Make It or Break It Point in the Last Chance Rally

Tomorrow at the opening may signal which way this market is going. Neely calls it the "make it or break it" point of the rally, since it has hit the end of his fractal box in both time and level. The STU has two counts, and tomorrow should determine which: 

• if it opens up, we would be in the final wave v up towards Dow10K/SP1100
• if it opens down, we likely have already topped and should fall to retest SP992

This chart from the STU captures their bullish count, and it has been the one I have been watching in my Last Chance posts here and here. This count has us in a minor wave iv. In my Thursday post I was wondering if it would break as a flat or triangle. It appears to have done a flat, with today's gap down at the open the final C wave. If so, it should take off at the open tomorrow in wave v.

This minor wave iv and v will complete the wave structure from early Sept. As seen in this chart, wave i was longer than wave iii.  Normally third waves are the longest and strongest; but the hard rule is that they cannot be the shortest, or the count is wrong. This rule puts an upwards cap on the final wave v: it cannot break SP1097 nor Dow10450. So the Dow can crest 10K but the S&P needs to fall short of 1100. 

Also, in an impulse wave which runs in the direction of trend, either the third or fifth waves normally extend. The extension can be seen as the herd piling on in increasing enthusiasm (or panicking in an impulsive fall). In this case the first wave may turn out to be the longest, which is another indicator that this is a rally running out of steam, not extending with enthusiasm and increasing volume. 

Now, the bearish STU count has a really small i and ii waves, which makes it suspect. An alternative count from Daneric makes wave iii the longest and would permit the wave v to run. Keep this in mind since if we break Dow10K the market may run to the 50% retrace of Dow10.33 and SP1121. 

Comments

[psycho_puppies]

"Mon Sep 21, 2009 12:29pm EDT NEW YORK (Reuters) - High U.S. unemployment keeps pushing up the rate of mortgage delinquencies, which could in turn drive personal bankruptcies and home foreclosures, monthly data from the Equifax Inc credit bureau showed on Monday."...At least they get to drive away from their foreclosed home with a shiny new car.

[Anti Losers]

What a loser is Neely!!
His service really sucks!!

Where is Glenn Loser Neely?
I miss him!!

[Neely the Guru]

Neely's market prediction logic and scientific method is not different from flipping burgers. It took him 7 months and a 70% rally in NASDAQ to start wondering whether he was riding the wrong wave. Yes it is scientific, but just a claim.

[Rob]

I know there is a lot of confusion out there as to where we stand in the wave count.

The way I read it wave iii started at 991.97 and went to 1074.47. So far it was not the shortest wave, rather it was by far the longest. Some say we may still be in wave iii and there will be a push higher to 1090.

I am not sure if the pullback to about 1057 was wave iv or if we have started it yet.

[Rob]

Also, Daneric has his wave count starting back in August (I believe the 17th) and Sept. 2 market the bottom of wave ii, not the beginning of wave i as EWI shows for the DJIA. His wave ii retraced most of wave i. A number of other EW blogs use the same wave count as Daneric. I think EWI is wrong.

No one focuses on wave counts for the DJIA anymore. The focus seems to be on the SPX. EWI should get away from that.

[yelnick]

Rob, in the S&P it is easier to count wave i up from 992 to 1049, then a drop to 1033 or so intraday, then the wave iii up to 1074. We came right back to 1074 today, and should continue up after maybe a continuation of the corrective plateau from mid-day on today. It is easiest to count wave iv as over yesterday, and now we are in wave v. Possibly today was wave B of iv in an irregular flat, and will be correcting for the next two days, coinciding with uncertainty over the FOMC and G20; but then again little is expected to come out of either, nor out of the largely forgotten Copenhagen meeting on global warming. In either case the wave structure fits better than this being one long wave i, or for that matter a completed 5-wave C of Y. I expect a continuation up, maybe into early October. Around Oct9 the timing of wave Y = wave W.

[yelnick]

Rob, I agree that the EWI wave count int he SP is suspect, given such a short waves i and ii. I like Daneric's better; but even better is the same count as in the Dow, which could also fit the SP.

[Rob]

It just strikes me that Daneric, Kenny & McHugh's methodology for the SPX are consistent & differ from what EWI has for the DJIA. Tony Caldaro still has us in wave iii with a potential push to 1090 before wave iv.

[Rob]

I just referred back to a chart that Kenny had up on September 21st. The DJIA had a lower low on September 3rd, whereas the SPX did not. Perhaps that is why EWI starts anew on September 3rd. but the others don't for the SPX.

The SPX retraced to 991.97 in wave ii, whereas wave i started at 978.51 and concluded at 1039.47. A lot of attention is/was being focused on wave iv not overlapping 1039.47 because that would violate an EW rule spelling the death knell for P2.

[Astrotrade]

55 Fibonacci trading days from the July lows will very likely be the short term tradeable top.

Stay tuned >>> hits early next week.

[Scotty]

Yelnick
Look for 1105 on friday for the end of this wave.

Gannsecret

[email protected]

[Mamma Boom Boom]

IMO, the entire move off the March low is corrective and excessively manipulated. I find it dangerous to put much faith in any count, under those circumstances.

[Mike McQuaid]

The move off the March low is impulsive and bullish. The correction into July was shallow defining the characteristics of the pattern.

[Mamma Boom Boom]

Sorry Mike, I believe that not to be accurate.

Actually, following the November low, I expected the final low to be in Feb or Mar. And that would be a multi-year low followed by a strong impulsive move. But, that structure never developed, and instead turned into a 'runner'.

And that definitely challenges the March low.

[DG]

If anyone would like to see what a real Impulsive wave at this degree looks like when plotted correctly on a Daily or Weekly chart, look at Figure 8-13a on page 8-16 of "Mastering Elliott Wave".

This BS of calling the move from the March lows Impulsive is completely subjective. It is NOT Elliott Wave, it is someone trying to use whatever credibility Elliott Wave has to push a market bias.

[Canadian Money]

SP500 Rally limit of 1200?

One possible wave count I see for the SP500 is a simple ABC correction that is still in play. Wave A has a credible 5 wave count with an end near 1250 in March 2008.

The current rally could be wave 4 of C with an upper limit of 1200. If valid... the March low should be taken out by the fifth wave. Because three of C ended at the March low and is already larger than wave 1... wave 5 could go as deep as required to end the bear.

[Mamma Boom Boom]

The boys in the pits just don't command the authority they once did. 6 point short squeeze???

[Cary Lloyd]

Maybe. Another possibility is something relatively rare, what I call a "stall out", where we simply trade between SP 1000 and 1120 for the next twenty years or so. Hard to believe, I bet you're thinking, but a decent chance of happening. Writing options will be the way to go if that scenario plays out. It will catch a lot of people by surprise at first but become self reinforcing as time goes on.

[psycho_puppies]

Strange... was watching Bubble Vision (CNBC) over lunch. Even they were talking about how the FED was going to keep out the "punch bowl" out. It's becoming mainstream that this is a drunken orgy of funny money.

[Mamma Boom Boom]

2:40 P.M.

Powerful. Haven't seen anything like that in months.

[Cary Lloyd]

buy at 1000 sell at 1200

repeat process

get rich

this is not a solicitation, do your own research etc.

[DG]

Cary,

I think the range will be wider than that (more like the March 2009 lows and the September 2008 highs) and won't go on for 20 years, but I think you're on to something for the next 2-3 years.

[Cary Lloyd]

DG, I've enjoyed your posts but you are so out of your depth here it's laughable. I'm not posting something about which I'm, say, 50% confident. This is the first time I've stuck my head out on this board and the reason is my confidence level is well over 90%. This is what I call a "stall out," and it will shock many people. Doubtless you think I'm wrong. I can only say that I am rarely wrong about things I share with other people. I will share my thoughts only when I am very, very sure of things.

If we were to drop below 1000, it would likely be a little blip to 997 or 998. We will not drop further. Nor will we crest 1200, of that I am even more sure.

So I will probably be writing options to avail myself of volatility premiums while they are still high.

The bear market will be in volatility and it will last 20 to 30 years.

[Hank Wernicki]

Wednesday September 23rd
4:01 pm

THIS IS IT <<<<<<<<<<<<<<<<<<<<<<<<

I'm going TO start going 100 % Short tomorrow ( ANY MARKET )

Buckle Up <<<<<<<<<<<<<<<<<

You can scale in with a Stop at today's high <<<<<<<<<<<<<<

[Mamma Boom Boom]

Hank, it does have that 'feel' doesn't it.

[DG]

This is the first time I've stuck my head out on this board and the reason is my confidence level is well over 90%. This is what I call a "stall out," and it will shock many people. Doubtless you think I'm wrong. I can only say that I am rarely wrong about things I share with other people. I will share my thoughts only when I am very, very sure of things.

Dude, I don't care if you whispered it in your newborn baby's ear as a sacred vow that you wouldn't rest until it was so and that you would use the money from writing options to buy her a pony on her 13th birthday, it's a horsesh*t call.

[Cary Lloyd]

My little "horsesh*t" call has already made me quite a nice little bundle.

I'm not the type to brag or chide people who failed to heed my good advice. I will take no glee from being right on this one. All I can say is, there is a reason I have kept quiet these many months and it is simply that I have not had what I call a "Can't fail" prediction. True, there is a 5 or 10% chance I'll be wrong but ask yourself: How many times in life do you get a 90% chance of being right in something that appears random to other people???

Volatility is still relatively high. It will nosedive. We will be seeing average daily moves of 3-10 points on the Dow Jones Industrial Average, I kid you not. The fact that you call my prediction a bad word is part of the reason it will come true.

It CAN'T happen, right? Wait and see. S &P 500 between 1000 and 1200 for 20-30 YEARS. That is not a typo. YEARS. It will be weird and remarkable at first. It will start to make news within a year or so. Then it will become self-fulfilling as people buy at it nears 1000 and sell as it nears 1200.

Eventually, people will buy at higher numbers and sell at lower until we achieve close to 1100 without fluctuations. Then, thirty or so years from now, all hell breaks loose and we will see daily swings of hundreds, thousands, tens of thousands of points. But that is for another time... Right now VOLATILITY DIES*********

[george]

hank,
could you post a link to
your fractals?
or is this market
call based on
something other than
fractals?

[DG]

The fact that you call my prediction a bad word is part of the reason it will come true.

While there is a sliver of logic in the idea that to be a true contrarian forecast, a forecast has to seem ludicrous at the time it is made, that means nothing with respect to a specific forecast, so whether or not I agree is immaterial to the likelihood of your forecast coming to pass.

Eventually, people will buy at higher numbers and sell at lower until we achieve close to 1100 without fluctuations. Then, thirty or so years from now, all hell breaks loose and we will see daily swings of hundreds, thousands, tens of thousands of points.

OK, there is no way you are serious. If you are serious, you're not sane.

[Rob]

That is the most ridiculous notion I have ever heard of.

To state that we will see average daily moves of 3 to 10 points on the DJIA average is ludicrous.

Why don't you substantiate your hypotheses with a series of points that cause you to come out with your statement, rather than just throw it out there.

You can't just rewrite history without justifying your position because your credibility is suspect to say the least.

[Eventhorizon]

Cary,

It's great that you have already made a bundle trading the 1000 - 1200 range.

Your program has been tradeable for nearly 4 weeks now and has completed 20% of the first of numerous round-trips from 1000 - 1200 and back. Off to a very good start I should say - ignore the doubters here: Clearly, you are on to something that they just can't see.

If your streak extends another 360 times as long you will be wealthy beyond Croesus' wildest dreams!

[Bird]

My problem with the 1000-1200 range idea is that, well, markets fluctuate. On a longer time frame, the narrow range looks like a straight line across the page. Markets can't do that for any extended period any more than people can flat-line for very long.

Of course, if there is any chance of this coming true, telling us won't help it.

[min]

Cary:

Is Elvis still Alive?

[psycho_puppies]

Yelnick and others,
I’m long 100 Jan 2011 $15.00 puts. http://finance.yahoo.com/q?s=OZCMO.X My average cost is .20.
We all know that timing can be difficult but we all seem to agree on the eventual outcome. I figure this gives me plenty of time and leverage without risking too much capital. I’ve been visiting this site for years and made small amounts of money here and there. The majority of my capital is in short term treasuries and my house. This is more of a hobby for me, but I thank all those who work towards people not losing it all in the inevitable.
Sorry if I bored some of you.