Market After the Mid-Term Election

Uncertainty is now behind the market. The R's accomplished the biggest wipeout of the party in power since 1938, a fitting year given all the macro similarities. The Fed's QE2 announcement at $600B was pretty much as expected. And Jerry Brown as the governator of California again somehow seems fitting.

You can understand California's economic dynamic as Era of Growth vs Era of Limits, or as Pre-Brown and Post-Brown. For those of you who are Back To The Future fans, it is his "density" to preside over the consequences of his decisions 30 years ago. Optimists in the once Golden State hope he takes on the unions. What does he have to lose? And only Nixon could go to China. Pessimists are preparing to leave. Will California be the next bailout? We'll probably get a read on this pretty quickly. 

We should get a pretty quick read on this market as well. The STU is hanging onto their ending diagonal, which would be in its final spike up. Recall that it should not get above Sp1208. Their alt count is the thrust out of a triangle, which could go higher, but should not breach the April high of 1219, or their whole model is wiped-out as much as the D's yesterday. Given that the Dow has already broken above, the Election QE Wave may roll over their wave count. For a clue, watch the Dollar Index. It was supposed to retest its recent low at 76.14, but held up last week. Today the QE2 moment got it back down near there at 76.22, hitting the trendline that has provided support for the past three years (70.70 in Mar08, 71.31 in Jul08, 74.19 in Dec09). The last time it bottomed (Dec 2009) it had a sharp thrust down, then a retest that fell short, then a huge up move in a short time. 

Comments

[Dot]

Yelnick, can you give some hints about neowave counts? Thanks

[Neo Tzu]

Its been tricky trading for the bears, but there looks like some immediate upside left for the bulls giving another short window for the bears...

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[Neo Tzu]

Notice in my chart how the Impulsive action has dissappeared since the 10/13 top (I've mentioned the 10/13 date repeatedly) and we are now in Corrective action.

The BIG question is how low will the late November c-wave go....crash? or just a wave 4.

All the Elliott bloggers I see out there are calling for a wave 4, but not me, I still see a bigger time drop somewhere down to SPX 1030-1090.

Mark this post, tell me how I did in December.

[Roger D.]

JNK Daily

http://www.screencast.com/users/fast996/folders/Default/media/56ac6b9f-4bda-4440-842b-30e5fbbe1158

http://www.businessinsider.com/irish-protesters-briefly-occupy-dublin-finance-ministry-2010-11

Roger D.

[yelnick]

Dot, his count is a double correction where the second wave began in Fed 2010 and has so far broken in three waves: A to the April highs and B to the August low. The September-To-Remeber rally is the C wave of the whole structure going back to Feb 2010.  Seems to be due for a small correction but it should get above 1200 before it ends. 

His wave structure would look odd to orthodox ewave. He has the beginning in Nov 2008 not Mar 2009 as a triangle formation. When this C wave ends, the big B wave from Nov 2008 would end, with a C wave down to follow. I have shown his chart previousy with his permission. The whole bear market should end around 2012. 

[crush]

I don't quite understand why anyone would still stick with a wave 2 count all the way up to 1 point shy of April top. Anything above a 62% RL should have resulted in an altering of counts, with wave 2 as a distant second alternate. The stubborn 'wave 2 is a primary count until it takes out April high' only misguides subscribers.

[yelnick]

crush, I am with you.when we broke above 1131, both fractal finance and ewave odds said this was no longer an inner wave 2; and breaking 1174 sealed the deal. This looks much more ike a corrective wave off the April high, not the start of an impulse down (P3).

[Manav]

I think EWI hurts its reputation by being stubborn sometimes....even though some of their analysis is very good...for instance Mark G, their Asian servioes editor called for new highs in Indian equities as far back as March, 2009 when few thought it even remotely feasible --- in fact he was laughed at on TV sometime then....but hes stuck to his guns and looks like will be proven right shortly....I think a sort of a halo effect hurts many EWI analysts too close to RP --- because they believe in their hearts that a devasting wave down is coming any minute, they focus on the bearish probabilities a bit subjectively rather than looking at objective possibilities...and of course their larger picture count may be flawed since as Neely points out, the rise till 1929 in the Dow seems corrective and not impulsive, in which case there is no crushing downwave coming, just a large sideways market with lots of up and down swings

[Account Deleted]

S&P 500 Analysis before opening bell: CLICK HERE

[Edwin]

Golden Cross Galore.

Listen to Carl Futia. He is hot and right on the money.

[Michael]

SPX at 1210 with a high this morning so far at 1213. Euro now above 142.

Prechter, Hochberg, Daneric, and all of the other "Perma-Bear" Elliott Wavers continue to be a terribly sounding broken record.

APA: +4.25
BTU +$2.00
CLF: +$3.00
WLT: +3.30
FCX: +3.60 and now trading over $100

Trade the tape folks, and not some esoteric "theory" that will BANKRUPT you!

[Wave Rust]

yel,
"Recall that it should not get above Sp1208. Their alt count is the thrust out of a triangle, which could go higher, but should not breach the April high of 1219, or their whole model is wiped-out as much as the D's yesterday."

okay, 1208 is tossed. that requires a new alt count since now 1219 is now by default the preferred (otherwise known as the Hope Count).

spx is only a buck 75 from making 1219 another failed count.

so in the space of a couple hours, bob and the bear crew need 3 new counts or maybe 4 new counts.

so how does he justify this? my guess is that the marketing budget gets a boost, and, a free week is looming.

I wonder what he would be saying if he used the ndx for a preferred count.

Ignoring the truth in the usd chart is the major error repeated by bears. remember the dollar chart with the line across the bottoms in a post here a week or two ago? i said then and will repeat, usd is going to 70-71, eventually.

with usd at 71, where should the spx be at that time?

like michael says ,,,, trade the chart, the tape ,,,, in other words, people should trade the reality, the truth ,,,, not their expectations, hopes, despair, etc.

am i wasting my time again? probably.

wave rust

[Wave Rust]

7 FOMC'ers speaking tomorrow
6 at the jekyll island, atlanta fed conference.
ben at college

is this the real fomc november meeting? or, is it just an apologetics mission for the trillions coming over the next 3 years.

drip feeding the sick economy with I.V. fire hose?

the Fed printing ink suppliers are going to get rich.

wave rust

trading is easy once you figure out the hard part.

[MHD]

Yelnick....how did Tony defend his count when you pointed out the lack of an extended wave and no alternation? Just curiosity on my part as to his views on the problems you have pointed out.

[vipul garg]

till people continue to see 1 mn charts and ending diagonals in them , ew ers are going to get a bad name.

[MHD]

3:00 ramp should take out 1220 and all the short term EW counts. I'm outside waiting for Santa Ben to do the helicopter drop. All those in favor of the name change to Santa Ben, please write to Uncle Sam as soon as possible!!

[Wave Rust]

MHD,

ben might need a C-17 this time.

wave rust

[?]

Wave,

No wonder cotton made a 150 year high.... All the money printing.

[Wave Rust]

vipul,

"diagonal-myopic obsessive compulsive disorder" has gone from an annoying vision impairment to become an incurable and crippling portfolio disease.

but it is still annoying to see diagonals being abused by top callers everywhere.

Stop Abusing Diagonals (S.A.D.) needs a group therapy foundation to collect donations and government funding to do research for a cure. :)

Maybe Gov. Brown will help if we tell him the unions want it. :)

wave rust

[Michael]

FCX now over $103 as WLT trades +$5.30 to $95.00 after opening at $91.06

Tremendous trading vehicles!

[MHD]

Scotty.... prepare for Warp 1220 and much more.

Love,
Captain Benny

[Wave Rust]

?

yeah, maybe dollar bills on microfilm would be better. but then cotton would crash and rip off the hopes of cotton farmers everywhere.

When QE 3.0 comes, I'm going to roll out my already patented, fully armoured, motorized wheel barrow for small businesses, who must do daily deposits of cash.

These armoured wheel barrows are just for getting from the parking lot into the bank.

It comes with voice activated machine guns, smoke machine and can be adapted to a riding lawn mower. More options available upon request. :)

wave rust

[MHD]

Can you make one for me too????

[MHD]

I wonder if Bob P. is rethinking the statement "they can't possibly be that stupid to destroy their only power which is the value of the dollar"? I guess he just doesn't know Benny well enough!

[Wave Rust]

MHD

Would you like that super-sized and with fries?

btw, a welded monogram plaque is complimentary and in the colours of your choice. Titanium wheels with bullet-proof tires are standard equipment.

wave rust

[JT]

The SPX just printed 1219.90 and took out the April high by a dime. Wonder how many ALTERNATE counts EWI and Hochberg come up with tonight!

[JT]

Make that 1220.20 on the SPX with less than 20 minutes left in the session.

Now can we stop talking about Prechter, Hochberg, and EW Theory???

[MHD]

You could save money and bulletproof it with stacks of $100 dollar bills!!!
The plaque should say "Got Ben"
Thanks!

[Wave Rust]

JT,
all counts are alternate counts.

wave rust

[Edwin]

today a good day to sell stocks to lock in profit.

[Wave Rust]

tomorrow is the most important day, not today

spx and the rest have to follow through by another up 10+/- points, or else, monday probably gets a pullback started.

a bullish pullback, but thats a good thing.

wave rust

[MHD]

The huge short positions on the NYSE must be feeling Ben's huge QE being rammed up where the sun don't shine.
I guess the insiders are just plain old idiots when it comes to investing. They have hardly bought any stock in the last 3 months and maybe longer.

[Wave Rust]

MHD
"You could save money and bulletproof it with stacks of $100 dollar bills!!!"

we'll apply for a Billion dollar bill grant from the Dept of Defense to test its weight against hollow points pros and cons.

if nothing else, we may just turn that idea of yours into a souvenir paper weight, and then, get another green jobs grant with that green paper weight. LOL

get it? green jobs?

wave rust

spx 1221 close brings out the fall back of "it exceeded our limit by less than "_____ %" wave count. (fill in the blank with what ever percentage will make the alternate bearish count work.)

[Sobranie]

When all bears get margin calls... Time for bulls to sell.

[Whitebear]

".. the insiders are just plain old idiots ..."

Insiders stupid? More Stupid than who said the above who still need to risk his money hoping for a greater fool passing the ball? Tell you what. Insiders are the smartest bunch getting something for nothing then selling it to the masses, pocketing the changes, buying up real estate, something real, which is having a bargain sales right now.

[Hank Wernicki]

http://www.elliottfractals.com

[Account Deleted]

Picking tops and bottoms is foolish. Just follow the trend as long as possible, and only sell when reversals are imminent or confirmed. Never go against a trend.

It feels great when you make bold calls like a prophet or contrarian, or a brilliant analyst. But it rarely pays. The markets can stay irrational longer than you can stay solvent. Go with the trend and make some money. Then you can afford the luxury to curse the irrational forces in your leisure time.

[Account Deleted]

S&P 500 CLICK HERE

[Jora]

Hochberg's STU (Special edition) today:

Update for Thursday, November 4, 2010; 4:40 PM, Eastern.

We will present our most up-to-the-minute market analysis of all the markets we regularly discuss tomorrow morning (Friday) in the November issue of The Elliott Wave Financial Forecast.--SH.

[Jora]

Neely's Update today:

Every few years, a major, unexpected news event jolts markets (and wave structure) causing unexpected price moves. With all 4 markets (S&P, Notes, Gold, Euro) experiencing violent, unanticipated price action the last 24 hours, it appears the Fed's unveiling of a $600 billion stimulus package created such a "jolt."

It is yet not certain what changes will be forced on to short- or intermediate-term wave structure or how that might impact future trends or potential. Generally speaking, if an event is "man made," its impact last only a few days (to a couple of weeks), then the markets adjust and get back to "normal, more predictable" behavior. For that reason, it is best we stay out of all markets until next week.

Glenn Neely
NEoWave, Inc.

[yelnick]

wave, I am with you. my fractal finance model has been bullish since we broke 1131. Dow and Naz already breach April highs. Dollar breaks the trendline. Neely says just a news spike. If so, it all reverses tomorrow or monday. STU tonight says look for EWFF tomorrow am. So I may post in the morning.

[Roger D.]

In the past 10 days I have seen several EW analysts throw in the towel. Most bears are in a panic and bulls feel invinceable. The "can't lose the Fed has your back" mentality is in full bloom. Whether right or wrong the "insiders" are dumping stocks big time and as usual they have been early. It doesn't really matter anymore,but the fact remains there are many signs that this hybrid bull/bear grand supercycle is nearing a end. I expect to see a compact H&S formation in the daily chart formed in the coming days. As most bulls won't admit the fact that Bernanke's addiction to free money won't spell disaster soon,the wholesale "panic" that fills the air presently on both sides,says the end is finally in sight.

Roger D.

http://www.screencast.com/users/fast996/folders/Default/media/b431df44-6951-4135-9a91-41cb7105f70f

[Wave Rust]

yel,

what is EWFF?

Watching the volume in the last half hour was amazing ,,,, huge across the index boards, with almost no price move, including the ETF/ETN issues.

same kind of pit work seemed to be going on when they were trying to close the spx at 666 ,,,, and they did it too ,,,, here they were trying to clear the April highs for all the black boxes to signal buys ????? I don't know but when I get one of those "am I getting hosed here" feelings, I start to back off the gas pedal.

did anybody hear whether they invalidated either or both of the two 10 million share late day block transactions in CSX? it sold off $2 on those blocks. those trades had that 'flashy crashy' bottom fishing ring to it.

wave rust

[Wave Rust]

hi roger

check out any of bulkowski's excellent work on head and shoulders. it's a lousy predictor of anything.

i see you are back to projecting doom on to the markets because the economy sucks.

history will decide whther Bernanke is doing the right thing. History may conclude that he is only doing what he can against the tsunami of the democratic deficit spending and socialist control of society and business.

it seems he and the Fed are the only ones trying to do what is right at the time ,,,, and these are no growth times.

the economy seems alot worse than it is because it is. But that is almost always the best time to buy stocks.

wave rust

[Wave Rust]

yel,
just saw the post above with what EWFF is :)

wave rust

[yelnick]

MHD, on Tony C, I did a pencast discussing on whether this was a bull market 

Tony replied and argued for his count in The Yelnick Challenge

I replied in Bull Market or Bull-oney and included a chart from Tony

At the time he had not done the simple count where wave 2 was the June Swoon (2009) and wave 4 was the January Jolt (2010), so he did not run afoul of the rule of alternation; but later he changed and now has to deal with that issue.  Back then he had the wave 1 up run to June, then had the next wave up to January be wave 1 of a bigger 3, avoiding the alternation issue. Since what would have been wave 3 of 3  to the April high was short, he had to switch his count to make wave 1 go all the way to the April top, making the June and January drops waves 2 and 4. 

I did add this at the end of the Bull-oney post:

Where I think Tony is spot on is his characterization of March 2009 as a major bottom. This doesn't mean we are in a new bull, but may mean it stands as a low point for a while. Here is my view of the three choices we are in - the first two make Mar09 a major low for a while:

New Bull: 2000-2009 was an ABC flat correction of 1982-2000, and we have begun a new wave up to higher highs Sideways Bear: The Hope Rally is a large X wave connecting us to a second flat correction soon. Alternatively, it could be the B of a large 3-wave off 2007 as part of a big triangle. In both cases it need not break Mar09 levels Big Bad Bear: We are nearing the end of P2 and are about to commence P3 (with P4 and P5 to follow) to break below the March lows. Note that we cannot fall the same distance again or we go below 0. P3 is expected to exceed P1 in percentage down from wherever P2 ends.
Reading that post again - from April 10 - I found this to be interesting:

In this regard, he also gives us tests of whether his bull market view is correct. In his Weekend Update, he notes that wave 1 of III (from Jul09) went 281 S&P pts, and wave 3 of III normally would go some Fib relationship of wave 1:

Short 3 at 61.8%: Sp1219 Normal 3 at 100%: Sp1326Extended 3 at 161.8%: Sp1500 
Of course we ended spot on 1219 - a short 3! This would require 5 (which may have started on Sep1) to go less than 3. We just busted that today. 

[Edwin]

An Ex-pat friend in Hong Kong wrote me..."your cash is trash". Hmmmm. He is right. I know what to do. BUY BUY BUY. stocks and commodities.

[MHD]

Yelnick.....interesting read. Thanks!

The S&P 500 is now 7.5% above its 55 day SMA. It only gets in this far above its average 3.7% of the time, so it's kind of overbought at present.

Edwin...tell your friend not to throw our cash in the trash. Have some respect and tell him to use it to wipe his ***!

[Wave Rust]

here's the answer to my CSX question

http://finance.yahoo.com/echarts?s=CSX+Interactive#symbol=CSX;range=1d

look at the volume spike, tot.volume for the day and avg. volume.

this is the same kind of thing that went on in the days leading up to and during the Flash Crash. this is like sending a space probe into a black hole.

the black hole is the empty space below a market that hasn't had even a tiny correction since 1040.

if spx turns down from here, and that's a big 'if', then spx 1,000 will be a real good target ,,,, maybe 940 for touch and go.

Why so deep?

new highs get sold,
unconfirmed new highs drop away so fast that bears freak out more than bulls,
bulls stay confident and don't take a profit,
bears have so little confidence and capital that they can't bring themselves to sell any more than a 'toe dip',
weak bulls go into denial
bears start laffing it up and mocking the bloodied bulls,
bears begin pyramiding near the previous intermediate lows (like 1040)
bulls become defensive about when they got stopped out,
alternate wave counts are flying out of the butts of bulls and bears,
the low is in when Bobby P renews his call for Dow 4,000 and all the bears say "Amen".
---------------

for me, the break of a 2% down off the high tomorrow, is the flashing sign for a DETOUR off of the "Bull High way", that can go back to spx 1000.

i am not calling for a top ,,,, i'm just looking at the market for what it is saying to me. it speaks and i listen.

wave rust

[Wave Rust]

edwin
china has a whole lotta usd's ,,,, maybe more than even we have.

china has reserves in usd
china has usd treasuries
they use usd to buy everything
they speak englush bettur 'n most of the people who work for google
they have huge exchange risk with QE 2.0

maybe Guam should annex china and become the 51st state.

wave rust