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« A Longer Pause Before the Final Surge | Main | Yves on the Greenshoot-Fed Sacred Fed Bull Died Fat and Happy »

Wednesday, June 17, 2009

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Mamma Boom Boom

-My stuff hasn't completely turned down, yet. But it is very close.

-I always find it funny that E-wavers can end a count at a strange point. October?

-I think we need to be very vigilant. This down-draft could get away from us. Remember the 'r'?

-Rock On!

BuckW

http://www.traders-talk.com/mb2/index.php?act=attach&type=post&id=11654

george

i got the following neely at:
http://www.traders-talk.com/mb2/index.php?showforum=45
here is an excerpt from that
page:
The critical 923.26 cash level was
broken today, shifting the odds
decisively in favor of the resumption of
the bear market. If the downtrend
continues, we will reduce risk a little
later this week. Right now I can
confidently say the high of the year was
made June 11, 2009, but I can’t say if
waves-E and (X) are complete.
this is what neely wrote on june 15th
in regard to the daily sp500 cash chart.
i found it interesting he said cash chart.
george

DG

george,

Neely only does wave counts on cash charts because they represent the actions of the broadest spectrum of buyers and sellers.

barood

based on the put/call ratio spike the last two days and the action in
Treasuries TBT VS TLT, it looks to me there is still a major snap back to 971 S&P. TBT did put a serious intermediate bottom today. The OBV is down a lot more than price in the last leg down in TBT and this signifies a major negative sentiment for TBT. TBT did not pull back with the rest of the market by the day end and this tells me TLT has not capitulated yet. I think TLT has to put a major capitulation candles before the market reverses. Weekly MA(50) is at 971 in S&P. Just my 2 cents. I could be wrong though big time.

Virginia Jim

Neely followed Charles Nenner closely. Most know Nenner who was previously touted as all but infallible. Actually, he and Peter Eliades quick called the rally this year (called the bottom in February when it bottomed lower in March) and I seem to recall him being pretty wrong last year. Nevertheless, he’s a very credible EW, cycle and sentiment analyst used by heavy hitter institutions and is wrong more often than right. He was on CNBC at 10:30 today and has called a top (went out to his clients last week). I’d expect the video is on CNBC website. To sum, his answer to the last question “Where would you be [investing] right now?” "Gold in another month or two. Otherwise, there is no place to hide.” Sounds ominous. I think they quick called it again.

I'm looking at mid/late July as the beginning. Lots of cycle work suggests that time frame, the Puetz window doesn't open until July 1 (closes second week in August), sentiment is not extreme enough quite yet and most indices have not reached preferable targets. But as Prechter would say, the market has done the minimum necessary to make everyone satisfied.... The dam can break at any time IMO. I'm just hanging flat a little while longer.

Virginia Jim

Oops, Nenner is right far more often than wrong. Sorry Charles.

Upstart

Maybe my call for a B-wave to new lows is not that crazy, just a different interpretation for getting to the same place. In the short-term, I'm keeping an open mind. I hear EN also calling the top with his indicators, and I read Carl Futia's blog and he thinks we're basing for a 100-point rally in the S&P. How about someone more experienced read his reasoning and critique it. Over the last two days, we essentialy closed the gap left behind by the last rally. I think we may get a snap-back since we're right before the Fed, and the decline starts after Fed.

Jacko

I think a comment by Glenn Loser Neely should be posted shortly. I don't think he can miss this opportunity.

I. Sosceles

barood

Good eye.

da bear

a b wave in TBT looks like an interesting count here. the rally off the lows today was very impressive. but i think it is nothing more than a corrective rally.

is a stock top here too easy? maybe it draws some more people in soon.
or we could do a double top sometime. remember the 2007 top was a double top. i think the first top was in July if i am not mistaken.


da bear

Wavist

Richard Russell also takes the view that we're only halfway through the bear market decline from last year. He's called a top since May when DJTA failed to confirm the new high in DJIA, following his recommendation to get long in March. If the averages retest the March lows, reverse and bounce back up above their May peaks it'll mean a new bull market and inflation. If instead they violate the March lows as he expects then a massive crash and deflation to follow.

Wavist

From an Eliott wave perspective the bullish view would be expected if last years decline was C of a three wave decline from 1999 we've either been in wave 4 and we're going to see a truncated fifth wave, or if the decline finished at March and the post March advance is wave 1 of a new bull market. The bearish view if we completed last years decline in March and we're in wave 2 of an impulsive decline or B of a three wave correction from the 07 high. Whichever way, the risk/reward ratio clearly favours being short from July to Autumn. There will be a final fifth wave push higher in a week or so, which may very well truncate. That will be the perfect time to get out of any remaining stocks or calls that anyone still holds.

Wavist

As I understand it although Neely has the top of his x wave in June it isn't actually over yet as the decline was too slow and he also expects a lower high still to come shortly.

yelnick

Wavist, good stuff. I think we can eliminate the wave 1 of a new bull off Mar6 because the wave has not been impulsive but sloppy and choppy. I think an alternative to consider which works in the Dow better than the S&P is that 2007 was the end of wave 5 of the bull, not 2000, and we are in an A wave down. Now, in terms of shape, in a flat the C wave tends to be the most dramatic, but in a zigzag, the A wave. This implies a B wave of a zigzag followed by another wave down of about the same percent move as the first wave, or another 50% down from here. If we are in a big B wave between one 18 month A wave and another one somehwere out there, it is certainly unlikely to be over this quickly. And then the third alternative is my triangle off 2000. Both of these alternatives would suggest a long corrective pattern from now into 2010. Right now we can say the bull is not back and a drop is coming, but cannot yet say whether the drop is the Neely 'below SP500' drop or less severe a retest of the Nov/Mar lows.

Account Deleted

Hey DG,
yes,i did mail u from a different id.Sorry bout that.Can u send me the blog link at mmanishbahl@gmail.com .
Thanx

Forkoholic Serge | Elliott Wave Forkology

Wavist, I'm thinking this wave 5 can be really quick or a repaet of 3
As many stock finished their May fractal, the whole May - October opens up again.
NYMO fast aproaching March lows
http://forkoholic.com/images/nymo061709a.jpg
this will be either just 1 of 5
or it's a fake move down

Howard

Here's a fundamental reason to go with the technicals that the top may be here:
The supply of stock is mushrooming -- a bearish sign
By Mark Hulbert, MarketWatch

ANNANDALE, Va. (MarketWatch) -- What bear market?

Notwithstanding the carnage the stock market suffered between October 2007 and March of this year -- the worst since the Great Depression -- corporations' share issuance departments are partying like it's 1999.

In fact, firms have recently issued far more shares of their stock (either through initial public offerings or secondary offerings) than they did even in the go-go years of the late 1990s and at the top of the Internet bubble in early 2000.

That's not good news, from a contrarian point of view: The stock market historically has tended to perform poorly following periods in which firms have flooded the market with more shares.
Prior to May, according to TrimTabs Investment Research, the highest level of share issuance in a given month was $38 billion. May blew that record out of the water, with a monthly total of $64 billion.

Furthermore, that blistering pace has continued during the first two weeks of June, according to TrimTabs.

How bad an omen is this corporate eagerness to offer its shares to the investing public? Looking back through recent history, TrimTabs found that there have been just 12 months since 1998 in which total new corporate offerings totaled at least $30 billion. The average return for the S&P 500 index over the 90 days following those months was a loss of 4%.

Dissecting the data further, TrimTabs next focused on those months in which not only did total corporate issuance exceed $30 billion, but also those in which total corporate share purchases were less. The S&P 500's average 90-day return following those months was a loss of 7%.

This more-narrowly-defined subset applies to today, unfortunately. According to TrimTabs, corporate new offerings since the beginning of May have been nearly five times greater than corporate purchases.

The recent surge in the supply of shares has also caught the attention of Ned Davis, the eponymous head of Ned Davis Research. He has found through his research that it is optimal not to focus on monthly totals but instead on a rolling 13-week window. On this basis, according to Davis, recent corporate issuance has been exceeded historically only by two other occasions -- early 2000 and early 2008.

Those were "not great times to buy stocks," Davis notes dryly.

Davis also draws an even more ominous parallel to the recent corporate rush to sell stock: "This high level of [recent] supply is one of the key characteristics of the monster rally in November 1929 - April 1930."

From April 1930 through the low in July 1932, of course, the Dow Jones Industrial Average fell by 86%.

For the record, I should point out that Davis, despite these ominous portents, remains cautiously bullish for the short-term, since many of his other indicators suggest that this rally has further to run.

But TrimTabs is quite bearish, recommending that clients be 50% short U.S. equities. "Stock prices are going to fall hard," they predict.

Upstart

Let's not forget, though, that for one of only two or three times in his life, Jim Rogers has no shorts because of all the money printing. So balance that with the TA.

DG

Rogers is typically very early with his plays, although he is usually right eventually.

Any TA system (ahem, EWI) that is off by years at a time is probably in need of at least a bit of refinement.

Neely's Dow 100K fits easily into Rogers' scenario, but we've got a few years before the move up begins, if Neely's on target. Seems about right to me, when you consider the debt destruction that needs to happen before consumption and inflation can take the stage.

Mamma Boom Boom

--Wavist--

You accuse me of not going any 'analysis whatsoever' then you throw out that bunch of gobbledygook. Tossing a bunch of balls in the air is analysis? A handful of 'ifs' is a contribution? Your a waste of time, dude. Your like a little girl skipping around the room.

Mike McQuaid

NDX June 1 gap still open qualifying it currently as a continuation gap. Two attempts to close the gap since Monday failed while a trading range whose resolution will be portentious has appeared on the 60 minute chart since Monday.
So currently we have 1 and 2 wave labels showing off of the March 9 low.

Mike McQuaid

XLF showing 3 black crows sitting on chart support and the lower Bollinger band as well as the 50dma, so a welcome display whose resolution telegraphs future events.

Mike McQuaid

SPX yesterday was a spinning top so we want to see some follow through to firm up the current bullish bias. Target 957 resistance to clarify the chart. If this one gets past 937 before 26 June we'll have more confidence in the waveform.

DG

SPX yesterday was a spinning top so we want to see some follow through to firm up the current bullish bias. Target 957 resistance to clarify the chart. If this one gets past 937 before 26 June we'll have more confidence in the waveform.

It took us less than 5 trading days to run down from 956 to 904. Now, you are willing to wait 6 trading days for us to retrace not even that entire move?

There's no logic in calling that scenario bullish. Bull market up moves should be faster than downmoves.

Mike McQuaid

SMH semi-conductor sector shows Nov '08 low and reversal. Wave 1 and 2 through March '09. Expanding triangle wave 2 in December - March spent a lot of corrective energy to allow the wave 3 to ride the 50dma up. Golden cross in May adds confirmation to the Nov. reversal and bullish bias scenario.

Mike McQuaid

$TRAN transport index, last of the recession selloff Jan - March '09 had an expanding triangle wave 2 centered in Feb. The alternating wave 4 was nearly indistinguishable by comparison of course. The subsequent V bottom couples to the wave 4 to highlight that large amounts of corrective energy was spent by the wave 2. The V bottom is a dominant feature on this chart.

Wavist

Thanks Yelnick I agree that the recent advance is most likely corrective both based upon its appearance and on the technical data from the March low: all bear markets end the same way, with extreme undervaluation and a cessation in selling pressure, following which accumulation rises in wave 1 of the new bull market that nobody believes in. Average p/e after major bear markets is below 7% with dividend yields of 6%, at the March low p/e were 25.79/28.38 and yields 3.99%/2.98% for DJIA/SPX respectively. Sentiment since moved to highs unseen before in recorded data, above that of the 1999 and 2007 peaks. And selling pressure has barely dropped from the low, the rise has been caused almost entirely by rising buying pressure. All of the above are typical of bear market rallies, and although technically qualifying as a bull market in terms of price, it remains a cyclical bull market - whether as Forkoholic/Wavespeak's wave 4, EWI's wave 2 of C or your own wave B - within a secular bear.

Wavist

Bushong, this is an Elliot Wave site and my statement that you produce no analysis to validate any of your postings is further supported by your comment - what you call a bunch of gobbledygook is standard Elliott analysis. If you don't like the fact that several counts are simultaneously valid than you should get reading Mastering Elliott Wave by Glen Neely as the purported advantage of Neowave is to produce a single wave count. Frankly I believe multiple wave counts are always necessarily present as the future is never set. The more alternative counts that can be produced the better, as this enables investors and speculators to position for ALL eventualities instead of betting on one possible outcome - however likely that is seen to be. In this instance the various counts only result in two general possibilities - a bullish scenario of a failed retest of the lows, which would be expected in the event of a truncated fifth wave - as I mentioned last year - or a McQuaidian second wave within a new advance; or as per Russell's prediction - a violation of the March lows to a much lower bottom as anticipated by Forkoholic's extended wave 5, EWI's larger wave 3, Russell/Yelnick's wave C, and Neely's expanding triangle's wave E. As I have already said whichever of these possible futures lies ahead of us unloading stocks and if aggressive shorting the market at the anticipated coming rise in the weeks ahead is a strategy that will work perfectly regardless of which of the wave counts is eventually fulfilled.

And if on this occasion you were going to tell us that your genitalia find the above all far too frustrating I can only respectfully suggest that you instead consider the option of their insertion through your anal passageway.

Mamma Boom Boom

--Wavie--

I can tell, you really pulled your hat down this time. But it's still gobbledygook! At best, you come off sounding like Richard Russel. That old fart been ranting the same bunch of shit for 50 years. Over and over and over and over and over .........

BTW, do all you homos think of the ass hole as 'GENITALIA"?

Hank Wernicki


3:47 pm

the 30 minute SPX fractal from last Wednesday is identical to the 2 hour fractal for this Wednesday and Thursday

in both instances there was a deep drop -- this is what I'm expecting for Friday

DG

Frankly I believe multiple wave counts are always necessarily present as the future is never set. The more alternative counts that can be produced the better, as this enables investors and speculators to position for ALL eventualities instead of betting on one possible outcome - however likely that is seen to be. In this instance the various counts only result in two general possibilities

I used to think this too. However, the real count is hardly ever the "average" of all counts and allowing multiple counts to influence your trading decisions VASTLY complicates your risk management.

For example, let's say the market makes an initial move that looks like it's going to be the "bullish" count, but it turns out to be a last gasp by the bulls and the scenario breaks down. By the time the "bullish" scenario breaks down and you take a loss, the "bearish" scenario might be getting ready to take a breather and have a corrective rally upward, which would have given you a chance to get out with a smaller loss. That corrective rally upward might reach far enough to make the "bullish" scenario plausible again. Does one jump back on the "bullish" scenario or stick with the "bearish"? What if the "bullish" scenario just needed that one more low and now is ready to run, in which case sticking with the "bearish" until it breaks will cause another loss. Better to use a system that enables one to either have one count or stand aside.

One does not have to trade all the time. As Dom Mazzeo of "Trading The Charts" (may he rest in peace) used to say "Flat is a position". One should take advantage of that.

Trading ceases at 8:30 A.M. CT

Last Trading Day
Trading ceases at 8:30 A.M. CT on the third Friday of
the contract month.

Eventhorizon

I noticed some discussion at the top of the comments about counts in TBT. Just curious as to how one takes account of time decay (negative compounding) in trying to count both leveraged and any kind of inverse fund.

It is entirely possible for the underlying instrument to comply with elliott rules while the derivative (say a leveraged or inverse fund) breaks the rules.

This suggests that one should only try and count the underlying, even when one trades the derivative.

Mamma Boom Boom

Hank........you could be right. But, I'm thinking the next important move is to fill the gap at 931.5.

da bear

eventhorizon,


i was trading a 2X leverage reverse index fund last year and it had a decent looking elliott wave look at some point.

the VIX also showed a good elliott wave form last year. even now it looks as if a big wave four correction is winding down with a wave five to follow.

TBT could be on the B wave rise now as i thought it may be. it may be hard to spot a stock top but a bottom in the VIX, in the dollar, and a B wave high in TBT could give hints that a top for stocks would be in...

not too sure if the top is in.

last year gold turned down first then stocks crapped out later on. a confirmed downtrend in gold (could happen soon?) could tell us that stocks are about to weaken.

regarding options, the better thing to look at is the VIX. if the VIX starts to bottom out then options would be priced the lowest and as the stock market moved down then the puts would increase in value. so look at the VIX first. the VIX would bottom out as stocks top, but if stocks rise and VIX steadily rises then that could be a bearish omen for stocks. so what you could do is chart the VIX using technical analysis and elliott wave (i think wave 1 was a couple of years ago with wave 2 being before the wave 3 which took place last year, now in wave 4. wave five could take VIX to 100 or higher.). when the VIX looks like it hit a wave 5 target high then that would be the best time to close out any put options as a wave 3 down in stocks would be nearing an end. so i would be looking out for a wave 5 rise in the VIX and a wave 3 decline in stocks.

da bear

Wavist

Actually Bushong it took a great deal less effort than my previous postings as I was simply repeating for the benefit of the slower students. In the event your last sentence explains your incomprehension - you are hardly at risk of scaling the bell curve and MEW may not have been the very best of reading recommendations. The Hungry Caterpillar is quite a popular choice for those showing similar proficiency in literary analysis.

And Richard Russell is a living legend, if his analytical style has remained consistent for 50 years that's the result of the reliability of his observations. His breadth of knowledge is easily comparable with Prechters and unlike him has caught nearly every market turn resulting in his place as HFD top market timer since records began. Which doesn't mean that he is infallible or that I agree with him on everything but I wish I could ever 'at best..come off sounding like Richard Russell'.

You don't warrant mention in the same paragraph.

Wavist

DG, I am not suggesting taking an average of all counts as being the most correct or always trying to trade all possible wave counts, but rather that where a bullish and bearish count exist simultaneously it is best to give the benefit of the doubt to both of them, for example by sitting back from selling until at a point where even the bullish scenario would expect a retracement. Then, when reaching the support at which the bullish count would expect a reversal and continuation of the advance you could take half your profits immediately and lower the stop on the other half to the point of entry. Or alternatively wait to buy where the bearish view would also expect a bounce. True that way you may end up sitting on the sidelines if you get stopped out of a big trend through whipsawing, but it also significantly decreases the chances of your having to take a loss.

vipul garg

too many alternative counts is more of prechterian style, hit and trial and one will fit kinds.
there is something totally wrong with ones style and method of wave counting, whomsoever he follows if : bullish and bearish counts and then many of each exist at same time.
one can have reasonably a bullish wave count , and the degree of bullishness can vary, thats still acceptable. for eg.'we have hit the bottom' doesnot mean we have ended a bear market. is different from ' we are in a bull market and will make new highs.'but the undertone is still same. - bullish and with a common factor -the low is in., buy all dips.

maintain a view and also know where it will be wrong is the key.

DG

Wavist,

It seems to me that one of the first objectives of wave theory and using it to construct wave counts is to determine if one is in an Impulsive market or a Corrective market. All other shorter-term decisions will flow from that one determination.

From there, it turns into a matter of which time-frame one wants to trade (one can also trade multiple time-frames with different parts of one's capital). Using Neely's deductive rule set, one should be able to narrow even a short-term count (Daily timeframe) to either a bullish or bearish view, so having multiple wave counts doesn't seem necessary. When one uses more subjective methods such as the old "eyeball" or "five waves up, must be an impulse" method, it is inevitable that one will end up with multiple counts, I think.

Mike McQuaid

SPX daily chart at March 6 showed a PPO-ADX pinch. Since mid May the 20,2 Bollinger band failed at two attempts to tag the lower band while today the upper band is flat and the price moving up. We're seeing an imminent, widely watched, Golden Cross. RSI(14) is 53 and curling up as the open today was a gap up into a fast chart pennant. The technicals are becoming overbearing with diminishing answers to this landscape.
All this describes action into a wave 3, yet prudence calls for confirmation, for those that are prudent.

Mamma Boom Boom

-------- I'm Drop'in The Hammer -------

http://www.bushongbusiness.com/opinion.html

....KICK OUT THE JAM'S BROTHERS AND SISTERS....

Tom Chechatka

Here's something you might want to keep on the radar...

Several years back, a cycle watcher named Steve Puetz attempted to see if eclipses and market crashes were somehow related. He studied eight of the greatest crashes in financial history, from the Holland Tulip Mania of 1637 to the Nikkei of 1990. He found that market crashes tend to occur near full moons, and that the greatest number of crashes start after the first full moon after a solar eclipse, when that full moon is also a lunar eclipse.

Puetz found that all eight crashes occurred six days before to three days after a full moon that occurred within six weeks of a solar eclipse. The odds of that being a coincidence, Puetz calculated, are less than 1 in 127,000.

Believe it or not, the crashes of 1987 and 1929 were immediately preceded by a solar eclipse which was then followed by a full moon/lunar eclipse at the time of the crash or close thereby.

So, check this out...

Lunar Eclipse: July 7, 2009

Solar Eclipse: July 22, 2009

Lunar Eclipse: August 6, 2009


Rob

I don't think we will be having another crash until after we have a confirmed Hindenburg Omen and that might not be until September.

trader

kiss-off was today....hard down into early july....then some deadcat bounce....look for a new low in late october/early nov spx 430

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