Just a heads up my friends. I'm seeing something potentially "very bullish" signals emerging on a whole raft of charts. I must admit that I'm a bit surprised by the recent developments because up until very recently we have been seeing some very bearish signals from... well all over the place. But it's starting to look to me like the correction might have indeed already run its course and we may be heading for new local highs. Perhaps 1450ish on the S&P 500. If that's the case, forget the old saying about "sell in May and go to hell"... it ain't gonna happen. At least not early in May.
Here's one of those very rare wave count offerings from yours truly. And for the first time ever I can commit with 100% certainty that it is correct. It is absolutely correct... insofar as that one of these two wave counts "is" right... probably maybe. I'll temper that bold statement just a bit by adding that most likely one of 'em is correct... as long as the markets goes higher or lower from here. In any case, all self doubt aside, it's sure become apparent to me that both possibilities really are becoming quite clear now. I just don't know which one it's gonna be and you have no idea how much I wish I could tell you. But I can't. Nonetheless, I honestly am somewhat comforted after today's action... finally... in that in spite of the fact that it could go either way, the pattern does seem to becoming clearer. That might sound like a contradiction but it isn't. In other words, going forward I believe we're going to be able to make the correct investment decisions and with perhaps a great deal more confidence than we've had over the past 6 weeks or so.
With both possibilities seen in the chart below being viable (at least from the EWT perspective and with nothing else taken into consideration), I'd have to say that judging by the market internals data I'm seeing, I'm going to have to lean toward the bullish outcome... the green count. Of course I reserve the right to change my mind but unless we see Monday's (April 23) low of 1358.79 get taken out, I'm going to assume we're heading higher. NYSI is certainly lending support to that conclusion. And with today's massive jump in AAPL, so is the AAPL:NDX ratio suddenly supporting higher prices... perhaps 'much' higher.
|Click here for a live and updating 'print' version (I offer the 'print' so those who are not subscribed to StockCharts can see the annotations).|
As well, the chart of the percentage of stocks above their own 50 day moving average is producing one type of signal that I promised myself that "the next time I see that signal I'm not gonna fight it... we're headed higher". So there you have it my friends, I have little option as of tonight but to go bullish unless and until 1358.79 gets taken out.
|There is a huge and unusual divergence going on between equities and the Aussie:Yen cross. This 'has to' resolve one way or the other. Click here for an updating 'print' version.|
EDIT: April 29, 2012 - I wanted to stay on the topic that I was demonstrating in the chart above, so I've put together an improved version (below) for a handful of different reasons. First of all, that's only a 15 minute chart and a lot can happen in a matter of just a couple of days. So I've expanded the duration of time shown. Secondly, I've separated the Aussie:Yen cross and now display it in a separate panel below the Russell... in the name of clarity. The turd reason I wanted to update this presentation is to more clearly show that we can see 3-wave sequences in the Russell throughout the entire duration of the chart. Some people might argue that where I see a 3-wave sequence, they see a 5 wave sequence. For those people I'd highly recommend a quick visit to this fun page. You can thank me later :-)
Fourthly and perhaps most importantly, I really want to issue a "heads up" and draw your attention to the fact that at the close of trading on Friday, equities and the Aussie:Yen cross ended the week being way, way out of sync. Here's what it all looks like now, in a new and improved version of the chart just above:
|Click here for a live and updating 'print' version|
To be honest, this particular topic is almost worthy of being issued in a new post so that all our friend out there on the interweb or whatever it's called would be alerted that yours truly had issued something he felt was relatively important. But the issue is going to be resolved one way or the other so quickly, probably within the first few hours of trading on Monday, that by tomorrow at noon it might already be a dead topic. Hopefully one that might have affected your positions in some positive way. Because this divergence is going to correct. All that remains to be seen is which of the two is going to surrender the most ground, equities or currencies.
If nothing else, this is one of the best examples of why I'd urge you to watch for new charts every time you visit this page since I quite often add them when the urge strikes me. I also always leave a notice in the comments section that there is a "new chart above". As it turns out, my methods that seem to be evolving here also give me the impression of being kind of "folksy", kind of like a "just between us friends" sort of thing. It's just one of those things that happen I guess, for a person like myself who doesn't offer a daily dose of EW guidance. I'm just not good enough at it to be of any value to you on that topic. For that type of analysis I can recommend no free site any more strongly than Pretzel Logic. I know, I know... I've recommended that site a half dozen times already but I'll do it again shamelessly because that guy does things right on so many different fronts. Another site you might want to consider is Michael Eckert's Elliott Wave Trends and Charts which is a subscription based service. I know Mike personally and am proud to report that he too is a great guy. To his credit, he also owns the same newest model of troll gun that Pretzel and I have, the Binford 6000. And regarding his visions for Elliott Wave Theory... absolutely top notch. One of the very best. He offers a free trial subscription and I'd highly recommend you give it a whirl.
UPDATE: April 27, 2012
I've finally caught up a bit and have time to post one of the market internals charts that, as of this evening, is pointing toward a bounce of some sort. Perhaps way more than a bounce but it's in the very earliest of stages and is still inconclusive at this time. In the chart below we take a look at the daily view of $NYSI, which is the summation index based on the McClellan Oscillator for the NYSE:
|NYSI - Click here for a live and updating version complete with a few key indicators. It updates after the close of daily trading.|
As you can clearly see, as a result of the past 3 days action on the New York Stock Exchange, this indicator is issuing some pretty serious signs that it wants to turn higher. It's difficult to tell yet whether or not this is indicative of a major bottom or whether it's just a hiccup in the indicator very similar to that which occurred in December of last year. That December 'blip' was caused by a sharp rally on the NYSE but it quickly turned lower once again. That same phenomenon could very well happen this time too. Most notable is that although NYSI is definitely struggling to turn higher, it's not from a particularly low level. In fact, if we look at a much longer view, it's clear to see that the NYSI could indeed fall much, much further before it could even begin to be considered as 'oversold'. Nonetheless, we have to take heed of signals such as this.
On the other hand, a weekly chart for NYSI that I have in a totally different configuration is definitely issuing a buy signal. It remains to be seen whether or not that one too will offer any follow-through. At this time, in the wee hours of the morning, the futures are turning bright red with CAC lower by 1.51%, DAX lower by 1.07 and the FTSE lower by... who gives a shit about the FTSE, that market is more manipulated than Gumby's dick. The S&P, Russell, DOW and NDX futures are all red as well and apparently wanting to turn redder. So it remains to be seen. From the Elliott Wave perspective, a case can be made for the market to fall directly from here and another perfectly legitimate case can be made for nothing more than a correction before the market scoots off higher yet again in a fifth and final wave higher.
One other chart in the long list of tools that I use, one which I mentioned further up, is the 'percentage of stocks above their own 50 day moving average. At this moment it is showing a signal that I'd mentioned that I would not ignore the next time I saw it. The action in the markets tomorrow and Monday should provide the confirmation I need to see before I could fully buy into it's bullish signal and accepting that the market is probably off to gain a 5th leg higher. In other words, much like a stochastic or MACD signal, a lower low in this indicator is possibly still in the cards. I'll show you that one when I get time to put it together.
On another topic, since I seem to be on an anti-corruption campaign today, I might as well show you an example of how incredible it is to witness the markets being levitated against all logic on days that matter most to JP Morgan and the rest of that den of Satan worshiping banker-thieves. It doesn't matter whether we're in a bull market or a bear market. It doesn't matter whether or not an investor has correctly pegged the market direction. It doesn't matter whether or not a person is even involved in the stock markets at all. The topic here is "corruption". In the chart below we take a look at NYUD, a figure that represents the "net advancing" volume on any given time frame.
|NYUD - This is such a short term chart that there's not much point in adding a link. All the annotations will have moved off the chart in a few days anyway. Let the 'picture' suffice to make the point.|
NYUD is a calculation of the net result of advancing volume minus declining volume. It just makes sense that in a healthy advancing market, more volume is flowing into advancing issues than into stocks that are falling. That's natural. That's what makes markets go up. But when volume starts to dry up for the advancing issues and starts to increase in those stocks that are declining, and yet the markets just continue higher anyway, you can rest assured that there's an underlying reason for it. Of course, one might argue that just as in any other indicator, a divergence can also be expected and shouldn't be considered too "out of the ordinary" That's true, and the correction will come. But the point I'm making here is that you can bet the farm that you know the days when this type of activity will happen... and "why" it happens. It's the days leading up to and the very day of options exploration. Most Fridays and certainly on the third Friday of every month. It doesn't happen every time, but 90% of the time is a rate that is beyond any possibility of being just random. It's manipulation and that's the end of that story..
My apologies for not supplying more supporting evidence with this post with the addition of supplementary charts of market internals data, but I find myself short of time at this late hour and having to play catch-up thanks to a totally unnecessary disaster courtesy of the local electricity supplier... a monopolistic fascist piece of shit corporation that has about as much social skill and care for its customers as all the rest of them. I have been without electric power for the past 36 hours and am just now back on-line. Needless to say I have a ton of catching up to do. If you like, feel free to bookmark this page as it is often my style to just add charts throughout the week rather than set up a new post. With limited time at my disposal and a lot of catching up to do I'll likely have to take that route this week.
I wish you the best with your trading decisions and bid you a happy and prosperous week.