Near Term Top Nearly Here

The market may begin a decent pullback in the next few days before continuing higher. Today completed an ending pattern of a five-wave thrust out of a triangle. Neely put out a bulletin this morning changing stops, and the STU put out a special edition this afternoon noting the completed pattern. Carl Futia also expects a 15-20 pt drop in the S&P is imminent. 

The thrust from the triangle can be seen in this chart from EWPrinciple:

 

EWP adds that this is one of the weakest thrusts he has seen in a long time. This may portend a little more upside, and sharper too, towards Sp1200/Dow11K, before the actual fall; but it also means the drop will be fairly strong when it comes (weaker upside volume suggests strong downside to follow). The Dow was down today, a negative divergence, so again we might see the Dow and S&P both do a final pop before the top is in.  

Comments

[nspolar]

"The market may begin a decent pullback in the next few days before continuing higher."

Remember the last time we had a decent pullback?

All the forced 5 wave counts from Yelnick, STU and the rest. The greatest contrarian indicator of all time it twas!

Now read and re-read the latest here. Is this a contradiction in english, in wave analysis or what?

Then just in the last few days we have Kenny blowing a gasket. The Neelyites ... going long now recently, now changing stops, predicting B's much higher, predicting moves now up into mid Mayish. Yep twas all written down in prior posts.

This market is making a fool of the Neely's and Prechter's. Literally. The Neelyites in particular.

abcde's... naw abcdefg's .... naw abcdefghi's naw .... geez what a count code here. Diametrics, semetrics, anti alias diametrics, forward and mid term alteration, reverse anti semetric diatmetric ......all kinds of complex formations ... just ask da man hisself.

What ever happened to KISS?

Dat's a three. Dat's a three. Dat's a three. Tain't no way a fiver! I knows it fer sure matey. I gots threes out the kazoo!

What does it all add up to? Is me lost? Is there some sentiment read here?

Read the headlines lately as well. Very carefully.

You be da judge.

ns

[monk]

yelnick
what is wrong with this count?

http://yfrog.com/1gspx500dp

[Diamond Jim]

The action in the stock market seems to be following rather closely the pattern set in the forex market. USD/EUR made a breakout on March 18 and Eur is again looking very weak. If news from Greece or elsewhere precipitates a sharp drop in the EUR, our market will proceed lower in lock step.

[DG]

abcde's... naw abcdefg's .... naw abcdefghi's naw .... geez what a count code here. Diametrics, semetrics, anti alias diametrics, forward and mid term alteration, reverse anti semetric diatmetric ......all kinds of complex formations ... just ask da man hisself.

Man, you do make a fuss over 4 extra letters and a couple of Triangle variants. It ain't that hard to keep track of. Just use the fingers on your other hand if you can't do it all on one.

Do you think Elliott descended from Mt. Sinai with the only formations that would ever be necessary to decode market behavior?

[David]

thanks yelnick...

i have posted an updated for those interested

http://www.tradeyourwayout.com/2010/04/sp-500-update-rally-of-fear-continues.html

[nspolar]

Yelnick, there are a few things in hindsight I may have left out in my previous post.

One issue is about the recent head lines. I think you have touched on a few key issues, very well as a matter of fact.

There is one issue you might consider ... well maybe two.

One is the issue of financial reform, pending on Obama Ramas agenda and/or in Congress. You da man with all the financial expertise and contacts ... can this be anything but market negative? Politician's need scape goats, no? Dem, repub, liberatarian, independent ... whatever ... I think the masses are pissed off at WS. How can the politicians do anything but come down on this lot, at some point? How can it be anything but market negative?

Are 'they' waiting until the markets climb to a point where they think it can take it, before they act, or what?

Elections are coming up. Something will happen, imo.

The 2nd issue is the BKX. I previously stated it is an Elliotician's dream. Have you a count? Is there an indicator here of things to come?

C ... will it survive? I have my doubts.

I have a count. Don't know if it is correct, of course.

ns

[yelnick]

nspolar, on your first question, the effect of financial reform on the market, the current reform is not likely to roil the markets. Adding consumer protection and another layer of bureaucracy simply creates a larger playground of 'influence' for Wall Street. Think about it this way - the Street took out competition and pushed a lot of risk and bad assets onto the Fed and the Govt. Who got the better of it, the Govt or the Street?

Now, if they try to do something more radical, like remove the interest deduction of LBOs (a possible cause of the 1987 crash - see this comment Friday, October 09, 2009 at 02:24 PM). The closest to that so far in the bill is an increase in the FDIC fee to create a bailout fund of $50B. 

[yelnick]

nspolar, on the BKX and C, often the leaders of a rally are the first to turn south before the top. First observation is to wait for the BKX to fall before calling the top. This would suggest that the next wave down will be driven by a second phase of the financial crisis, likely sparked not by the Dodd bill but by the second wave of mortgage defaults (which should begin in June) and/or the Greek Tragedy putting Euro banks at serious risk.

Given its current momentum, we may not have to wait that long, but I think it blasts above the current level of 55.

I have seen a number of counts for it, and they seem to have a hard time with the long sideways action from late August until Feb. One way to make it work is to treat the whole period from the initial peak in May 2009 to Feb 2010 as large triangle B wave (or X wave). It is a "barrier" wave in the newer EWI parlance, with an ascending lower trendline and a flat or barrier upper trendline along the 49 level with peaks in Oct and Jan. Then we would be in the C or Y wave up. Given A went 19 to 44 or 25 pts, C should go at least to 59 (C = 62% of A) or as far as 69 (C = A).

Another way to count it would have the current upwave starting not in Feb but back in Dec at the kickoff of the Santa Rally, or from just under 42. That would give slightly lower targets (57 - 67).

BTW I think C survives. It had a near death experience in the early '90s too.

[yelnick]

Monk, it is an interesting idea to make the Y wave a double zigzag just like the W wave. My biggest objection: you end up with an expanding ED as C of the first ZZ. As I have somewhat laboriously explored across 4 posts, that is still a low odds wave structure, one which EWI has put in and taken out of newer editions of their EWP book over the past 20 years. It also suffers from the inside waves being larger than the prior B wave, a disproportionally issue.

If you missed my pencast post about a Skewed Triangle, it discusses the alternative to your double ZZ: make the period from your first b wave to the Oct2 bottom a triangle of a new form: skewed, meaning sloping with the trend as opposed to sideways to the trend. They have seen this form in currency markets, and now it appears to be spilling over into equities, perhaps due to the relative increase in futures/derivatives trading. Now, their skewed triangle bears a strong resemblance to their running flat in that both slope with the trend and have a larger B wave than A. I suppose they could have termed it a running triangle except they already use that term for a somewhat overlapping concept (bigger B than A but not upwards sloping).

Does it matter? You end up in the same place as the current EWI count, that we ended a Y wave in Jan and are in the Z wave.

[monk]

Thanks Yelnick.I know they have been experimenting with newer patterns off late.And that's what irks me. You remember their 2000-2003 A-wave leading expanding diagonal.Even last year they allowed 1-4 overlap in chineses index(A cardinal sin).Their defence other chineses indices do not overlap hence allowed. But when questioned about their Indian market bullish stance they keep silence. If you have not seen Indian indexes I would Like to mention that except sensex and nifty other Indian markets indices made tripple ZZ in march09 and cannot be counted as impulse waves up.
I like e wave of triangle ending in the price trretory of a wave of the same triangle and hence suspicious of their skewed triangle.It is an unnecessary pattern for me. The more you try to make complicated the more trouble you invite.The same thing has happened with Neely's unnecessary additions to his theory.

[forex-cat]

Your article is useful.
Thanks.

[Glenn Loser Neely]

As I said,

we just need DG to defend his lover Neely to have a double sell signal.
With Neely long in this market, make no mistake.. we are topping.
What and idiot!! Useless just as DG !!

Glenn Loser Neely

[Gooner70]

Yelnick.

I have been looking at the similarity of the bigger picture price action of the Dow in recent years, and the similarity between the major market moves in the period from the early 1960s to around 1981. In particular the period from 1971 through 1976 seems to echo pretty well to the period from 2006 to the present.

In light of this, the recovery in the Dow over the past 12 months seems to be following along similar lines to the recovery from 1974-1976. The natural assumption from this would therefore be for a return to close to the 2007 highs around 14000. However, I believe that the recovery this time is showing less dynamism than the 1976 recovery, furthermore the fall in 2008 was somewhat deeper (as a % of the market price at the prior top), which leads me to think that perhaps this rally may eventually run out of steam around 11,500/11,700 around May time.

[trendlines]

Agree Yelnick, correction ahead:

http://trendlines618.blogspot.com/2010/04/s-short-term-correction-ahead.html

[Chabazite]

Eurozone growth lowered to zero See http://news.bbc.co.uk/1/hi/business/8606878.stm Being British, I blame it on the French, Germans, Spanish, Irish, Italians, Greeks, Portugese, Austrians, Polish, and Czechs and Slovaks - but not necessarily in that order.

[da bear]

this could be THE top too. but it would take a while to figure that out. If the stock markets make tops here then have a quick sell-off, and churn for the month of May and trade with violence and volatility to the downside in June then that would be a rhyming replay (as opposed to a repeating replay) of the 1930 Experience.

da bear

[marketman]

Carl Futia makes another solid call!

[Mr. Panic]

ISEE 10day put call ratio as of yesterday at 221. 10day average hit 248 on 07-18-07 and 232 on 10-11-07.
The last two days registered readings of 276(highest level since October 2007/third highest reading ever) and 263. Right now despite the market being down, its registering a still exuberant reading around 230. The next two days will see the lowest readings of the 10day set drop from the calculation.