Update Thursday, Feb 11, After the Bell
I’m trying to pass this exercise off as good therapy tonight (I’m not sure it is, but it helps me think through this mix of confusing signals).
Here’s the 2 hour chart of the NYSE. (chart updated as at Feb 12, 11AM EST) I like to come back to it when the market is confusing, as I find it tells the most realistic story of what’s really going on. It’s come down to a double bottom, which means the overall wave is in 3 waves. That’s a corrective wave.
If we go back to the start of this confusion (Nov. 3), you can see the possible truncated 5th wave up. Then we have a wave of overlapping waves down (not motive), which I’m labelling as wave 1 (until we know better). The rest of the wave down looks ok (there are some minor issues), but when we get to the fifth wave, it’s all in overlapping waves, (again, not motive). So, we’re left with the conclusion that this is a corrective wave, unless the fifth wave is not complete yet.
Above is the hourly chart of the SP500. (chart updated as at Feb 12, 11AM EST) It tells a similar story, but when we get to the fourth (yellow) wave, I’ve drawn in what might be an ending diagonal in progress. If this were to take place, it would make this wave down (considering the truncation as real) a motive wave 1. That’s stretching it a bit, but it’s possible.
However, at the moment, the fifth wave as marked has come down to what is essentially a double bottom with overlapping waves, like the NYSE.
Above is a two hour chart of the eurusd currency pair. It has been moving contra to the market, almost in “lock-step.” You can see what I’ve labelled a first wave up of a large C wave, coming out of a triangle. At the horizontal line (1.15585), this C wave would be 1.618 X the A wave (not shown). It has some distance left to go to get there. This pair suggests that an ending diagonal might be forming. If you’ve been following me lately, you’re well aware of my complaining about all the ending diagonals in this market (I’ve never seen to many!).
If an ending diagonal is forming here, it supports the idea that we’re in the process of one forming in the US indices. If not, then we have more of a corrective looking wave down to deal with, and that would bring up all kinds of questions …
A very difficult, frustrating market, but this is my best shot at coming up with a possible path.
Update Monday, Feb 8, 11:30EST
Above is a 30 minute chart of the SP500 showing this morning’s drop. No technical damage so far, we’re still in a B wave, with a C wave up to go.
And here’s a 30 minute chart of the trouble-maker – the Nasdaq. I’ve showing the possible ending diagonal 5 wave. If this is correct, it likely means the other indices have already done 5 waves down and that we are in fact, looking forward (again) to either a second wave or a larger 4th to extend the first wave down. I would lead toward the former, but then, this is all speculation until we see more.
Original Post (Sunday, Feb 7):
I’ve been mentioning for months now that the entire market is moving as one entity, the “all the same market” scenario, a phrase that Robert Prechter coined many years ago, when he projected the upcoming crash.
One of the frustrating elements though, is that when the market turns, it takes longer than usual to do so, because the entire world (in terms of the major indices, and by extension, the mood of the masses) is turning at the same time. So, in this report, you’ll see an underlying theme of equities moving inversely in lock-step to the US equities, because … that’s what’s happening.
The entire world is moving to the tune of debt and the deleveraging that has to happen. All bubbles burst eventually and this one is one that will go down in history, because it’s the largest debt bubble in history.
In terms of the Elliott wave count, it became very much clearer to me on Friday, when the Nasdaq “gave away” our current position by signalling a fourth wave with a triangle. I suspect we have about a week more to the upside and then we’ll turn down in fifth wave of the first of the third. US currency pairs should continue to head up when that happens.
Here’s a video overview of the market as at Sunday, February 7:
Market Report for Feb 8
|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.
Here are some charts from the video:
Above is the hourly chart of the Nasdaq showing the five waves down (yellow) and the give-away on Friday of the d wave of a fourth wave triangle. We should now complete the e wave (give it about a week) before turning down into the fifith wave. The Nasdaq is the only US major index that completed five waves up (rather than truncating), so the Nasdaq gives a very clear picture of the path ahead.
Remember that once we get five waves down completed, it confirms the new trend.
Above is the hourly chart of the SP500. I’m showing the truncation here, which is what has made the forecast so difficult (truncations are extremely rare, and in this case signal an exceptionally weak market). The SP500 shows the same count as the Nasdaq (the DOW is similar to the SP500) except that the fourth wave appears to be tracing out a flat (3-3-5). Expect 5 waves up from here to a top somewhere between 1950 and 1961.
We should then turn down into a fifth wave.
Above is the 4 hour chart of the SP500 showing the projected path for the completion of the fourth wave and then the turn down into a fifth wave.
After we complete the 5th wave, we should head up in three waves to the 62% retrace level. It will likely take at least a month to get there. More on that later.
Above is an hourly chart of the EUR/USD showing my projection for the current wave structure. We appear to have completed a first wave up of a large C wave. If so, this will require a second wave retracement before a turn up to complete the remainder of the third wave of the C wave. I have drawn in the 62% retrace level, which I should be able to confirm as this wave progresses.
Above is an hourly chart of USD/CAD showing the projected short term path. As I mentioned in the video above, I suspect the retrace to the 62% level (marked by the horizontal line at 1.42885) will take about a week or so as the US equities trace out the projected fourth wave.
This has been a difficult chart to decipher because of the odd triangle configuration of the most recent third wave, but when you keep in mind that currencies are all moving in tandem (revolving around the movements of the US dollar reserve currency), the picture becomes much clearer.
My promised forum has been a labour of love in that there have been lots of technical issues and a fair amount of learning at the same time. While you can view the forum by clicking on the link in the post below (in red), it’s not really live yet (you can look but you can’t touch). It will require a log in to be able to post to it and I hope to have this ready to go in the next 24 hours or so.
Here are some of the things it will allow you to do:
- the current market post will automatically show up in the “Today’s Market” section of the forum, so you’ll be able to comment there or in the traditional comments area (the one you use now). You’ll be able to move back and forth with one click.
- post pictures and videos
- carry on personal discussions with anyone in the forum
- post to any of the other areas that you have access to
- access ongoing charts, information about cycles and Eliottwave, Gann, and more much more easily. How up-to-date you keep these areas is up to you. I’ll be overseeing it all, of course, but there is a tremendous amount of knowledge amongst us that I hope will be shared
- and much more
The forum will require a log in so that we can lock out spam. There will eventually be paid areas but the entire forum will be free to all for the first few months. I hope it will be THE PLACE on the internet to amass information about the upcoming depression that we can all benefit from.
In the meantime, profitable trading …