Last Chance is Gone, Top is In

The market broke all prior levels to confirm in all major indexes that the top is in. How much of a top we shall see but for now expect at least a serious decline. The last chance to get out before the top is behind us but you have one or two more shots at it, at a lower level of escape. Wave structure *might* allow a small continuation up on Monday of the bounce off the intraday lows today (counted as a really small wave (iv) of the current down move). Regardless, the current down wave will soon plateau and a stronger counter-trend rally will give the last last chance to get out (or sell the e-mini futures, going short).

For those counting, we are in a wave 1 of a minor degree within P3 down - what degree of wave 1 is unclear. The last last chance will be to catch the wave 2 rally top before the stronger and deeper dive of wave 3. Note that the normal wave 2 top will be about where wave iv of (iii) down happened, or about the same level this wave (iv) will end if it continues up Monday - call it Dow9550 +/-. Note also that minor wave (v) down could run back to the Sep lows of Dow9250/Sp992. And wave 2 need not come back all that way.

After that wave 3 finishes we will have a better idea what degree we are in. if you buy that this is the STU primary wave [3] down (so-called P3), we are only in [i] of 1 of (1) of P3 - a LOT more downside.  But it may not be that bad - the various choices for which degree down are listed in yesterday's post.  The STU concludes their wave count this way:

The top wave structure is the one that we’ve been discussing: Primary wave 2 (circle) topped on September 23 at 9918.00 in the DJIA and 1080.15 in the S&P and Primary wave 3 (circle) down is now in its infancy. The alternate counts sport much lower odds at the current market juncture, so we won’t discuss them now. If the evidence changes, we’ll then delve into other potentials.

For you Neely fans, his confidence is growing as well that a major top is in, right where he called the end of his fractal a week ago.

Final note: the STU count on the long bond is different than Yves' count in the post earlier today. It is right at a level where one or the other will break. More as this unfolds. Similarly, the USD is moving up "in fits and starts" according to the STU, but its pattern is not definitively up. Watch for a break up next week. Point is the equities have confirmed a trend change; quite quickly we should see bonds and the USD also confirm their direction.

Comments

[JR]

Can someone please tell me how the Dollar is suppose to rally strongly in the face of a deflationary environment in which the Long Bond has a much greater chance at seeing a yield of 2.5% than 4%?

[Morning Wood]

Historically, the dollar is the safe haven. Today it is considered the least bad of all the other currencies.

[beavis]

Please, tell us the secret of morning wood.

[Mike McQuaid]

Not so fast, with the first two sentences in the presentation above. The SPX 38% retrace of the Oct '07 top to March '09 low is 1013, how 'bout we test that first, before we get excited. This is the first pullback greater than 25% since the bullish March reversal. It's a good buying trading opportunity. The chart painted 13 fib days today back to a doji, a setup for a reversal. If the pattern originating Sept 3 at 992 broke as support, maybe the above outline could develop.

[Mike McQuaid]

Edit my post to be the $TRAN not SPX regarding the 13 days and the doji, same effect though

[Taz]

Hi JR,

If the crap hits the fan so to speak, most people will focus on paying down debt. Most debt is usually denominated in the reserve currency.

Most people believe the US$ will weaken when in fact a llok through history suggests it will experience real appreication in the aftermath of a bubble as paying down debt overwhelms the ability of the inflationists.

Taz

[da bear]

yeah Taz the dollar should rise. as should all the major fiat currencies.
but that doesn't mean that gold will crash through the floor either.
it could hold up well.
i am counting gold as in a B wave (of cycle wave 2). then we get the C wave down (but i doubt that gold goes below its november 2008 low). then the big Cycle Wave III will follow until about 2020.

da bear

[Account Deleted]

Dear Vipul !!

SO now wht is your view on the INDIAN Mkts.It has defied the entire ELLIOT

or NEO WAVE theory beautifully.

Let us assume the fall in INDIAN mkts from Jan08 was a TRIPLE COMBINATION

FALL(Indian NEOWAVE master VIVEK PATIL claims it to be one) and Triple

combinations are always one LEG Of a triangle(according to NEO WAVE).IF we

consider the fall from Jan08 to MAr09 as A leg of a triangle then the

subsequent rise has to be ofcourse B wave of that triangle.Now NEOWAVE says B

wave of a triangle if retraces the A wave by more than 0.618 % then it has to

take more time than A wave except for NEUTRAL TRIANGLES.Now u must be aware

tht rise since March has retraced the entire last years fall by 70 % till date

but it hasnt consumed more than than A Wave (it took 13 months).So this cannot

be a B wave of a triangle or it has to be B wave of a NEUTRAL Triangle.But it

cannot be B Wave of a NEUTRAL Triangle also as B Leg of NEUTRAL Triangles

normally retrace the A leg by approx 0.382% but definitely not more than 50

%.This entire thing falls on its face.

Last time u replied to me tht we completed an Expanding triangle since

Jan08 and could be in a X wave since MAr09 lows.But According to NEOWAVE X

Waves cannot be more than 0.618 of the previous decline.

Consider the entire fall from Jan08 as A leg of either a FLAT or ZIGZAG(as

possibility of Triangle based on pure nEOWAVE is nullified) then in both FLAT

and ZIGZAG the b wave has to compulsorily consume more time than A wave.THis

is also not the case with the current rise(termed as B wave).I dont think

Indian mkts would meander for next 6 months before it ends this entire B Leg

from MArch lows as its looks nearly impossible for it to do that.

SO the possibility of FLAT or ZIGZAG is also nullified.

ITs neither a triangle nor a FLAT nor a ZIAGAG.Then wht is it .Can u

enlighten me with your views.

OR is it that NEOWAVE has to be rewritten once again to incorporate the

current price movement in INDIAN SENSEX>

Thanx in advance
Regards
VB

[Hurst Cycles]

Hurst 10 week cycle low is due Monday, may see one more bounce before the 40 week cycle lows.

[Howard Bernstein]

Yelnick,
I wouldn't get so bogged down with the wave count that the STU has. It's much too refined and prone to error. STU's track record is abysmal. Hulbert has been ranking their performance for more than ten years and they have produced -10% per year performance in their trading recommendations.
I'm a suscriber to the EWT and EWFF but read it only for the long term insight.

Is the top in? Probably but who knows for sure? How many 'the top is in' forecasts did STU, EWT and EWFF make on the way up in late 1990s and 2004-2007? Even though their trading recommendations have been miserable, I still like to read it because I believe in their long term view. But Prechter thought the 1987 high at 2720 was THE top (yes, I was a subscriber back then). Of course, the overvaluation went to such extreme levels in 2000 that even Prechter was surprised at the magnitude of the hysteria.

I will be at the New Orleans investment conference this coming week (I'm speaking at a workshop on managed futures) and I will attend Prechter's speech, as I am an admirer of his work in socioeconomics.

[DG]

But it

cannot be B Wave of a NEUTRAL Triangle also as B Leg of NEUTRAL Triangles

normally retrace the A leg by approx 0.382% but definitely not more than 50

%.

vipul may say the same thing, but if the Neutral Triangle has Reverse Alternation, the B-wave could retrace more than 50% of the A-wave. One would then look for the D-wave to be approximately the size of a "typical" B-wave.

[Ben]

Those who can't do teach.

Prechters "socionomics" garbage is so he can keep his dignity while being utterly useless to people who actually want to make money.

[DG]

Consider the entire fall from Jan08 as A leg of either a FLAT or ZIGZAG(as

possibility of Triangle based on pure nEOWAVE is nullified) then in both FLAT

and ZIGZAG the b wave has to compulsorily consume more time than A wave.THis

is also not the case with the current rise(termed as B wave).I dont think

Indian mkts would meander for next 6 months before it ends this entire B Leg

from MArch lows as its looks nearly impossible for it to do that.

The B-wave could subdivide into a Flat itself. This first movement up would be the a-wave of the Flat, with a retest of the lows a b-wave, then one final move up to levels near where we are now as the c-wave. Thus, the entire B-wave could remain below the top of the A-wave and take more time than the A-wave. A final 5-wave move down would then complete an A-B-C Flat off the January 2008 high.

[Upstart]

Carl Futia thinks the drop is essentially over, and we base over the next couple days for a move to 1120 e-mini.

[Rob]

That would make wave [5] the longest wave of Int. C and is probably highly unlikely given the fundamentals appear to be deteriorating for the most part.

[Account Deleted]

DG !!

If B wave is the B wave of a Neutral triangle with REVERSE ALTERNATION then wht could be the be nature of C wave.

Regards
VB

[DG]

VB,

The C-wave should conform to the standard rules of Neutral Triangles, most importantly, being longer than the A-wave. I would say that is one argument against the A-wave being a Triple Combination, since that would require it to be the longest wave in any Triangle of which it was part. I haven't looked at that chart, but I would speculate there is something else going on in that A-wave.

[Account Deleted]

DG

Its a TRIPLE Combination for sure.Tried various other
permutation combinations none seemed to have worked.

u can have a look at the chart on http://charting.bseindia.com/charting/index.asp

Regards
VB

[DG]

VB,

The last leg down seems quite long for it to be part of a Triple Combination. Refer back to the "waterfall effect" and the loss of momentum in Combinations, which Neely discusses in MEW. Another possibility is that there is a "missing wave" in there that could turn it from a Triple Combination into a Double Combination (e.g. a Double Combination in which the first segment was itself a Double Zigzag with a very small x-wave), which would allow the Neutral Triangle hypothesis to remain valid, since the C-wave could then be longer than the A-wave. Also, a Triple Combination shouldn't be retraced more than, at a maximum, ~80%, so that B-wave is right at the cusp of being too long, if it isn't already.

If it is a Triple Combination, it is possible that the idea I mentioned about about the B-wave subdividing into a Flat is valid.

I've had reason to think about the limits Neely has put on Triple Combinations (i.e. only allowing them as the longest legs in Triangles or Terminals) and I think that is too restricting. They also need to be considered as the longest :3 waves in Flats, Diametrics and Symmetricals.

[Account Deleted]

Thanx DG.But the structure is way too unclear to allow any trade to be entered on it.

Regards
VB

[Hurst Cycles]

Hurst 10 week cycle should bottom early this week.

http://traders-talk.com/mb2/uploads/monthly_10_2009/post-414-1254631377.jpg

[Web Bots]

Web Bots are predicting Implosion of the U.S. Dollar into November.

Buy Gold, Silver, Food, Commodities.