Galileo: The Contrarian
Galieo Galiie (1564 – 1564) was an Italian astronomer, physicist, and engineer. He is considered “the father of modern physics, the scientific method, and modern science.”
He was the “disrupter” who introduced the theory that the Sun was the centre of our Solar System (ie. – the Earth revolved around the Sun —”heliocentrism”).
This idea was met with immediate opposition from his peers, and most notably, the religious establishment. He spent the rest of his life under house arrest. He published his work in Dialogue Concerning theh Two Chief World Systems, in 1632. However, It wasn’t until 1758 that Galileo’s works were removed from the Index of prohibited books.
It’s generally held that with the publication of Isaac Newton’s Principia Mathematica (1787), we entered The Age of Enlightenment. There were a slew of scientific discoveries, ground-breaking literary works, and inventions of all types that followed on its heels. After all, this cycle top was instrumental in bringing books to the population (Gutenberg Press in 1440). The year 1492 is generally considered the top of the 516 cycle.
Galileo was born in a world leaving behind feudalism and slowing moving to a new monetary system; a period 500 hundred years ago that marked a major shift into our modern world. It was moving too slowly for Galileo. The world was not ready to embrace his system at the turn of the 17th century; however, the Age of Enlightenment and the Elizabethan period set the stage for other scientists, musicians, politicians to usher in immense changes across a wide spectrum of professions.
These “golden ages” are natural phenomena. Each hundred year cycle has an golden age; there are particular periods in which warm temperatures and adequate rainfall create an era of optimism and human energy.
Where am I going with this? Well, cycles determine what history repeats and when. There are only certain periods in which we revere our politicians, for example (other periods when we consider them tyrants and authoritarian). Our most beloved kings, rulers, and politicians all reigned in times of abundant food and a relaltively warm climate that led to growth periods across the world.
The world might not yet be ready for the truth of the Elliott Wave system, but with the coming Awakening on the horizon, it may well be that it will find it’s platform in the years to come. The timing has to be right, just like the time is becoming right for a world-wide revolution, and market crash.
Know the Past. See the Future
Elliott Wave Objectivity vs. Subjective Stupidity
I get accused of all kinds of wild and imaginative actions I’ve supposedly taken here on the free blog (or words I’ve apparently written), none of which are true, many of which would seem to be illogical.
Being a member of Mensa International, I expect to have to deal with a lot of “out of left field” comments, but the stupidest comment of all has been recently, with a variation of the demand that I “change the count” on my charts because somebody thinks it would be the “right thing to do.” This shows a complete ignorance of Elliott Wave methodology, scientific method, and technical analysis.
There’s a page on “objectivity” right out of the book, the Elliott Wave Principle, itself.
“Despite the fact that many analysts do not treat it as such, the Wave Principle is by all means and objective study, or as [Charles J,] Collins* put it, “a disciplined form of technical analysis.” Hamilton Bolton* used to say that one of the hardest things he had to learn was to believe what he saw. If you do not believe what you see, you are likely to read into your analysis what you think should be there for some other reason. At this point, your count becomes subjective and worthless.” — p94, Elliott Wave Principle
* Charles Collins and Hamilton Bolton were well-known and respected writers for the stock market during the 1920s and 30s
Summary: The reason for having objective technical analysis is that you DON’T arbitrarily change the count to conform to some pre-formulated plan or expectation. That would add bias to the count and render it worthless; unusable.
The Mother Ship Review: The NYSE
Above is the daily chart of the NYSE. I refer to this exchange as “The Mother Ship” because it spawns the DOWS (Industrials and Transports), the SP500, The Russells, and the OEX.
However, all those sub-indexes are traded directly, so they’re just chocked full of animal spirits. Only the NYSE gives a clear picture of what’s actually going on. As I have stated ad nauseam, you cannot analyze the market unless you’re looking at multiple indices, and most importantly, the NYSE as a whole.
There will never be a situation in which the NYSE will have a different overall count than the sub-indices. You can’t have the SP500 completing five cycle degree waves to a hew all time high and then plummeting unless all the relative sub-indices trace out the same count … which means they would all have to reach new highs. A fractured market with different counts (with some indexes at new high and others not) has never happened, it isn’t going to happen here, and it is very unlikely that it will ever happen in the future.
In the chart above, you can see that the B wave has traced out an ending diagonal at the top. An ending diagonal is an ending pattern. The fifth wave cannot be longer than the third wave (a hard Elliott Wave rule). At the moment, the fifth wave can still rise another ten points or so to adhere to that rule.
NOTE: The NYSE is nowhere near a top, and has no chance of getting there under the current wave structure.
The Herd’s Inherent Bias
Above is the 3 day chart of the SP500 going all the way back to the 2015 year. You’ll see that I’ve placed an ellipse around a small degree fourth wave in 2016, which has a similar pattern to the one we’re tracing out now (in the upper right area of this same chart). I’ve marked the current B wave up (blue B).
You can see that the same pattern traced out in the most recent 4th wave of one lesser degree; the current dilemma with a corrective B wave up approaching a new high is a pattern that’s relatively common. One more reason to suspect that the current count will result in a similar result.
The put/call ratios are also similar to what they were back at the end of 2016.
Elliott Wave Basics
Here is a page dedicated to a relatively basic description of the Elliott Wave Principle. You’ll also find a link to the book by Bob Prechter and A. J. Frost.
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US Market Snapshot (based on end-of-week wave structure)
This chart is posted to provide a prediction of future market direction. DO NOT trade based upon the information presented here (certainly NOT from a daily chart).
Above is the daily chart of ES (click to enlarge, as with any of my charts).
For the second weekend in a row, there's very little new.
We're still sitting near the top of a B wave that's risen to well above the 76% level of the height of the previous set of waves down from the all-time high at October 3, 2018. Almost all the other assets I cover on a daily basis are hovering near inflection points.
As I've been saying over and over like a broken record, all major asset classes are moving as one. That requires them all to reach new B wave highs before they can turn down together. It's like herding cats and is taking much longer than expected. It's also difficult to project a date for a top, because you have to take into account several assets.
IWM (Russell 2000) still needs new interim highs before everything heads down in a dramatic capitulation — it seems to the last NYSE index to require a top. On the currencies side, the US Dollar Index also has to complete its leg down before it turns up in earnest.
We appear to be in an ending diagonal in the SP500 and NQ. In ES — we now have an expanded triangle on an hourly chart, within the ending diagonal. All these indices are showing signs of exhaustion, with gaps that are being left unfilled.
The next major move is to the downside.
As I've been saying, the wave up from Dec. 26 is clearly corrective and, as a result, must fully retrace to the downside. This is supported by the US Dollar Index, the major USD currency pairs, WTI Oil, along with DAX and other international exchanges.
Summary: My preference is for a dramatic drop in a C wave to a new low that should when all these asset classes I've identified have reached their targets. The culmination of this drop should mark the bottom of this large fourth wave in progress since January 29, 2018 - over a full year of Hell. It may be a dramatic drop that lasts multiple months, and will target the previous fourth wave area somewhere under 2100.
Once we've completed the fourth wave down, we'll have a long climb to a final new high in a fifth wave.
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