I've completed the tasks to provide a longer-term signal that incorporates I1 and some of it's components that show a tendency to mirror market psychology when in elevated or depressed levels for extended periods. It has a very good track record for issuing multi-month signals, superior to the smoothed I1 that I had previously devised for longer-term signals..
I've placed the info on a separate page Longer Signals using Time Elevations. Currently the longer-term signal is down into July:
I am flat at this point in all markets.
The wave count is a 5-up from the May 25 low for cash markets and a 3-up for futures. As long as SP futures remain above 1084 and ND futures remain above 1832 then the 3-wave becomes a 5-wave on rally to new highs.
The daily technical composite has registered a buy signal passing +26 that will only be neutralized by a return to +4. Does this return have to happen? No, it can keep going to +36 the intermediate-term signal. But it has stopped and partially reversed. The odds are on a return to +4.
Steve
ReplyDeleteI was taking a close look at the DJI for the last 30 days and noticed that May 25th on a inter-day low took out May 6th inter-day low (if this day is valid as per Bob Prechter) During that same time period on May 27th the inter-day high for that day could not take out the inter-day high set on May 20th. This looks like a set up to next test May 25th low. If this next wave is wave 3 it should blow through this number and tern heads. You are right we are at a very critical point in the market right now. I can not find a good headline any where I tern, and I can see a lot more bad to come. You are right to raise your head to the Fitch credit down grade of Spain, it makes the contagion conspiracy go from speculation to fact and will definitely add to the spread of fear in the markets. Wait until local cities start to threaten bankruptcy chapter 9 before the unions start excepting less and government jobs start to go here, in the USA. Then the contagion is here, and that’s not that far away. There are a lot more credit down grades to come and that does not exclude the USA. After all that’s happened the credit rating agencies are not going to be blamed for not warning. Bob Prechter believes that the deflation we are going to see makes the great depression look like a cake walk. Back to cleaning the pool.
Hi Steve,
ReplyDeleteI've been reading you for a few months and I figure I can pipe in here too. The only two people I've seen calling the recent market downturn timing generally right are you and Dan at daneric's elliot waves blog. I'm not affiliated with Dan.
Anyway, Dan's primary count suggests that the market should actually finish out its last gasp up very soon (e.g., tomorrow morning) up to 1110 or so possibly, and then, as Jack above posits, move onto a devastating wave down that takes out the recent intraday lows and then some.
The Technical Take blog, formerly linked at Zero Hedge, is indicating that the dumb money indicators just turned solidly bearish (from the viewpoing of the dumb money), which is actually bullish 85% of the time. The other 15% of the time it will prove spectacularly wrong.
Barry Rittholz at the Big Picture is citing Alan Abelson in Barron's pointing to extremely lopsided insider selling in the Nasdaq's 8 heavyweights (77 to 1 selling).
Last data point for me is the Zero Hedge note last week that worldwide central bank foreign reserves are hitting lows of recent years, after massive intervention to support the Euro. Aside from outright printing, it looks like the CBs have mostly approached their limits.
All in all, my sources, which align with your recent writings, seem to suggest that the next few weeks may be quite memorable!
Thanks for providing us with your interesting writings.
Hi Josh,
ReplyDeleteI started counting the cash markets as a double zigzag but that rally late May 25 - early 26th was titanic. That's when I started looking at it as a diagnal triangle 1st wave and a huge 3rd. In this context the 4th wave pullback was severe but stopped above the supposed 1st peak early May 25 and resumed to a new high, thus completing a 5th wave. I count the futures as a completed simple 3-wave and EWI is using just the futures count to forecast an immediate move down. Now, if the market rallies to new highs, for me that would confirm the cash market count as a 5-wave into A with the recent decline as B and the rally as C.
I'm not going to pick the top, but wait for the market to break support. I1 is going down and has made me a fool too many times.
Thanks for the post!
Jack,
ReplyDeleteI was in Farmington Hills coordinating card for my mom a year ago. Detroit area is definitely feeling the deflationary cycle and it just goes on and on and on. Spain is currently looked at as stronger than Greece and, true, it is a bigger chunk of the EU. However, if you've ever talked to Spanish middle class they are predominantly socialists, just like Detroiters used to be. Only hard times can teach people how full of crap they are and Spain needs a lesson, just like Greece. BTW whenever you are at a party and someone mentions "social justice" jump out the window because you definitely do not belong there! You are a long-term trader and I've finally got something I can pin a long-term trade on with this new enhancement.
Hi Steve,
ReplyDeleteI am a bit confused by your position here. We have an I1 accelerating downward and you have a longer-term signal saying down into the july bottom, no? Yet, you are flat. I can understand you are in capital preservation mode and want to play small ball getting singles rather than striking out. But, shouldn't this setup at least engender a small core position? Maybe not in SDS or DXD..maybe SH? Please don't take it as criticism..I am just trying to understand what you are seeing. Is it the oversold situation? The over-bearishness? The wave counts? A combination? I am a big believer in not taking a trade if it makes you uncomfortable. My last one like that was when Buffett split his B shares 50:1 and got added to the S&P...would have made $10/share easily but I sat it out. So, please straighten me out on your logic since I think you wanted to know if your position didnt seem clear.
Charles
Steve
ReplyDeleteYap, could you picture me at a union meeting, I’d probably not make it out alive. The problem with are society today is every one wants something for nothing. I believe the road to prosperity is risk taking in many different forms whether it be starting your own business or investing in others that take risks. And let’s not forget working hard. There is no back bone left in this country and its going to take this devastating deflationary cycle to wake America back up, but I do believe we will rise above it all and hopefully learn from ours and others mistakes to make this a better world to live in.
Charles,
ReplyDeleteI1 is my main tool. I will take a core position on strength from here. I tried to get short Friday but I couldn't get SDS under 34.40. I think it will get back to 34.50 this morning. As far as the rest of a position the technical composite is my primary gripe. SP futures breaking 1070 would solve my dilemma. I don't mind selling on weakness if it proves the market's point. If the market is near critical support why not wait for the rest?