EDITED 10:40 PM Wed: Added a nice 1 minute chart.
Primary Count: SPX has finished tracing out subwave (iv) of [v] of 3 of (5). It should now work down toward a capitulation bottom for Minor wave 3 of (5). Rough target is now 679 SPX plus or minus…
Alternate Count: SPX is tracing out the beginning stages of a wave 4 of (5). That would imply that 692 was the low for wave 3 of (5).
It was a weird 2 days. Last night A/H’s the e-minis sold off to 681.5 thereby giving credence to a plunge and capitulation today as I suggested in yesterday’s update. However things never work that simple and stocks were too oversold and there was too much bearishness for it to materialize today. And as I noted on my 1 chart last night, there is a chance wave (iv) of [v] of 3 of (5) still needed to retrace a bit. That was indeed the case today.
Also pink wave (iv) hadn’t met any kind of normal retrace Fib targets such as 38%. It pretty much met that today.
Everything is pointing to a plunge tomorrow on Thursday. Things are better aligned at this stage then they were yesterday so chances are much higher that a sub 700 move is coming. Here is the evidence:
1. E-mini Futures are now aligned to drop. Take a look at the MACD and Stochs on any 10,15,30 or even the hourly chart and they are now again “high” enough to all0w a considerable selloff to occur.
2. The VIX is aligned for a move higher. a) Hammer daily candle. b) clear ascending triangle formation on both candles and RSI and it hit “e”. c) 5,10,20,50,200 DMAs are now properly stacked including now the 5 DMA. Its ready to move over 53.
3. CPC is moving toward where I have it targeted for wave 3 of (5). Although the day was bullish, for most of the day, the CPC was put heavy until the end of today. I expect this trend to continue tomorrow, particularly as the end of day selloff was severe.
4. SPX Inverted H&S target was met.
5. SPX Ascending triangle was met.
6. Rising wedge in the SPX. Very rough overlapping waves. Sound familiar?
7. Wave (iv) of [v] has now retraced sufficiently in time and Fibonacci percentage.
8. Market left a 2 point gap at today’s open. Didn’t even try to close. I realize there are gaps higher, but what gap gets closed first? Teh hard to reach one(s) higher or the easy selloff in brutal bear market?
Dan,
I’ve asked this before and perhaps im missing the obvious, but EWI has indicated that we may be in wave 3 circle instead of 1 circle. I can’t figure the count for that. Can you see it as a possibility?
I guess its possible, but man that would be a bummer….I don’t think cviiliazation can take a continued selloff….
I think we correct for a bit this Spring/Summer…..
Honestly though, no I don’t see this as Primary 3. And EWI doesn;t either.
if it were…we would go down to spx 200 or something by primary 5 hahaha!
we could all make fortunes!
Yeah, but we’d be living like Mad Max.
If you look at the indices, adjusted for inflation, you can see a clear Primary 1 and 2. Primary 2 in this chart shows how the recession of 2001 was inflated away.
Some argue that it makes sense to account for the huge amount of credit pumped into the markets over the past few years.
As much as it would hurt to be in Primary 3 now, I’d rather get it over with. I don’t like thinking about the false hope a Primary 2 will bring, only to be followed by the 3 we have to endure anyway.
Like pulling off a bandaid. Just do it.
I’d rather wait for Primary 3 so I can trade Primary 2 and make enough money to hit the biggest crash of all time and get rich.
I haven’t heard much mention of the fact that we are definitely in a Puetz crash. It started exactly on cue on Feb.9 and should end the 3rd week of March at the latest.
Daneric: I am leaning towards the same conclusion as you have reached – we are now in wave (iv) of [v] of 3 of (5). I would not want to see it rise any further though or I will likely change my opinion.
I am interested in your reaction to today’s Ellliott Wave Short Term Update. Hochberg says that we are already in wave 4 of (5). I find that Hochberg is generally correct so it is causing me to question the above conclusion.
Did you have the same reaction when you saw his report today?
Blue
He is often actually incorrect when he tries to determine the “turn” for minor waves or lower. Recall the “triangle” that he sent a special update out on and I too jumped on it in January (largely because of his “certainty”)? He was wrong and my trumpeting the formation made me look foolish….
Yeah it cannot retrace any higher, the NASDAQ came within 2 points of ruining my count, yet it held….for now.
I think my VIX interpretation will pan out.
Gap up today is a target….
I want to see a true washout for minor wave 3 (5)
Yeah that’s my count too Dan, although I had mislabeled the minuette waves as minute waves on my blog–I’ve since fixed that. So tomorrow I see us starting out the morning with a subminuette retrace ii,(v),[v],3,(5)–nothing major, just a few points or so, and then we get into the meat of iii,(v),[v],3,(5) which should take us below 700, followed by some mid-morning “mop-up action” by iv and v taking us to 680-ish. The waves could compress a little at a slightly higher target but I think that’s pretty much how it will pan out.
Alternate count: 4, (5). I was allowing for this this morning and even had it on my charts but I’ve since taken it off. It’s a slim possibility. To pull it off would require that we had put in a truncated fifth minuette wave yesterday. Not sure why the market would want or need to do that, as bearish as it is. I think rather it is using every down wave to the fullest extent that it can.
I actually think this 5 wave move lower that we’re about to end is all Primary Wave 1. We will then correct for 6-9 months in an A,B,C move which will account for Primary Wave 2, then we will have 3, 4, 5. This whole process could take over 6-7 years, and we could see the Dow close to 2000-3000 by the end of the 5th wave.
That’s one view, and i believe it is gaining popularity.
Thats what EWI postulates.
EWI says a low of 400 on the Dow by the time this is all said and done. Mind-boggling.
400 is ominous but it doesn’t scare me that bad. I think we can survive 400.
200 however scares the living crap out me. That’s Mad Max. That’s buy guns, ammo, food, and move to bunker in Montana. 200 is pucker time.
Are you sure that you mean 400 on the Dow and not the S&P500? Idan mentions 2000-3000 on the Dow, and GBT is bringing up 200? On the Dow or S&P?
I have to think 400 on the Dow means raising chickens and rabbits and growing a vegetable garden and if you currently reside in an urban environment get the heck out now.
400 on the S&P will be bad enough, but 200-400 on the Dow and it’s Goodnight Irene.
Honest, EWI says 400 on the DOW… I questioned it too, but all of their other targets are Dow numbers.
Then they are predicting the end of capitalism, beginning of full-fledged socialism.
Awesome.
a correction of 6-years fits into k-cycles too, which bring the US moving back into economic prosperity in 2016
“I actually think this 5 wave move lower that we’re about to end is all Primary Wave 1.”
Did you read BadMofo’s post last night because I spent some time musing about this. For one thing you’ve seen the 1937 chart I’m sure. Well, where are the 4th and 5th waves? That’s been bugging me ever since MktMike posted that chart because I’m damned if I can find them. And you know how faithfully we’ve been following that 1937 pattern.
Ok, so there’s that. Then there’s Larry Pesavento, who is a pretty good TA in his own right, who has been saying for weeks now that Mar 5th or 6th would be a significant bottom in the market, not just significant, but historically significant. He’s calling it one of the all time great Christmas gifts and says you absolutely have to go long here (I haven’t listened to his program today BTW but I’m sure he’s licking his chops because this is panning out just as he has predicted). Well, that’s always bugged me too, because I knew even a few weeks ago that for that to be right there couldn’t be any 4th or 5th minute wave of any significance.
The only thing I can figure is either: a) The count is right and we will start minor 4,(5) tomorrow or b) We somehow missed the 4th and 5th waves! Maybe that doesn’t mean much to some of you, but it bugs the living hell out Ellioticians.
BTW, anybody who wants to can listen to Larry thrice weekly on iTunes for free. I’m going to go listen now. Here’s the podcast URL:
The Larry Pesavento Interviews
http://www.tfnn.com/sti/rss.xml
I’ve been calling out for a March 6th turn date and the next wave down to hit 673.. MINIMUM.. key word : MINIMUM
let’s see what happens. was going to take a small short OIL but as i thought about it more and more.. at the last minute i took more. putting a bear flag in now as i type at $45. .
the ES .. it’s in trouble already:
http://social.stocktock.com/photo/es-weds-night?context=latest
as for FL – holding through earnings. if we took 100 stocks right before earnings we would probably be right 7 out of 10 and the 7 down stocks would outperform the 3 up stocks as ive seen many beat the street please the owners of the equities so it turns into a sell off a few days late
i’m thinking it is IMPOSSIBLE to put in a strong bottom on the 6th. im saying that it will be a temporary turn date. we should head higher and then tank again into OPEX and the market will be lower in APRIL than it is in March 6th. and continue lower . this why i have JULY through JAN for most of my puts.
A significant number of gated funds announced in 2009 that they would open the gate March through May 2010. they will use these redemptions strategically to position the market for thier own material gain. they will not place the clients best interest first. thier mentality will be ” you want your redemption.. you got it. and they will redeem at the low”
furthermore, many retail investors will simply want out by May. some will simply be forced to cash diminished 401Ks just to survive.
if this anything like Japan’s lost decade… we just keep heading lower one step at a time for quite a while.
“i’m thinking it is IMPOSSIBLE to put in a strong bottom on the 6th. im saying that it will be a temporary turn date. we should head higher and then tank again into OPEX”
This is consistent with the the current wave count and FWIW waves 4,(5) & 5,(5) can achieve this. This is one of the problem’s I had with Larry’s prediction. OK, need a break now before my eyes fall out of their sockets.
Sorry Idan, I don’t think I properly understood what you were saying. I thought you meant that we weren’t going to see the minor wave 4,(5) and 5,(5).
Duh. I re-read what you wrote and now I see you didn’t mean that at all. You were talking about the big picture view. Sorry, my misread. Please disregard my ramblings.
Holy freakin’s bear gone wild and takes off clothes and burns them…
That’s a bit extreme…but wow, you caught my attention with that comment Idan!
hey Dan we are above the previous impulse’s wave 4 as you have marked it and outside the wave 5 3 (5) channel. And how come you can’t see the possibilty of the VIX RSI breaking below 50.
I can see it… I just feel bearish….
If that was how wave 3 of (5) ends, that is kind of anti-climatic, with no panic at the end unless the A/H’s low was it (could have been).
But today’s end of day selloff was on high volume.
Just playing the formation…ascending triangle on the VIX, filled its gap, hammer on the daily….and the market is closer to filling the gap up today than it is the big one higher.
Actually Kenny, black sub wave iv may in fact be the neckline backtest bump…likely I have it marked wrong…..the black iii hard gap down was a nice 1.618 in length…
Hochberg gets the turns wrong at Minor degree and lower……I think he is wrong again. Remember the triangle in January?
I am using him as a contrarian and from what I understand Cramer is bullish tonight…..
I will hold to my theories on the CPC and VIX about how they should end for a minor wave 3…until they prove me wrong. NASDAQ came close today to violating my count, but not quite.
I agree about Hochberg. He’s not good when it comes to the small count. Not trying to blow smoke up your keister Dan, but you are much better.
Kenny here is another theory I am developing: If wave 3 does not expand by 1.618, then wave 5 will make up for it by expanding against wave 3 by the amount of 2.618 = (expansion of wave 3 + expansion of wave 5 = 2.618)
Because if wave 1 = wave 5 that is a 1 ratio. If wave
Same thing in reverse (I think). If wave 3 expands by 1.9. then wave 5 will not equal wave 1 by a ratio lower.
So we have subwave [iii] of 3 only expanding by 1.45. So that was one reason I suggested wave [v] of 3 would expand on wave [iii] by an amount so that the sum of wave [iii] + sum of expansion of wave [v] = 2.618. And so far I was correct in that wave [v] would be longer than wave [i].
grrr I wasn’t done.
So what we have on this wave 3 of (5) is this:
Wave [iii] of 3 expanded by 1.45. So expect wave [v] to expand 1.16 of wave [iii] (2.618 – 1.45 = 1.16). That would be 112 points for wave [v] of 3 of (5).
780.12 – 112 = 668 SPX.
Also we have pink subwave (iii) of [v] of 3 expanding only by 1.293 of subwave (i) of [v]. Therefore we can suspect that the last wave (v) of [v] of 3 will expand longer than (iii) of [v] of 3 or at the very least longer than subwave (i) of [v] of 3 which was 45 points. That would take the lows in agreement with the calculation above.
That would also hit some Fib expansion ratios of wave 3 itself which has yet to hit 1.382 (685). A 1.5 expansion would be 668.
So I must remain bearish….
“That would also hit some Fib expansion ratios of wave 3 itself which has yet to hit 1.382 (685).”
This first fib expansion is the one I’m going with. I think 3,(5) will fall somewhere in the range (1x to 1.382x * wave 1,(5)).
Tonight’s discussion on Daneric’s Elliott Wave update has caused me to review with a critical eye the EWI wave count for wave (5) that started in early January. Up until now I have accepted this wave count as gospel and altered my wave count to match EWI.
Looking at it again, I notice that wave 2 which started in on Jan 23 and ended on Feb 9 is assumed to be a WXY correction. The interesting point is that the final Y wave does not reach the peak of the W wave. I remember that I did not feel comfortable with this count at the time, but accepted it.
If the wave 2 correction was actually a simple ABC correction from Jan 23 to Jan 28 and the assumed wave X and Y are actually waves i circle and ii circle of wave 3, then the effect is that wave 3 is much longer. As a result, this current wave 5 is actually still a fair bit shorter than wave 3.
Here is the link to the wave count that I am considering. Looking for feedback and critiques.
http://social.stocktock.com/profiles/blogs/rethinking-the-official
I’ve kicked that around in my head too. Problem is, it diverges extremely with the NASDAQ. Thats the main problem.
I see your point. This count does seem to match up with the Dow.
GBT,
yesterday .. page 4 … post 25.. gave you my thoughts on the market
you replied “don’t pay attention to the news”
what im posting there is not news. these are my thoughts on market psychology and the treatment of selling puts and calls as a function of the market and a big business. the influence of the options market on the daily workings and movements are HUGE. ive always paid attention to this. there is no news story about it.
these are my thoughts and if you put yourself in the shoes of a market manipulator you will increase your trading profits. if you can feel the actions and movements for thier purpose you will profit immensely. this is an important part of trading and has nothing to do with news. try to think how you could best sell worthless calls to people by providing hope of a monster rally. you must make it look as if it is coming.
take a look at the options curve for this month on the SPY… you will be amazed!
Yes, I realized later what you said wasn’t news related. I should have modified my comment. Oh I do look at MaxPain. Most definitely. In the future I will try to become like Spock and mind meld with the manipulators. For our joint profit of course!
Does anyone else think we’re still in [iii] of 3 of (5)? I’m not entirely comfortable with [v] of 3 being steeper in slope than [iii] of 3. We could have a lot more decline to come on 3 of (5) than it seems…
On the CPC . CPC. The line blue dashed is correct ?
Thanks.