The Market is Getting Spiky

While the S&P looks flat, hovering along the 1065 level, the S&P futures look spiky, making relatively huge moves in the past week. See chart from SlopeofHope. I hope Yasi is doing ok trading the e-mini. 

This is a warning shot of a change of trend. The wave count is right on the cusp. Remarkably it has bounced along the 62% retracement at Sp1065 for two days. Yesterday I discount due to light trading (Jewish holiday) but today the volume came back and the market faded after a morning blip up (presumably from overnight orders being filled). The 1061 pivot was but a momentary obstacle. 

One shouldn't make too much of Fib retracement levels, but typically a wave 2 will go back no more than 62% (with at times a slight slop-over above). Prechter kept finding 78% retracements of wave 2s back in 2001-2 in his favorite formation, a nested 1-2; but in retrospect the period can be better counted without those unusual wave 2s. And so to here. Although a wave 2 could theoretically retrace 99%, they rarely do, and a break above 62% usually indicates the count is wrong. Hence it is fascinating to see how the 62% level provided resistance other than the morning slop-over to 1069. 

Right now we have two counts to watch, and both involve that pesky 62% level slop-over at sp1069/Dow9835. I showed several wave structures on Friday, and the bullish one is still extant (the first chart here). 

• Bullish count has us ending wave iv down off Sp1080 at Sp1041. The rise off that breaks as a five-wave impulse to SP1069, and the long goodbye at Sp1065 is a corrective minor wave ii. Expect a rip-roarin' wave iii tomorrow to break Sp1069 and run past the recent high at 1080. Sp1100 in sight! And Dow10K! Likely timing is Oct8-15 for this to peter out. It would match a pattern of month-end/month-start strength, although one should not rely too much on such patterns; the prior quarter end was a downturn into Jul8. 
• Bearish count has us ending the first wave down off Sp1080 in between the two charts from Friday. The up and down to a lower low at Sp1041 on Friday counts as waves A and B of a flat correction, and the fast charge up Monday/Tuesday-at-the-open to Sp1069 is wave C. A flat breaks as a 3-3-5, and waves B often go beyond the start of wave A, so this fits even though (read Daneric's post today) the waves A and B are relatively tiny. Expect a rip roarin' drop in a wave iii down. 

If we break 1070, the bull is on. If fail to break it tomorrow, the rout should be on. 

Other warning signs are ambiguous. The USD has rallied, and given the inverse Dow/Dollar relationship, is bearish for stocks. But the rally is not yet convincing. If we pop up tomorrow the USD is likely to fade and retest DX74.50. Gold counts as a five-wave down off the recent peak, which indicates a change of trend to down. Volume increased a lot today but breadth was mixed. 

The most interesting warning sign is the second chart from InvestorsIntelligence which comes courtesy of the STU today. It shows a spiky series of buying climaxes - new 52 week highs followed by a lower weekly close. The STU explains that:

This was the highest total since June 2007 and eclipses the extreme reached at the October 2007 top, revealing once again that Primary-degree second wave rallies will often sport technical extremes that exceed those present at the previous peak. "

Comments

[Brian]

The "buying climaxes" chart is interesting. It would have been nice if they looked at it a month ago when they were predicting the market had topped. At that time, the there were no spikes which should have hinted to the market not yet topping.

[Taz]

Looks like a nice impulse off the low for the us peso so i expect we will only get back to 75.5 before another move higher.

[Doroteo Arango]

Dg,

As far as I know, Neely is noy gay.
Relax!!... you do not need to defend him or fight with everyone here because they write nasta things about your trading/boyfriend hero !!

He IS NOT rich... trust me!!

GET A LIFE !!... How many hours do you spend writing in this blog?
You seem to be a lonely gambler, that requieres help!!
JA JA JA!!

Doroteo Arango

[Bird]

Taz what is your email?

[Taz]

daniel.goulding at rbsmorgans.com

Thx Bird

Taz

[Jing Chen]

If you look carefully at the climax chart, you will notice that in the bear market, wave 3 had the most powerful climax, while wave 5 often had a climax divergence. Namely, wave 5 would make a lower low, but the climax value showed a bullish divergence compared to that of wave 3.

And when you think about it, it makes sense. The climax value is essentially a different way of measuring breadth. And we all know at wave 5, the breadth is poor as many stocks are no longer participating in the prevailing trend. Instead, they have already reversed and no longer meet the climax criteria (e.g. making new 52-week high/low).

Extrapolating that insight into our current bear market rally, I would like to see a new high in DJIA with another buying climax that shows a bearish divergence. Ideally, the new high should exceed 10K and cause widespread media coverage and celebration. This will help to convert remaining bears to bulls and cause a final speculative buying frenzy.

I want to see some irrational exuberance in the media, if possible. :)

[Jing Chen]

One problem with our bears is that they are often too early in calling the trend change, as they are unconsciously just too eager to see their prophecy and profit realized. The same goes for bulls too. The thing is that if you really want to see something, you usually can find evidence for it. We are all prone to this human flaw.

I have a lot of admiration for Robert Prechter, as his Elliott Wave teachings literally changed my understanding of human nature, financial markets and social events. Still, I am quite aware of the fact that he was too early in calling the tops of Internet bubble and the credit bubble. This is the same as saying bears (and bulls) tend to be early in their calls as they unconsciously see what they want to see.

The take-away is that I automatically presume that Robert and STU are too early in their calls, to make sure I have some room to counteract this human tendency.

[KRG]

It may be interesting to recall Neely's updates last year. In Apr 08 for example, he forecasted S&P to bottom out around 600 in 2009 and the bear market to end at a higher low by 2012!! It is a pity that he had abandoned this for a new count calling for lower lows and is now skeptical of the same.

Nevertheless, one could easily wager that Neely cannot be poor because of trading. For, risking 1-2% of capital and staying put much of the time awaiting for a right risk-reward and getting the big trades right majority of the time cannot make you poor

[min]

Doroteo Arango and Charlie Tarango both choked on a mango.

But at least Charlie could spell...

[Doroteo Arango]

KRG said..
"Nevertheless, one could easily wager that Neely cannot be poor because of trading. For, risking 1-2% of capital and staying put much of the time awaiting for a right risk-reward and getting the big trades right majority of the time cannot make you poor"

Well, that doesn't make you rich either. As I said... Neeely is NOT rich...
he lives from his website, not from his trading.... that is FACT..

Doroteo Arango

[vipul garg]

he lives from his website, not from his trading.... that is FACT..
Doroteo Arango

does anything come after this or you are in the habit of providing everyone with your opinion disguised as facts

[Doroteo Arango]

Vipul

I say is a FACT because I know Glenn Neely since the 80s.
Something you obiously don't.

Guys.. do not fool yourselfs here. Glenn Neely is not what he seems to be.
He is an average guy that makes his money from his website not from his trading.
What is wrong with that?

Does it hurts to know that his method has not made him rich?
Were you guys expecting to become rich on his Neo Wave lunacy theory....you fools!

Doroteo Arango

[DG]

trust me!!

I am not in the habit of trusting unverified statements over my own due diligence.

Again, provide me with a real name and let's get your story verified. Anyone can make claims online without any real-world substance to those claims.

[vipul garg]

Doroteo Arango

still what next?

you have enlightened us with a factual revelation.now what do we do with that fact?stop following neowave?
or you have started a website of your own that you want posters of yelnick to follow?what is it.

[DG]

I say is a FACT because I know Glenn Neely since the 80s.

Glenn Neely is not what he seems to be.

So we are supposed to take the word of a person who knowingly remains friends with another person whom the first person considers a fraud?

Why would you remain in personal contact with Neely for 20+ years if you think he is a fraud?

Nothing you are saying adds up.

[Hank Wernicki]

Gap Down as Expected ! Buckle up

[Bird]

Good call Hank.

[george]

the thing i like about glen neely
is there is
a stop in case things don't
go as planned. also money
management using a limited
amount of money not betting
the farm on a single trade.
glen is always ranked high
by the newsletter evaluation
services. i don't understand
his methods but you really
don't have to because he
tells you when to go short
long or neutral and how much
to risk and the stop loss level.
his services don't require
you to figure things out.
just look in the boxes marked
long term intermediate and short
term and follow the directions.

[Rob]

I don't follow Chris Carolan, but I read on another service I receive that in a recent report to his subscribers he said he expected a reversal to come on October 9th and that there would be false signals before that date.

The service I subsribe to says he may be right and that this sudden selloff may be premature for "the" reversal.

A seconday trend line has held for the SPX as has 1041.

[Gaylord]

Buckle up

Maybe not.

[O____O]

I don't follow Chris Carolan, but I read on another service I receive that in a recent report to his subscribers he said he expected a reversal to come on October 9th

Makes sense. October 9 is the Sun trine Jupiter

May keep market afloat here

[Account Deleted]

Did anyone recieve NEELYs newsletter in mail today.
He is completely lost and still finding his way out.Has also accepted the limits of ELLIOT Wave theory in predicting the mkt and also in true sportsman spirit has acccepted tht his calls have not worked this year as well has they worked last year.Though he has found some SICK EXCUSES to justify it also.

But some NUTS here will keep on defending NEELY and the sick theory even though the so called master has accepted its limitations.Some NUTS will never understand as they have been left worthless by this tremendous BLOW tht has been hurled on ELLIOT WAVE practitioners that they have no other work but to indulge in timepasses like POSTING on BLOGS.

SOmeone rightly said on this board that NEELY defenders should understand that NEELY is not a GAY.So doesnt need you.

[Upstart]

5-month cycle bottom due in September is now over.

[DG]

SOmeone rightly said on this board that NEELY defenders should understand that NEELY is not a GAY.So doesnt need you.

Can you find me some post where I said Neely "needs" me to defend him?

Has also accepted the limits of ELLIOT Wave theory in predicting the mkt

I've posted numerous times that Elliott Wave Theory != "crystal ball".

no other work but to indulge in timepasses like POSTING on BLOGS.

I'm trading full-time and that usually requires I be in front of a computer. Besides yourself and a few others, there are people who post here who are quite interesting and have insightful things to say about the markets.

Honestly, you come across as a child.

[Account Deleted]

I pity u

[DG]

I pity u

I don't care either way. You are just some random moron on the Internet.

[Account Deleted]

U r clearly ruffled.By using adjectives for me u r just proving how much ELLIOT WAve has damaged u and how much u need some neurologists help.Whether I come as a child or u r proven as CHILD is evident from the way u and ur favourite sick theory have taken a serious beating.U r one stubborn JERK who will never come on ground and accept your mistake or limitation.It requires guts to accept it and only men can do tht.
Good continue abusing me.I am enjoying the kiddishne

ss.

[da bear]

The stock market must have a fatal attraction to DOW 10,000. ... one last kiss goodbye.

da bear

Read your Figure 5.7 in At The Crash of the Tidal Wave people!

[DG]

VB,

Whatever. If you want to talk about the markets, fine. Save your cheap armchair psychoanalysis and medical diagnostics for someone who cares.

[Account Deleted]

Ha Ha ha !! COntinue continue..I am enjoying..Some more please

[sucker's best friend]

Study Figure 7.5 in The Great Crash of the Tidal Crest. It's a doozy! We am f-cked!

please send 1.618 or 3.1415 (for our super-magical Pi-Circle-Ratio-Golden-Ticket-Subscription) dollars a day to Box 1618 Gainsville, GA.

[Account Deleted]

Ha Ha ha !! COntinue continue..I am enjoying..Some more please..Common use the last bit of your vocabulary and try and hurl as many verbal blows at me as u can.It will help u relax and cleanse your mind from the damage that u have gone thru (as such u cant do a shit to the mkts so u might as well pour your angst out on me).

[Astrotrade]

Yesterday was 55 Fibonacci trading days from the July lows which suggests a top.

Holding short here.

[Bird]

No need to bash. No need to defend. Neely has constructively advanced the question of what is going on in the markets more than anyone else in this conversation.

We are in his debt.

His discoveries have also not lived up to the wish.

I once asked myself, if I was God and I wanted to design perfect order in the markets, what elements would I include? You may think I'm a moron for this and maybe you're right. I for one believe the holy grail is really there, that one could KNOW, to enter a trade at significant turning point and hold to the exact, intrinsically related end. Over and over. I could be wrong, but I think I am closer to the truth about the markets because I've searched and searched than I would be if I hadn't.

One way or another, everyone pays. In losses. Frustration. Ego bruising. Hard work. Paying is a good thing.

[soso]

I dont understand why yelnick doesn't step in an moderate this anti-neely maniacs, they (or maybe he if he's using multiple screen names) dont have any constructive arguments to bring besides neely being gay, loser etc.

Really yelnick you have to do something about it, I'm tired to scroll through these stupid comments...

[DG]

You may think I'm a moron for this and maybe you're right.

I don't think you're a moron, but I do think it's hubris to believe that any person can fully comprehend the markets in advance, except in the realm of probabilities.

I don't know why some people are ascribing the view to me that there is such a thing as certainty in the markets, because I don't believe that at all.

[DG]

I dont understand why yelnick doesn't step in an moderate this anti-neely maniacs, they (or maybe he if he's using multiple screen names) dont have any constructive arguments to bring besides neely being gay, loser etc.

It's probably my fault. I give them a target because I stick to my guns that Neely's, at the very least, on to something powerful and that his methods repay study.

[yelnick]

soso, DG is more than holding his own. however, if it continues to clutter, I will take action

[Bird]

Maybe so DG. But it is an oft-humbled hubris. The markets are made up of people and all sorts of things can happen. But there is an structural omega to each alpha.

Here is an example. Not the most exciting but exciting enough. Take the time of a swing and look for a clear turning point at a fibonacci ratio out from there. In most cases the move that starts there must go to a fibonacci price level (and pivot there, at least short term) to "lock out" before the move ends. This can't be counted on (i) if the "lock in" timing point ALSO has price (tho its probably not a bad place to put on a position--in fact you could just stop there), or (ii) it is PRECEDED by a fib price level in the swing before. Now maybe this doesn't happen every time. But it does so enough to make one wonder what is going on and whether there are other ways in which "the ending is foretold in the beginning". (A word of caution, even this simple approach is easily misread because the time element isn't specifically designated as a high or a low.)

Yes, because it doesn't happen every time that is where the probabilities come in. I can only agree. But if I weren't a little naive and a little over-confident I would not have come even this far.

[AJ]

The two year cycle runs out to around the 9th October date mentioned earlier(a day or two later actually) and 90 days from July low is 6th October - there is also a cluster of other cycle dates I have due on 6th as well so next week should be a top of sorts. Still expect that we will simply be completing wave a of II of the ending diagonal C wave, with the top in 2007 being the big B-wave preceding this ending diagonal C. I still think this count makes more sense longer term else we go to Zero if some are to be believed. also, 4 year cycle likely to have started up in March 2009 low and historically we are in the up part of this, there will be more upside to follow a lengthy correction into middle/third quarter next year. Then mid 2011-2012 will be the third wave down in an ending diagonal, so sharp yes, but not greater than the first wave off 2007 top. The point of recognition for the ending diagonal will be when we break back up through the March 2009 low after this third wave down (judged by the surprised look on Prechter's face)- by then most of the damage will have been done.

[Rob]

There are some cycles guys who believe the most recent 4-year cycle low was in January 2008, with the most recent 4-year cycle high being in May 2008, resulting in a left-translated trading cycle.

I believe that is Tim Wood's position.

That would allow for a lower low for the next 4-year cycle than seen in March 2009.

[philippine fred]

Ending diaganols all over the place in countries and assets, one wave left upwards.

[Doroteo Arango]

Glenn Nelly-Myther Challenge!
You could win $3000!

Ok... guys...lets see id the Glenn Neely that DG defends is real!!

I will give $3000 to the first person who can provide evidence that Glenn Neely is millionare because of his trading using Neo Wave.

This is a one-time offer, which will only go one person for proving the evidence. The first person that delivers the evidence will get the money.

If someone earns the $3000, I will let everyone know. And I will tell everybody in this blog that I am a liar!!

I am willing, if necessary, to deposit the 3,000 dollars with Duncan (Yelnick) and he will be the jugge.

Write me at [email protected]. Include your evidence and I will give you the money. This offer is open until Oct 9th, 2010.

If no one gives evidence about the "success" of Glenn Neely trading his Neo Wave, tben it will prove that I said the thruth about Mr. Neely

"Glenn Neely makes his living from his website, not from his Neo Wave trading. He is NOT RICH because of his stupid neo wave theory"

DG, contact your friend Neely and tell him about this prize.... he might help you.... Until you prove me wrong... please be quiet!!

Any questions?

Doroteo Arango

[DG]

Doroteo,

First of all, you said you had proof of your own, based on knowing Neely personally, that what you are saying is true. Why should I, or anyone, have to obtain proof of the opposite? If what you say is true, and there is some proof other than your own saying it is true, you show us.

Secondly, given that I have already quoted TWO statements of Neely's that indicate he has made at least $1.6 million and possibly as much or more than $7 million in trading capital, most of which could not have come from his subscription services, and you do not consider those proof, what would you even consider proof? Neely's bank statements for the past 20 years? His tax returns? An e-mail from Neely saying "Yes, I have made over $1 million trading with NeoWave"? What?

Thirdly, why should I take the risk of making Neely think I am some kind of fool by writing to him and asking him, "Hey, can you help me prove to some anonymous person on the Internet that you've made over a million bucks with your own trading methods?" He will, rightly so, think I am a maniac and tell me to buzz off. Any normal person would. I have written to him a few times to ask him questions about NeoWave and he has been nice enough to reply. It is completely inappropriate for me to ask him anything of a more personal nature. Anyone whose mother raised him with proper manners would know that. I have made far more than $3,000 trading with NeoWave, so your financial reward is a pittance compared to the risk I would run of Neely telling me that my subscription was no longer wanted.

Any questions?

Yeah, what's your real name, so we can prove that Neely even knows you and end this stupid charade.

[Doroteo Arango]

DG,

Neely reads this blog sometimes. Send him an email, and he will read my challenge....and guess what... we won't be able to win my challenge.

anyway since you do not like anything....here is another one.
Ok...lets do this.... Send me 100 dollars and I will prove you that Neely is not rich because of his trading... Since you already made more than 3000 using neo garbage, then 100 usd should be nothig for you..... but guess what?
Since you are loser.... you won't accept anythig.....

By now, everybody in this blog, knows that you are a gambler, and an internet addict...get some professional help! Get a life!!

Keeep defending your boyfriend Neely, he might give you a free subscription as a reward for your services here!!...but as far as I know..Gleen is not gay, so you might not like that either... I feel sorry for you.... .

Doroteo Arango

[Doroteo Arango]

DG,

I forgot to tell you that if you need more information about me..
just ask your mother.. or your sister..
they know me very...very well..

Doroteo Arango.

[DG]

Ok...lets do this.... Send me 100 dollars and I will prove you that Neely is not rich because of his trading

Clearly, you weren't paying attention to my last post where I asked what you would consider proof. The only possible way to prove something like this is through brokerage statements or tax returns. What are you going to do, write up a document that says, "Glenn Neely has not made $1 million trading with NeoWave. Signed, Doroteo Arango" Or maybe something that claims to be Neely himself, saying "I am Glenn Neely. I just want to say that I have not made $1 million trading with NeoWave and that most of my money comes from my website. Signed, Glenn Neely".

Anyone with half a clue knows that only tax returns or brokerage statements would be definitive proof of something like this. As it is, I am deducing it from secondary documents (the statement about the Australian dollar trade and about the $70K in losses from trading in 2007). Are you claiming to have Neely's brokerage statements or tax returns? If so, I do think he'd be interested in knowing that.

Since you already made more than 3000 using neo garbage, then 100 usd should be nothig for you..... but guess what?
Since you are loser.... you won't accept anythig

Do you really think this amateur reverse psychology is going to work on me? Call me a loser so I'll get angry and take your challenge? Come on. The reason I won't accept any of your offers is because there is nothing in it for me.

I forgot to tell you that if you need more information about me..
just ask your mother.. or your sister..
they know me very...very well..

They already told me about the escaped mental patient they saw running down the road screaming "Neely's not a millionaire! He makes his money from his website! Give me $100 and I will prove it!"

Give it up, man.

[min]

Is it Arango or MORONgo

[Zoroteo]

The question isn't whether Neely's made a million bucks. It's whether Neely's made more money than Doroteo. Doroteo, please provide your account statements to Yelnick to prove you are as great a trader as your posts imply. Our thanks, in advance, for saving us from that arch-menace Neely.

[Account Deleted]

So now here is the Proof for everyone on this BLOG.Poor DG has been left so bankrupt by this NEOWAVE theory that he is resorting to BEGGING for 100Dollars on such public BOARDS.Ideal place for u would be below on WALL STREET with a perfect WAVE SHAPED BEGGING BOWL In your hand.Well someone would have some pity on u and would give u some money.But dont expect 100 dollars as its way beyond what u deserve.