Bulls Ready to Stampede in Final Surge

We broke the Jun11 high in the S&P of SP956 (barely), faded off it, and ran back up towards it at the close.  Courtesy of Slope of Hope, here is what it looks like - note the seven straight trading days up, and a huge increase in volume today.  It looks like a new closing high will come soon with the summer rally in full force.  The wave pattern anticipates a pullback shortly after that break of SP956 - Tony Caldero suggests a 50 pt drop after cresting the next pivot point in the range of SP961-968.  He sees the final wave after that going into the range of SP1018-1041 with mid-August timing. 

Meanwhile the CNBC cheerleading and Obama fantasyland "I think we've put out the fire" jawboning continue despite an horrific report that the US Govt has assumed $23.7T of liabilities to stem the coming depression, way beyond any Congressional authority.  (TARP was only $700B, the mere rounding error of $0.7T in this huge number). How this happened is another story, but this rally is shrugging off bad news.  New narrative is Obama's potential failure to get healthcare nationalization and cap&trade passed (both bills are in trouble) may be stoking the rally!  His agenda's failure is said to be bullish.

Enjoy the rally, and be attentive again after the first week of August. 

Comments

[da bear]

interesting. does anyone here have the DOW in a final wave 5 up from the 8,127 lows? because that is what it looks like.

i put out a Report last night through my website at wal-streetweak.com.

here is a link: http://www.phpbbplanet.com/damessageboard/viewtopic.php?t=6719&mforum=damessageboard

tell me what you guys think. i would love some feedback!

thanks,

da bear

[Q]

The chart posted from Slope of hope seems more "climatic" in nature, then a begining of another new leg up. We'll see soon enough.

[Wave Rust]

This is from a few weeks ago posted here. Still looks right whether you want impulsive numbers or corrective letters for the labels.

http://i478.photobucket.com/albums/rr146/Wave_Rust/dow3s.jpg

Since dow 7775, it is nothing but 1's and 2's in at least 4 different degrees.

This one from January was spot on too.

http://i478.photobucket.com/albums/rr146/Wave_Rust/dow4ths.jpg

I'm wondering whether 11,300 in the first chart is doable this year. Or, if it takes longer, then it might go much higher.

wave rust

[vipul garg]

943 is now a crucial level. below which some correctiion will be seen to 910 odd levels.

[Forkoholic Serge]

Anyone knows what Market Facilitation Index is/does?
I accidentally put it on SPY daily and forgot to take it off
Anyway, it was 0 from 1995 to now. In last 2 days it jumped to 2!

[Le Chiffre]

Serge, the absolute value of MFI is very dependant on volume, so big rises on low volume would make it pop up. What SW are you using?

[Mike McQuaid]

SPX rally sequence needs to follow, in some fashion, this scenario to continue to confirm the pattern. The Feb high to the March low reversed and extended goes to 1000 as a 1.618 fib move. The pattern may then consolidate and push higher as wave 3 off the March reversal. Currently the June high is offering resistance so that is obviously portraying into the consolidation portion of the pattern too. There are other spots to measure fib reversal extensions but they're mox nix as they end up painting the same picture. So simplify it further, we're seeing a breakout from the bull flag off the March low.

[Sherman McCoy]

Why is everybody looking for a "top"? It's such a silly low probability trade. Is it bragging rights, maybe? Do you go to cocktail parties and brag, "I picked the top"? I'd rather be rich than be right. Trend followers don't pick tops, but they make a lot of money.

"The trend is your friend, until it ends"

FWIW, I see a lot of 1s and 2s in individual securities. I wouldn't be surprised to see an extended wave 5 kill all the EWT people.

[A]

>Is it bragging rights, maybe?

speak for yourself

[Sherman McCoy]

Those that tell don't know. Those that know don't tell.

[A]

>Those that tell don't know. Those that know don't tell.

so do not tell.

[Sherman McCoy]

I thought the whole point of this blog was to spread misinformation. What is retail if not a bunch of lemmings? We need somebody to blame for our mistakes. Isn't blogging all about your ego, or is it some public service we're blessed enough to receive for free?

[MHD]

Yelnick...do you follow Dow Theory and if so what higher levels would have to be reached to confirm a buy signal? What I'm thinking that if this is a V shaped recovery (which I doubt) a move above those levels would have to be broken. Tim Wood follows Dow theory pretty close, but I have not seen any numbers that give an all clear to the bull.
Also, where do you think Neely went wrong on his count? He was pretty bold in his top is in call. He had to be close to 100% certain of his count, yet the market did the opposite of his forecast. EWI which had been terrible in its forecasting in the early 2000's seems to on the right track, getting the bears out right near the bottom.

[DG]

McCoy,

I know it won't matter, but you'd have a LOT more credibility with me if you had been pounding the table to buy in March. A guy who shows up after a 40% run talking about "the trend is your friend" feels a bit late to the party. If you followed this blog with any level of attention, you'd know that some of the people looking for a top now, including myself, said in April/May that we could go as high as 1000 before reversing. Specific numbers I gave were probably closer to the 96-98 areas. So, despite your "holier than thou" attitude, your apparent belief that none of us looking for a top thought we'd even get this high is just factually incorrect.

[DG]

"96-98 areas" of course being on the SPY.

[yelnick]

Sherman, at times it feels like this blog is all about the ego of the more avid comment makers! Then I get some perceptive comments of the more humble - which I immediately can spot as experienced traders. This is a probabilistic game, and the experienced ones have scars to prove it.

[yelnick]

MDH, I watch Dow Theory but am not a follower. Wave theory superseded it. At the moment I believe the Transports had a double top around Jun11 and have not confirmed the break. So the DT has to rise too to confirm. Whether this is an official confirmation I don't know - I too rely on Tim Wood and others to say.

As to Neely, the most likely explanation is he was following a pattern that was one degree lower than he thought. Today he pushed it down a level. This happens all the time with classic elliott - is the wave 4 and 5 the end of the whole move or just a long wave 3? We see it now with the continued view that the action from Nov to Jun was a wave 4 of the prior drop. The lesson is that impulses are easier to predict than corrections.

[Josef]

Yelnick,

I am very appreciative of your blog and also very grateful that you take the time. You have a very good writing style and are able to summarize different viewpoints superbly.

Please disregard the ego-driven, immature nitwits who are still out to impress Mom with the "Look ma! No hands" spiel from their tricycle-riding days.

I am curious about Neely's statement to the effect that passing SPX 956 is very bad news for the market in the long term. I don't understand this line of reasoning.

Also, has he changed his count now that SPX 956 has been taken out?

[yelnick]

Josef, thanks for your kind remarks. Yes, Neely has changed his count. He has reduced the prior expanding triangle a degree, and thinks it is extending. Best to wait until month end to see where his count settles. At the moment he wishes aggressive traders to stand down until he has more count clarity. Why this is a big deal is it implies that the downturn off 2007 will be much longer. Previously he thought we would have a sharp dive and the bottom would be as early as Jan 2010. Now he expects a grinding over several years.

[Wave Rust]

yelnick,
joining josef's gratitude and thought the monday and tuesday posts were tops.

about tarp: heard some banks are paying off tarp by borrowing talf,,, peter to pay paul,,, from visa to pay master card

now thats something the bank's customers can understand about the bank bailout. :)

wave rust

[Wavist]

da bear that's been Wavespeak's count for months now, as I wrote back during the decline a couple of weeks ago that was not the time for selling as the market would at least retest the June high in a fifth wave that may or may not truncate. Now it's complete, the only question is whether we've finished wave 5 of 5, or just 1 of 5 of 5. Time to sell big time either way.

[Wavist]

Actually Sherman McCoy trend following has not worked this year at all. Long-term trend followers first sold into the decline in February making large profits by March. By April all of those profits had disappeared and by May would have showed a heavy loss. It was at this point that new long-term buy signal came, resulting in trend followers again making similarly large profits by the end of June. At which point the market reversed just low enough to take out stops and leave them even further down on the year. One highly successful long-term trend following system that I've tracked (lstrader) is now showing a >60% loss for 2009 ytd. Shorter term trend following would have worked well this year but produced appalling losses over the past decade.

[teaf]

i am surprised any wavers are thinking short as we are impulsing out of a 3 wave correction. even if its a c wave we could go much higher and there is nothing but air between here and 1250.

it doesn't look like a 5th to me but the beginnings of a 3 - counting this as a 5 off the lows doesn't look proportional to what would be the 2

at least imo