Vacation time

My lovely wife and I are leaving for Thailand - Phuket for the next two weeks for a much needed vacation. I looking forward to a nice relaxing time loading up the batteries for the coming market collaps...

I'll be back on November 14.

See you and take care out there!

DJI - Very bearish action friday

The action seen yesterday was very bearish. Thursday
we broke back above the trend-line support giving the
bulls hope that this was once againe a flase break, but the
the break back below the trend-line and the close below
doesn't leave them any hope (or ta least shouldn't), but I'm
they are hoping and we should let them hope and suffer.
Monday may bring a small rally, which should be the last
chance to get out of the way, but we should see a 10-20%
loss before entering the next minor low close to November 13.

The VIX Index saw a very clear breakout on friday too,

calling of a increase in volatility over the coming months.

The USD Index has broken out of its falling wedge calling

for a substantial rally. A break above 77.50 would be very

bullish for the USD and wave [C] should take us back up

to the 90 area over the coming months.

Just wante to show the EUR/USD pair, as we have seen a

break and close below the trend-line support at 147.19, which

has activated the bearish wedge calling for a decline to

the 120 area. Will we see a move down to the 144.45-144.75

area a minor rally back to around 148.50 and then the big Bang?

Time will show

S&P 500 - Wave iv of I is close to its top

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Wave iv of I is close to its top. It should find a top in the area between 1,066.77 to 1,067.42, but more importantly at no point should the ongoing rally break above 1,074.37 as wave iv then will enter wave i, which is not allowed under the Elliott wave priciple. If 1,074.37 is broken an altenate wave count of a series of wave one's and two's becomes the prefered count.
But for now expect a top near 1,067.42 for a decline 1,042.08 closer to 1,020.22 to finish wave I down.
Wave iv could of cause be a more complex corrective wave as wave ii was a simple zig-zag wave iv should be more complex due to alternation like a flat or a triangle

DJI - October 19 was a perfect hit!

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CONGRATULATIONS TO VIRGINIA JIM FOR POINT OUT OCTOBER 19 AS A TOP!

We can now conclude that October 19 was a perfect hit, so can we point out the next important dates from the Spiral Calendar - Yes, of cause we can and they are November 13 as a bottom, then a lower top on November 24 and finally a panik crash on December 10.

As Virginia Jim said in his article, he might expect that because we are so late in the cycle that the crash might come early, and that is absolutly a possibility. But lets stay with the facts July 14 was a perfect hit at the bottom, Octrober 19 was a perfect hit as a top, so we will let time show.

The DJI has broken its support-line on a log-scale, but it has not yet broken on a linear scale, which will make most investores see this like a perfect buying opportunity (I feel sorry for them)

S&P 500 has broken down on both a log and linear scale leading the way down for the major indicies.

The two leading sectores are Banks and Building Material both has clearly broken down. I think it's quite funny that Goldman Sachs after its second best quater ever almost topped on that exact day it was announced and are headed towards 157 as first target with 137 area as the next.

DJI - October 19 looks more and more like a perfect hit

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Evidence that the October 19 closing high was a perfect hit becomes more and more convincing.

On the 5 minutes chart we can count two clear 5-wave downmoves, which on the daily would be a serie of one-two's, this is of cause the bullish case, but it still could "just" be a double zig-zag.

I do prefer the one-two serie count, as the S&P 500 has broken below and closed below the supportline from March on a Log-basis. The USD also seems to confirm the brearish count, that said we still need more evidence to call the final verdicte.

I might have to alter my brearish count on the DJI, as the first wave 2 could be a tuncated wave 5 of C, but that will not have any big effects for now.

DJI - As support continues to hold I still don't know for sure if the top is in place

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The rally from 9,917.01 has become much bigger than expected, that does bring the altenate count of a flat correction since the October 19 high at 10,117.81 in to play. I still prefer the top being set on October 19 (closing high) and the impulsive decline from 10,119.17 count, but as long as I don't see a close below support at 9,931 and more importantly 9,827.87 I can't exclude a push higher towards 10,138 and maybe even 10,178, but as I said I don't favor this picture at the moment, but will stay flexible.

Bank Index - Impulsive decline

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After the break below the uptrend-line from early March and the very impulsive looking decline late last night both add confidence to my call for a top Yesterday.

I'm looking for a move to at least 44.92, but would expect a further drop to the 43.22 area where wave 3 will be 1.618 times the lengh of wave 1.

As I look around all my charts more and more evidence points to important tops have been set Monday or at yesterdays highs. The German DAX seems to have topped, the UK FTSE 100, all the major US indices, the Brazilian Bovespa and the Indian Sensex all seems to have topped too. We do need some more downside action to cast the final verdicte, but it looks very convincing.

DJI - I still concider the Monday high as a hit!

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Okay we saw a small new high to 10.119,17 yesterday, but it was so shallow and quick, that I still concider the high (10,117.81) and closing high (10,092.19) made Monday the 19 of October a perfect hit. With that said and giving this all the benefit of the doubt, we do need to see a break below support at 9,940.14, even better a break below the red uptrend line since the March low which comes in at 9,767.17, a break below here would the first serious sign since the false break on July 6, that the bear market rally is over.

If we follow Virgina's lead we now have two perfect hits. A low (8,093.84) on July 10 (the calculated date was July 11), the October 19 top at 10,117.81, the next date to look for is November 23/24 where we should see a low high and finally the crash on December 10.

If the high on Monday the 19 of October was infact the high we where looking for, we can expect a decline of at least 10-17%, but as Jim says it could be even greater than that because we are in the last stages of the peak season, and I totally agree with him.

FTSE - Topping action

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The UK FTSE 100 is showing signs of topping.

The [B] wave top might very well have been set on October 20 at 5,298.54 and a break below support at 5,176.82 and more importantly 5,154.15 would be the first indications that an important top is in place. To confim the top we do need a break below 4,944.16.

Looking at the internal relationships they to point towards a possible top.

At 5,162.71 the second zig-zag was equal to the first zig-zag and to a smaller degree in the second zig-zag wave c was equal to wave a at 5,291.58, which was as perfect a hit that one could expect.

Again a top in the FTSE 100 at this point would fit nicely in my view that a top in DJI might have been set.

DAX - Possible topping action

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It's very possible that the German DAX index has topped with the 5,885.66 high set on October 16.

The 5,885.66 high was just above the percent from the 50% retracement at 5,870.23 of the fall from 8,151.57 to 3,588.89 and it was less of half a percent below the 5,914.47 where wave C would equal wave A.

On the hourly chart we can see a small Shoulder-Head-Shoulder pattern, which was activated with the break below 5,761. A break below the left shoulder bottom at 5,695.83 would call for drop to at least 5,595.82.

The current action is very fitting to my view of a possibly top set in the DJI on Monday.

DJI - Still undecided about a possible top

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The possible top in the DJI on Monday the 19 of October could still be a perfect hit, but we haven't seen any critical break below the important support, so I'm still undecided - Time will show.

As we are waiting on the final verdicte I thourght you might find the developement in the Bank Index interesting.

We might have an important top in place with the 49.28 high on October 14. From the 49.28 we have seen a very nice and clear 5 wave fall to 46.64 defining wave 1 or possible wave A?

A close below support-line at 46.34 would add confidence in the topping scenario and call for a continuation down to important support near the 43.22 area. If we see a drop of this magnitude that will make wave 3 1.618 times bigger than wave 1, which would be a nice relationship.

As the Banking sector is a leading sector, it fits nicely into the picture of a possible top already been set on Monday or will in the very short term.

Finally I just want to say, that most indices are looking very toppish and I can't recommend being long in stock or the indices at this point. At the very least protectiv stops should be in place by now.

We hope for the best, but should be planing for the worst!

DJI - Was the top set on Friday or will it be today?

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We still can't say with any degree of certainty if we saw a top on Friday or it might be set today or perhaps not at all...
What we can say with 100% certainty is, that any new high after today will cancel the possibility for a top and delay it to around the time window from November 11 to November 18.

As can be seen above we can count a five wave overlapping advance in wave C. On Friday we saw a break below the small support line, but we need a break below 9,807 to really add confidence in top set Friday or today scenario.

A break below Fridays low at 9940.14 would be first indication, but only a break below 9,807 would add confidence.

A follow up on my Friday post in regards to a possible top in DJI

I just had an idea in regards to the possible end date of wave C of [B], that I have just calculated:

What if wave C of [B] was a Fibonacci number of wave A+B of [B].

Wave A+B took 88 days to finish and the Fibonacci 78.6% would make wave C 69 days long. Remember my post on Friday, where I stated that wave C since the bottom of way B had taken 69 days if we saw a top on Friday...

Still maybe just a coincident, but I do think more and more evidence points towards an imoprtant top Friday. I still would accept a top without questioning Monday due to Viginia Jim's dicovery.

Virginia Jim says a top in DJI Friday or Monday

Those of you how read my stuff, knows that I have been trying to pinpoint the top, as most other following the Elliott Wave Principle, and I will be the first to admit it has been more than difficulte this time, but my little post early Friday before the opening bell about a possible top Friday was dwafted by miles by Virginia Jim.

By coincident I fell about some recearch he had done in regards to the Spiral Calendar. I will not try to pick in Jim's article, because its explains it self and what he thinks perfectly and much better than I can. I hope Jim don't mind me bringing he article in full, but it's exellente. A truly amazing discovery - Congratulation Jim.

XXXXXXXXXXX

October 16, 2009 (+-1 day) might become a very important day. This is a follow up on my post dated September 25, 2009. It should be in my archive and will give closer detail on how I came up with Spiral Calendar projections I’ll discuss below. The preamble to this “follow up” condenses and says the same thing as the September 25, 2009 post.
Chris Carolan discovered a Fibonacci/lunar relation between 1929 and 1987 and documented it in his excellent book “The Spiral Calendar”. He identified 4 dates in 1929 that reappeared near exactly (within the projection measurement error of 1 day) in 1987. Forgetting about his astrological reference to the lunar months in relation to the first equinox of each year, he related 1987 to 1929 by taking the square root of the 29th (“F29”) number in the Fibonacci sequence (514229 or “F29”) and multiplying by the synodic lunar interval or 29.5306 day. So, the square root of 514229 is 717.0976 X 29.5306 = 21176.32 days. Take 4 key dates in 1929 add 21176.32 days and you get the comparable date in 1987 in relation to that crash year:

I discovered and have not seen it written elsewhere that 2009 preliminarily appears to be reflecting the Spiral Calendar dates in 1987 and 1929. So what? It’s easy to project any of the Spiral Calendar Fibonacci computations forward…..just math. And you can take the 4 dates in 1929 and project them by every Spiral Calendar sequence you won’t get a single date in 2009. But you can with 1987. The 25th (“F25”) Fibonacci Spiral Calendar sequence gives you the four dates explained in the above Excel chart in 2009; July 11, 2009 (significant low), October 16, 2009 (final highest high in the crash year), November 23, 2009 (secondary high before a crash) and December 10, 2009 (crash).
So, you can make a 1987 projection to 2009; what makes this other than pure numerology? Nothing. Any extrapolation of history to the future is numerology absent physical or deterministic mathematical support. Gaussian statistics (bell curve) and variants, even given widely accepted causal rationalization, is numerology; it’s just very persuasive and accepted. The Spiral Calendar projection is different only in that it is not very persuasive. There isn’t a whiff of causality.
But there are two ‘conincidents’ that preliminarily support these projections. First, F29 interval between 1929 and 1987 is 21176 days or 58.0 years and the F25 interval from 1987 to 2009 is 8088 days or22.1 years. Their relation is .381, a near perfect and highly prominent Fibonacci relation. Second, July 11, 2009 is the first of four projected dates, is now behind us AND IT WORKED. July 11, 2009 should have been a prominent low next preceding the final highest high before the crash. Recall on July 11, 2009 everyone was following the unconfirmed head and shoulders top and vastly expecting a crash. It didn’t happen. Instead, July 11, 2009 was a clearly significant and widely unanticipated bottom (July 11 was actually a Saturday and July 10 was the bottom). I’ve updated a chart I posted September 25 and this is what the IMPLIED FRACTAL looks like to date:

If one had noticed this 4 date projection on July 10, 2009, you would have gone long to October 16, 2009 (not followed the H&S fiasco) and would have made, yet to be determined, but probably greater than 24% on an unlevered long trade. Then you would have gone short to sometime in early November and long into the 3rd date of November 23, 2009 (the F25 projected secondary high before the crash). Here’s an idea of the proportions of price change between the four dates (note that I’ve added a fifth date, namely the first bottom after the highest high):

So, IF October is a valid projection, the 1929 and 1987 models would indicate a substantial first wave decline of 10% to 17%. I think it could be greater than either because we are in the last stages of the peak crash season (as documented by Stephen Puetz, Chris Carolan and Peter Eliades). December 10 is late for a crash. And, many Ellioticians believe the projected wave commencing after October 16 is at a very high degree of Elliot Wave trend; EWI would show it as intermediate (1) of primary circle 3, of cycle c, of supercycle (a) of grand supercycle (IV).
Three notes of caution. Chris Carolan has not identified his own Spiral Calendar projection from 1987 to 2009 as significant, either by oversight or has dismissed it. I cannot confirm it either way despite efforts to contact him and his followers. Carolan’s website shows his computation based on 2007 and 2008 dates as indicating a top on October 11, which has not worked (more than one day off at this point). Second, Carolan originally noted the coincidence of 1929 versus 1987 dates in relation to the number of new moons following the spring equinox but distilled his thinking in terms of Fibonacci and synodic lunar intervals. 2009 is one moon greater than 1929 and 1987 so that gave me pause when I first considered these dates. I’ve rationalized the contradiction in noting the true computation is not relative to the equinox but it is a Fibonacci computation in lunar intervals. Third, this is the purest form of numerology; not hint of causality.
So, all we have is four dates and two “coincidents”. If I’d projected this six months ago, and said it would occur BECAUSE of a .381 relation in the years between 2009 and 1987 divided by the years between 1987 and 1929, I’d say the chances of four monument dates in 2009 being successful would be incalculable. If I’d noted that item and July 11, 2009 turned out to be a successful projection, I might say the odds of the other 3 being successful were within the realm of number system but still negligible. But, since we are narrowing in on October 16, 2009 and despite the emotions in the last months since July 11, 2009, it is still viable. I am very interested.
If October 16, 2009 prints a new recover high (or October 15 or 19), I will be giving far greater weight to the implications of this model. I’ll be expecting an Elliot Wave primary 3 of cycle c to begin very soon thereafter. Granted it’s only an intermediate 1 of primary 3, but it can be crashworthy IMO. Remember the character a c wave is that it is not expected by anyone; certainly, with a blowoff top in the making today, October 14, 2009 on top of INTC and JPM earnings, who expects a crash?
But who expected, on July 11, 2009, that the market would not have fulfilled the great head and shoulders top de jour of that date much less been 24% higher three months later?
Good luck,

Jim

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Just a word or two: We don't know yet if Jim or I was right in our prediction. A new high will be allowed on Monday in regards to Jim's prediction. A new high wouldn't fit well into my reason, but as I think Virginia Jim's discovery is way more important than mine I will not question a new top set on Monday. That said I do think that all the right ingridiences and the wave look is just right for a top having been set Friday, but time will show.

Who said green shoots?

Take a look at this video from Sacramento US.

http://www.youtube.com/watch?v=46r4yxttThw&feature=player_embedded

That is scary. It looks a lot more as depression than green shoots to me...

DJI - Possible turn day today

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Trying to pick the top has proven more tuff than usual. After breaking above the 38.2% Fibonacci retracement and wave iv of 3 high at 9,653.95 The next obvious target would be the 50% retracement target near 10,341.89. If the new correction target is 10,341.89 when can we expect it to be reached? Looking at the structrue since the wave [A] low to the low of B it took 88 days. Wave C often take and equal amount of days to finish, that would mean, that the A-B-C zig-zag correction since [A] would reach its high on November 11, where wave C would have used 88 days since the wave B low.

Eventhough the above is an absolut possibility we need to consider that a top might have been reached yesterday or will be today. Wave A took 68 days from bottom to the top and yesterday was the 68 day from the wave B bottom. An other clue could be, that the low of wave [A] was reached on Friday March 6. The top of wave A was on Thursday the 11 of June, but the closing high was on Friday the 12 of June. The low and closing low of wave B was on Friday the 10 of July, so could we see a small new high today Friday the 16 of October 69 days after the wave B low?
It might just be coincident, but it's a possibility we must consider. It would also fit nicely with the DJT and Nasdaq 100 making a double top formations and not confirm the new highs for DJI and the S&P 500.

It will be very exciting to see todays action so stay tuned!

Overnight action is clear

We still don't have a top in Gold, Oil and still no bottom in USD.

Gold is headed for triangle target near 1,080.

Oil is headed for resistance nead 76.30.

USD index is headed for the cluser of support in the 74.38 - 74.75 area.

Everybody knows gold is rising and everybody wants some. Bullishness is running high and targets at 2.000 or 3.000 USD an ounce has become ordinary. Even targets at 5.000 and 10.000 are mentioned quite frequently. Remember the dot.com boom and the predictions that became common. Dow in 36.000 even 100.000. You know what happende
In the opposite campe we currently have the USD. Nobody wants it and it's even obviouse that the Government wants the USD to fall, no country or central bank any longer wants to have USD in its reserves as it has become clear that it's going to tank. I even heard a talking head on CNBC mention that AUD ag. USD is heading for par.

The sentiment is just about right for everything to turnaround surprising almost everybody.

We hope for the best, but should plan for the worst!

AUD and NZD have finished their top formations

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Both AUD/USD (on the daily basis) and NZD/USD (on hourly basis) has finished an expanding triangle top. This kind of topformations is normaly very reliable and a break below the baseline forsees a total retracement of the preceeding rally, which for AUD/USD would call for a decline to at least 82.37 and for NZD/USD would call for a decline to at least 66.80. In both cases I would expect much lower levels to be seen.

DJT - Impulsive five waves down Part II

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I'm certain that wave B or 2 has finished and we are currently seeing the early stages of wave C or 3 down to at least 3,534.59 if it's wave C, if however it's wave 3 I would expect 3,534.59 to be broken to the downside adding confidence to the view that important top has been seen in all the major indices.

The divergence between the DJI topping yesterday and the DJT topping on September 17 was an important clue that a top could be close at hand.

Major tops could have been set in Gold, Silver and Oil today (not certain yet) and a important bottom might also have been set in the USD, if we are currently seeing some major trend changes we could see some very violent moves.

SSEC - Wave 2 of [3] seems to have ended

(Click at the picture to enlarge)- Shanghai Composite

It seems that wave ii of red wave 3 finished on friday and we are now in the very early stages of wave 3 down. It also lookes like a nice falling channel has formed. We very often see that wave ii of 3 breaks slightly above the channel top, but in this case it has respected it perfectly, but maybe wave (ii) of iii will break it slightly before the wave iii collapse sets in.

Stay tuned!

DJT - Impulsive five waves down?

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It sure looks like we got a impulsive five wave down move from the 4,051.76 high. The rally since the 3,656.23 low does look corrective and we should be close to wave v of c top. I do expected the 78.6% retracement target at 3,967 to protect the upside for at least one more five wave downmove as wave C or even better wave 3 of a new five wave decline.

Are looking for 3,967 to to hold for a break below 3,853 (wave iv of c) and more importantly 3,749 which will prove this to be a zig-zag correction and call for a decline to at least 3,571.

If my count is right, we now have a clear divergence between the DJI and DJT, which calls for a top in DJI and the other major indices soon.

USD Index - Do we need one more low?

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We can count a clear five down move since the 89.62 top on March 4'th, so no doubt that a bottom is close, but do we need a move closer to the 74.45 - 74.57 area to complete wave v of C of [B] ?

If we do need one more move down, there is plenty of evindece to why the 74.45 - 74.57 area should be the end target area for wave 5 of C.

* At 74.45 wave [B] will be 78.6% of wave [A]
* At 74.48 wave 5 of C will be equal to wave 1 of C
* At 74.57 wave 5 of C will be 61.8% of wave 1 through wave 3 of C

So buying just in front of the 74.45 - 74.57 area will represent a very low risk oppotunity.

Even at the current level (76.02) we are just 2% above this very strong support area will in my eyes pose a low risk oppotunity. Risk/reward are excellente possing a 2;5.87 risk/reward if the USD Index only rally to 80.48 from here.

Judge yourself...

Wheat - A major rally ahead?

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Wheat is currently sitting on major support near 434 (horizontal red line). My favorit count seen above suggest, that wave b of major B has just finished and we should see wave c of major B higher towards to Shoulder/Head/Shoulder neck line at 740 over the coming month.

A rally to near 740 would make wave c 1.382 times wave a in a irregular flat correction.

Time for some more cheerful farmers...

What is going on part II

Whats going on part II would be a suitable headline for this post.

Trying to count every little squiggle since the 9,917.99 top has now more possibilities that I care trying to figure out. The best thing to do rigth now, is to step back an let the market eliminate all the least possible and leave us with one or two top counts.

I still see very strong resistance near the wave iii of 3 top at 9,794.37, which could halt this upmove for a new test of important support at 9,430.08 and even more important support at 9,252.93. A break below 9,252.93 will be the final nail in this bear market rallys coffin...

S&P 500 is also back testing its small trend line from the low of wave X. As is the case with DJI we could easely have set the top with the 1,080.24 test, but we will need a break below 1,020.22 and more importantly the 992.25 support to confirm that.

If however 1,080.24 is broken to the upside a rally to the cluster of resistance from 1,120.88 to 1,132.99 could be seen.

* At 1,120.88 we will meet the 50% correction of the fall from 1,576.06 to 666.92

* At 1,129.36 red wave c will equal red wave a

* At 1,132.99 the red zig-zag will equal the back zig-zag

VIX has broken out of its wedge calling for increased volatility, but again we must accept one final move lower towards 21.50 as long as resistance at 29.56 stays intact. A break above 29.56 would confirm, that the S&P 500 has put in its top.

We can count five waves down since the 89.62 top, but as long as resistance at 77.48 isn't broken to the upside we must accept one more fall down below 75.87 and maybe even closer to support at 74.54, before a firm bottom is in place. But a bottom is close at hand.

DJI and S&P 500 - All odds favor that a important top is in place

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Eventhough we can't say for sure, that a firm top has been set in all the major indices, all odds do favor that it's the case.

The Banking Index made a fifth failuer on October 23 The Dow Jones Transpotation did not confirm the top made in DJI and in the S&P 500.

The S&P 500 and all the other major indices didn't confirm the wave i overlap before the day after the DJI made its overlap.

The Junk bonds (Symbol = JNK) has broken below its wave 2-4 Elliott wave channel bottom, confirming that an important top was set on September 24.

The reason why I show the Banking Index and Junk bods is, that i would be expected that the will lead the move down, just as they did during the 2008 collapse.

What we now need to see is a break below 9.252 is the DJI and below 992 in the S&P 500 to confirm the top and that much lower levels will be seen during the the fourth quater of 2009 and the first three quaters of 2010.

Be prepared, playing the short side will be the right side to play from now on.

NZD/USD - A firm top is likely in place

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As it is the case for AUD/USD a firm to is most likely in place in NZD/USD.

After an almost 50% rise (49.45%) the doubl Zig-zag has ended in a expanding triangle and at the same time meet the back side of the long term trend line back from late September 2001, that it broke in late September 2008.

I'm looking for a break below the 70.90 area and more importantly 70.14, that would call for a move down to the bottom of wave b of the second Zig-zag at 66.82. Longer term I expect to see a move down to and below the red wave [A] bottom at 48.90.

A top in AUD and NZD against the USD points towards the recovery coming to and end. The Shanghai Composit has long pointed towards the economy reentering recession and likely even worse (read depression).

I rather be prepared and wrong, than unprepared but right!

AUD/USD - A firm top is most likely in place

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After a 47.55% rise since October 2008 the Aussi dollar just finished a five wave C rally. This C wave rally has meet strong resistance in form of the trend line back from October 2001 that was broken to the downside September 29 last year.

The five wave C rally has ended with a expanding triangle (best seen on the hourly chart). These formation are very important top formations and are very reliable. I'm now looking for a break below the 86.00 area to confirm, that wave C and red wave [B] has finished.

A break below 85.82 will at least confirm a move down to the bottom of wave iv at 77.00. But red wave [C] should ultimately take us down to and below the bottom of red wave [B] at 60.04.