Market in Denial

Update: Friday, April 1, 2:40PM EST

Above is the 60 minute chart of ES showing the progression of the ending diagonal. We’re in the final wave. Ending diagonals typically have a throw-over (they exceed the top of the upper trendline) but don’t have any way of reliably identifying a final target.

In this case, we can break down the final wave up into A, B, and C waves and project the end based upon the length of the A wave. A C wave of 1 X the A wave would give an ES target of 2086.

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Update: Thursday, March 31, 11:30PM EST

I am back to fight another day! The kidney stone: she has ceased to exist!

Meanwhile, back at the ranch: Above is the 60 minute chart of ES. We’ve dropped to confirm the 4th wave (in three waves). One final wave up to go. I can’t provide a stopping point, although I doubt it’s very far. The waves are getting shorter as the pattern progresses.

Nothing has changed. This is the final wave. All we need to do it get there.

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Update: Wednesday, March 30, After the Open—Watch for the Turn

Updated Chart (12:30PM EST) Above is the one hour chart of the ES (SPX futures). We’ve traced out a larger fourth wave and are getting ready for the fifth. This pattern has morphed into a full-fledged ending diagonal. It looks to me like we may not see the end of it today … hard to say.

Ending diagonals have no end target. They stop when they stop. However, they’re in 3 waves (they actually have 5 but in a three wave configuration). We’re waiting on the very last wave to burn itself out. Ending diagonals end dramatically with a retrace to the start of the pattern (in this case, around 2012, or so).

Above is the daily chart of the EURUSD. You can see that the final E upleg I was expecting (see chart of EURUSD further below). The target has been hit and I expect an immediate turn down. US equities should do the same.

USDCAD has also met its target, as well, but looks like it may need a little more time to get there. So I’m not sure if we’ll turn immediately or a bit later after the open. In any event, this is the set up for the turn I’ve been expecting.

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Update: Tuesday, March 29, After the Close

Above is the SP500 (5 minute chart) showing a projection of the current and final set of waves up. Wave 3 is complete and we’re now working on wave 4 (likely overnight). I don’t have a number projection for the top, but the waves are getting shorter. Wave 3 did not make it to 1.618 X wave 1 (but it is longer), and subsequently wave 5 will likely not be full length. I wouldn’t be surprised to see it simply do a double top, but it also could go a little ways above the previous top. Same projections on time as the ES below, of course.

Above is the 60 minute chart of ES (SPX futures). As per the forecast, ES has  worked its way up to a new high in three waves (so far). We’re missing a fourth and fifth of this final wave.

I’m expecting a fourth wave tonight and fifth tomorrow. Tomorrow is a turn date for the dollar, and as equities and currencies are moving in tandem, I will be looking for a turn in US equities tomorrow.

USDCAD  and EURUSD are performing as I’d suggested. Watch for them both to meet their targets (below before rolling over together with the US markets).

Above is a 30 minute chart of NDX showing the ending diagonal that’s formed. Ending diagonals are in 5 waves and the final wave usually “throws-over” the upper trendline (in this case). It will end in a dramatic reversal and revert to the beginning of the pattern (around 4230) relatively quickly.

The Nasdaq COMP has the same pattern forming.

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Original Post (Sunday, March 27): How many times have we expected a rollover and it just hasn’t happened? This 5th wave has been a “plodder.” It should be. It’s a counter-trend push that’s just about out of oxygen. Large second waves at the top of the market are like that. Bullish sentiment is at its height (so close to a previous high—last week, it rose to 81%) and yet this is what we want to see (being contrarians).

But the Elliott wave count is telling us we’re almost done and if you look at some of the goings on under the economic hood:

The Republican party in the US seems just about to implode with Anonymous and the National Enquirer chiming in the “spill the beans” on Ted Cruz. Nobody could write a movie to equal the entertainment value of this particular political campaign. See the background story in Zerohedge.

Zerohedge also reports that world trade has collapsed. The chart above shows that in January, we exceeded ten year lows. You can find that story here.

The chart above is a dramatic look at investor credit and each of the major peaks over the past 20 years. These “red dips” show the extent of investor leverage in the market. In short, it’s the greatest it’s ever been. This means when the market comes down, we’re going to have scores of investors dashing for the exits. In order words, we’ll likely have a crash.

The site this comes from is dshort.com, which is site with fabulous articles and charts, primarily for financial advisors, but you’d do well to spend some time there and learn as much as you can about the dire straights the worldwide economy is in.

From Zerohedge, the chart above shows the state of the Chinese housing bubble.

China has entered the stage of attempting to end the bubble with new harsh economic regulations. All through history, the crashing real estate bubbles are the final step in a total financial collapse. Look out below. The entire article is here.

Elliott Wave International has stated that the VIX has flashed a sell signal at long last. Tonight (Sunday, March 27), Zerohedge also has a story about the VIX changes.

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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.

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Here’s a video overview of the market for Monday, March 28:

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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The Charts Going into Monday.

The vigil continues ….

I know this is making us all crazy, but we’re really, really close. Above is a 10 minute chart of SPX. The wave down on Friday NEVER looked motive because it’s first wave was missing a proper second wave. We ended up getting an abc corrective wave—what’s ended up as a final, much deeper fourth wave. I expect one more wave up and would not be surprised to see a triangle, however, at this point, it’s up to the market to tell us what the shape of the final move up.

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.

The latest move up last week appears to be in 3 waves so I’m expecting a full retrace to 1.29236 or so before turning up. If this is a first wave of a series of corrective waves it will retrace to the 62% level, but it makes sense that it will seek a new low as the equities head into a third wave. They’re been moving in tandem for months now.

A Major Inflection Point:  Here’s the 2 day chart of EURUSD showing the waves up over the past few days that suddenly turned corrective. I was expecting the motive waves to continue, but this flashes a warning.

We now have a corrective triangle, a major inflection point that is destined to head down into a euro fifth wave as the US equities implode lower. We’re waiting …

Shorter term, I expect the downturn of the past week to be fully retraced, and to move in tandem with the US equities. The eur/usd should top at the same time to finish the E wave with a double top.

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.

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First Wave Down – What to Watch For

This weekend we’re dangerously close to a top of a second wave (again).

Let’s look at the SP500. When we turn over, we should drop like a stone.

The first wave down will be in 5 waves and will likely drop to at least 1968 SPX (previous 4th wave). 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.

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The Alternative Count

Here’s a somewhat updated, edited segment of a longer video I’ve posted previously. This video only deals with the likelihood that the market is going to go to a new high.

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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