Update Friday, April 8, approx. 3:00 PM EST
Above if the 60 minute chart for ES as at the above time. This final wave up looks to be in the expected five waves. I’ve revised the count structure for ES to align with the SPX. You can see we’ve done a what looks like a running triangle for first set of waves of the fifth wave, and we’re working on the final fifth wave up. We appear to have finished wave 1 up, 2 down, and are starting on wave 3 up. If it’s 1.618 X the length of wave 1, it should top at ~ 2082.
Update Thursday, April 7, Approx 3:30PM EST
Above is this afternoon’s ES chart (60 min). We dropped into a larger fourth wave this morning, which changed the structure of the ending diagonal yet again. We now have an expanding ending diagonal, which is much more bearish.
This is suggesting that we’re looking at a final wave up of an ending diagonal.
We’ve blown past another cycle turn date. The next one is the middle of next week. Judging by what’s happening in currencies, this may take a few days. We seem to be having problems making this last wave up (which is to be expected).
Above is this afternoon’s 30 minute chart of the SP500 (as at 3:15 PM EST), so that you can see the configuration of the final wave here. I have changed the count based upon this morning’s drop into a fourth wave. We’ve just extended the fourth wave and still have a fifth up to go.
This morning was a failed fifth wave and the resulting extension of the fourth wave. We didn’t go to a new low and the count still works. One more wave up to go. It shows the weakness in the market.
Currencies have turned to support the wave up in equities.
Update Wednesday, April 6, After the Close
Above is the 30 minute chart of the SP500 showing the progress today (Wednesday) in tracing out the final fifth wave. The pattern for the final sequence is up for interpretation. It’s not quite a proper ending diagonal (at least, not at the moment)—the waves don’t touch both sides of the pattern (trendlines) as they should. Because the waves i and iv don’t overlap, I’ve labelled waves i-v a five wave sequence up to the end of wave 3 and allowed for wave 4 down, leading to this final wave up.
Other indices have overlap and are sporting very obvious ending diagonals, so the market is a bit of a mess at the moment, but everything points to this being the final wave. I will be looking for a turn on Thursday.
Above is the 10 minute chart of the SP500 so that you can see what’s happening “under the hood.” The final wave up is in progress and I’m showing the count so far. This count may change, as the wave up may be all of three, rather than the 3/4 combination I’m showing. In any event, I expect this wave to finish at a new high. We could see future drive up the cash indices tonight to a new high, resulting in an opening gap reversal tomorrow morning. This is when the cash indices open with a gap and then immediately reverse.
Above is the 30 minute chart of IWM (Russell 2000—mid cap stocks). It’s got the cleanest ending diagonal. You can see that we have one more wave up. The other indices are not as “clean” and the pattern is not as obvious. They all have to end together and turn down together, so it’s important to look at the overall market to see what all the players are doing.
Original Post: Yogi Berra was a world renowned New York Yankees catcher and coach who was as well known for his non-sensical “truisms” as for his accomplishments on the baseball field. The title for this blog post is perhaps his most famous saying, but here are 49 more, if you’re interested.
In any event, this 2nd wave is almost over. The next cycle turn date is April 6.
On Friday, the NYSE advance/decline ratio was negative all day. There is divergence between the DOW Transports (DJ-20) and the DOW (DJ-30) for the week.
The euro has moved slightly outside the triangle I’d identified last week and so I’ve now marked the current spike up as wave 2. As I keep saying, as soon as we see the euro turn down, so will we see the US equities turn down. The dollar controls the market and it’s at a major turning point. Watch it closely for the signal of a turn down in equities.
We’re still in the the final fifth wave of the C wave and while we may see a spike in the indices in this fifth of fifth wave (the throw-over), it should be short-lived and I would expect a dramatic turn down, with waves that should revert to the beginning of the ending diagonal relatively quickly (in the case of the SP500, this is ~2022.00).
I’m calling this final wave an ending diagonal, even though SPX does not show overlapping waves. ES (SPX e-mini futures) does, and the pattern otherwise lends itself to that analysis.
As I mentioned last week, the VIX has flashed a sell signal for equities (the VIX should turn and head up in the next few days).
Celebrating: I’m mentally celebrating a major milestone (no cake or candles …). This past week, we reached 125,000 visitors to the site annually and over 1 million pageviews a year. So thank you to everyone who have kept the site positive and a learning experience, thereby attracting a bit of a crowd! And double thanks to all the contributors.
The Latest from Donald Trump (click here): I was somewhat “floored” to find out that Donald Trump is expecting the downturn in the economy. I’m not sure he’s ready for the fallout personally, as it’s going to dramatically affect his “empire.” He seems to have a rather naive view of the gravity of the situation, based upon this recent interview with the Washington Post.
Here’s a link to my interview today on trunews.com, for anyone interested. We focused mainly on Global Cooling, but also covered a fairly wide range of cycle-related areas in a short amount of time.
Here’s a video overview of the market for Monday, April 4, 2016:
Market Report for April 4
|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.|
The Charts Going into Monday.
In the fifth and final wave …
Above is a 30 minute chart of SPX. The final fifth wave is in the final stages. I don’t have an ending target, as this appears to be an ending diagonal. We may have one small down wave and then an up wave. The top will be sudden and should retrace to the start of the pattern (about 2022.oo).
Above is the 30 minute chart of the Nasdaq COMP. As noted last week, we’re in the final stage of an ending diagonal. If you count the subwaves, you can see we’re in the fifth wave of the fifth. The end is nigh.
A Major Inflection Point: Above is a 4 hour chart of USDCAD. I have been watching this first wave down unfold and it’s met the target. The wave measures and numbers as a first wave or a complete ABC corrective wave. It has retraced right to the area of the previous fourth. This may be the extent of the correction before a large 5th wave up to a new high, which is now my preference.
As I mentioned last week, I was expecting a retrace down to a new low. We have now met that short term target. Expect one more wave down perhaps to a double bottom. Watch CAD and EUR for the turn, as this should signal the turn down in the US indices.
A Major Inflection Point: Here’s the daily chart of EURUSD showing the waves up over the past few days that exceeded the previously market E wave of the triangle. As a result, I’ve relabelled the final wave to a wave 2, which is now similar to the structure of the US indices.
Last week, I mentioned here that I expected to the wave down to be completely retraced to a new high, which is exactly what happened. The eur/usd should achieve a double top with the b wave marked before turning down in tandem with the US equities..
The US dollar should do the same thing but in the opposite direction (up).
Above is the daily chart of GDOW (Global DOW) showing the current count. It looks to me like we’re tracing out a second wave after an ABC lower part of the wave. This wave will likely stop very close to the 23.6% retrace level (or 76.4%) from the bottom of the wave. This should lead to a very large and strong third wave down.
I do not see a path to a new high for GDOW and, in my opinion, this strongly lowers the probability of a new high for the main US indices.
First Wave Down – What to Watch For
This weekend we’re dangerously close to a top of a second wave (in the fifth of the fifth, with an ending diagonal pattern).
What we’re looking for to confirm a turn is a motive wave down in 5 waves.
Because we have an ending diagonal, the first wave will likely drop to the previous fourth, which is also the beginning of the ending diagonal pattern (~2022). After that, we should get a second wave that will retrace in 3 waves about 62%. That’s the preferred EW entry point. So don’t feel you have to rush in. There’ll be a much better opportunity at the second wave level than at the top and the risk is substantially reduced.
The Alternative Count
Here’s the alternate count which calls for a new high. I’m going to leave this up for one more week, but I give it even less chance of happening than I did when I created this stabnd-alone video (on March 25, 2016).
The Alternative Count March, 2016