Wednesday, June 6, 2012

Russell Is A Tattletale


Well whataya know?  For the first time in a long while I can finally stick my neck out there and say that I can see a bullish looking chart that even I can buy into.  Me, the one person who is tormented above all others with a bearish bias so powerful that I can't even read my own TA work properly half the time.  Well in fairness I should probably say that "I can read it alright, but I can't believe that what I'm seeing is even possible sometimes".  As difficult as it is to completely ignore the fact (at least for me personally) that Europe is on the verge of a complete meltdown, the global power brokers seem to be up to their old tricks and just might be able to temporarily reflate the equities markets one more time.  Of course the entire world realizes that it will just be another in a long list of failed attempts to stop the motor in the torpedo that's well on its way, but for now it looks like they just might be able to stall the big hit for a wee bit longer.  "We hope to have video on the torpedo attack later in the news hour.  And now... back to our regularly scheduled programming..."

How does somewhere in the first two weeks of August for a top sound to you? I'll show you where that time frame comes from in a moment.  For now, let's start off by looking at a 60 minute chart of the Russell 2000:

RUT 60 min - Click here for a live and updating version.  For those not subscribed to StockCharts... here's the print version so you can see the annotations.

Talk about not seeing the forest for the fish
I want to start off with the 60 minute chart (above) because it's on that chart where I finally had the epiphany I was looking for.  Why didn't I see this sooner?  In retrospect, I can say that Pretzel had pointed out that the first wave down off the high (yellow wave 1 in the chart above) has bothered him from the beginning because it looks like a 3 wave structure when others counted it as a fiver.  In fairness to all, it can be counted either way.  But to my eye, it's a 3 wave structure and even though I had read Pretzel's admonition it didn't really sink in.  Until now!  Because dang it all, not only is that first wave a 3 wave structure... all five yellow waves above are 3 wave structuresThe whole thing appears to be a leading diagonal (without the required overlap)!  Is such a structure legitimate in EW Theory?  I don't think so, but darn it all each and every one of those waves is a 3 wave structure and even though the overlap between waves 1 and 4 did not occur, that's still a motive wave.  That's my story and I'm sticking to it. An embarrassingly late light bulb moment.  The only caveat I'll throw in here is that in these wee hours of the morning I'm not totally convinced that the fifth and final 3-wave leg lower is complete.  For one thing, the ideal target for the H&S has not yet been met.  Although it doesn't have to be met, it usually is.  A bit of a conundrum.  We'll have to see how the market reacts to a huge gap higher this morning (Wednesday morning).  If it's going to pull back and get started on that final push lower to complete that last 3 wave, we'll likely see it begin quite quickly.

["I also want to briefly discuss another pattern that's been knocking around in my skull for a while.  I have always been bothered by the form of the decline that started at the end of March.  Readers will recall me mentioning the RUT in comparison to the SPX on numerous occasions, and discussing how the RUT didn't quite reconcile as a five-wave decline."Pretzel Logic, Tuesday, May 29th

So although Pretzel wasn't entirely sure, at least he identified the possibility above.  Cudos to Pretzel!  I certainly did not discount his warning, but nether did I pay enough attention to it.  But wait a minute... I'm not going to beat myself up about this.  In fact, I'll answer my own question.  I failed to recognize that the entire decline from the end of March was a diagonal because just like almost every other Elliott Wave practitioner out there, we're fixated on identifying 5 wave structures.  And we do that because 5 wave structures represent the hallmark of EW theory... a motive wave... an impulse.  It's by identifying 5 wave thrusts that Elliotticians navigate in extremely difficult-to-chart waters.  So by focusing so mightily on identifying fivers, I like most other technicians, too often fail to see a 3 wave structure when it's right there staring us in the face.  Even after Pretzel (correctly) identifies one that he envisions to possibly be a 3 wave sequence, lol.  But for me to miss 5 of them in a row?  I'm going to blame that on the failure of waves 1 and 4 to overlap.  No doubt that threw not only myself off the trail, but must have surely thrown even the best EW specialists off the scent as well.  We have a normal (but probably unhealthy) tendency to insist on seeing fivers when they may not even exist at all.  Nonetheless, I think I'll just slip under this rock now if you don't mind.  But alas... it's early in the game and nothing is lost.  In fact I think new vision is found.

Admittedly, the 60 minute chart above is a wee bit crammed but I wanted to display it so that you could see for yourself that even though yellow waves 1 and 4 do not overlap, the entire sequence of 5 waves is nonetheless made up of five 3 wave pieces. To me that's good enough.  It's a motive wave lower... and it's finished (or very nearly so).  So where does it go from here?  Let's continue by taking a quick step backward in time and looking at this weekly chart as presented on May 2nd:

Click here for a live and updating version.  We'll know real soon whether or not these targets are nothing more than whimsy or a little more real than that.  For now at least, it's just a bit too interesting to dismiss outright.

Although the analysis I'm presenting today appears to be in defiance of that shown in the May 2 piece on Exponential Decay, we can still use the cyclical portion of that study as shown in the chart above.  As you can see, the yellow cycle dates are still as valid today as they were a month ago.  They still indicate that an important turning point in the markets should occur in the first week of August.  As I'd mentioned in the previously-referred-to article, we can't necessarily tell by looking at a cycle study whether it's identifying a market 'high' for the first week of August... or a market 'low'.  5 weeks ago I thought early August would mark a low.  Today I believe it is in fact pinpointing a market peak.  Because not only is the Russell revealing what appears to be a completed (or nearly completed) 5 wave sequence lower, the market internals data are now beginning to reveal several positive divergences that suggest that they are more than willing cooperate with a sizable bounce in equities.  So to the best of my knowledge, other than the fact that Rome is almost burning, all the ducks seem to be lined up for the markets to march higher.  One more final thrust lower notwithstanding.  Those freakin' bankers are just magical wizard bastards, are they not?

How high do the markets bounce?  Let's take a look at the daily chart of the Russell:

$RUT Daily - Click here for a live and updating version

Let's assume for the moment that the conclusion I've drawn is correct.  If the market were to begin to blast off from here, the very minimum move we should expect would be that the upper trend line in the chart above be broken.  More likely though, the neckline of the Head and Shoulders pattern is most likely the target.  Personally, I doubt very much that that level will be exceeded.  (I need to qualify that by pointing out that the Russell is likely to stall at the neckline and reverse from there, but not necessarily the S&P.)  But it's possible that the Russel could exceed the neckline as well, since EWT would allow for the entirety of the move down off the March high to be retraced.  Possible, but extremely unlikely in my opinion.

On that note then, I need to mention a recent call by our friend Pebblewriter.  I think most of you probably know who Pebble is but if not, he's a terrific technician who's expertise is in the field of Gartley Patterns.  I don't know all that much about that field of study but Pebble has been kind enough to point out a couple of the nuances to me.  I'm not good enough at (not nearly good enough) to quote any of it but I do know that Pebble eats a lot of butterflies and crabs.  I'm not sure if that's a prerequisite to understanding what he knows but I ate a butterfly on Saturday and nothing happened.  So I defer to Pebblewriter's expertise which led him to drop the following comment on the last post on this blog only two days ago (Monday, June 5th).

["Haven't quite reached a conclusion yet on a "new high", but the bounce should be substantial."] Pebblewriter, Monday June 5th, when calling that a low was in.

In other words, it appears that Pebblewriter absolutely nailed the low. Even if there were to be one more thrust lower, his analysis would still be within a few days and judging by the size of the bounce that he has measured, it would be one heck of a great call.  So friends, if you'd care to see more guidance about the potential for the size of this next bounce, Pebblewriter's blog offers a completely different (and often very accurate) way of looking at things.  In his recent article entitled "SPX: The View from 30.000 Feet", Pebble gives a potential target that is surprisingly high... much higher than just a test of the neckline that I'm envisioning.  But not for one second would I discount his vision.  He's been far too accurate to dismiss.  Not to mention that like many of the other bloggers that I've gotten to know, he's one of the nicest guys you could ever hope to meet up with.  So is Pretzel... and at 6'4", I'm kinda glad Pretzel is one of the 'good guys' too.

Ok, back to the daily chart above.  Notice the bright yellow band on the right side of the chart.  That band is identifying the potential cyclical turning dates discovered in the analysis on Exponential Decay.  As faulty as that study may or may not have been, at least the cycle dates that it identified are still perfectly valid.  One caveat I'd like to throw into the mix here:  In each of the past 3 years, an important market turning point has occurred on (or very near to) July 1st.  A low in 2009, another low in 2010 and a peak in 2011.  Just food for thought and it's very important that we keep that in mind as we near the end of June this year.

At this point I had planned on inserting some charts that show how the market internals data is now set up to staunchly support a bounce in equities.  But that can wait until later this week and I will do just that... add some charts as those indicators (lagging indicators) begin to make the turns higher that I'm almost certain are coming.  Those turns higher will be visible later this week and I'll add some of those charts at that time.  So please feel free to bookmark this page and come back in a day or two for the updates.

Oh... news flash!  Just as a reminder... that torpedo is still on its way and it is absolutely, 100% guaranteed... unstoppable.  Delay-able?  Absolutely... but not for much longer.  When it hits we're going to understand all too clearly, the meaning of "that sinking feeling".

Wishing each and almost every one of you the very best.  Until next time...


Here is the first chart that we should take into consideration after a terrific rally on The Strip Wall Street.  Much has happened, and very quickly, since this article was first published... only 15 short hours ago.  Here's another look at the 60 min. chart of the Russell:

RUT 60 min - Click here for a live and updating version.  For those not subscribed to StockCharts... here's the print version so you can see the annotations.

Well!  As they say at Quicky's Cat House Express: "This won't take long, did it?"  As mentioned in the main article above, the first order of the day would be for the indexes to break though their down-sloping resistance trend lines.  They did that today with a flourish.  Not only did they break out, but the rally was very broadly based with participation from all sectors and with very meaningful improvements in the horrid conditions of the market internals.  In other words, this rally is very powerful.  In reality, that doesn't necessarily equate to "long lasting".  Nor does it mean the market is off toward new highs, although that too is possible.  That aspect of it remains to be seen because let's face it... Bernanke could very easily slip a turd into this punchbowl.

So in spite of the beautiful breadth of today's rally, it's still entirely possible that it's still just a natural reaction off a very dismal market internals situation.  It could just as easily be powerful people taking advantage of a wonderful opportunity to offload their bags of toxic poo.  I know that sounds like my inherent bearish bias is acting up again... but what I say is not untrue.  It's very true!  These improvements in the market internals data could fizzle in a heartbeat and Ben controls that aspect... period.  But in order to alleviate the pain my words will surely cause in the ears of those who are bullish, I will say this... if Bernanke says all the right things, I go as bullish as everybody else.  Unfortunately, it depends entirely on what he announces... or fails to announce.  Isn't that a sad state of affairs? 

So what next?  As you may have already surmised I like to focus on the Russell, mainly because it's a leader.  It tends to telegraph the moves in the S&P in both directions because it better reflects the actions of those who take bigger risks... the big boys.  So now that the Russell has broken out, the next logical point of interest is unquestionably the level where the previous big H&S pattern's neckline intersects.  That level is identified on the chart above and it resides in the area of 777 on the Russell.  On the S&P it's not nearly as clear but in my estimation an equivalent would be the area between 1335-1340.  I don't think there any chance whatsoever that the Russell won't hit that line at the very least.  However, I really doubt that it can make it all the way in one fell swoop.  I know, I know, the mood out there has suddenly turned uber-bullish.  Rumor and jaw-boning by the likes of Janet Screamin tend to have that effect.  But we have to be very realistic now, until Ben the Benevolent actually announces something monumental, it's just that... rumor and conjecture.

Nonetheless, we have to put all that speculation aside and focus on what happens tomorrow when Mr. Bernanke actually puts on the performance.  Perhaps the performance of a lifetime because wow... that one is a biggie.  In a nutshell, here's what I think is absolutely critical... that neckline.  Either it is going to be surpassed or it isn't.  And that's it.  There's no point in speculating on whether or not that happens, but there's definitely reason to examine each case.

I doubt very much that the neckline will be tested in one straight charge and think it's more than reasonable to expect the pullback as shown on the chart above,  BUT, if the neckline is tested and offers insurmountable resistance, we're going to see the Russell react first and probably very violently to the downside.  Thankfully, more often that not, the re-test of a H&S neckline as beautiful as that one isn't usually a long drawn out affair.  We should know fairly quickly.  In other words, I highly doubt the markets are going to fool around there, knocking on the door 4 or 5 times.  The world is just too damned edgy for that kind of messing around these days.

On the other hand, it is definitely possible that the neckline fails to hold the Russell back.  In that case, it's a whole new ballgame and the minimum upside targets then become measurable and substantial, with 828 on the Russell seen as a minimum.

Up next, we take a look at one measure of internal market strength, the NYSE Summation Index (NYSI).  Summation Index is a breadth indicator derived the McClellan Oscillator, which is a breadth indicator based on Net Advances (advancing issues less declining issues). The Summation Index is simply a running total of the McClellan Oscillator values. Even though it is called a Summation Index, the indicator is really an oscillator that fluctuates above/below zero. As such, signals can be derived from bullish/bearish divergences, directional movement and center line crossovers:

$NYSI Daily - Click here for a live and updating version.

Some of the finest signals issued by the Summation Index are based on divergences.  As well, the actual numerical value is relatively important, especially the zero line and the extremes.  On the topic of the extremes, at this point the Summation Index is not particularly oversold by any stretch of the imagination.  At MAJOR lows like the 2009 bottom it was much, much deeper.  However it is currently sitting in a position where 'every day run-of-the-mill market lows' often occur.  And perhaps most importantly, based on signals from its RSI, it is definitely about to turn higher.  That's a bullish sign "for the NYSI itself".  However, there is one aspect that I find to be somewhat troubling...

And that is in regard to the fact that the Summation Indexes almost always provide a very reliable divergence at major turning points.  Witness the last 3 very important market bottoms; March 2009, June of 2010 and August of 2011.  In all 3 cases the market had suffered a substantial decline, the smallest of which was in the summer of 2010 and which represented a drop of 17.9%.  By comparison, the recent sell-off in the NYSE over the past 11 weeks was only 13.3%.  So does the recent decline qualify as a major bottom?  Perhaps not since in truth it might be just another 'run-of-the-mill market low'.  It is equally possible though that perhaps there is more downside to come.  I hate to sound negative but the lack of divergence dictates that this possibility is very real. 

Nonetheless the recent decline was a significant enough event that it brought the NYSI down to a level where market lows are often found.  So where is that positive divergence?  It raises the prospect that perhaps it is yet to come because it is expected although not absolutely mandatory.  On the other hand, and this is a very noteworthy observation, although the NYSI has reached a level which is approximately equivalent to its level attained at the low of the previous (and scary) decline in the summer of last year, the stock markets actually have not.  That fact alone can legitimately be interpreted as a very bullish signal for equities. So once again, as is so often the case, we find ourselves looking at a very valuable market indicator and it's flashing mixed signals.

So in order not to leave you thinking "well that was barely worth reading", let me summarize it with these interpretations:  The positive divergence is not absolutely mandatory although its absence is concerning.  Other than that little "glitch", the Summation Index is definitely going to turn higher.  That fact is flat out positive for the equities markets since it suggests they will turn higher as well.  And the final clue (which I believe is the most positive aspect of all) is the fact that while NYSI is now at the same depth (close enough) as it was at the last major low, equities themselves are not.  OVERALL... other than the missing positive divergence, these should be deemed as very bullish developments until and unless proven otherwise.

UPDATE: JUNE 8, 2012

The markets are going to finish off the week having put in very green "bullish engulfing" candles.   This is an extremely bullish signal, especially when the market internals are all at low levels and turning higher, as they are now.  [Please ignore the annotations on the chart below... they were written quite some time ago in a fit of cynicism and attempted humor.  I was showing how some wave analysts will count that yellow wave down and call it a 3 wave sequence.]



  1. Heya AR

    "We have found one diagonal in the Dow in which wave four did not reach the price territory of wave one." (EWP, 88)

    I couldn't help but notice some downright Binvesque comments above about looking for 5's.  Here's his preferred guy's take on the issue:
    "Another variation in impulse waves is the diagonal triangle...Overlaps between the terminals of waves 1 and 4 are also frequent, although not obligatory." (EWP-AFEM, Balan, II-3)

    I just saw your response to my last comment here (2 weeks ago!).  I wasn't intentionally ignoring it, but when I went to look back at the main post some hours after commenting, I got an error message to the effect of "this topic has been removed."  Since I noticed someone else in the pub mentioning something to the same effect, I figured it must have been Disqus.  Now that I see the post is visible again, perhaps the culprit was just user error on my part...

  2. Mark Hulbert's article Market Significantly Undervalued,Yield analysis suggests few stocks are overvalued

    It seems that since the 2000 top stocks have slowly shifted from exteme overvalued to undervalued during this 12 year sideways moving secular bear.. It doesn't mean stocks can't get even more undervalued similar to late 1974 & mid 1982. All it would take is for another large decline to achieve it.. Its confirming what John Hampson discusses in his SolarCycles blog... That is, a recession is due after the next solar maximum is marked, which is due around March 2013 time frame. Its will be from the stock market lows achieved during this recession that a new long term secular bull market should be born.. Hulbert's analysis supports nad adds further weight this conclusion.

  3. I think Prechter was the "discoverer" of the leading diagonal, and he described it as being a 5-3-5-3-5 in contrast to an ED 3-3-3-3-3.

    I'm aware that this has been argued over and over again in the blogsphere, and that the consensus is to accept that a LD can also be 3-3-3-3-3, but if we were to be precise, shouldn't we be clear by saying that Prechter's LD is a 5-3-5-3-5 and that the 3-3-3-3-3 LD is the "internet consensus version"?

  4. Nice work.

    A couple of main differences we might have in our respective analysis is that I'm leaning more towards calling the recent decline a triple zigzag, and I'm also working with a slightly longer ~15 month cycle off the 2009 low.

  5. No, I was on the verge of shutting the blog down and had put that entire post into mothballs.  Nothing serious.

    "Another variation in impulse waves is the diagonal triangle...Overlaps
    between the terminals of waves 1 and 4 are also frequent, although not

    Perfect!  Thanks for that info.  I have to say though that I'm still pretty darned suspicious that the final leg lower (which should also be a 3 wave sequence) might not be complete.  If that's the case, a guy could catch a lovely little crash somewhere near the open and ride it lower over the next couple of days before the real correction upward can begin.  In fact, the more I think about it, the more I'm leaning in that direction.  I also think we're going to have the rare luxury of being able to figure out the market's intentions pretty well over the next few days.

    Nice to see you again Zimmer.  Hope you have a great trading week.  What the hell... I hope you have a great week period, lol.

  6. Great analysis in the OP.

    As far as waves "breaking rules" -- Nature makes waves, men make rules; nature feels no obligation to respect or abide by men's rules.

    BTW I think the AUD/JPY still wants to touch 72.00 to complete its move down. Kind of harmonizes with your feelings that there's a little more downside to come before the bounce.

  7. I suppose it is best to just let the text (10th ed, (c) 2006) speak for itself:
    "It has recently come to light that a diagonal occasionally appears in the wave 1 position of impulses and in the wave A position of zigzags.  In the few examples we have, the subdivisions appear to be the same:  3-3-3-3-3, although in two cases, they can be labeled 5-3-5-3-5, so the jury is out on a strict definition." (EWP, 40)

  8. Oh, good.  Sure wouldn't want it to be anything serious ;P

    The gyrations between (roughly) SPX 1300 and 1333 may have left me assuming whipsaws are all that's allowed, but I sure hope your ideas about luxury coming our way in the next few days is as prescient as some of your past calls.  Regardless, it does feel like excitement awaits--what with even sideways being so extreme.

    Well-wishes right back at-cha...July 1...good things come in threes...

  9. Don't mean to shoot you down in flames, Oh Aussie Chairman in China, but Hulbert is the biggest knob going around. Everything he comes up with is designed to give the impression that things aren't as bad as they seem and the next bull market is just around the corner. Typical MSM, trying to keep the whole shebang propped up on pain of death.
    ps where in Aus you from?, I'm currently writing this from darkest Back o Bouke lol.

  10. Thanks for the kind words Papa.  In the comment a bit higher than yours, Zimmer points out that the wave 1-4 overlap is in fact "not compulsory".  So we're in the clear.

    And about the Aussie:Yen... earlier DarkestKnight had posted a great chart on that and I had suggested to him that perhaps the that pair had finished off an 'abc' and was now heading higher.  I made that claim envisioning that "it would have to be doing that" if equities were indeed about to skyrocket.

    On the other hand, DK's chart is probably right (meaning you are also right).  And if so, that would absolutely support one last thrust lower for equities.  I think we're going to know which it's gonna be before this day is over.  Surely by EOD tomorrow.

  11. Thanks so much for that Zim.

    I've got the 20th Anniversary Ed. that I bought not too many years ago (after 2006 anyway), and I've never been able to explain the difference between editions. Do you know why and how they vary? Did Amazon sell me an outdated edition as though it were the latest? (I've never been able to find this information with the online book stores, or anywhere for that matter - and this is not the first time I've asked other Elliott Wave folks either).

  12. looks like the drinks are on me , AR.....but you'll be buying the cigars later.....AUDUSD, AUDJPY (4) almost complete...

  13. Great charts HighRev.  I particularly like the dark one.  One question though:  On your black chart you state that the upside target would be 1485, way above the April 2 high of 1422.  I'm wondering how that can be the case since the entire move down of the April 2 high is a fiver.  That would imply that that high 'will not' be taken out.  I'm sure there's an answer so I'm not debating you, but instead am very interested in that analysis.  Good work by the way... I hadn't gone to the trouble of calculating those uncanny retracements.  They're remarkable actually.  So you've got some sorta mojo going on there and I'd like to hear why you can see a high of 1485 when the recent pullback is a fiver.  I guess it would easily be explained "if" the recent pullback was an 'A' wave.  I think Pebble is forecasting way up there as well... 1472 as I recall.  Thanks :-)

  14. One more with new data from today and I'll leave the rest of the TA to you (lots of bullish divergences on multiple time frames, extreme readings on trend indicators and oscillators as well as sentiment, etc. etc. - my favorite is the daily ADX; now that's an extreme and a sustained one at that!)

  15. Geez... I'm scared man.  The Russell and S&P have both broken that upper down-sloping trendline very cleanly... implying that the decline is finished.  Also, the moving averages are giving off a pretty darned bullish odor all of a sudden.  And so are the market internals.  Oh my god they're gonna be bullish after today's ramp.  I'll do some work on some of them and add them into the post above either tonight or tomorrow, depending on what they're showing after today's action.  In my humble opinion, I have little choice but to conclude that a big leg higher for equities is in progress.

  16. Yo Dark, you forgot the head, its ‘knob head’.. Strewth don’t you know how to
    speak the Australian lingo? I suppose you must also think Robert Prechter is a
    bit of a knob head too? Hey, you’re not one of those P3 drongos are you? Yeah
    guess so.. Never heard of Back o Bourke... sounds remote.. Me, I’m from
    Freshwater Creek.

  17. Nah. Notin' to do with EW. I'm really not that big on EW for entries and exits. I post counts, but I seldom if ever derive entries or targets based on EW. I use EW mainly as another trend finder tool. A three can just as easily turn into a five. Remember the 2009-2010 rally? 5 wave motives? Impossible!!! That is until everyone caved in and put a 5 wave motive count on the weekly and said, "we’ll leave it a that". ;-)

    Those targets are derived from the Fib. retrace trading system developed by Dave Halsey at . He puts up a morning video with open access just about every day.

    When looking at things from an EW point of view, I'm looking at the recent decline as a triple zigzag in an intermediate (X) position that I think has a good chance of having completed. One more good multi-month wave up and then the big, long, retracted decline would be my idealize projection (cycle wise I'm leaning that way too), but if we get a failure and the big plunge comes sooner, I just have to re-label it. ;-)

  18. Nice article's a good thing the bankin' bastards don't have you doing their have a way with words. I just wish I had read this yesterday...I was too busy taking my lumps...not too many though. :)

  19. Not your fault Nostra... the lightbulb only lit up for me at about 1:00 a.m..  So I only published it at about 4:00 a.m.  Sorry I didn't publish it sooner.  But I don't think there's any debate at the moment, we appear to be heading higher.  What I'm planning on doing is to wait, wait, wait and watch for that 'abc' correction lower tomorrow.  Then nail the 'c' wave higher.  It should be a nice 'c' wave at the very least.  So we might be able to catch 'more' than just a 'c' wave.  It should be a relatively low risk opportunity to gain some green.

  20. bear not dead yet

  21. You're in luck! 

    As to the edition history, before I knew about the ebook above, I was able to notice Google books and scribd and the like had a few different versions up--not a definitive list, I'm sure, but maybe somewhere to start if the above link doesn't satisfy your curiosity.  If you ever do find a nice list, I'd be interested to know about it.

    Thanks for all the charts you post.

  22. A case study in biases:  my first reaction to the chart was, "oh, so 9.8% are in denial!"

  23. Agreed wholeheartedly.  Both outcomes are entirely possible and sadly it all depends on what Mr. Bernanke says.  Sick.

  24. Thanks Al.  I'm honored that you drop in to look at it.  And as you know (from the occasional private chat), my opinions are not cast in stone... they are fluid.  I particularly appreciate the good and respectful rapport you and I share on the occasions when our opinions are in opposition.  But that's the way friends behave... that should be the norm because after all, we're all in this together and all we're trying to do is to help each other navigate.

    All of us absolutely have to be open minded at all times.  Admittedly, that's a lesson that would have served me very, very well had I learned it earlier in life.

  25. UK, Italy, Spain Sovereign Debt Downgraded

  26.  Brilliant fib retrace analog analysis there HRev.

  27. EURAUD
    low for (2 ) on daily chart is IN

  28. a-b-c complete for eurusd

  29. I'll accept that compliment even if I think you've overdone it a bit. ;-)

  30. GOLD 1
    The commercials [JPM and possibly HSBC]
    who are in the process of covering their shorts

    have tried three times in May
    to  break the Dec 29, 2011 gold low
    and cover their shorts
    by buying the sell stops below.

    Anyone who wants gold around that low level
    probably could not buy the stops below the low
    cause JPM probably put their orders in for those stops
    when they started to drive the market down.
    And, as I understand it
    the High Speed Traders [JPM]
    pay off the exchange
    for the privilege of front running other orders.
    So, other purchasers must place their orders
    above the Dec low.

    If the Chinese [or any sovereign nation]
    wants to buy gold,
    as JPM sells to drive the price down
    they can grab that gold for sale
    at no cost to them,
    because they can buy gold
    the same way they buy bonds.
    When an enterprise does business in dollars
    and wants to exchange those dollars for Yuan,
    the government takes the dollars
    and prints the Yuan for payment.
    They then use the dollars received to buy bonds...
    or gold.

    Since the gold is paid for in printed money
    and is free to the government
    [tho not to the taxpayers]
    their purchasing power is unlimited.
    They can hold a basket above the low,
    The huge buying volume
    on June 1st
    appears to be capitulation by JPM
    and loading of longs
    for the next move up.

    There is reason to believe
    the gold price will be at $1950
    before it will fall below $1523.

  31. Yeah you're right.. I've toned it down a tad.. Nice instead of brilliant! lol.

  32. Your ST scenario is playing out AR. The possible neckline of the possible IH&S was sold into. So far, so good.



  33. I have no idea what the US indexes might do what with all the QE (and QE rumor) front running and HFTs and stuff, but here's a maybe on actual social mood:




  34. So far so good.  I'm just heading out and haven't had a chance to review all the market internals data yet.  But I did see NYSI and it looks like the internals measures are not objecting to another bounce here.  In fact I'm assuming one is coming.  Pretty much as seen in the lowest chart above.  Gotta run....

    Have a great night :-)

  35. I concur, Papa...
    AUDUSD says this ain't no wave 2  comin

  36. USDJPY
    so far, so good

  37. Hi I love the site, I went ahead and added a link to your site to mine 

  38. Love that chart DK.  But what's really bothering me is that the market internals are starting to turn somewhat bullish.  They're down at levels where lows are often found as well although back in March 2009 they were a heck of a lot lower than they are right now.  So even though they're turning higher, there's lots of room for them to eventually fall further yet.  But right now all of 'em are turning bullish.  That doesn't mean "off to new highs" or anything like that, but it 'does' show that the market is actually getting stronger from within.

    But one thing that's missing is a positive divergence on NYSI.  It's not absolutely mandatory but normally we'd be seeing one at a market bottom.  So where is it?  Well one answer might be that "be patient... it's still coming".  And in order for it to show up breadth would have to continue to improve.  And in order for that to happen, equities would have to surge another leg higher... then drop as you're expecting.  That type of action would not negate your count but it would suggest that your wave 4 possibly isn't finished quite yet. The daily charts suggest this might be what's in store.  And of course, a second answer to that question might be "be patient... we're nowhere near a bottom yet".  lol

    I dunno bud, I'm starting to see some bullish signs (as incredibly difficult as it is for me to utter those words).  The S&P daily is flat out bullish looking but the 60 is flat out bearish looking.  So I'm thinking the market could play out pretty much as shown in that link below the 60 min. chart at the top of the post.  Here's that link.  One more assault on that big neckline might be in the cards.

  39. On a side note, of interest to myself perhaps more than anybody else
    here, for the second time in a row Canada has told Europe to get their
    shyte together and stop asking Canada to bail them out. Canada will not help bail out Europe. Germany is angry at Canada now and Canada couldn't care less.

    In the words of Fareed Zacharia, when asked why Canada is so strong and
    ranked by the IMF as having the most sound banking system in the
    world... "Because in Canada they use common sense."

    Do you have any questions about that Germany?

  40. 1.2455 is the target on the diamond breakdown on the EUR/USD. That also lines up with the 50% retrace of the entire move off lows and the lower boundary of a possible base channel (parallel with the upper boundary connecting Mon. and Thurs. highs - not shown on last night's 15 minute chart), 200 SMA on the hourly (where we also have a new positively aligned slow moving average trio - 50,100,200). Good place to keep an eye on. Go through that (1.2415 is the official failure level), and I would be looking for a retest of recent lows, minimum.

  41. Glad to see at least one country gets it.. Now that's what I call sending a signal.. Way to go Canada!

  42. I have to fully agree with AR on this one.. we're getting a good bounce just now, but that's probably all it will amount to.. a bounce.. The lack of divergence on NYSI makes it suspicious and a concern for the any bullish case senario.. I think this bounce fades out next week and then market heads down to lower lows.

  43. Lol... not to be rude or anything like that.  Canada is friends with pretty much every other country out there, including Germany.  But when it come to the topic of throwing good money after bad... I said NO.

  44.  SOMEBODY'S got to put the brakes on, wish the U.S. would follow Canada's lead

  45. Yeah... it's one of those "tough love" kinda deals.

    I went long this morning once that vicious and beautifully choreographed dip started to bounce and was supported by a big spike in NYAD, among others.  But basically that 60 min. chart at the top of this post seems to be playing out more or less as shown (but apparently quite a bit quicker than I had envisioned at first).  The market internals definitely support some upthrust here so I did the impossible, lol.  IMHO, the Russell is headed to "at least" test that big H&S one more time.  I wouldn't doubt that it will be penetrated either.  In fact I think it will be.  There are just so many signs pointing to "bullish" that I simply have to stop fighting them.  I don't understand where the money is coming from to drive this market, but it is what it is.  Best of success Al  :-)

  46.  I'm standing aside for now, non-market priorities need my attention.  But looks like down ST to me.

  47. Hey AR, just now getting caught up on my favorite blogs and was thrilled to see the huge plug (check's in the mail.)  Seriously though, another great post, my friend.

    I think you're right on the money.  I've been looking at fan lines lately, and came up with a doozey of a chart that very strongly argues we're not headed any lower in the near-term. 

    Keep up the great work.


  48.  hmmm, chart didn't attach.  Will try again...

  49. Yep. Very nice weekly candles (in many places).

    Started out the day (over here that's 2:00AM Eastern) thinking "what a terrible way to end the week", and then I started to think that maybe it was only early, end of week, profit taking, which turned out to be correct, and I ended up thinking "well, that was quite nice".

    Have a good weekend all.

  50. I've been talking a lot about Fib. retracements lately (due to their importance at inflection points), and I thought it might be helpful to try and give everyone a quick overview using the /es daily and weekly charts as an example (it's also one of the most important places where the "bots" come out to play). Hope it helps.

  51. You put plenty of effort into that presentation HighRev.  Much appreciated.

  52. Thanks Pebble.  You gotta quit sending me those checks though man, they're starting to clutter up my coffee table.

    But in seriousness, I don't make those mentions as a plug per se, but simply because of the fact that your analysis is very valuable and 'good'.  People should know about your work and I just wanted to make sure they know where to find it.  It's for the benefit of all really.

  53. Germany Is Growing Resentful and Angry

    Blaming Teutonic industry for neighbors’ profligacy could awaken old rivalries

  54. "There is one general rule about the history of the modern state of Germany since its inception in 1871: Anytime Germany has been both unified and isolated, armed conflict has inevitably followed."

    It's a fact that the global banking cabal has funded both sides of every war since, and including, Napoleon.  Obviously that also includes both world wars.  They love wars, they love starting wars and I doubt they really care who wins because after all is said and done, they still own all the horses in the race anyway.  Just as they own all the horses in elections races.

    I have a very difficult time harboring any ill feelings toward the Germans in today's fiasco.  Why in hell should they be blamed for being hard working, innovative, efficient and 'savers rather than lazy spenders'?  On the other hand, I've suspected for a long time that the entire European experiment was destined to fail with polarities being created in the process.  And it was engineered "totally" by bankers.  So what else is new?  The biggest "tell" that the entire thing was 'destined to fail' was the fact that England (home and 'heart of' of the darkest banking mafia in the entire history of mankind) had a whole lot to do with the creation of the European Union and at the last minute refused to join it.  How slick... they can still print their way out of their own mess but none of the EuroUnion members have that luxury.  We'd better recognize the entire 'plan' for what it is.

  55. have you seen this angle? Germany is trying to force Britain out of the EU.

    Germany Is Betraying Britain—Again

    "If Britain agreed to the plan outlined on December 9, it basically would have had to hand control of its finances over to European leaders. By refusing the plan, Britain was simply protecting its fiscal sovereignty.
    In other words, Europe created this conflict!
    Why would it do that? Because it wants to push Britain out of the European Union!"

    A Deadly Secret Plot Has Been Uncovered

  56. No I had heard nothing of that.  I find the whole idea a bit preposterous at first glance, but I'm not going to dismiss it.  After all, the history behind the Illuminati (money changers) goes back what... 2000 years?  There are definitely dark powers running the show and who knows what their ultimate goals are... other than ruling all of humanity by enslaving it in debt of course.  I find it so incredibly unbelievable on one hand that "here we go again", but not at all surprised on the other.

    Really, when we think about exponential growth, let's face it, the world can't easily handle another doubling of its population over the next 54 years.  The message on the Georgia Guidestones is clear enough in my opinion, about what their plans are.

  57. Nice chart!  I like the breakout of the channel ... guess the 2 retrace should stay above that old down channel, eh?

  58. Here is a similar chart that I meant to include ... you called 78 as a target support level months ago ... looks like a good level given all the points of resistance there months ago.

    The party may be starting soon with this one.

  59. I agree ... I think this 5-waver, if the first wave of Minor 3 should extend beyond minor 1 ... so that target would be below 0.9384 for v of (1) of P3.

  60. I agree ... I think this 5-waver, if the first wave of Minor 3 should extend beyond minor 1 ... so that target would be below 0.9384 for v of (1) of P3.

  61. There's a new post up.  A buy signal on the weekly chart of the Summation Index.  Here's a link to that post.