DAX - My favorit count says one more decline...

My favorit count calls for wave 4 to end just below 5,649.30 and then one last decline to 5,500 (red square) ending wave 3 before wave 4 sets in for a move higher towards the 5,715 area.

A direct break above 5,649.30 will point towards an unfinished wave 4 (irregular flat) calling for a move higher towards the 5,750 area before the next decline can be expected.

DJI - Favorit count points still lower

Back to the Dow Jones Industrial Index.

My favorit count points towards even lower levels over the coming days and the most bearish count (red alternated count at the bottom of the chart)points quite a bit low still, before black circle wave 1 is finished.

The Favorit count calls for a move to just below 10,000 (9,973 area)ending black circle wave 1, while the more bearish count points towards the 9,768 area.

Finally be aware that you could make a case, where black circle wave 1 ended where I have wave 3 ending at my favorit count, if Black circle wave 1 is finished, the support at 10,094 should hold for a break above 10,186 calling for a correction higher towards 10,392 - 10,472.

Stay flexible.

Copper - A top i finally in place

The rally in Copper has been relentless taking 55 weeks (a Fibonacci number) since the ultimo December 2009 bottom at 124.41.

My prefered count is, that wave [b] became a double Zig-zag where wave c of Y became equal in size to wave a of Y, but wave c (14 weeks) took twice the time wave a (7 weeks) did. The break below the lower channel support has been the final confimation that wave [B] has ended and we can now expect a deep decline in wave [C] bringen us below the start of wave [A] at 124.41.

First important point of support is the 38.2% correction at 265.19, which is expected to be first target for this new decline.

S&P 500 - Possible S/H/S top setting up?

I'm normally a Dow Jones Industial man, but just for fun let's look at the S&P 500 today.

The pictures is almost identical, eventhough the DJI went a little deeper than the S&P 500.

Okay back to the possible Shoulder/Head/Shoulder top set-up. As can be seen the Left Shoulder took some 17 days to from. The Left side and the top of the Head took 27 days to form. The Right side of the head only took 6 days to form, which was less than a quater of the time the left side took. If the right shoulder is as quick it will finish within a four days timefram. with the top of the Right Shoulder near the 1,119 area.

I have absolutly no possible way to know if things is going to play out as stated above, but it's always nice to have some kind of map going forward

EUR/USD - The target area has been hit

It has been some time since we have visited the EUR/USD cross (acturally it was on January the 15, where I expected a decline to 140). This target was hit a broken for a very short period of time in overnight trading.

No doubt that we can count a five wave decline from 145.81 (top of wave 4 or maybe this top was wave 2 of a higher degree?). No matter which of the two counts is correct, a short bounce to at least the 142.00 - 142.20 area will be seen. If we saw the ending of black circle wave 1 overnigth, then we will see a much bigger correction, which should at least reach the top of wave 4 at 145.81.

BUT someting doesn't look quiet right with the count ending black circle wave 1 at 139.37. After looking at the USD/CHF cross what I counted as wave 4 in the EUR/USD pair became much to deep in the USD/CHF pair, and can only be counted as a black cirkle wave 1 and 2, which means that black circle wave 3 is ongoing. So I'm every tempte to make my alternate count my prefered one instead. But lets see how the correction from 139.37 plays out.



Above the minor wavecount for EUR/USD, showing a nice five wave decline from 145.81 to 139.37.



First the long term picture of the USD/CHF cross, which is now calling for wave [C] to at least the 128 - 132 area.



Above the shorter term picture of the USD/CHF cross, showing clearly overlapping waves, which tells us, that this can only be a serie of wave one's and two's and therefore the ongoing rally must be the start of wave three calling for much higher levels before ending. A more likely ending point for wave 3 could be close to the 117area.

DAX - Textbook waves

On Monday the 25 of January I worte that we should see a continuation of the decline towards ideal wave 3 target at 5,567. It went to 5,579 (just 0.002% from the ideal target), After hitting wave 3 target near 5,567 I expected a correction back to the triangle apex, which I had close to 5,680, and we have seen a correction reaching 5,675 (just 5 points or 0.0009% from its ideal target).

This kind of predicting can only be made thanks to R.N. Elliott's discovery of the Wave Principle.

Looking further ahead, we can expect a decline towards at least 5,500 as wave 5 of wave I target. That said I would not be surprised to see a continuation down to the next level of strong support near 5,352 before wave 5 ends, but we will have to see how the internal structures of wave 5 of wave I develops.

CRB-Index - Perfect time for a breakdown

The CRB-Index is breaking down after a prolonged time period of correction. Ideally the time used up by the correction would take between 50% to 61,8% of the time used by the wave that are being correctede. Correction can become prolonged as we have just seen here in the CRB-Index in this case the correction has taken 1.382 times the duration that wave [A] took.

Wave [A] took 34 weeks (A Fibonacci number itself) and wave [B] took 34 x 1.382 = 47 weeks.

Looking at the internal relationship of wave [B]. If we regard the correction as an A-B-C correction, wave A took 16 weeks (a little less than half the time wave [A] took). Wave A+B took 21 weeks, which is a Fibonacci number and finally wave C took 26weeks, which is close to 1.618 times wave A (16 x 1.618 = 25.89).

You don't get it much better than that.

As can be seen, we have clearly broken down below the support-line from early March spelling trouble for the commodity currencies - AUD, BRL, CAD, NZD and ZAR (BRL isn't freely traded, so we can count that one out, but for the rest we can expect some very steep falls.

Silver - Shoulder-Head-Shoulder top activated

Finally the break below 17 is so clear, that we can say with a fair amount of conviction, that the Shoulder-Head-Shoulder top has been activated. The top-formation calls for a decline to at least 13.89, but we should not be surprised to see a much deeper decline.

DJI - More evidence that a important top is in place.

Soory for not really being online yesterday, but I had a very busy day and evening.

Still got a little time to look at the charts thus and I found even more evidence that the wave [B] rally is over.

The simple evidence is the negative cross-over in the MACD. This is the first cross-over since the March 22, 2009 cross over underpining the negative outlook.

Whats more interesting is the two time issuses. Wave [A] took 74 weeks from top to bottom and wave [b] took 61.8% of wave [A] (0.618x74 =45.73 (46 weeks)), adding even more confidence is the fact, that wave C of [B] became 2 x wave A of [B] in duration.
Wave A took 14 weeks, while wave C took 28 weeks.

All facts adding confidence to the important top scenario. Looking at the short term picture we just need one more new low below 10,158.47 to confirm that a five wave downmove since the 10,729.82 top has been seen.

DAX - Headed for its wave 3 target near 5,567

As can be seen the waves a froming nicely and the wave 3 target at 5,567 is just ahead.

Minor wave 4 became a triangle telling us, that after this last move down close to 5,567 we shall have a correction to at least the apex of the triangle near 5,680.

As wave 2 was a simple zig-zag we should expect a complex wave 4 correction. problably somting of double correction with its ideal target near 5,740 before the onset of wave 5 down ending wave I

Silver - Shoulder-Head-Shoulder top

A break below 16,96 will trigger a S/H/S top calling for a decline to 13.88 at least.

I havn't labled the chart, but what we currently are looking at is wave 3 of [C] down. This wave is the most powerfull of the waves.

FINALLY THEY GET IT, BUT WILL IT PASS...

“We’ve got a financial regulatory system that is completely inadequate to control the excessive risks and irresponsible behavior of financial players all around the world,”

Quote President Obama.

FINALLY! THEY GET IT.

President Obama(and especialy his predecessor Bush)and his administration is not without responsebility in this mess. President Obama, Treasury Secretary Timothy F. Geithner and his predecessor H. Paulson in their eager to "save" the financial system was very very quick to deem some banks, but even worse some Investment Banks too big to fail. At that point they totally missed the core issue, that Investment Banks was is in no way essential for the financial system working. When H. Paulson and Bernanke scacrified Lehman Brothers, they got everybody so scared that they took the bait and bought the "Too big to fail" fallacy, but Paul Vokler is about to change that.

Paul Volker hit the nail on the head yesterday saying

"The heart of my argument is who we are going to save and who we are not going to save. And I don’t want to save what is not at the heart of commercial banking".

Therefore President Obama yesterday proposed wide-ranging moves on bank regulation, which was first proposed by his economic advisor Paul Volcker, the former Federal Reserve Chairman. We still need the details of the proposal to fully know the range of the proposal. However, the focus is expected to center on strict bank size limits and a limitation on proprietary trading at regulated banks with access to the Fed discount window. This is a dramatic re-alignment in policy away from the no-strings attached bailouts backed by Hank Paulson, Geithner and Summers last year toward much more substantive financial reform.


- but will it pass Congress? Let's hope so, because the moral hassard we have seen from mid-1990's to October 2007 and from March 2009 until now can't be going on forever.

FTSE 100- The triple zig-zag wave [B] has finished

Both of the big European indices has finished their triple zig-zag wave [B] calling for the onset of wave [C] that should breake below the bottom of wave [A].

Short term next important support is found just below 5,200, but we are only in the very beginning of the new downtrend.

Shoulder Head Shoulder top in Goldman Sachs

The uptrend since early 2009 has just been broken, almost one year (+1 day) to the date when wave C up to 193,60 began.

The Shoulder/Head/Shoulder top has a target near 128.

Goldman Sachs is a leading stock showing that a more serious trendchange has been seen also in the major indices.

DJI- The top is clearly in place!

Just a short follow-up on my previous post.

By breaking below 10,518.28 we got the confirmation we needed that the decline yesterday was wave 1, the rally to 10,615.25 was wave 2 and wave 3 down is ongoing. Also notis the small gap "Point of recognition" that the trend has changed and is down.

Hold on as we have much further to fall.

German DAX index has finished its triple zig-zag

As can be seen on the chart above, the German Dax Index is breaking down from the March 2009 rising trendline. The break below the trendline confirms that the triple zig-zag is finished and thereby ending wave [B] and the onset of wave [C] decline below the end of wave [A] at 3,594 longer term.

Short term the next important support to look for is near 5,612, which is the 61.8% correction of minor wave c. A break below 5,612 would accelerate the decline to 5,481and 5,382



The VDAX shows a classic throw-over and a quick return above the ending diagonal calling for a important bottom and a rally towards the channel-top.

Gold - Fractal point 5 is done

The break back below the upper light green resistance-line show us, that fractal point 5 has finished and we can now expect a serious sell-off down to at least 957. A break below strong support at 1,000 will make the perma-bulls pull the emergency break.

The famous invertede Should/Head/Shoulde would be invalidatede and the extrem high number of speculative contracts/positions will have to be closed.

DJI - Is the top in place or do we need one more rally higher?

The break below fridays low at 10,561.66 adds favor to the picture of the top finaly being in place with the 10,729.82. The current rally would then be wave 2 which should find resistance in the 10,623 - 10,649 area for the next decline under the wave 1 bottom at 10,517.38 for a continuations to at least the 10,279 - 10,304 area.

Whats adds to the bearish case is, that none of the other indices made a new high yesterday. Leaving DJI lonely at the freezing cold top...

BUT! Until we see the break below 10,517.38 we are once againe presented with an alternate count, which I have shown below. This count has wave 4 ending at 10,517.38 yesterday and one more new high should be seen in the next couple of days.

The Known Universe

Thank you for this fantastic film from the American Museum of Natural History http://www.amnh.org/

DJI contra the USD-Index

There is an invers correlation between the DJI and the USD-index. A stronger USD will be mirrowed in a falling DJI or at least a sideways consolidation (we saw a sideways consolidations in the DJI, when the USD rose in most part of 2005).

Looking back to October 2007, when the DJI topped out the USD continued to weaken into early March 2008 building up pressure, which when unleashed had the USD rising more than 24% in little over a year, while DJI fell 43.8% in the same duration of time.

Since early December 2009 we have seen the USD rise 5%, while DJI has continued to strengthen about 3%, but how long can this be going on? One of the two have to give away its gains. I'm sure the DJI will be the one caving into the pressure. It should just be a question of time.

DJI - The low bet alternate count became a reality...

As I wrote yesterday "I will not bet on that count" meaning the alternate count calling for one last rally above 10,723.50 and what did we get? YES! you guessed it, we got the alternate count, so the stops on any shorts just above 10,723.50 was off cause taken out with a very small 0.41% loss.

So now that we know, that the move to 10,561.06 was only wave 4 of c of Z og [B], what can be expected? As wave 3 can't be shortest wave the maximum length of wave 5 is to 10,879.41.

As I don't like to loose more than 1% on a trade, I will short a break above 10,771 with a 10,880 stop or on a break below 10,561.06 ((the bottom of wave 4)with a 1% stop-loss), which would call for a quick move down to at least 10,263.97.

DJI - Minor wave 2 has entered its last stages

As can be seen wave c of 2 has become a nice looking five wave rally and the last wave (wave iv) became a triangle and we know what that means. Triangles always tells us, that we will see one more move in the direction of the ongoing trend. In this case a move higher towards 10,680 - 10,690 area. From here we will see at least a correction or as I expect in this case the top of wave c of wave 2 calling for wave 3down below 10,560.

This makes a great oppotunity for entering a short position in the DJI with a stop just above 10,723.50

DJI - Trendline-support from March has clearly been broken

The trendline-support since March 6, 2009 has clearly been broken to the downside.
From an Elliott Wave perspective we saw a very nice Throw-over in the final ending diagonal, which was C wave of Z of [B].

The break below ending diagonal wave 4 at 10,568.99 has confirmed that a top is in place for a decline to the beginning of the formation at 10,263.97.



The above chart is just a close-up of the final z-wave rise to 10,723.70.



This is a 1 minute chart of the decline from 10,721.50, which is a clear 5 wave decline to 10,561.06 and the following rise clearly looks like a a-b-c correction, which should a least reach 10,622.14, which marks the 38.2% correction of the decline from 10,721.50 to 10,561.06 and also the top of wave 4.

As this is a wave 2 correction I wouldn't be suprised to see a higher rally towards the 10,640 - 10,660 area, but it's not a necessity.

Finally a minor warning - Be aware that none of the other indices has confirmed the breakdown in DJI and the is a possible altenate count saying that this is wave 4 calling for one final rally above 10,723.50. I will not bet on this outcome thus, but just like to know it is a possibility.

GBP/USD - Time to begin wave 3 down to 157.05 at least

I was a bit confused about the faliure to reach strong support at 157.05 and the rise back to the Shoulder-Head-Shoulder neckline, but if wave 1 was a Leading Diagonal, things begins to make sense again.

Wave 2 then corrected 50% of wave 1, making a nice back-test to the S/H/S neckline and wave 3 down to at least 157.05 should be ready to begin. A break below minor support at 162.45 would be first signal, that the decline is underway, while a break below 160.60 will confirm the decline.

A break below 157.05 will have long term complications for the GBP as it would call for a decline to the 135 area. I do expect support at 157.05 to be broken soon or later.

DJI - I have made a small ajustment to my Ending Diagonal

Reviewing the priceaction of the last few days, I have had to make a small ajustment to my Ending Diagonal.

We are currently tracing out wave 5 of the Ending Diagonal. The maximum length possible of wave 5 is to 10,823.05 anything longer than that would make wave 3 the shortes, which is not allowed under the Wave Principle.

If wave A and C of Z is relating to each other a 61.8% relationship could be expected. If wave C relates to wave A x 61.8%, then wave C would end near 10,760.74 way below the maximum allowed at 10,823.05.

The chart below is a close-up of the Z wave in the Triple Zig-zag that began on March 6, 2009. A break below the red trend-line support would be first real sign that wave [B] is finished, while a break below wave 4 at 10,569 would adds confidense.

EUR/USD - Wave 3 of 5 has clearly begun

The second shoulder became smaller than anticipated, but looking in the rearmirrow it does make sence, that it alternated from the left side double shoulders.

First target area is the 142.15 - 142.25 area, but I still look for a decline towards the 140 area.

Stay with the USD for now.

EUR/USD - Minor wave 2 of 5 is ongoing

Just a short update to my post from yesterday.

As I said, I do expected minor wave 2 of 5 to take more time to finish and that has been the case. Minor wave 2 could be finished, but I do think the ideal structure would call for a move closer to 144.53 and a new rally towards the 145.55 area before collapsing through 144.53 for a decline closer to 140.

EUR/USD - Wave 5 down has most likely begun

On monday I wrote, that wave 4 wasn't finished as the move down to 142.64 clearly was a three wave affaire and we would see a move higher towards 145.70. This morgning we saw a move to 145.81 terminating wave 4. What's needed now is a break below 144.53 to add confidence to that assumption. I would expect minor wave ii to take up more time, before breaking down through 144.53 for a move closer to the 140 area.

DAX - Possible topping action ?

Wave [B] from early March has become a triple zig-zag. looking at the final zig-zag (red a-b-c)depending from where you messeaur the start of wave c it has entered the ideal topping area from 6,055 - 6,150. The Candle that entered the target-area became a Shooting star (which we also saw in FTSE 100 yesterday). This candle points to a fading momentum calling for a possible top. If todays candle becomes a black candle the Shooting star from yesterday is confirmed as a topping pattern




The above Chart is a closer look at the prize-action since March showing the confirmed Shooting star and a break below 5,949 would confirm a nearby challange of the uptrendline from early March, which currently is at 5,797. A clear break below the uptrendlinie calls for a much bigger decline

FTSE - Topping action?

Was just 10 point below the ideal target at 5,610, where red wave c would equal red wave a in length, at the same time we have a clear Shooting star indicating fading momentum, but we need a break below 5,494.75 to confirm a short term top and a test of important support 5,390. A break below 5,390 will be first serious sign that a much bigger dicline is ahead.

DJI - A top could be in place...

Today we got a classical Throw-over in the possible ending diagonal, what is needed now is a quick return into the ending diagonal and a break below the support-line and trend-line near 10,505.

A break below 10,505 would call for a quick move down to 10,235 and possible much lower.

Copper - Possible top is bulding

Copper has stages an impressiv rally during 2009 rising 176% from bottom to the top, but we now see some clear signs, that a top might be bulding. The test of the channel top was accompanied with a Shooting star, which also could indicate that a top is bulding.

The relationship between wave A and C in the second zig-zag where equal in length at 349.47 with a high set at 352.35. A break below 335 would be first signal that a top is in place, but a break below 306 will be needed to confirm the top.

Possible fractal in Gold (XAU)

Could a possible fractal be building in Gold (XAU)?

If yes, we should expect the ongoing rise in gold to reach the 1,195 - 1,196 area ending black circle 5, from where a serious decline to around 970 should begin, which would end minor black circle 6.

Please be aware, that the chart is a semi-log chart, so the two rectangles are close to be equal in points size, whereas the purple has only taken about half the time the organge did.

A clear break above 1,196 would call for a move higher towards 1,300.

EUR/USD - Wave 4 correction is still ongoing

The decline from 144.85 clearly was only a three wave affair, therefore wave 4 is still ongoing.

We should see a move towards the 38.2% retracement of wave 3 at 145.70, before wave 5can be expected. At no point can 148.28 be broken to the upside. If this resistance is broken wave 4 and wave 1 would overlap, which is not allowed and my alternative count would be favoured then.

I still think that we lack one more decline, but be flexible and let the market guide you.

EUR/USD - Minor wave iii of 5 is underway to 141.20

After reviewing my wave-count yesterday I changed it to a ongoing black circle wave 1wave 4 ended at 144.78 and wave 5 is currently ongoing. If we go down one degree wave ii of 5 ended in Far East trading at 144.46 and wave iii should ideally decline to 141.20, before some kind of flat or triangle wave iv sets in.

AUD/USD - The break above 90.50 forced me to alter my wave-count

The break above resistance at 90.50 forced me to alter my wave-count. Before we get to the new count, this is one of the nice things about the Elliott Wave Principle, that the rule, that wave four can't overlap wave one, gave you a very low risk trade. Yes the stop was taken out, but with a very limit loss.

Okay then the new count is, that minor wave i ended at 87.33 and minor wave ii became a double zig-zag, which ended yesterday with the test of 92.66. A break below 91.81 would be first minor confirmation that wave ii did infact end at 92.66, while a break below 90.90 confirms for a new decline below 87.33 for an ideal target near 83.08.

I am thinking that a new low risk trade have precented it self againe in selling AUD ag. USD on a break below 91.81 with a 92.70 stop-loss (1% risk).

EUR/USD - I have change my count

After reviewing my count I have decided to change it so wave 4 ended yesterday and wave 5 of black circle wave 1 is ongoing at the moment.

I feel more comfortable with this count. I do think that the black circle wave 2 count, wave 2 would have been much to small, therefor and extended wave 3 and finished wave 4 count is more prudent at this point, but I have keept the alternative count below.

Wave 5 should at least hit 141.65, but I wouldn't be surprised to see it closer to 139 and maybe even the 137.40 area, the last target is less likely thus.

EUR/USD - Possible black circle wave 2 is over

I currently see two possible counts for EUR/USD. I have showen both counts on the chart. The Alternative count is the same as I have showen under the USD-Index as my most bullish count.

The black circle wave 2 or wave 4 count became a complex double correction. I do think that a top is in place for a new decline below 142,18, which has a first minor target at 141.50 with a possibility to head down close to 137.40.

A low risk trade could be to sell on a stop at 143.90 with a 144.95 stop-loss.

Is the Dow 30 Enhanced Primium & Income Fund Inc. in trouble?

Dow 30 Enhanced Premium & Income Fund Inc. (the Fund) is a diversified, closed-end management investment company. The investment objectives of the Fund are to provide a high level of premium and dividend income, and the potential for capital appreciation. The Fund pursues its investment objectives principally through a multi-step strategy. The Fund will purchase the 30 common stocks included in the Dow Jones Industrial Average (DJIA Index), weighted in approximately the same proportions as in the DJIA Index (the Dow Stocks). The Fund will also purchase other securities or financial instruments, primarily swap contracts, designed to provide additional investment exposure (leverage) to the return of the Dow Stocks (the Additional Dow Exposure). The Fund also will engage in certain option strategies, primarily consisting of writing (selling) covered call options on some or all of the Dow Stocks (the Options). The Fund?s investment advisor is IQ Investment Advisors

Either they have made a major investment mistake (options?) or they have some illiquid investment they can't price mark-to-marked, forcing them to write off large amounts.

I don't know what has happened, but they can't just be holding the common stocks in the same proportions as in the DJIA.

This very much resembles some of the problems Funds ran into before the equity markets topped in October 2007.

S&P 500 - Could this be it too?

The picture for the S&P 500 is pretty much the same as for the DJI, so YES, this could be it too.

I have choosen a different time fram (240 minutes), but failuer too break free after the breakout to upside from the rectangle is again showing weakness. The up-trendline since early July has once again been broken, but will we get a followthough this time? If we do the next support to break will be 1,112.55 calling for a decline to the rectangle bottom at 1,084.06, if this support breaks too the next important level will be 1,058.24 as a break below this level will make this decline bigger than any decline since early July and for certain make sure that the uptrend is over.

Again the aggressive trade will sell the S&P 500 index on a rebound or a break below 1,112.55 with a 1,130.38 stop for a decline to at least 1,084.06.




The fractal count in S&P 500 is still valid which does call for a very big decline over the comming months

DJI - Could this be it?

Looking at the action yesterday my first thought was "could this be it?" YES it could. But we have seen so many false breakdowns in this [B]-wave rally I don't even care to count them anymore. Therefore let's play it a littel save this time.

First we saw a small break up from the rectangle, that has defined all the action since mid-November, but it quickly failed showing weakness. A break below 10,404.62 would be next small support to break adding to the weakening picture. A break below the rectangle bottom at 10,231.93 would do some real damage, while a break below 10,093.33 would make this decline the biggest since early July telling us that this uptrend is finished.

The agrresive trader will try to short the DJI on a small rebound or a break below 10,404.62 with a stop just above 10,580.18, for a decline to at least 10,231.93.