully unless it was a c wave or 5th of 5 to keep the trend intact.however i see no loss in trend if a portion does retrace it fully and possibly the patterns conclude higher.
a 4th wave by nature is a wave whos nature is to deceive !!\

i see no problems in accepting a horizontal expanding triangle as per neely ..
it will give neccessary alternation to patterns.. it is in no way more complex than previous expanding pattern and is within the price and time limits of X wave so far.

it is actually diifcult accept X wave as jayanth says as it does not obey the rule of time similarity and balance with the previous pattern which on the degree we are looking at sp500 should be there.

further lets say neelys X wave concludes here at 920 odd , a 45% decline will imply 515 kind of levels to have equal ratio with prior pattern.

[gambler]

Vipul,

Neely's discomfort with my alternative count is primarily because the X-wave in my count consumed too little time. The requirements for a NeoWave X-wave are spelled out at http://www.neowave.com/qow-result.asp?qid=94&searchterms=x-wave .

[gambler]

Neely's 2004 forecast that shows the wave structure of Cash S&P 500 can be found at http://homepage.mac.com/neowave/.Public/INTERVIEWS/IKE%20IOSSIF/3%20Part%20Interview/Forecast2004.pdf .

[vipul garg]

jayanth,
thanks for the 2004 count, much appreciate that.

whatever be the count , an expanding triangle as X or not ;
very interesting point you have brought up here with the extended 5th wave ..a stimulating point in some long time .

[EN]

I keep selling near the 200 day MA. Past experience shows that it works when you go with the trend, which is down on a longer term basis.

I will, however, be really impressed if we can get to 950-1000 as forecast by The Master Blaster.

Was today not McHugh's turn date?

[Forkoholic Serge of Elliott Wave Forkology]

Have we topped? Elliott Wave Forkology May 20th update
Ok, let's gather evidence one more time and see if we indeed have topped

1. $NYSI Summation index rolled over. Since 2007 top it was a very good(a bit delayed) indicator of a top. Not so much before 2007 though - 2nd lower top was needed to indicate a top.

2. $TPC (CBOE Total Put/Call Ratio) has broken an uptrend + had huge divergence since late March. Yes, we know - never trade on sentiment alone.

3. $BPSPX looks like rolled over. I prefer to see a sharper peak at the top as at previous tops so I'm a bit conflicted here. So MAYBE

4. $NYMO rolled over, that is for sure

5. Our proprietary Market Structure Indicator alerted us what top on May 8th was very similar in structure with May 19th, 2008 top.

Many readers remember earlier in 2009 we said 2009 will look similar in many ways to 2008, so there is also a nice 11 days symmetry with 2008:

Lows: Mar 17, 2008 - Mar 6, 2009 17-6=11

Highs: May 19, 2008 - May 8, 2009 19-8=11

Smells like a top, looks like a top, quacks like a top
WHAT ELSE ARE WE MISSING?
Send us any more evidence "for" or "against" a top
http://forkoholic.spaces.live.com

[Glenn Loser Neely.]

EMERGENCY UPDATE FOR ALL MY LOSERS...

I ATE AT MC DONALD'S YESTERDAY AND THEN I HAD AN URGENT STOMACH PROBLEM SO I WENT TO THE BATHROOM AND THE WAVES SPOKE TO ME IN AN EMERGENCY UPDATE, HERE IS WHAT MY TOILET TOLD ME:

HOURLY LOSERS:

We were stopped out of our Long position today, at a profit, making about 26 points!. I was expexting 50 to 100 more points to the upside, but since I am a LOSER I got it wrong (again!). Also take into consideration that the entry level at 876 was NEVER hit during the open session. So we actually made like 12 points!!, but since I am a liar....lets say we made 26!! so I can keep selling my NEO GARBAGE SERVICE to all you idiots!

ALL TRADERS:

Today's sell-off is the first warning that the S&P may have topped. Enter Short immediately (risk 1%) with a stop at today's high. That stop may change later after I have time to review my next cheat.

More details as soon as I go to the bathroom again!

Glenn Loser Neely
NEoGarbage, Inc.

[Tom]

Jayanth, thanks a lot for posting Neely's longer-term count.

In his book, "Mastering Elliott Wave", at the bottom of page 11-30, he states that for expanding triangles, "waves a & e will usually relate by 161.8". He also stated this in his recent trading updates when describing his current Wave E up (see update on May 1st). So the relationship doesn't always hold, but typically it does.

[DG]

cribrange,

I've seen Neely say that he doesn't bother keeping a track record because how would anyone know if it were accurate or not? Only he would know for sure. But, by keeping his archives available, he at least can be kept honest by his subscribers.