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ON DECK: Wave 3 of 3
In my opinion, wave 3 of 3 is on deck (Minuette 3 of Minute 3 of Minor 1 of Intermediate 1 of Primary 3 of Cycle C… see Elliot Wave Notation). Today’s close will create some bullishness from the talking heads over the weekend.
Maybe it lasts through Monday-Tuesday. The renewed optimism is expected right before a wave 3 of 3. Do not be fooled. I’m holding February puts in SPY, QQQQ, XLF, and some individual stocks.
The recent moves in the dollar, gold, and oil are not signs of a healthy market. Most people are still dismissing debt concerns as overblown (just heard Doug Kass say this!). I think structural problems in the global economy are just beginning to be exposed. I remain bearish on just about any hard asset, including gold. Deflation will be a common dinner table discussion in the near future. The US Dollar will continue to run. I expect this Bear will slice through “support” levels as if they were not even there. Valuations are based on faith, not growth. We are about to witness what happens to a faith-based economy when faith erodes.
Primary Count (Borrowed from DanEric)
SPX 5-Minute
XLF holding support. Touched 200DMA. Makes sense to see this break during wave 3 of 3… moment of recognition.
More elliot wave charts.
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987
So let me get this straight if you look at the SPX wave count chart from 1982-2010 we are about to enter a C down that should take out the 2009 SPX of 666?. In other words the declining 55 month EMA should be the ceiling of any rally going forward. Where do you think this short term third wave declines to?.
February 5th, 2010 at 5:08 pm
Here’s another E-wave site with some good charts:
http://danericselliottwaves.blogspot.com/
February 5th, 2010 at 5:22 pm
Noticed that the market bottomed today at the 10 month ema and it also corresponded to the “post-2007 crash bounce high of 1044″. which is shown in daneric’s chart.
— GREAT POST — thanks!
Again I agree with this count. My alternate count is that Minute [i] just bottomed today and we are now in minute [ii] which will bring us back to a solid 50+ retrace of minute [i]. I think a lot of people are expecting a strong showing by bulls to bring the market back above 1100, maybe that’s why it wont happen.
as a trade i’m going long monday
February 5th, 2010 at 8:55 pm
Oh-oh . . . everyone is thinking that exact same way expecting
mutual fund mond to rerun ?
I swear every single segment of the market thunked the same thing
at 2:30 and bought longs in anything traded.
You shorty pants folks need to pull your heads out of your butts…..come on, the bottom is in, the market has gone nada in 10 years…inflation running at 4 percent give or take a 1% compounded means the market is trading in the 6000-7000 thousand range inflation adjusted,…aka 1997..That is about right. You Gen Xers do not have a clue……lets see the dow hovered around 1000 with 17 percent interest rates, no computers to speak of, 50 cent a gallon gas, new homes for 30K, FICA limit was 22000, and you think the market is going to go below 9000….GAFL you morons…..INFLATE…just like your Dad’s fat belly……..
February 5th, 2010 at 10:34 pm
What happened today? Well the XLF pierced the 200dma for like a min then swung back hard. VIX green and marking it’s second consecutive close doesn’t bold well for Monday Bulls.
XLF has successfully back tested the break down of the complex head and shoulders Xlf bounced off the 200 dma hard and the h&s neckline was backtestet at the close and ended under it yet again giving the bears power.
The fact the XLF actually hit the 200dma for the first time seems real bearish to me. Will there still be buyers at 1029 on the SPY or will we slice right through as the powder was used today?
The dollar is on a tear. Look at the chart. Look at uup call action. Look at money flow. Gold has bow closed 2 days in a row under it’s main trendline. Dollar trade to now get extreme on the overbought side!
February 6th, 2010 at 9:19 am
You ‘mercans sure does talk funny, LOL. All them fat cells round
your mouth or trying to talk with a mouthful of mcdonalds.
February 6th, 2010 at 4:58 pm
If your rational is only based on inflation adjusted then you’re just looking at it one sided. Technically gold should be over $2000 once it’s adjusted for inflation too, but I bet you’re not buying gold hand over fist. Inflation adjustment value is just one side of the analysis. Just like the markets can stay oversold/overbought for a long time the same can happen with any inflation adjusted models.
So you think the government can just keep printing money at this rate and still balance inflation and deflation? What’s your target on the SPX by next year 3000?
Most Wavers see exact the same count, that means it’s now clearly impulsive.
Buy Puts and get some money back, which we lost on the Up Correction!
February 6th, 2010 at 12:50 pm
The implied volatility is not the same as it was back when the S&P was at 1145. You have to watch out, a 2% up-swing in the SPY, and a 15% drop in the VIX, can literally destroy your put value; while a 2% drop in the SPY may not even make you ITM as the premiums you pay to buy a put are big.
Woo – any thoughts on the AAPL chart – do you see this bouncing or going down and what would you be watching for – thanks
The only thing that concerns me is that everyone is expecting Monday to be bullish – like they have been the last 13 times out of 15 times or something like that …. does the mkt surprise and not be bullish this time round ?????
February 6th, 2010 at 6:09 pm
In Primary wave 1, benefit of the doubt went to the Bears almost every time. I remember because I was trying to play bounces and got killed. It’s a tempting but dangerous game.
The common EW count is that we are in Minute Wave 3.
Any chance that friday’s low marked the only end of Minute 1? If so, Minute 2 could take us all the way back to ~1110 (62% retrace from 1150 to 1046).
February 7th, 2010 at 4:29 pm
I’ve been searching for a valid count that supports this but none work well. And with so much overhead resistance, I think its unlikely Minute 1 ended Friday.
February 7th, 2010 at 4:31 pm
thx craig