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Events Don’t Change the Trend

All this talk about a Trump rally … absolutely ridiculous! Elliott waves predicted this rally a years and a half ago—even longer, in fact. So, what are the financial pundits talking about this time? The thought of every word that Donald Trump utters having any real effect of the market is just ludicrous.

Knowing that the market is traded around the world, to think that the entire world buys and sells based upon what happens in Washington DC is really extraordinary. The height of man’s hubris knows no bounds. Next, they’ll think that we’re in control of Earth’s climate!? (oh, yeah, I forgot for an instant …)

This notion that events have any major impact on the market is part and parcel of this same kind of thinking. It will be fascinating to see the reaction when it starts getting noticeably colder right across the world, the market crashes big time, and the people realize that we’re really not in control of anything that happens on the third rock from the Sun.

Of course, that will only be some people, as the major media will blame the financial crash on Donald Trump and the climate, or an event that “happens to” coincide with the predicted top.

The truth is that the movement of the market is a mathematical representation of the mood of the herd.

The market will continue moving up in its Elliott wave rhythm until the herd is more negative than positive and at that point, it will turn down. There will be a major event in and around that time, but it will not be the single event that will change the course of history. However, as in the past, it’s likely that the herd will pin the cause of this historic market collapse on that single event, even though it’s highly likely that it won’t happen right on the day of the top, but somewhere close to it.

Major events do not change the market trend. The trend wanes over time until, as I said, it just keels over. At that point, the underlying weakness takes it down quickly and the concern that’s been percolating under the surface suddenly takes hold and quickly turns to fear. From a daily or weekly chart perspective, the market will come down in three very predictable waves, with countertrend subwaves hitting their targets along the way just when they’re supposed to.

It will be an historic drop that “nobody saw coming.”

Elliott Waves and the Stock Market

Waves reflect the mood of the herd. As a result, at the highs of the market, good events occur, because the herd is in a positive mood. At lows, bad things happen.

We’re rather regularly hearing the cries of pundits or even hedge fund heads that the market is reacting positively to bad news these days. They simply don’t understand how that can happen! Well, that’s because the market is bullish due to the overall mood of those who affect it.

I often find it amusing when pundits and other media types make every excuse they can think of to explain a market that’s not reacting to events the way they expect it to. Or when they try and explain a downturn on good news. They’re certainly very creative!

Elliott waves move in very specific patterns that always play out to their prescribed end points. Virtually all the waves have fibonacci ratio relationships to other waves and so the predictability is extremely high. Given the knowledge, it’s relatively easy to predict wave ends accurately.

As I explained last week in the blog post, every ending wave is in five waves, it doesn’t matter whether it’s a motive or corrective market. I’ve never seen a truncation, even though some say it could happen. Yes, if this time is different, I suppose it could. But that’s what this site is all about: cycles. Cycles play out over and over again; otherwise, they’re not cycles. Elliott waves are price cycles and they play out as predicted until the mood changes.

A Couple of Examples

Brexit (SP500): Above is a daily chart of the SP500 from April through July of 2016. The recent Brexit vote of June 24, 2016 had a dramatic effect on the market for a little more than a day. I remember it well. We had already started a correction and I had expected a drop. I happened to be on a plane when it happened and could not take advantage of it (it had been hours of delays on the road and I wasn’t able to access the market).

It’s interesting to note that the C wave shown in the chart ended up being exactly 1.618 times the A wave down, which is a typical fibonacci relationship in a correction. Two days after the event the market headed right back up (I had made the call based upon the wave structure) and it didn’t take long for it to completely retrace the drop. The trend did not change—the market simply continued the correction and then turned up again on schedule.

I remember all the pundits making a really big deal of the drop, as if it were the end of the world.

Nine-Eleven (SP500): Above is a daily chart of the SP500 from May – December, 2001. On September 11, 2001, the attack on the World Trade Center took place in New York City. The US market had already been in a downtrend since May 22, 2001 (on the above chart). The market bottomed on September 21, just ten days after the attack and turned right back up, eventually heading to a new high, of course. Although we had a steep drop on the day of the attack, an historic event of this magnitude did not have a major effect on the larger trend.

John F. Kennedy Assassination *SP500.” Here is a daily chart of the SP500 from October, 1963 through January 30, 1964. Kennedy as assassinated on November 22, 1963 (the big red bar down). We were already in a downtrend. That day (22nd) finished the downtrend and the next day, the market turned around and want up to a new high and continued on with the larger trend.

_______________________

Based upon these examples, it’s not logical that Donald Trump’s election has had any kind of lasting effect on the trend. After all, the rise in this fifth wave we’re currently in had already been predicted through the Elliott Wave Principle. Events do not change the trend.

But it’s sure fun to watch the pundits play!

The real deal …

‘Educational, insightful and thorough market analysis for all levels of traders. It’s Elliott Wave at its best….Peter Temple is the real deal’ —SM

Tops in your field …

You are tops in your field.  Tried to follow Elliot Wave international for years.  They were always behind the market.  After discovering you, I perceive that you are an expert in reading the waves, which puts you way ahead of the rest of your peers. And you can read the Waves like you are reading tomorrow’s financial section.  I pray you stay healthy.  —DZ

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The Market This Week

Above is the daily chart of ES (click to enlarge, as with any of my charts). The call was correct once again, of course. Last weekend, I had called for a dramatic turn later in the week and we certainly got it.

Fourth waves are ABC corrective waves. We've completed both the A wave and the B wave. We're starting down in the C wave.

Much more downside to come. This is the fourth wave of the C wave of a zigzag (the fifth and final wave of a larger topping structure).

Summary: We're in the fourth wave in ES.

After completing the larger fourth wave, we'll have one more wave to go, which could be an ending diagonal as a fifth wave. The long awaited bear market is getting closer.

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{ 114 comments… add one }
  • Alex May 21, 2017, 2:26 pm

    Yeeeeeees. Finally the IV 🙂

    • Peter Temple May 21, 2017, 3:18 pm

      🙂

      • Bill May 21, 2017, 8:26 pm

        Are you sure we do go back up to test the highs…futures looks strong

        • Bill May 21, 2017, 9:49 pm

          I meant to say we dont go back up and test highs…

          Valley,
          How does your PALS system look now. We trade options so have to be right on time and direction.. look at all angles..

          Thanks
          Bill

          • valley May 21, 2017, 10:56 pm

            Phase: bullish all week
            Distance: bullish all week
            Declination: bullish from Tuesday
            Seasonals: bearish until Wednesday
            Planets: neutral
            News: Trump on world stage, trading partners buying stuff, seems bullish.

  • valley May 21, 2017, 7:24 pm

    Thanks, Peter. Excellent summary of current market conditions. While I believe we will see a few years of higher equity prices, I can foresee a 10 percent correction sometime during the next four months.

    Iceagenow.com has interesting article on mini ice age that may be coming.

    • Bill May 23, 2017, 6:50 am

      Valley,

      Do you know what happened to john hampson..he was one of the best researched bear market guy..but its very difficult … I guess you are right you can’t fight the debt/liabilities without a rising market. So 4th wave EW is set for fail if we reach another high or we will have to redraw 3rd wave. Capital preservation time for bears i guess.

      • valley May 23, 2017, 10:47 am

        John Hampson was very good at teaching solar/lunar price correlations. His work on sunspot cycles and market performance was very easy to understand. The Styx song from the 70’s: “Domo arigato Mr. Roboto” succinctly states the bull market believers thesis. “Mr. Roboto” will deliver the goods.

  • TheG May 21, 2017, 9:55 pm

    Peter, great work! I really like to see this wave 4 coming down as well. In fact, I am fully positioned this down move since last Friday. I am looking for a gap down on tomorrow morning but future is not moving much yet. I understand the important of Elliott theory, but I feel that to be Elliott wave expert is not very easy. I view Elliott wave count is more based on price rather than timing. My focus is always more on timing rather than price. I feel that waiting for price to come is very frustrating sometime. Only timing is more predictable. Since I have discovered your website, I have been so inspired a lot by your cycle theory more than your expertise in Elliott Wave analysis. Your cycle knowledge gives me a lots of new idea. That is what I am really interesting on. Thanks for sharing your thoughts.

  • Tom May 21, 2017, 10:19 pm

    short term realtime energy stream data attached
    I think Comey testifies on Wednesday
    https://s28.postimg.org/45yu9t4el/MAY_22_TO_24_REALTIME_Energy_Stream.gif

  • John May 22, 2017, 5:22 am

    Thanks Peter,
    A good example for me how EW works.

  • Joe May 22, 2017, 5:32 am

    Peter
    You said it perfectly lol .
    I’m often humored by the morning news vs the news after the close .
    Stock x down on disappointing numbers , then after the close investors shrug
    Off stock x disappointing numbers .
    I’m conflicted with this market right here right now .
    My cycles point strongly up into June 30th and I have no counter to your wave count .
    I place a lot of faith in the 20 day occilator on the Dow , it’s still showing an oversold reading .
    I don’t know what kind of reading the trin gave on the other days sell off so no idea on the 5 day trim sum
    Nor the 10 day trin. I don’t guess the numbers on indicators.
    I’m accepting any sell off that comes yet I’m thinking the June 30 cycle high will be where I take a short
    Position .
    Andre , thanks for your post , I’ll ‘re read that .
    I’ve got about 4 hours work to do and I’ll have my model completed to may 2018.
    My gut is telling me to start following the US bond market on a much closer basis .
    If there is a shoe to drop I’d think that would be a good starting point .
    Liz h
    You made me laugh and in a good way .
    ( politics )
    Lastly , when president Kennedy was shot and killed you would assume the market did what ?
    Great post Peter

    • Alex May 22, 2017, 5:54 am

      Joe there’s a huge megaphone on IWM, doesn’t seem to have much space up until it goes down first. https://www.tradingview.com/x/EcIJ58WR/ unless we go vertical…you never know 🙂

    • rotrot May 22, 2017, 6:39 am

      http://worldcyclesinstitute.com/the-cycle-turns-on-canadian-banking/#comment-16400
      March 28, 2017, 10:58 am
      “I truly admire the perspective on the purposes and proper use of money. I deplore the sanctioned violence by some of its adherents. I do have to say though, considering what we have been learning of late about the depth of depravity of what appears to be quite a large number of our political leaders, not only in the US but across the Western world, their disgust is entirely understandable. I doubt few Americans are aware of the depths of outright wickedness being perpetrated by their leaders. So sad. There is now in the rumour mill, which obviously I cannot repeat here, some absolutely shocking news that explains the mealy-mouth conduct of FBI leadership the last several months in the face of spectacularly criminal conduct. How can some of these people appear in public and say the things they do with a straight face is mind-numbing. It betrays in my view, what is beyond contempt for the observing public. It must be the fluoride in the water…!”

      http://worldcyclesinstitute.com/elliott-wave-taking-apart-the-chart/#comment-18159
      May 17, 2017, 8:41 pm
      “I think now that the rules are clear I hope Verne will post again?”

    • Peter Temple May 24, 2017, 7:47 pm

      Joe,
      I added the JFK assassination chart to the blog post. The last one on the bottom.

  • andré May 22, 2017, 10:22 am

    See now 5/24 is also a very strong date. Could be the market will be consolidate into that date. But Wednesday something happen.

    Cheers,
    André

  • rotrot May 22, 2017, 2:07 pm

    May 16, 2017, SPX low 2,396.05…need to touch that level to close the gap down on May 17, 2017…

    • rotrot May 23, 2017, 7:33 am

      gap filled…

  • rotrot May 22, 2017, 3:04 pm

    http://worldcyclesinstitute.com/elliott-wave-taking-apart-the-chart/#comment-18095
    Andy Pancholi FREE video update
    “Week Ending 19th May 2017…S&P 500 together with a whole series of global markets are going to change trend”
    http://tinyurl.com/ksoewjm

    Chris Kimble FREE email update
    “The US Dollar…has shown strength versus the Euro…since 2008…But that market dynamic is at a crossroads… and may be nearing a turning point…A currency “shift” here would have short- to intermediate-term consequences for various assets across investors portfolios….Could these reversal patterns mark a turning point in the global markets for traders?”
    http://tinyurl.com/ks5tf7n

  • valley May 22, 2017, 3:20 pm

    2 1/2 feet of snow in Nye, Montana. IceAgeNow.com. The “cooling cycle” seems to be here.

  • valley May 22, 2017, 10:08 pm

    I am long tech stocks this week. Guess we will see a nice rally into Friday’s close. Based upon PALS being bullish (next week is when I guess the market will sell off).

  • Alex May 23, 2017, 2:12 am

    What kind of EW is this supposed to be?

  • Ed May 23, 2017, 4:12 am

    Peter G,

    Did yesterday’s a/d line take away the “slight divergence” on your Trade Station data? So the only way I see ever getting a divergence or at least a meaningful one is for the S&P to sell off meaningfully and the market rally much like Peter T (our host) sees in his EW count.

    • Peter G May 23, 2017, 10:39 am

      It sure did, Ed. Every time the a-d line makes a new all-time high, the implication is that a final market high lies in the future, and only after the DJIA and/or S&P makes a new ATH without confirmation from the daily a-d. Mind you, such a circumstance does not guarantee you are at an important high, it just seems to be a necessary concomitant in order to even suggest the possibility of a final high…

  • whitemare May 23, 2017, 11:21 am

    Could the divergence stretch into September for the a-d line? If we turn down here for a wave 4 without divergence and make new highs in Sept with lower a-d than now, would that work?

    • rotrot May 23, 2017, 11:27 am

      in 2007, the NYAD high occurred in May…the SPX high occurred in October…four plus months…

      • rotrot May 25, 2017, 2:14 pm

        NYAD +96.00…

  • valley May 23, 2017, 12:02 pm

    Added another call option Tuesday. Wednesday to Friday should be bullish based upon declination, phase, distance, and seasonals. Next week should be bearish.

    • valley May 23, 2017, 1:37 pm

      Sold out. Tiny gain. Will look for weakness next few weeks to trade to long side. Have low price Friday expiration call in case market decides to move higher.

      • valley May 25, 2017, 12:23 pm

        Glad I kept the call as price has moved nicely higher.

  • Alex May 23, 2017, 2:47 pm

    Looks ready to drop tomorrow. Still can’t reconcile what wave from hell is this one 🙂

    • Peter Temple May 23, 2017, 5:37 pm

      It’s a never ending zigzag, capped off by an ending diagonal (ES). A present from Satan.
      🙂

      • Alex May 24, 2017, 1:51 am

        Lol Peter you can tell Satan (GS) that it’s really appreciated 😀 a market too easy to trade would surely be boring *-*’

  • valley May 23, 2017, 5:19 pm

    Market will probably move sideways into weekend, sell off “bigly” next week, and then rally into early June.

  • TheG May 23, 2017, 7:52 pm

    I am positioning this down trend since 5/15, tomorrow it should be repeating the 5/16 drop. This Monday I was expecting an inversion, but it ended up a rally up. Today it hits closed to a double top, but it didn’t break through 5/16 high. My down trend ended date is still 5/30/17 for this move.

  • andré May 23, 2017, 11:06 pm

    5/25 is 179 squared from 1929; should do something. Also 1440 high.

    • John May 24, 2017, 4:03 am

      May 24/25 is still my focus for a turn could be a sudden drop like 17/18 or a drop into May 29/31..let ‘s rock and roll.

  • Alex May 24, 2017, 1:53 am

    Just a “news timing” note. The Comey’s outing is not today but sometimes after ThanksGiving (if it’s still alive by then). Today we have our lord and savior Queen Witch’s Minutes at 2pm 😉

    • Tom May 24, 2017, 5:56 am

      FED also speaks @ 2:00pm today

  • DWL May 24, 2017, 6:44 am

    Wow guys. Plunge Protection Team going mainstream. Explains to the public why the markets are so elevated – they can’t go down substantially due to the backstop! Just buy the dip, guys!?

    Sure seems like setting up the BTFDers to be the bag holders. Only question is when?

    https://twitter.com/CNBCFastMoney/status/867140373306458112

    https://www.archives.gov/federal-register/codification/executive-order/12631.html

    • Jody May 24, 2017, 9:50 am

      I seen the same thing yesterday..

      My question though is if they were put in place in 1988..

      Where were they in the crash of 08?

      • Jody May 24, 2017, 9:52 am

        Peter, Have you ever heard of the PPT?

        • Peter Temple May 24, 2017, 9:58 am

          Yes, what effect it will have in a plunge is highly questionable. Doesn’t affect my work.

      • DWL May 24, 2017, 9:53 am

        Ha…my thoughts exactly. Very good question. A friend of mine say he knew someone who works at EIA that told him a bit about it and was offered a job there lower level

      • Peter Temple May 24, 2017, 12:27 pm

        Exactly, but my point comes from the fact that all the major indices are moving in tandem and when this thing comes down, the entire world is going to come down. It doesn’t matter what the FED does. They’re too small.

  • Tom May 24, 2017, 12:11 pm

    That drop @ 2:00 today very muted (PPT action?) but we saw it on the stream two days in advance. May 24 to 26 realtime attached below
    https://s29.postimg.org/ap6fu36cn/May_24_to_26_realtime_short_term_energy_chart.gif

    • Qwertyqwer26 May 24, 2017, 12:27 pm

      Might drop a little later. I doubt an effective PPT exists otherwise there will never be another market correction or crash. I’d prefer if a PPT that was viable existed as I’d put all my funds long and be able to retire early.

  • Jody May 24, 2017, 1:27 pm

    The PPT was quiet until yesterday.

    So I wonder why now is it coming out?

    And like I mentioned earlier, if they were formed in 1988 – where were they during DOT.COM drop and Financial Crisis?

    Maybe they wanted it out there so when this market does blow up, people that are long will hang in there under false hope.

    When it does start to happen I believe it will start overnight. The drop will be so devastating that folks will freeze in hopes it will bounce like it always does – but it wont for awhile and just before it does come back for W(2) everyone will sell as smart money is buying..

    Just my take.. SPX 1750 I believe will be the target for W(1) when it does finally go.

  • Alex May 24, 2017, 1:48 pm

    please someone tell the market that wave IV was supposed to move the other way…

  • Peter G May 24, 2017, 1:51 pm

    OK, this is admittedly one man’s opinion, but I would ask any of you who live near an ocean to visit it on one of its ornery days, perhaps a hurricane or, worse yet, a typhoon. Ask yourself if there is anything man (collectively) could do to control the beast. It would be quite obvious there is not. So it is with financial markets as large as ours. Perhaps they can be very slightly manipulated by outside influence for a very short period of time. Markets are strictly psychology and when the real thing comes along, the real “crash,” nothing on God’s green earth will be able to quell its passion. PPT to me is the excuse (complaint) by a bear when the market fails to crash or follow through with a continued and accelerated decline once one has appeared to begin, especially after a continued decline or crash was predicted by the complainer. “Well, it would have crashed if the PPT hadn’t stepped in!” Balderdash!

  • Alex May 24, 2017, 3:11 pm

    The “psychology argument” is very seductive, but it’s like an argument on human productivity. These are all bots. Programmed by humans according to human logic, not emotions. Most of the times programmed exactly to eliminate emotions. Bots not influenced by planets, as far as I know (not that I exclude it, the sea is not human last time I checked). What I mean is…don’t rely too much on a sudden global emotional awakening or something…better rely on an hacker attack on the CBOE or some electricity grid for how it works right now…

    Human retail traders are 1-2% of ES liquidity, you (generic 🙂 keep ignoring this data. It’s huge. No matter what happens emotionally to that 1-2%, it’s a 1-2%. The remaining HFTs machine, institutions and HF algos, let alone money printed out of nothing from FED and other CBs can’t possibly emotionally behave the same way, or I’ll start looking at my PC with suspicion right now.

    • Alex May 24, 2017, 3:12 pm

      already started (better safe than sorry)

      • Alex May 24, 2017, 3:16 pm

        the PC is looking back, I quietly exited my home, running right now…

    • Peter G May 24, 2017, 5:03 pm

      Let’s wait and see if your robots will be as unyielding to psychological pressure as you think, after the first 25…30…40…50% decline begins. Algorithms will easily ignore psychology, they are admittedly not subject to it, but at some point the programmer takes over, unable to stand the pressure of losses and the algorithms are overruled or forgotten (“Just this once!”) and psychology becomes the final arbiter once again…now if you want to argue that the bots take over and refuse to be overruled, you’re talking a different ball game. We may be closer to that than we all think, but we certainly are not there yet! Until then, I argue that psychology, whose patterns were ingeniously unraveled by Elliott, and cycles which are arguably caused/influenced by astronomical patterns will continue to reward those who are able to decode them…

      I add as an epilogue, Alex, that I am amazed you continue to follow this group if you truly believe that 98-99% of investment decisions are ruled by bot algorithms, unless you argue the algorithms start to present independent patterns of their own 🙂

      • Alex May 24, 2017, 5:43 pm

        My point is, we usually get to those breaking points where the bot would get shut down (I agree) because there are human emotions in play. Not easy to get to that -20%, -30% now imho.

        You are human, you don’t buy the dip all-in after a 50 handles drop causing these violent V shaped moves we’re seeing, systematically recovering every overnight flush in 24 hours. You are human, you don’t trade statistically, every trade is important, you care about a single trade, you think about it, you don’t flood the market with fast math-based orders, you don’t buy the dip if a nuclear bomb is flying over your house, a terrorist explodes in your garden or a complete nutjob with the IQ of a banana and an FBI investigation over his head wins the elections (Any resemblance to real events and/or to real persons, living or soon to be impeached, is purely coincidental).

        Tell me if you think that an auction involving 100 humans and one involving 1-2 humans and 98 bots would behave the same and have the same outcome 🙂 .

        NB: I don’t “believe it”, the 1-2% liquidity is an hard fact based on research by the FED after the flash crash. If that fact doesn’t suit our “mass human emotions” narrative let’s feel free to change it, we’re in the Trump era, I’m sure we can do that

        I’m interested in EW and believe in cycles, I’m just pointing out that any sort of influence the planets can have now may not be the same they once were because the forces at play in the market are not the same (bot vs humans / finite capital vs infinite electronic money printed out of air / semi-free market vs state regulated/run market / globalization of policies with Swiss CB owning trillions in US shares / 1% of the population owning 50% of the resources / market needing millions of people money vs 6-7 HF algos battling each other and accounting for over 30% of liquidity…).

        Seems a pretty different ball game to me. All those things are very recent changes in paradigm, big(ly) ones. Maybe we should take them into account. Maybe the planets influence everything including rocks (why not, really?). But saying that EW right now works because of Paul and Jenna cute retail traders’ emotions putting their hard earned money in the market is simply factually wrong, no such thing exists anymore.

        Btw, what wave is this lol 😀 (inverted IV from hell, the bots are misbehaving…

  • Ed May 24, 2017, 5:40 pm

    Peter G,

    Do you have an opinion as to where we are? Peter T, our host, believes we are looking a Wave 4 of some degree prior to a final Wave 5 up to finish off this Bull Market. I agree with him. Your A/D line would place evidence that Peter T is right.

    Then there is record or near record bullish sentiment, consumer confidence that always exist at a market peak by definition. Low volume and nary a bear to be found. My only problem with the A/D line is the influence of the ETF’s and Indexing which pushes stocks not deserving of new highs to new highs regardless of the fundamentals (no price discovery). Are we hoodwinked by what has been a reliable indicator?

    You have obviously thought about this. Bill Fleckenstein says, “bull markets just exhaust themselves”. Is there anything in particular that you are looking at that offers you perspective? I have admitted to myself that I do not know but thought I did.

  • Joe May 24, 2017, 7:14 pm

    Peter g
    As someone who not only lives 4 miles from the Pacific ocean
    And has made a living for the past 37 years in the Bering sea as well
    As the Pacific ocean I will say you cannot stop mother nature period .
    The addage is, mother nature does not ask for your respect , she demands it !
    You put it perfectly when you said the nonsense about the ppt is from
    A bears point of view since the market failed to drop .
    Humans have a hard time accepting when they are wrong so the blame game
    And denial go hand in hand .
    It’s all trumps fault or George Bush or Hoover etc….
    This cycle runs into June 30th so a move to new highs seems like a given to me .
    No doubt there will be more denial going forward since there is still a month to go .
    The June 30 date should be significant in some degree , Andre noted an early July date
    On the previous thread . I have June 30 based on 2 completely different methods .
    The Oct cycle is another peak yet the June 30 date by one method is the high of the year .
    I consider it as important but to be honest I doubt June 30 is the last high of this bull market
    That all said from June 30 to mid Sept is where a bearish window lays .
    Meaning , June 30 high and mid Sept low .
    I need more data to refine that but a bearish bias will be my mantra for July Aug and September .
    Should be an interesting summer 🙂
    Joe

  • Joe May 24, 2017, 7:41 pm

    Alex
    You make several valid points
    I’ll point out the obvious discrepancy
    Program trading or algorithms type trading
    Are based on human biased research .
    Those errors are built into the system .
    Statistics etc…..
    No such thing as a 100% statistic unless you wish to debate
    That for example , everyone that has ever drank water has eventually died
    Or the tobacco industry sells more cigarettes today then it did 100 years ago
    And people now live longer on average than they did 100 Yeats ago so you could
    Say based on statistics that smoking actually increases your life expectancy.
    You can make a statistic turn out any way you wish .
    At the end of the day history repeats in some form because we humans
    Tend to do the same things over and over .
    Joe

    • Alex May 25, 2017, 1:51 am

      Yes Joe, I agree. With statistics I meant that and algo has a very different approach to taking a trade, it behaves on the premise of the house in a casino: no matter how a single trade goes, the system wins over a statistically relevant serie of trades (thousands at a minumum…). It doesn’t get emotionally attached to a single trade like we do. We should trade like that too (just read “Trading in the zone” by Mark Douglas, a little gem on trading psychology imho), it’s the only way to have an edge on the long run really, but for a human being is almost impossible and you have to overcome your whole psychology to do that, for an algo it’s impossible to do the opposite.

      Take what’s happening right now. If you’re short like I am now, this is not a normal loss, this is a devastating one. Is it on a math / point level? No. But there will be no trace in a bot of all the considerations and the emotional pain I’m going trough right now.

      We just trade differently. If you’re analyzing a market where millions on me are trading right now you’ll have an outcome. If there’s one me every 99 algos, well, the outcome won’t be the same, it can’t be.

      This morning you have (according to market participants composition, the real, factual one), 1 human bull that’s celebrating naked in the streets, 1 human bear thinking about killing himself (don’t worry, not my case, I have the gift of infinite rage keeping me afloat…), and 98 bots that don’t give a flying f*.

      They won’t disconnect, unplug themselves or change job if they lose a trade. It’s just an insignificant blip in a statistical serie for them, for me, it’s my whole life => We’ll probably have a different outcome than a market with, say, 50 bull celebrating naked in the streets and 50 bear thinking about killing themselves.

      With that said, I repeat, the planets can influence the microchips for all we know. I was criticizing the “collective human emotions” argument, because it’s based in sheer ignorance (in the Latin sense of ignoring-not knowing) of market composition, not the planetary effect / cyclical one, the climate isn’t changing because humans are sad, quite the other way around ;).

      Peter says this market is extreme / nuts. Maybe part of that is cause by the above argument (maybe not who knows 🙂

  • Peter Temple May 24, 2017, 7:48 pm

    Joe asked about the JFK Assassination chart and so I added it to the blog post.

  • Joe May 24, 2017, 7:49 pm

    I noted that for a good reason Peter .
    It fit with your theme
    Events do not change the trend 🙂

    • Peter Temple May 24, 2017, 8:08 pm

      Yeah, it was a good idea. I was trying to think of major events and that’s a good one.

  • rotrot May 24, 2017, 8:22 pm

    back to the drawing board…ES new all time high was just registered…2411.25…

    • Peter Temple May 24, 2017, 8:28 pm

      It isn’t much of a change for me. The original target for ES was 2410-15, if you remember. It just extends the third wave by a few points. Always have to pay attention to Mr. Fibonacci is the lesson.

    • Dimitri May 25, 2017, 8:09 am

      Any news from Mahendra ?

      • Mike Caruana May 25, 2017, 9:01 am

        We may (hopefully) have a top forming in ES/SPX.
        My question:
        When we pullback, is another (and final) top around 2430 a possibility, or is that ruled out?

        • Peter Temple May 25, 2017, 9:02 am

          It’s an ending diagonal (if I’m correct) so it can actually do whatever it likes. But my measurement puts a top here.

        • Peter Temple May 25, 2017, 9:11 am

          Boy, tops don’t get much more brutal than this …

          • Peter Temple May 25, 2017, 9:17 am

            I like what currencies are doing … it’s amazing that ES/SPX keep on going. We have to be very close to a top. With an ending diagonal, I have no way of telling.

        • Peter Temple May 25, 2017, 9:42 am

          A typical ED ending. No warning. Just a sheer drop.

        • Peter Temple May 25, 2017, 9:46 am

          I pulled on a blindfold and got short ES at 2414.

          • Dimitri May 25, 2017, 10:20 am

            Peter,
            I would take off my hat if I had one -:)

          • Peter Temple May 25, 2017, 10:32 am

            Not out of the woods yet. 🙂

          • Peter Temple May 25, 2017, 10:33 am

            Back out. This monster is not quite done.

          • Dimitri May 25, 2017, 11:04 am

            Have you seen the bitcoin today ?
            That is the Monster

          • Dimitri May 25, 2017, 11:06 am

            That is the kind of blow-off.
            There is no way to enter

  • Bill May 24, 2017, 9:03 pm

    Hi Peter,

    Would you consider this as fail or just say that 3rd wave is still not complete.How can we justify after having almost 50 points drop last week and saying we are in 4th wave, then going back and saying no we are in 3rd wave. I am just trying to understand do we have to be this flexible or this is just little abnormal situation.

    Thanks and appreciate your inputs, want to see how you handle these situations

    Bill

    • Peter Temple May 24, 2017, 9:31 pm

      Bill,
      Back a couple of weeks ago, my target for the top of wave 3 was 2410 to 2415. That was a fibonacci measurement. The lesson is to pay attention to fibonacci measurements. We eventually get there (once again proven out). This market is a really extreme example (particularly in a corrective market, which we’ve never seen before at the top of a third wave), so this is new territory, as I’ve said many, many times). We appear to have traced out an ending diagonal as the third pattern in a combination (to be confirmed).

      So in ES, we’ve ended up 5-6 points higher than the previous high. As an ES trader, you know that’s nothing. My mistake (which I likely won’t repeat again) is to not pay as much attention to Mr. Fibonacci as I should have.

      Now, I could be like Elliott Wave International and tell you we’re either going up or going down with each call I give – they do that all the time. I choose not to and I’ve been very vocal about that. If I’m wrong by a few points every once in a very long while (I analyze 10 assets a night and I’m seldom wrong), I’ll take the lumps. Would you rather trade from analysis when someone tells you we’re either going up or down, or would you like analysis that’s wrong less than 5% of the time and you lose 5 points when it is?). At least you know when you’re wrong and how to trade it. Your choice. If you want the former, don’t hang around here. 🙂

      Now, I’m not slamming your question, just explaining the background. As I’ve explained over and over, this is a situation nobody has ever seen before: a corrective ending pattern, a 500 year top, and no volume. It’s just plain wacko. If you trade it, it helps to be out-of-your-mind. I can’t ever remember a market like this.

      Hope this helps.

  • Joe May 25, 2017, 4:55 am

    Alex
    I’m in the Santa Barbara channel off the California coast and phone
    Reception in and out . I have to take a longer point of view when I’m working
    Because of my work . I have noted on here a few times I am in the early process
    Of building an automated trading system . My reasoning for this is two fold .
    One is to understand how these algorithm/automated systems work and secondly
    It is about putting everything I look at into one organized and very defined rule based
    System .
    What I do though today is I quantify where the market stands based on everything
    This includes price time Elliott wave and indicators . In order for me to take a longer term
    Trade I sell myself on where the market sits today . If I can’t make a solid bullish or bearish case
    I do not trade .it doesn’t matter if you use a 14 day rsi or bollinger bands or the average true range
    Or a pivot system . What matters is that you use a method that keeps you in check .
    You have heard this said yet if not , trade by what you see not what you think .
    If I can’t make a solid case based on my indicators then I wait for my indicators to line up .
    The best set up to sell or sell short is overbought readings on an occilator and an upper extreme
    In the 5 day and 10 day advance decline line . I do not use the cumulative advance decline line .
    On the buy side I look for lower extremes in the advance decline line and while the 14 day rsi does not always
    Go below 30 if it does and it goes below 27 I exit bearish trades and look for a bounce at a minimum .
    In other words I trade extremes in my indicators .
    Now if I configure all that into an automated system , my own errors in trading will be built into the system
    Algorithmic trading system are no different . If you want to beat the algos then you should study them.
    Yet Elliott wave theory should also be understood so you understand where the market stands wave wise .

    Peter
    Hurricane Katrina was an event as well , it happened right before a short term high in the price of oil .
    Another odd event was in March of 2000 ,it was the IPO of Palm .
    Palm was a spin off from 3com I believe and the day of the Palm ipo , Palm closed with a market value higher
    Then it’s parent company . I remember that day very well .
    One thing though I could say , the event may not change the trend yet it does seem that the event comes
    Closer to the end of the present trend .
    Donald trump puts out a best seller at the top and is in bankruptcy court at the bottom
    His winning the white house I view as a best seller , what is next doesn’t sound like much fun
    Maybe they impeach him near the low of some degree on the downside .????

  • Joe May 25, 2017, 5:19 am

    Last thought on trump
    Maybe they impeach him at the top ?
    Not going to claim that but who knows

  • Charles May 25, 2017, 7:10 am

    Peter, does the extended count to 2412 in wave 3 make wave 4 steeper?

    • Peter Temple May 25, 2017, 7:17 am

      Hi Charles,
      No. But the time it’s taken to get to this target shows me how weak this market is.

  • Charles May 25, 2017, 8:22 am

    Thanks for all your hard work Peter.

  • Qwertyqwer26 May 25, 2017, 8:46 am

    Market may be forming a sort of rounded top and then the final part will be a rapid drop to the low. Under that case we could hang around the top for a while and this should help extend wave 4 for the 10 weeks expected.

  • Alex May 25, 2017, 11:17 am

    The planets are on crack…

    • Alex May 25, 2017, 11:23 am

      not that I blame them…they’re probably looking down at us and thinking “cash me ousside”…

  • Charles May 25, 2017, 11:34 am

    Finally, Finally a top to wave 3 @ES 2416.50!
    I hope.

    • Alex May 25, 2017, 12:27 pm

      promise me Charles PROOOOMISE MEEEEEE

  • valley May 25, 2017, 3:09 pm

    Based upon PALS ideal time to short is going to be next Tuesday at the open.
    (phase post New, distance, post perigee, declination post North, seasonals May- June intramonth transition is weak). Still a Rooster year with incipient tech bubble that has just begun so won’t be shorting much or for much duration.

    • valley May 25, 2017, 3:12 pm

      The max weakness is Friday’s close or Tuesday’s open until 6/11/19. I will probably buy a small short position on Tuesday at open.

      • DWL May 25, 2017, 6:39 pm

        Valley, have you ever looked at the midpoint of a Chinese (lunar) calendar year? Interesting turn points.

        http://imgur.com/a/Tr4jB

        • valley May 26, 2017, 11:14 am

          Fascinating, thanks DWL!

  • andré May 26, 2017, 10:53 pm

    12/28/15 was a significant torque high. Add 17 months and we have 5/28/17. Some major cycles have turned this week. That the market doesn’t react instantly does not mean the cycles are wrong. Short term inversions can delay events but only for a short while. 5/28-29 is yet another significant time frame. 6/23 will be a significant low and my cycles tell me that as of Monday we will be on route for 6/23.

    So basically the market will turn 5/29. As US markets are closed on Monday we will see a high on Tuesday. 6/1 is another strong day. After this date things will speed up. 6/2 will be a low.

    I have one cycle that gives a high 6/15 and then it’s down into august.
    5/25 was a very strong day. Add a 4 day inversion window and w have 5/29.

    I know; the market takes longer than expected to make the turn. But time is running out. Just a matter of days now.

    Think the ultimate low will come 7/7-ish. That would be 100 months from 2009 and 85 years from 1932. And a Bayer rule 17.

    Anyway; next week looks weak. Volatility will increase during the week. 5/29 mars opposite Saturn. 5/30 is Bayer rule 36. Rules 17 and 36 are the strongest we have.

    Will give some background over the weekend.

    • Valley May 27, 2017, 10:08 am

      Thanks, Andre! Hadn’t considered Mars opposite Saturn, and will look at the Bayer rules.

  • Peter Temple May 27, 2017, 11:24 am

    My site is loading incredibly slowly this morning. Something going on with hosting, I think. Trying to find out why (if you’re experiencing problems).

    • Peter Temple May 27, 2017, 11:59 am

      It is fixed now. The weird stuff I have to go through …

  • Peter Temple May 27, 2017, 3:59 pm

I welcome questions or input about Elliott Wave, cycles analysis, or astrological input relating to any market. However, due to a heavy schedule, I may not have the time to answer comments.

I reserve the right to remove any comment that is deemed negative, disparages the Principle, is otherwise not helpful to blog members, or is off-topic.

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