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The 41 Month Stock Market Cycle

Special Market Update for Thursday, December 8

NOTE: Since I have the ending diagonal posted and I’ve made changes to my call on it, here’s a video explaining it all. This pertains primarily to ES (and secondarily to SPX)

Market Update GENERAL ES December 8,2016

setquality100px Make sure you zoom the video to full size with frame expander (arrows) in the bottom right hand corner and also set the quality to as high as your web connection allows. This is an HD quality video so the best viewing is at that level.

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Original Post:
Back to basics. Here’s an article published way back in 1945 talking about how the stock market (through humans, of course), is affected by the Sun. There are obvious references to climate and the fact that humans have virtually no effect on it. But more importantly, there’s a discussion of how the regularity of stock market cycles are caused by the changing mood of the herd. We’ve known this for a long time, the “we” being a very small group of enlightened individuals—very small.

Other than for that small group, nobody reads history, believes in science, or can imagine anything more powerful than a human being. (big “sigh” here)

Atmospheric Electricity and the 41-Month Rhythm

by Ellsworth Huntington, from “Cycles, Rhythms, and Periodicities” (1945)

220px-ellsworth_huntington

Ellsworth Huntington

We are now ready to inquire into possible causes of this persistent and widespread cycle of 41 months. Is it due to the weather? According to Brunt’s analysis, a cycle of this length can be detected in atmospheric pressure at Edinburgh and in temperature at Edinburgh, Stockholm, London, Berlin, Paris, and Vienna, but it is everywhere weak. It is not evident in pressure at Paris or in rainfall at Edinburgh, London, Milan, or Padua. At London the average difference between the highest and lowest temperatures of the cycle during a century was only 0.4°F. In the plotted curves of temperature the cycle is so faint that the ordinary eye cannot detect it.

A cycle of 44 months has been found by C. E. P. Brooks in Nile floods. Clayton finds one of 45 months in atmospheric pressure at nine widely distributed equatorial stations. Both of these periods, however, are too long to represent the 41-month cycle. Moreover, neither they nor the European cycles found by Brunt and Beveridge seem to be anywhere nearly strong enough to produce the persistent development of the 41 month cycle seen in business. Therefore it seems impossible to believe that the weather in its ordinary forms can explain the 41 month cycle as a whole. A generally accepted conclusion as to this whole matter is well summed up by Clayton: “When one looks at the regularity of certain natural cycles such . . . as [are] shown by certain insects and fish [as will appear in a later chapter], it seems impossible that such regularity could be brought about by the irregular changes which are found in the weather.” He also says that, “if such cycles are associated with solar cycles, it seems more probable that the living objects are influenced directly by changes in solar intensity.” We would add that the effect is probably produced through changes in the earth’s atmosphere, which are induced by the sun, but are not of the kinds most readily evident in the weather.

When we turn to the sun, a most interesting fact appears. Sterne of the Harvard College Observatory has determined that the solar constant, as measured by the Smithsonian Institution, fluctuates in a compound rhythm, one part of which is 40.8 months in length. According to Sterne, there is only one chance in 250,000 that the rhythm is accidental. Dewey, by fitting a 41 month rigid cycle to Sterne’s data, shows how far the ideal and the actual cycles agree. The agreement is far from perfect, but considerable similarity is evident. This suggests a possible solar cause of the 41~month cycle. Solar heat is not necessarily the basis of this, for the solar constant, very imperfectly to be sure, indicates many kinds of solar activity, including ultra-violet light, infra-red rays, and electrical waves. Thus the 41-month cycle may be derived from the sun, but may be due to other factors much more than to temperature, rainfall, atmospheric pressure, and ordinary weather.

Before the present author knew of Sterne’s work, he had prepared the lower curve of Figure 61 (below).

chart61

This shows a significant resemblance to those of the solar constant, on the one hand, and the stock market, on the other. It was prepared in order to test the hypothesis that atmospheric electricity, influenced presumably by the sun, may affect the human reactions that govern fluctuations in the stock market, in iron production, and in other business activities. Tests of the electrical data showed that the condition most likely to be effective was apparently the variability of the electrical current (potential gradient) between the air and the earth. The lower curve of Figure 61 shows the average of this at Eskdalemuir in southern Scotland and Kew near London. In spite of minor discrepancies the electrical curve clearly fluctuates in a cycle of 41 months and its maxima keep coming back to the expected dates.

Perhaps the most remarkable thing about Figure 61 is the time relations which it indicates. Although the two curves were prepared entirely independently, their dating coincides quite closely. The regular sequence is for a maximum of the solar constant to be accompanied or more often immediately followed, by a maximum in the variability of atmospheric electricity. At almost this same time the solar constant itself drops off quite suddenly. Thus it looks as if a sharp decline in the solar constant were associated with great variability in the electrical condition of the earth’s atmosphere.

The maxima of electrical variability in turn are generally soon followed by a change from a bull market to a bear market on the stock exchange. This is indicated by the asterisks, which in Figure 61, indicate turning points in the rate of change in the Dow-Jones averages, except at the end of 1919, when World War I had disrupted matters and the solar constant itself had gone off the 41 month cycle. Each maximum in the rate of change in the stock market falls within 3 to 12 months after a maximum in electrical variability. This is about the lag that would be expected between a physical cause of this sort and its effect on business.

dow3-5yearsrev

Above is a monthly chart of the DOW from about 1975 through 2016. The green arrows mark major turns closes to the 3.5 year mark, represented by the vertical white lines.

The jump from electrical conditions in Great Britain to business affairs in New York seems big, but scarcity of both records and funds for further research prevents a closer tie-up. Hence our conclusions are valid only on the assumption that the electrical condition of the atmosphere varies in essentially the same way on both sides of the Atlantic Ocean. There is considerable ground for this assumption. The earth’s electrical field is known to act as a unit. Auroras, for example, are evidence of peculiar electrical conditions in the far outer atmosphere. They become manifest all over the northern hemisphere at the same time. Stetson and others have shown that radio transmission is another phase of atmospheric electricity, which is closely dependent upon variations in solar radiation. Moreover, the probability that the same solar cycle dominates the atmosphere over wide areas is increased by the fact that when we average the observations at two observatories 300 miles apart, we find that the 41 month cycle is much clearer than when one observatory is taken alone. Then, too, the relationship between the 41 month cycle in the solar constant and in the potential gradient gives reason to think that we are dealing with a solar cause, which acts in essential1y the same way over vast areas. Hence, in spite of scanty knowledge, there seems to be a sound basis for the working hypothesis that electrical variations in the atmosphere of the sun induce corresponding variations in the atmosphere of the earth, and that these in turn are associated with psychological rhythms in human beings. Such close and reasonable relationships as we have seen between the solar constant, atmospheric electricity, and human psychology are not likely to occur by chance.

The nature of the physiological effect of atmospheric electricity, if such there be, has not yet been investigated experimentally, but it seems to pertain primarily to the nerves. When electrical variability increases, people apparently feel relatively buoyant and optimistic. They are therefore ready to risk their money on stocks and in other ways, with relatively little attention to unfavorable signs in business and politics. At the same time consumers, merchants, manufacturers, and others feel a similar stimulus. Therefore they increase the size of their orders, open new lines of activity, and make plans for enlarging their business. Thus the ascending phase of a cycle is generated.

The impetus thus received produces its full result quickly in some instances and more slowly in others. If it is simply a question of investing a few spare dollars, the response to the environmental stimulus may take place with little delay. The effect of this on stock prices, however, is far from instantaneous and may not be fully felt for months. How quickly it will be evident depends partly on the strength of the stimulus, partly on the previous trend of business, partly on the well-recognized conditions of the credit cycle, and partly on many other factors. Hence the amount of lag and the closeness with which events follow the solar cycle will inevitably vary greatly. Still greater variations will occur in business in general and in prices as a whole. For example, increased optimism among retail dealers in stockings, neckties, and similar articles will show its main effect on manufacturing some time after the maximum effect has been produced in the stock market. The lag in such goods as building materials will be much longer. The reverse of all this seems to occur when atmospheric electricity becomes less variable with an apparent decrease in its stimulating effect.

The final test of this electrical hypothesis of mental activity must await prolonged experiments. Meanwhile its probability is increased by recent studies of electric currents within living organisms. The measurement of such currents between one part of the body and another has already led to significant results. As Burr puts it, “wherever there is life there is electricity.” Stated more specifically, this means that every “animal possesses a true [electrical] field …. Changes in biologic activity [of the kind associated with] growth and development produce just as significant variations in the electrical pattern as do heart and brain waves, … ovulation, [and] cancer. It is inconceivable that such a widespread phenomenon should be a by-product of life, for it is so intimately bound up with fundamental biological processes that it disappears at death.” If each organism is thus the center or source of an electromagnetic field, it seems inevitable that alterations in the general field of the surrounding atmosphere must influence the field of the individual organism. Thus there seems to be a definite mechanism whereby atmospheric electricity may influence mental activity.

Here, for the present, we must leave the matter. We have seen that cycles of many lengths and kinds are widely prevalent. Some, such as the 35-year cycle of Bruckner, are primarily evident in the weather and in its effect on crops. Their influence ramifies outward, however, into public relief work, politics, rebellion, migration, and many other matters which are thus influenced. Other cycles, such as those of 7 years and 8 years, present fruitful fields of study but are beyond our present line of investigation. The 41 month cycle is so widespread and clear in literally hundreds of types of business that we can scarcely pass it by. In searching for causes we find this cycle only vaguely in ordinary weather. On the other hand, it is evident in the variability of atmospheric electricity and in the solar constant. Thus we are led to the working hypothesis that variations in the sun influence the electrical conditions of the earth’s atmosphere. These in turn apparently exert a psychological effect upon man. Or perhaps some more pervasive cause influences the whole solar system and shows its presence by means of changes in the sun, in the earth’s atmosphere, and in human reactions.

New to Cycles?

You can read “Cycles” (by Edward Dewey and Og Mandino) online here. If you haven’t read it, it will be well worth your time to do so.

Ending Diagonals

We continue to work our way through the ending diagonal.

Ending diagonals suggest a market that is extremely weak and barely able to trace out a new high. Although it falls under the banner of a motive wave, it has properties more aligned with corrective waves. Ralph Elliott described an ending diagonal as occupying the fifth wave position of a motive wave when the preceding move has gone “too far too fast.” He maintained that it indicates “exhaustion of the larger movement.”

Projection for a Top

Based on the ending diagonal we’re currently in (which is the pattern playing out in all the major US indices), I’m projecting a final top to our five hundred year set of Supercycle waves at the end of the 2016 year or into early January. I’m leaning towards the end of December or early January.

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Here’s the latest daily chart of ES (emini futures):es-12-16-daily-12_10_2015-12_2_2016
The “top end” for the 3rd wave is 2237 (where wave 1=3). In other words, the red third wave cannot exceed this level. The third wave cannot be longer than the first wave (a hard rule in Elliottwave). I’m expecting a more likely turn at about 2222-4.

Wave 3 also has to reach a new high (higher than red wave 1). We’ve now achieved that. The previous wave 1 high is 2184, and it’s been exceeded. You should begin to look for a top to wave 3.

However, right now, I put us in wave 4 of the C wave of the third wave of the ending diagonal. We still need to complete red wave 3.

Summary: We are completing the third wave of the ending diagonal before zigzagging to the top of the largest bubble in history. The long awaited bear market is getting closer.

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Sign up for: The Chart Show
Thursday, December 8 at 2:00 pm EST (US market time)

chart-showThe Chart Show is a one hour webinar in which Peter Temple provides the Elliott Wave analysis in real time for the US market, gold, silver, oil, and major USD currency pairs.

Get caught up on the market from an Elliott Wave perspective. You’ll also get Andy Pancholi turn dates for the balance of the current month. There’ll be a Q&A session during and at the end of the webinar and the possibility (depending on time) of taking requests.

All registrants will receive the video playback of the webinar, so even if you miss it, you’ll be sent the full video replay within about an hour of its conclusion. For more information and to sign up, click here.

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{ 148 comments… add one }
  • Joe December 3, 2016, 1:01 pm

    Peter
    when is the next peak in the 41 month cycle due ?
    looking at your chart I’m thinking Nov – Dec 2014 was
    the prior high in the cycle ( not price ) , I have been thinking
    for a while now Sept 2014 was a momentum high .
    adding 41 months to Sept- Dec 2014 brings us to late 2017
    to mid 2018 ? I’m only referring to the 41 month cycle .
    Joe

    • Peter Temple December 3, 2016, 1:03 pm

      Yeah, probably. That doesn’t mean a larger cycle won’t change the overall direction well before then. Larger cycles “trump” the smaller ones (probably the wrong verb… lol).

  • Valley December 3, 2016, 6:17 pm

    This is a fresh cycle that appears tradable. Thanks, Peter!

  • Valley December 4, 2016, 12:57 pm

    Hi Peter,
    Is this 41 month cycle available online?

    • Peter Temple December 4, 2016, 1:22 pm

      Valley,
      I don’t understand what you mean by that.

      • Valley December 4, 2016, 6:01 pm

        Peter,
        I was referring to data sources for the daily data of this 41 month effect so I can watch is much the way sun spots are monitored on “Solarham.com”.

        • Peter Temple December 4, 2016, 6:39 pm

          The only raw data I’m using is for the DOW chart I developed. The solar/dow chart was simply pulled from a pdf I have on hand. So, not that I know of.

          • Valley December 5, 2016, 10:34 am

            Thanks!

  • Red Dog December 4, 2016, 8:59 pm

    Has this guy got any runs on the board or just another book seller. Scary stuff.

    https://www.caseyresearch.com/cm/project-fedcoin

    Pete, has gold hit your bottom yet.

    Also a Global Warming (climate change) update http://www.news.com.au/travel/world-travel/pacific/shock-as-hawaii-is-covered-in-90cm-blanket-of-snow/news-story/c1ce9c62662f3b5585cd07bd9b95aede

  • joe December 5, 2016, 3:37 am

    hey Peter
    a bit colder out here in the Pacific ocean and the
    weather this past 3 weeks has been strange .
    looking at a few weather maps I see heavy freezing spray
    forecasted off of Japan and the typical heavy freezing spray in
    the Bering sea , weather patterns showing more cold temps to come
    long story short it’s colder off the coast of califonia as well as Oregon
    then usual for this time of year and I first noticed the temp change back in August . I recently discovered in bowditch a few web links on ice data
    national.ice.ctr as well as sea.ice . I have yet to dig into them
    yet might show some meaningful data going forward .
    no doubt the collapse of the sunspots is doing it’s job
    Joe

  • Valley December 5, 2016, 11:37 am

    PALS this week:
    Phase: weak
    Distance: very good, post apogee
    Declination: good, post south
    Seasonals: December usually ok
    Summary: should be good week for US markets

  • luri December 6, 2016, 9:39 am

    [cough] – ahhh – hellooo – is anybody home?? “HEeLLlloooooooooo” is anybody out there?

    [whispered under my breath] – “where the bejesus is my hollywood homecoming??!! the prodigal son has returned… sigh.”

    whatever, who needs a warm welcome anyway – they are so very “TRUMP”.

    purvez? andre? peter? – is this the set of ”Zombie Apocalypse II”? – and still i hear “crickets”……..

    • Peter Temple December 6, 2016, 9:46 am

      It’s -19C/-2F here and I think my charts are frozen, ’cause nothin’ is movin’, and all the crickets are dead. I’m gob-smacked (not sure Purvez will let me say that) at how NOT this market is. But I’m here …

      • purvez December 6, 2016, 12:50 pm

        Hey, we are Brexiting so ‘gob-smacked’ is available for international consumption again without any EU shackles. Now we just need to agree a unilateral ‘royalty’ for saying that.

        I’ll speak to my PM…the RH Teresa May and get back to you. Maybe I should start with the RH Boris Johnson first as ‘international stuff’ is for him to make a mess of.

        • purvez December 6, 2016, 12:53 pm

          Oh BTW my charts have frozen too….and it’s now where near -19C. We are in a ‘balmy’ (or barmy) +2C here. It’s the blasted ‘wind chill’ factor which is sitting at some uncomfortable -somethingteen C. Whoever invented ‘wind chill factor’ needs shooting.

        • Peter Temple December 6, 2016, 12:58 pm

          haha … and the US thinks they have the best political show on Earth. There’s nothing like British politics … or media, for that matter! RH, eh? Perhaps you had a double entendre with “unilateral royalty” …

          In terms of the weather … it’s a “dry cold” here, which is not supposed to affect us much (and it won’t if I stay right here next to the fire) …

          • purvez December 6, 2016, 1:05 pm

            No no….not Royal Highness…. just Right Honorable.

            To be honest I hadn’t thought of the ‘double entendre’ till you mentioned it. Hehehehe!!

          • Peter Temple December 6, 2016, 1:09 pm

            Oh, I thought that was the cynic in you coming out … which gives an indication I guess of my views of politicians at the moment … lol.

          • purvez December 6, 2016, 2:25 pm

            Yes that’s why I cottoned on to what you might be thinking about the ‘RH’ mnemonic. My views on politicians matches yours.

          • Peter Temple December 6, 2016, 2:28 pm

            I probably have an even more jaundiced view. All you need to get elected in this country is hair and an iphone.

          • purvez December 6, 2016, 2:31 pm

            Uhmmm comments elude me on THAT one.

          • Peter Temple December 6, 2016, 2:46 pm

            I was perhaps being a bit unfair. Make that “nice hair.” We then make you RH King of the Selfie.

      • luri December 6, 2016, 2:15 pm

        peter,

        that’s “summer time ‘ weather for you up there in Calgary northy pole – huh?! :-)) i feel the whole ‘markets’ thing…. what i am unable to understand, is wouldn’t Trump WANT the markets to crash back in price. If he waits till after he is crowned king – the weight of expectation, and blame would fall on his shoulders.
        if trump takes out a needle now, and pops it, it will fall squarely on his opponents….

        • Peter Temple December 6, 2016, 2:26 pm

          luri,
          sure, it might be summer here, but my brain hasn’t frozen over … yet (lol). If I remember correctly King George the Bush was at the helm when we had the previous top and nobody cared—the next guy was the target. The House of Trump is going to get all the blame no matter what happens and when. It’s like getting cast for the lead in Rocky 17. Seems like a good idea, cause it was successful before, but people are still going to hate the movie, and you’re going to get a beating, but in this case the beating will be real.

    • purvez December 6, 2016, 12:57 pm

      Luri, weeeeelll if you will keep disappearing without announcement like the prodigal and then reappearing at inopportune moments what can you expect.

      A small notice and we would have had the ‘brass bands’ lined up even if their equipment was frozen due to the wind chill factor.

      I just re-read that last sentence and it can be construed as vaguely rude. I DO LIKE THAT!! LOL.

      • luri December 6, 2016, 2:22 pm

        purv, baby – me “vaguely” rude? ME?? muhhhh EEEeeee???…….. for the public record, i am unable to even spell the word ….”VAGUELY”??

        well, here i am, in all my bombastic glory!!! here, …here is something for you [and don’t say i never gave you nuttin] …make a wish, and i shall grant you two!

        • purvez December 6, 2016, 2:28 pm

          No luri my OWN sentence. The penultimate one in my comment above. You can’t hog all the glory for yourself you know. That’s just greedy.

  • Harvey December 6, 2016, 10:33 am

    Anyone seen Andre ?….
    Always good conversation when Andre is around.
    Thought provoking…Gosh, he’s on another plane altogether..
    Wish I had his talent.
    Well, hopefully he’ll show up soon…get our juices flowing once again…

  • Peter Temple December 6, 2016, 3:13 pm

    Dale Pinkert, late of FXStreet, and well known for his work with the RSI indicator gave me this early Xmas present, which I share with you. It’s about 15 minutes long. https://www.youtube.com/watch?v=QZIuA–XqPY

    • Skippy December 7, 2016, 5:52 am

      I first heard how a MACD surge or divergence can help confirm one’s Elliott Wave count from a Bill Williams video. I have since seen others use these kinds of indicator divergences to great effect, current video included. Thanks for posting.

  • Peter Temple December 6, 2016, 4:58 pm

    Canada’s Feds are starting to fess up about the shape of the economy, but of course, they’re still painting way too rosy a picture. http://www.cbc.ca/news/politics/finance-liberals-economy-budget-morneau-consultations-jobs-1.3883770

  • Skippy December 7, 2016, 5:47 am
  • LizH December 7, 2016, 9:20 am

    Appreciate any thoughts on IBB. Is it continuation of Wave 3 down from high last July 2015?

    • Peter Temple December 7, 2016, 9:24 am

      LizH,
      I don’t like it. It looks corrective. There might be a first wave down from July, but the structure is questionable. I’d think at the least it’s going to retrace 62% before heading down.

      • LizH December 7, 2016, 9:36 am

        Peter, thank you! I thought the 62% retrace is already done from 8/24/15 to 9/17/15?

        • Peter Temple December 7, 2016, 9:41 am

          Of the first wave. But then you need a larger second wave. There’s also a double bottom at 240.00 and that leads me to believe we’re attempted to get back off the matt and do a larger second. If it got to a new low, then I’d change my tune.

          It’s also not below the previous 4th wave up, which doesn’t help it calling the rally over.

          • LizH December 7, 2016, 9:50 am

            Thank you Peter. I think I’ll wait after Dec. 9th rather the weekend to determine if I’ll play the retrace.

  • jody December 7, 2016, 11:34 am

    Just went all in short through UVXY… Good Luck All:)

    • jody December 7, 2016, 11:41 am

      S&P @ 2229.25

      • Peter Temple December 7, 2016, 11:43 am

        Yeah, we should be looking for a top.

        • luri December 7, 2016, 12:04 pm

          peter,

          what happens to the ending diagonal if we exceed 2237ish level? we are 3 points away…. 2234 right now

          • Peter Temple December 7, 2016, 12:11 pm

            It is no more. Or somehow we’re in the final wave, but I can’t make that pattern work in all indices.

  • Dimitri December 7, 2016, 11:44 am

    $3.1 Billion worth of S&P 500 futures traded between 13:21:14 and 13:21:15 ET. That’s a record (excluding open/close) $ES_F

    Nanex research

  • Dimitri December 7, 2016, 11:52 am

    Two more points in SPX and the ending diagonal will be dead

    • Peter Temple December 7, 2016, 12:02 pm

      In SPX, (by my measurements) this wave can go to 2296, so there’s lots of room. ES has much less room.

    • Dimitri December 7, 2016, 12:10 pm

      Well let’s see.
      The move is really violent and resembles the last chase of stops

  • Dimitri December 7, 2016, 12:00 pm

    It seems SPX is in just a classic 3rd wave up

  • jody December 7, 2016, 12:22 pm

    ED – Wave 1 the longest
    Wave 4 must must drop into wave 1 territory
    Wave 5 a blow off wave

    W1 1810-2111 Longest
    W2 2111-1991 Brexit low
    W3 1991- 2193 Double top
    W4 2193-2084 Dips into W1
    W5 2084 – Crescendo right now

    • Ted December 7, 2016, 12:41 pm

      Jody-

      My only 2 concerns with this count is that the trend lines do not converge and for wave 5 to get to the upper trendline it ends up being bigger than wave 3. Wave 3 can never be the shortest wave. I have that trendline at about 2290 at the moment. Wave 5 cant exceed 2283.

      I am also making a long volatility play now though. Agree with your trade for sure.

      • Peter Temple December 7, 2016, 12:47 pm

        Yeah, it’s the converging trendlines that negate it.

      • jody December 7, 2016, 12:57 pm

        Yes W3 can not be the shortest W5 will be.
        W1 301 pts
        W3 202 pts
        W5 151 pts ***IF 2235 holds

        Remember a trend line that has the most touches has a higher probability of being correct.. Allow for over throws and connect 1810 low to just above Brexit low and touch the bottom of the next day gap up candle..

    • luri December 7, 2016, 12:45 pm

      jody,

      good potential you are correct, with a blow off 5th wave here [terminal price thrust]. i have been following the topping formation in the russell 2000 since 2014. it is a broadening formation. as you can see, we are in that terminal price thrust for the 5th wave. http://invst.ly/2whi4

      • jody December 7, 2016, 12:58 pm

        Luri,
        Yes.. I watch the RUT – I am seeing what you are seeing..

        • jody December 7, 2016, 1:01 pm

          Another tell is the fact we are up- 265 Dow – 23 S&P – 53 Comp
          and UVXY off only .24 cents..
          Its over……..

          • Dimitri December 7, 2016, 1:18 pm

            Jody,
            do you mean somebody is hedging ?

          • luri December 7, 2016, 1:19 pm

            less sure about the dow formation, although looks like a terminal thrust of prices in an overthrow.

            http://invst.ly/2whzf

  • jody December 7, 2016, 1:24 pm

    Dimitri,
    Like a MOFO 😉

  • luri December 7, 2016, 1:24 pm

    so , is the volume buying spike today reflective of some kind of capitulation??

    http://www.zerohedge.com/news/2016-12-07/what-happens-when-buying-algo-gets-excited

  • luri December 7, 2016, 1:37 pm

    peter,

    any general thoughts? with the ending diagonal out, maybe the blow off 5th wave? it has that feel to it…..

    • Peter Temple December 7, 2016, 1:40 pm

      We’re in a bit of a grey area here. Emini roll-over is tomorrow and it’s at 2235 at the moment, so I’m not sure how to count this. Based on tomorrow, we’re still OK but only a couple of points below the allowable high.

      I’ve never had to count an ending diagonal wave on a roll-over day.

      • Peter Temple December 7, 2016, 1:42 pm

        The final wave is in an ending diagonal itself, but near an end.

        • luri December 7, 2016, 1:51 pm

          i would have to see a chart. lol – your “grey area” is my “omg, i am lost”!…….

          • Peter Temple December 7, 2016, 1:56 pm

            You don’t need a chart, really. If you rollover futures to the March contract, which is supposed to happen tomorrow, then futures are 5 points lower than the December contract. So you split the difference and that would have put our top in futures at 2237. I actually did another measurement and got 2238 and a bit for a top allowable end.

            So if you go by the March contract starting tomorrow, we’re within limits. All the cash indices are will within limits, so I’d go with the ending diagonal being intact … barely in futures. I’d have to look around at everything tonight to be sure.

            This should be a dramatic reversal if the smaller ending diagonal is right. We haven’t quite cracked the lower trendline yet …

  • Peter Temple December 7, 2016, 6:59 pm

    I posted a section from my normal Market Update that I do each night tonight, with an explanation of the structure of the ending diagonal and why we saw wave 3 go slightly beyond my target.

    You’ll find it at the top of the post. I’m posting at 9 pm EST so if it’s not there immediately, it will be in a few minutes.

  • luri December 7, 2016, 8:29 pm

    peter,
    thanks for the post.
    here is something interesting. if we pull back to the weekly or monthly on the dow and spx, going back to 2007, you get an even bigger contracting triangle formation, [ending?] in which we are in an overthrow situation NOW.

    http://invst.ly/2wk9p

    • Peter Temple December 7, 2016, 8:38 pm

      Well, it’s more of a broadening formation. In the DOW, you could call it an ending expanding diagonal (but I don’t think they exist, even though it’s supposedly an EW pattern). You actually want to go back to the top in 2000 for the top of it. The problem with the ending diagonal is that the wave down in 2008 was not a zigzag.

      But you can see how the final wave up from 2009 is clearly in three waves. I used to have “discussions” about that in the early days (I was adamant that it was a 3 – now it couldn’t be more obvious).

      But yeah, it’s an extraordinary big bubble top—a 500 hundred year monster!

  • luri December 7, 2016, 8:47 pm

    on the weekly timeframe – including 2007 top, and 2009 low is a triangle [ending?].
    here is the ES and we are in a throw over as of today.

    could this be the biggest ending diagonal of all of history? :-]]

    http://invst.ly/2wkci

    • Peter Temple December 7, 2016, 8:50 pm

      Not quite an ending diagonal. The second wave is not a zigzag and the 4th wave didn’t come down into the area of the first wave. But it’s the biggest bubble top in history, that’s for sure.

  • Skippy December 7, 2016, 9:23 pm

    Isn’t (aren’t) 40.8 months awfully close to “a time, times, and half a time”?

  • luri December 8, 2016, 5:03 am

    so, regardless of correctness of specific labeling of pattern, we are coming into a confluence of long term resistance. [shout out to jody]
    the top heavy red line which goes back to 2004, has seen long term prices rejected from this line[black down arrow] . the dotted black line, has also contained prices [pink down arrow].
    we also have the RSI failing to confirm the price moves. In fact, 2004 saw the highest reading of RSI, and it has been ‘non’confirming higher prices since then.
    http://invst.ly/2wnvl

  • luri December 8, 2016, 9:16 am

    jody- we are super close to throw – over of 5th on broadening pattern on RUT! once it throws…..run for cover!!! it will be the end!

    • luri December 8, 2016, 9:47 am

      ok – WHERE BE MY PEEPS?????

      this ‘roast’ is DONE……stick a fork in it, and run for cover!!!
      bit.ly/2h9UYBK

      • luri December 8, 2016, 9:55 am
        • luri December 8, 2016, 9:57 am

          that link is failing….try the bit.ly above and copy and paste into url…. it is the RUT…

          all i hear are ‘crickets’!!! wake up y’all!

    • jody December 8, 2016, 10:33 am

      Picked up 5000 shares of UVXY @ $8.90 yesterday so I am with you.. Looking for S&P below 1800 in the next month or so..

      • jody December 8, 2016, 10:35 am

        Looking for a long topping tail on the S&P daily candle today and possibly close red. VIX is heading higher;)

        • jody December 8, 2016, 10:43 am

          Your on a roller coaster heading up the hill.. click-click-click-click the you get to the top and the clicks stop.. you know whats next…

          The clicking on the S&P roller coaster has stopped.. put your hands in the air.. here we go!!!

          • purvez December 8, 2016, 11:20 am

            Jody, much as I appreciate your commentary…..sadly it’s not click-click-click up….but ‘WHOOOSH UP’ and ‘maaaaay be’ click-click-click down before another ‘WHOOOSH’.

        • luri December 8, 2016, 10:59 am

          j,

          might be today, or tomorrow to see a topping candle – if that fails, we are in a full fledged ‘blow off’ top…..

  • purvez December 8, 2016, 10:43 am

    Given the action within the last 30 mins I can’t imagine that the ‘bulls’ give up until at least 20K!! on the DJIA (without even dropping below 19400 before then). I would DEARLY love to be proven wrong though.

    • luri December 8, 2016, 10:49 am

      purvez,

      in this rigged existence, ALL is possible………..

      • purvez December 8, 2016, 11:17 am

        Sadly so! However it’s looking increasingly LESS likely for a reversal in my Life time.

    • Dimitri December 8, 2016, 12:23 pm

      Purvez,
      if DJ goes to 20.000 it will follow through.
      Otherwise it should stop somewhere here.
      Look at today candle of DJ.
      It’s completely out of bolls.
      It’s very rare occasion. It was usually sanctioned the next few days.
      I don’t say the crash but usually it goes to touch MA7 at least.

      • purvez December 8, 2016, 12:36 pm

        Dimitri, I’m not suggesting a pull back won’t happen but from my experience when it goes parabolic like this then the pull backs are shallow. Usual rules DO NOT APPLY to parabolic moves.

        Of course it ALWAYS ends in total annihilation but not before LOTS of people get burnt.

        • Dimitri December 8, 2016, 12:58 pm

          It’s not parabolic up to now.
          I just want to say that even if it goes to 20.000 it should go to test MA7 daily before.

  • jody December 8, 2016, 12:26 pm

    The people in the front of the coaster are seeing the drop.. The people in back still just seeing blue skies.. Here we go!

  • Harvey December 8, 2016, 12:29 pm

    Another very rare occurrence was a .46 equity put/call ratio last night.
    Most often associated with great embedded complacency and a top.
    I’m with Jody…..look out below!!!!!

  • luri December 8, 2016, 12:35 pm

    AN RUT “ODE D’CRASH” TO JODY!! ……oh yeah, SHILLER SAYS THIS IS THE SECOND MOST EXPENSIVE MARKET IN HISTORY- SCHILLER P/E OF 27.7 [BEATING 1929] ! SAYS VALUATIONS ARE NOW FLASHING CRASH ‘RED’…….

    http://invst.ly/2wrvz

    • luri December 8, 2016, 12:45 pm

      sorry, i put my “W” and “X” for 5th wave in wrong spot. [OH, to the ‘glory’ of the god of MARKET crashes, “WE BE SLOWLY SELLING OFF”!!!]

      here it is corrected.
      http://invst.ly/2wryg

  • purvez December 8, 2016, 12:57 pm

    Here’s an ‘optical illusion’ of an Ending Diagonal on the DJIA from the Feb’16 lows.

    Each of the waves is in 3’s and the diagonal lines converge. Wave ‘v’ in a blow off never really looks like a 3 but it is.

    https://postimg.org/image/j38d5bzjn/

    So…..what’s wrong with it? Wave iii is longer than wave i sadly.

    So I reckon my 20K on the DJIA looks ‘set in stone’.

  • luri December 8, 2016, 1:11 pm

    my six cents on the NDX.

    http://invst.ly/2ws4k

    • purvez December 9, 2016, 2:21 am

      Nice one luri. Any projections on where 5 will end?

      • luri December 9, 2016, 3:36 am

        p,
        there is a good potential that wave 5 has ended – which is why the ndx has failed to make new price highs while the other indexes go price “parabolic”.

        remember – price parabolic to the upside usually ends with price parabolic to the downside.

        • purvez December 9, 2016, 4:08 am

          Luri, thrusts out of triangles are usually 5 wave affairs. The 5th wave shown on your chart looks like i of 5 with an expanded flat in the making as a ii of 5. So we have the strongest wave yet to come I believe.

          I do however agree that when it ends the reversal will be swift and severe. Parabolic to the down side!

          • luri December 9, 2016, 4:47 am

            P,

            all is possible, although a simple glance at the RSI [daily] for example, is giving a different picture. The ndx has been the market leader. so, it seems reasonable that the ndx will top first, and be the leader to the downside. so the one thing i am looking at is ‘valuation’. when Schiller does an interview, and indicates that according to Schiller P/E that the current valuation is second highest in history [eclipsing] 1929, and at 27.7 it is ‘flashing red’ for a crash – well this information is already known by Trump. Trump spoke at length about this artifical bubble and that yellin rigged it. So do you think he wants the parabolic run up to pop in his first 100 days of office? for him to take the blame? no, he wants this thing to pop before he takes office. he wants obama to take the blame for his failure. so that is why i am purporting that this bubble pops in dec/ or jan before oath of office!!!

            http://invst.ly/2wx66

          • purvez December 9, 2016, 8:49 am

            Luri, that’s a perspective that I had not considered. I very much see your point of view and it is certainly possible that PE (president elect) Trump will want the bubble to burst earlier.

            However I’m not sure that without the reins he has enough clout to do that.

            It’s certainly going to be an interesting Christmas and New Year in the western hemisphere.

  • andré December 9, 2016, 12:40 am

    Tuesday 12/13 should bring a very significant high. Then down into 12/23 and a test on 12/29.

    • p December 10, 2016, 8:41 pm

      Thank you sir!

    • LizH December 11, 2016, 12:18 pm

      Thank you Andre.

  • luri December 9, 2016, 5:07 am

    p,
    http://invst.ly/2wxcw
    so the parabolic move by the dow is behaving more like an E wave, than a 5th wave. E waves are emotional waves that ‘crash up’ or ‘crash down’. i think that is what we are seeing right now. i think we are seeing an E wave right now. once done, an E wave turns quickly.

    • luri December 9, 2016, 5:10 am

      sorry , gave you the wrong link p,

      here is the one i wanted to give you.
      http://invst.ly/2wxer

      • luri December 9, 2016, 5:21 am

        and with a little color and resistance in this area of prices

        http://invst.ly/2wxhd

        • purvez December 9, 2016, 8:52 am

          Luri, please would you extend either of the above graphs to the left enough to show the start of A. That’s what is going to define the triangle or the Ending Diagonal.

          If your ‘B’ goes below the start of ‘A’ then I think from an EW perspective we are ‘snookered’.

          • purvez December 9, 2016, 9:00 am

            …..unless you are suggesting an expanding Ending Diagonal. Although the trend lines you drew don’t suggest that.

            Sorry, but as far as EW is concerned it is pretty much black and white. Which is why I LURRRVE it so much. You KNOW when your count is WRONG…..what you decide to do about it defines you as a trader.

          • luri December 9, 2016, 9:59 am

            p,

            sure. when i have a few minutes between work, i will be glad to extend the chart….

          • purvez December 9, 2016, 10:14 am

            Thx Luri. Will be able to better comment once I have that info.

          • luri December 9, 2016, 11:30 am

            p,

            the data on the daily time frame only takes me to 2003. the weekly and monthly time frames are pulling in ‘less” data.

            maybe there are system issues. i will try later tonight again.

            sometimes, it is best to put perfect EW rules aside, and look closely at the patterns taking shape over the bigger timeframe, for the sake of clarity.

            i find that sometimes you see in EW what you ‘want’ and ‘need’ to see. Goalseeking EW counts is the big downfall for EW.

          • Peter Temple December 9, 2016, 1:08 pm

            uh … I might change that last line to “big downfall for EW analysts.” imho, EW is never wrong; it’s the analysts who don’t remain objective and are wrong. That’s the downfall. 🙂

          • purvez December 9, 2016, 1:04 pm

            Aaah yes Luri, I’m definitely guilty of ‘goal seeking’….not just EW waves.

            However ‘rules are rules’. I pay less attention to ‘guidelines’ but when a rule is broken then it’s no longer an EW wave count. May well be an ‘alternative’ one but NOT THE ONE you are trying to trade. That’s my ‘exit strategy’. Otherwise I’m ‘screwed’…..hope I’m allowed to use ‘that’ language. I’m too tired today to be PC (politically correct).

          • Peter Temple December 9, 2016, 1:06 pm

            As far as I’m concerned, anything you’d find in a British tabloid is fair game. So …. lol … you know what THAT means!

          • purvez December 9, 2016, 1:25 pm

            Haha!! Peter are you SURE you want to ‘streeetch’ the rules that far?

            I can get far more colourful then.

          • Peter Temple December 9, 2016, 1:26 pm

            Anything to get more views ….

  • Dimitri December 9, 2016, 10:40 am

    Well,
    it’s all about JPY.
    Japs are buying everything as Yen crashes against all the currencies.
    Who knows how much value keeps this paper ?

    • Dimitri December 9, 2016, 10:50 am

      At the same time I haven’t found any other occasion during last 10 years that DJ stays two days completely out of bolls without at least a touch.
      Technically it’s unsustainable.

      • Dimitri December 9, 2016, 11:05 am

        The only explanation is that BOJ doesn’t care.
        The traders wouldn’t do that.

        • purvez December 9, 2016, 11:27 am

          Yes Dimitri, the BOJ doesn’t NEED to care. It’s not their money. Just their reputation that is at stake.

          They genuinely don’t care (and that goes for Yellen and Draghi and all the other CBers too) whether their populations suffer massive pain provided the history books sing their praises.

          We live in a CBers driven world which is without feeling or UNDERSTANDING of the suffering that they cause.

          GOD DAMN them all!!!….and I’m not even religious. Ha

          • luri December 9, 2016, 11:35 am

            wave ‘E’ are emotional waves and seemingly defy the sustainable – until they are spent.

          • purvez December 9, 2016, 12:56 pm

            Hehehe!! I’m very glad my ‘EMOTIONS’ shown through. I NEED an ‘E’ wave here…..or a very STIFF drink. It’s ‘that’ time of the evening in the UK I guess.

  • purvez December 9, 2016, 1:37 pm

    Does anyone here doubt that with the DJIA at over 19700 today we WON’T make 20K?

    Wow I find that difficult write let alone believe but ce la vie!!

    • luri December 9, 2016, 2:40 pm

      p,
      all prices are possible. its hard to swallow, but the pure flow of information that happens from man’s highest form of language – [math and prices] – has been broken.

      this break, will hurt us all!

    • Jim December 10, 2016, 6:02 am

      I don’t think 20,000 will be a stopping point. I reckon a few more months at least left in the ending diagonal if it holds. I applaud Jeremy Siegel and Tom Lee for their fantastic predictions. Im surprised Draghi extended QE to end of 2017. That is far too optimistic and he should be be more honest and extend QE to 2020. I am convinced the final top will occur inconjuction with a major European bank failure. Until that we can look forward to re-labeling the Elliot waves endlessly. This is evident from the top being predicted around 2250 but now 2500 is possible. What if we get past 2500 and the projection hits 2750-3000?? That would surely take us well into 2018-2019. Predicting the final top is a game for fools so focus on the short term Elliot waves to remain profitable. Peter is great with quickly re-labeling when required so I look forward to following this into next year.

  • Valley December 10, 2016, 1:13 pm

    PALS next week:
    Phase: negative
    Distance: negative
    Declination: very positive
    Seasonals: positive
    Summary: Trump hosts tech sector leaders in NY this week. Fed rate hike. Expect choppy market this week, no clear direction.

  • Alex December 10, 2016, 2:08 pm

    Peter,

    first of all thanks for your analysis (and the other people comments too, some very insightful analysis, thx luri for some great charts). I only trade indexes and stocks (no commodities, just a personal taste I guess), I thought you had a service covering only gold…am I wrong? If you have a subscription covering this indexes’ mess I would gladly join 🙂 I followed a lot of EW gurus but your analysis is the only one I found that is actually on point. Let me know! 😉

    In the meantime I keep holding my shorts and praying…PLEASE GIVE TRUMP HIS TWITTER ACCESS BACK LOL – my only hope for a crash at this point 😀 – I think he can drop some solid bombs for Yellen’s day this week.

    Thanks again,
    Alex

    • Peter Temple December 10, 2016, 3:17 pm

      Hi Alex,
      Thanks for the kind words. I do cover gold, but if that was all I covered, I’d be long asleep. 🙂 Gold is a no-brainer in terms of its major moves. My Trader’s Gold services covers ES/SPX/SPY and the other US indices (including the Nasdaq, but if they’re the same, I often don’t cover them individually), EUR/USD, GBPUSD, AUDUSD, USDCAD, USDJPY (if there’s a setup), gold, oil and TLT (in the Chart Show). DAX also in the chart show. The link and further info is here http://worldcyclesinstitute.com/traders-gold-signup/
      Noting that I have to update my page with the additional ones, which I’ll do. I also do a chart show on Thursdays (although this next week, there won’t be one, as I’ll be on the road).

  • Alex December 10, 2016, 2:18 pm

    Jim if you’re looking for an European bank failure look elsewhere. I’m European, they already loosened the bail-in laws, basically re-introducing “we the people pay if private banking institutions go broke” – I don’t think another Lehman will do it…they’re already reaching for our wallets, so banks are relatively safe…imho we’re seeing a massive shift in political / economical power from US to China, just the time to make the Yuan great again (next world currency) and the US will default on its debt…it’s a very straight line and it’s already in front of our eyes…Europe will be fine, we never recovered, we’re already a 3rd world continent whatever they tell you in US, no jobs, no growth, massive social tension, no political guide, poverty growing for years…it’s not easy to crash when you’re already digging…

    • Skippy December 11, 2016, 4:31 pm

      Why would the US default on its $19T debt when it only spends 6% of its budget on debt interest and has $125T (no typo) in oil and gas properties alone?

      https://am.jpmorgan.com/us/en/asset-management/gim/adv/market-insights/5-myths-about-u-s-government-debt

      • Alex December 11, 2016, 4:48 pm

        Hi Skippy, you’re taking as assumption a stable global demand for USD, I’m not. I know it sounds crazy right know, but we’re just in the middle of it, and the Yuan already became IMF reserve currency:

        https://www.amazon.com/Currency-Wars-Making-Global-Crisis/dp/1591845564/

        As you well know many countries are already dumping US debt…if the geo-political shift towards eastern countries continues, we may be in for a wild ride in the next years. Obviously when / if US defaults the rest of the world will follow and we’ll need a different global social pact…or war; I’m afraid we go with number 2 as usual 🙁

  • jody December 10, 2016, 4:39 pm

    i do not believe we get to Dow 20k.
    we are witnessing the blow off wave in my opinion.
    i believe it wrapped Friday (Gann 9) or its close to wrapping.
    candles can not extend as far as they have from the 20 SMA and keep going.
    the VIX tells the true story and with the market up “Big League” hehe – the VIX has held strong the past 2 days.
    The market psychology is it will go forever, its just getting started don’t miss out, look at this move..
    For those who trade the market we have seen this pattern over and over at the end of a run.. It is so impressive because it is the last bit of a major multi year run.

    Its over folks – time to short…. In my opinion;)

    • luri December 11, 2016, 7:36 am

      jody,

      As per your prediction, i am going to “HOLD YOUR FEET” to the fire! do you like ‘HOT FEET”??? lol.

      It takes character to make the call you just did – good for you!

      actually, i am in agreement with you. http://invst.ly/2x6gg and a wide view http://invst.ly/2x6gm. it looks to me we are in a zone of resistance. This is also FOMC week.

      what side of history are we on?

      • jody December 11, 2016, 11:59 am

        There is another pattern that nobody seems to be talking about.. Since the pattern starts back @ Dec 2014 it is hard to see the exact tick where this run will stop, but Dow 20K is not in the projection..

        I mean I guess it could extreme over shoot and pull back but that would be a far stretch I would think.

  • Joe December 11, 2016, 7:17 am

    Hi Peter
    I got back home yesterday and woke up early so decided to
    go through my charts ( far from catching up ) i was looking at the monthly
    spx chart and came here . your video answered my question yet i thought
    id note something .
    wave 4 bottoming in march 2016 fits my charts so im counting from feb
    to date.
    your 3 wave move from feb to august ? as a wave 1 of an ending diagonal
    is very easy to see on the monthly chart , wave 2 would be the Nov 2016 low ?
    that would imply ( if wave 3 cannot be longer in terms of points ) the 2467.50
    spx level wont be touched ( wave 3 would end below that point.
    secondly , this wave from the nov low on the monthly chart is only 1 wave
    and if this is a true ending diagonal wouldn’t we also need a drop followed
    by a rally to complete wave 3 ( each wave should be a 3 ) .
    i realize i m using a monthly chart and a broad brush yet since the spx
    has gone above what you were initially targeting and since you have adjusted your count does that higher price level have meaning to you ? the 2467.50
    level on the cash spx .
    the other issue i am considering which you most likely wont agree on yet
    its a concern . ( monthly spx chart ) feb the wave 4 low and a series of
    1-2 and i ii which places us in wave 3 of 3 to much higher prices .
    with that possibility in mind i end up with a cluster of resistance
    at the 2467.50 ,2478.71,2479.17 levels .
    Any thoughts on the $util index ? monthly chart 2002 to date .
    Oct 2002 low , Dec 2007 high , march 2009 Low ,Jan 2015 high .
    Sept 2015 Low , this last high could be an A wave of an ABC ( 5 )?
    of an ending diagonal ? again a broad brush look at the monthly chart .
    lastly the $Sox index , its now coming up near the .618 retrace
    of both the 2000-2002 bear market as well as the 2000-2009 bear market .
    the sox index from the Aug 2015 lows ( monthly chart ) looks to be nearing
    a wave 3 high in the range of 909-980 yet the .618 retrace levels are in the
    905-921 range.
    attempting top put this together id say the utilities need another high
    which would imply a bounce or retrace in the bond market .
    the $hui has support right here yet the 164-150 level id rather see tested.
    Back to updating my charts
    thanks for the video update
    Joe

  • Joe December 11, 2016, 10:16 am

    a couple thoughts in regards to this market .
    If the low in the dow on jan 20th 2016 is the meaningful
    date then we should see a high next week , if the feb low is
    the real date then the high should come in the week of jan 23rd .
    i see date clusters surrounding the week of july 17th and a minor
    date the week of may 22th . the methods im using is an unorthodox
    version of the late George Lindsay’s count from the mid section .
    Looking at the overall market ( dow + Tran + spx + oex + ndx + sox + nya )
    wave 3 is best placed the week of july 14 2014, the drop that followed
    was ABC W into the week of oct 13 2014 followed by an abc X into the week of
    Feb 23 2015 followed by an ABC Y into the week of Jan 18 2016 and labeled wave 4.
    labeling the week of jan 18 2016 as the bottom of wave 4 there is 5 waves up
    ( weekly chart ) into the week of april 18 2016 , labeled wave 1 . wave 2 would
    have bottomed the week of june 27th 2016 . then minor wave i of wave 3 went up
    into the week of july 18 2016 with minor wave ii of wave 3 bottoming the week
    of Oct 31 2016.
    Price has 4.5% of upwards movement to go to keep this wave 3 scenario on track
    which makes me question a high next week yet time and price are different equations . the week of jan 23rd fits the timing much better for a top of some degree , My bias is its the top of a 3rd wave with in a 5 wave structure
    this leaves a possibility of the major top coming as soon as jan 23rd
    to as late as the year 2018 . timing versus the wave count .
    Chart to follow . im far from finished digging through my charts
    and this is my notes for next year so please only look at this as a potential
    guide going forward as nothing is cast in stone until the market proves itself
    bottom line , i don’t see a reason to be bearish at this juncture because
    i don’t see a completed wave count .
    Joe

    • luri December 11, 2016, 10:51 am

      joe,

      question here? so when did they repeal the 61.8% or more retracement for wave 2’s?…so going back to the 09 low’s, [for all those that labelled a 5 wave move], the corresponding waves 2’s of importance, none of them retraced even close to 61.8% or 50%. …..what happened there? in fact the 4th wave of your amalgamated chart, well that never retraced 31.8% to 50% of the prior move either. why i mention this is because if you have shallow 2’s then the 4’s are alternatively very deep. nope that didn’t happen either……???? why?

      • Peter Temple December 11, 2016, 2:24 pm

        The wave up from 2009 is corrective. It’s a zigzag. That’s why it doesn’t conform to a motive structure.

  • Joe December 11, 2016, 10:18 am

    http://i.imgur.com/nXIB81J.jpg
    Lots of time to see how this market moves

  • Alex December 11, 2016, 1:26 pm

    My 2 cents. EW is great but we should also look at other complimentary methods. Whatever the Wave Count right now, we also have, in no particular order:

    – extreme liquidity warning, no liquidity confirmation for this move
    – big lots divergence (small buy programs vs big sell programs)
    – both dark pools and algos aggressively selling the move, at least least Friday
    – the channel pointed out by Iuri and Jody, confirmed by its median
    – Shiller P/E ratio at pre-crash levels
    – Looking at the weekly chart, the Wyckoff distribution schematics are being respected to the tick (this would be UTAD -> the final top)

    Wave Count can point in different directions, but the money flowing in and out seems to point towards a nearby top, and a big / structural one.

  • Peter Temple December 11, 2016, 2:21 pm
  • Joe December 11, 2016, 3:19 pm

    Luri
    why didn’t the waves 2 and 4’s retrace a set amount ?
    such as a .382 or 50 % retrace ?
    My only answer to that would be because the next higher degree
    is higher prices , ( strength )
    the wave 2 on the chart posted was just over a .382 retrace
    and the wave ii was just under a .382 retrace .
    i do not show a wave 4 in this chart yet it is there on a minor wave
    which i didn’t label .
    since i do not see a narrowing wedge on the weekly chart
    i am allowing for a full complete 5 wave move .
    i can see based on some timing methods why peter is correct
    yet i cant see the wave count he is calling for on a weekly chart .
    I want to be bearish mind you yet i cant go against my work .
    i will follow peters wave count though and ill trade accordingly
    once i see a reason to .
    at the moment i m not taking any bearish trades and next week
    for me will help me define what im seeing timing wise .
    why am i cautious ?
    based on historical moves over the past 80 plus years .
    i have a projection of the dow at 21296 on jan 24th .
    that would be a typical move and not be considered
    outside the norm . that said 23335 on the cash dow is
    where things look to stall based on present data .
    can this all be wrong ? certainly it can be yet i don’t want to
    be short with projections like that .
    i can wait a few weeks and let the market fail .
    a big bear market is coming . we will know it when it arrives
    no doubt about it .
    in the mean time , money from all around the world is seeking
    a safe haven and the united states is where it is coming to .
    Lastly , my model which has done a terrible job these past several months
    is right more times then not . i still have a turn up in that model from
    jan 20th , maybe its inverting yet that has not been the case most of the time.
    Gold has been following the model much more closely so my bias is to
    go long the gold stocks near jan 20th . keep in mind this thinking goes against
    the grain . typically gold rises into January and im saying im looking lower.
    some may disagree with me yet i m not a perma bull and i agree we will
    see much lower prices out 5 years from now .
    coccoa in 2000-2001 put in a very clean ending diagonal which once complete
    took off big time . ending diagonals are terminal and i understand completely
    where peter is coming from .
    take my notes as guide in case we get the what if i m wrong scenario where
    the market keeps running .
    A Bull Dies Hard ( they don’t die quickly )
    Joe

    • luri December 12, 2016, 4:58 am

      joe,
      thanks for the insight. i was always taught that shallow retraces are a sign of structural price weakness versus “price strength”.

      real bull markets like to go back and fill in all the “gap ups” and retest previous break out levels, before they proceed with price advancements.

      Just look at all the unfilled “gap up’s” since the 09 lows. It is truly epic. Look at the unfilled gap up’s since the election!!! the markets inability to fill those gaps ‘first’ truly indicates the underlying weakness of the price advance.

      Prices may be advancing, but this is a very weak bull market.

  • Alex December 11, 2016, 4:51 pm

    Well Joe…if this looks to you like a quick death 😀 (nearly 2 years of distribution on a 7 year bull run)

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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