I spy a tri in SPY - as possible pattern, pointing low or high?

Although I've been thinking that the Elliott Wave count for the S&P 500 is that it's started a small-level (minute, it might be called) wave 1 of the fifth (larger-level) wave to finish the rally - by today's close it's also started looking like a triangle (tri). You can see this on the 15-minute bars chart of the SPX below. It's a consolidation move with progressively lower highs and higher lows - a contracting triangle. Normally a trader can do very well trading in the direction of a triangle breakout. In this case, the indicators support the idea that the breakout can still be upward, with a good 5th wave thrust pointing to 1080 or slightly above. Now, this doesn't have to be the pattern that completes, because we could still see an upward sloping, wedge-shaped ending diagonal triangle. Either way, suggesting that a new high still lies ahead, even if it isn't to a greatly higher new high level. This interpretation would be jeopardized if the index first falls under today's lows. (And at this point, I don't see how it would stay poised for a new high if it fell under 1039.)

I notice that Tony Caldaro placed trendlines onto his hourly Dow Jones Industrial Average chart which suggest an ending diagonal triangle there. With waves 3,4,5 (or c,d,e) still ahead.

The McClellan charts below also show a triangle in the Oscillator. While meanwhile, the Summation Index is now struggling to remain above its own 50-day moving average. All in all, still reasons to think this bear-market rally has a little time and price left to go ... but maybe, only a little. If you're not a day trader or fast moving swing player, this choppy environment can be very challenging to navigate. Might want to wait and look for a trend reversal pattern to show up. When a trend reversal shows up on the daily charts next, it should result in much more serious downside than we've seen in months.

PS to ChartsEdge fans daytrading - you could have seen their Pattern Recognition map this morning at their subscriber site - it did a neat job of pointing to how the day actually played out, especially useful for any traders who stay in the game after the first couple hours. (Though many do just play the first couple hours and then go golfing!)

Bill Gross of PIMCO buying Treasuries - should you?

Bloomberg TV reported yesterday that Bill Gross of PIMCO again said he's buying Treasuries. When I prepared this post last night I was still bullish Treasuries and glad to see Bill Gross, the "bond guru", agreeing. As I post this today, TLT is up $0.35 and may break above its 200-day moving average. That's a classically bullish move no matter what the wave count may be! Will Treasuries go to new highs? No, we cannot expect that - but their rally should continue higher for some weeks. And while I've liked $101-102 for a while for TLT, that's a conservative target and somewhat higher seems likely by the time a "B" wave count looks completed after some weeks.

ChartsEdge (US equities) map for 9/30

Market Map for Sep30
Posted: September 30th, 2009 |
Author: Mike Korell |
Filed under: One-Day Market Map | »

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Thanks once again, Mike and ChartsEdge! Folks - their Pattern Recognition map for today is also at their subscriber site. As they say, when there's good agreement between them, plus factoring in their weekly cycle map, you get greater assurance. This one above is their very interesting "BP" generated map.

Their weekly cycle forecast indicated up today, so that's different. The OEW count suggests we're either seeing more of small (minute?) wave ii down, or even more of a small second wave before a (minute?) wave iii up. Basically, I'm looking to see if the SPX tests 1053 or maybe we go into a triangle consolidating mostly sideways with higher lows and lower highs (contracting triangle), before a final fifth wave up to cap off the whole zigzag rally.

The bearish alternative is that it's over already - which I doubt, but it's another good reason to be careful, as always, out there! Don't forget to watch the dollar index ... And - Happy market navigating!

Currencies continuing to stretch toward retracements - or new extremes

It's interesting that, despite the inverse correlation between the U.S. dollar index and equities, that the dollar has retraced more than 62% to its low - while the euro (also inverse to the dollar index) has moved a similarly large amount - most equities indices haven't moved more than 50% back to their highs. So for U.S. equities, it seems the gains are diluted by the dollar's relatively greater weakness. Below, underneath the charts of yen (daily), euro (weekly) and dollar (monthly), I've added weekly and monthly views of the SPX "valued in euros" meaning as a ratio to the euro. This factors out the dollar's weakness to show the picture of what equities have gained or lost, separated from dollar weakness. But - the main point of this post is to point out that the yen has re-tested the important $111.49 pivot. I'm expecting it to work off this resistance and move higher above the pivot again. As for the euro and dollar - both look like they're facing another wave that should extend one more time, before they reverse trend. I've borrowed the euro chart from Tony Caldaro's site (always included in the list at right - thanks again, Tony!), which is labeled (apparently by a student or trading friend of Tony's) as readying for a last wave v of 5 up. It's reasonable to think that will go along with another finishing rally for equities (and dollar drop) over coming days.

These SPX:Euro charts are a different way of seeing the SPX. Aside from the obvious diminution of the 2007 "highs", it's also interesting, on the monthly you can see the SPX is now just testing the candle body of the 2003 low. Sobering!

About Gold; and: Fiat currency devaluation - Article by Tony Caldaro

After my terse remark this morning I'll add a terse explanation: I'm basically bullish on gold but just not convinced there isn't more correction still ahead for gold before it goes into the next really bullish phase. Currently it looks to me still poised to go either way, depending on whether the dollar gets support anytime soon or continues to work lower and retest or make new lows. As for the underlying fundamentals, I'd like to refer to an article Tony Caldaro wrote and posted to his site 9/28:09, at http://caldaroew.spaces.live.com/blog/cns!D2CB8C5EBA2ADE86!54130.entry. He includes a few charts, and here's a quote from part of his article:

From 1946 to the early 1970s, the Bretton Woods system made fixed currencies the norm. In 1971, however, the United States government abandoned the gold standard, so that the US dollar was no longer a fixed currency, and most of the world's currencies followed suit. From then on, the world's currencies have been floating against each other. In the first decade, the 1970's, the inflationary effects of an unlimited fiat currency drove interest rates to around 20%. Then for the better part of the next two decades the floating currency system worked well. Currencies with loose monetary policies were devalued against currencies with tighter monetary standards. In example, in 1985 the USD peaked, and then proceeded to lose half of its value against the YEN by 1995. In 1991 the ECU was introduced, it went sideways until 1995, and then began to decline with the YEN, against the USD into the end of the decade. During this entire period of time, the shelved currency, Gold, essentially went sideways.

Of course there's more, so I think you'll find it a good read. Whether or not the dollar finds support and can make a significant run, with gold doing more significant correction before its own next big bullish wave, you can count me in as seeing the currency perils that make gold attractive in the long run. Just so ya know.

ChartsEdge (US equities) map for 9/29

ChartsEdge has made available for today, their Pattern Recognition version of their daily map forecast. Subscribers to their service can of course see more they may provide for the day. Looking at this map, I see it fits with their weekly cycle forecast too (generated with other means) - that had shown Tuesday to be a low point, leading to higher levels the rest if the week. If we see an intraday low about 1053 or just 1058, the fit should work well (though lower is possible but I'm feeling not very likely). Of course it's also convenient for the new month, new money "cycle", LOL. Still, as I've said before: this is still zigzag movement which usually feels extreme, and remember that when the zigzag resumes to the downside.
A reader sent me a fascinating idea about a bullish fork on the monthly charts. It would fit with the idea we're already on the path if a much larger (supercycle?) wave V up. We may not have that answer fir another half year or so.....
As a side comment, I still think gold hasn't proven that it's following the bullish versus bearish wave count on the weekly charts - will just have to see for now. Naturally there's a lot to think about vis-a-vis the dollar!
So without more, here's today's contribution from ChartsEdge:
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ChartsEdge Pattern Recognition for Sep29

Posted: September 28th, 2009 | Author: Mike Korell |
Filed under:One-Day Market Map |
Comments to ChartsEdge »

The SPX sees your "two" but seems to be raising a healthy "one" as we look at prospects for another new rally high

Some Elliott Wave types think the equities markets already topped last week, as I mentioned over the weekend here, and therefore should be counting today's rise as all or part of a "wave two" corrective pullback upward. That might be "two for you," but "one for me" as the markets raise the stakes with the probability that today was all or part of a "wave one of 5" movement pointing to new rally highs. So far it looks to me like either a small "a-b-c" or a small "wave i, ii, iii" but I won't go into great Elliott Wave counting detail. Suffice it to say, if the SPX is tracing out an ending diagonal triangle (EDT) then this can be the first wave up with a second wave down very soon, then a nice third wave up. It was on this basis that I tweeted today about the potential for a small intraday head-and-shoulders pointing toward 1058 or possibly lower support at 1053. The small stick save at end of day (presaged by ChartsEdge's "pattern recognition map" at their subscriber site) may be saying that we'll see more movement up for this first wave, and possibly negating an ending diagonal wave structure - but again, I know that's more detail than most really want or need. Bottom line - support levels have moved higher again, with 1061 again and 1063, and important support at 1058 and especially 1053. At this point, it would even be surprising to see a break of 1039 (but never say never). If you prefer to cling onto a more bearish point of view, help yourself - given what the Elliott Wave count really looks like (this is why it's a good idea not to pay someone else to count it for you because they can and do make mistakes, you know who I'm talking about) - and given the cycles and projections indications from other methods like Andre Gratian's technical analysis, the ChartsEdge cycles, and frankly the Fibonacci levels in the QQQQQ's which now points to $43.30+ - the odds favor the markets testing higher.

Does this mean I'm bullish? Hey, if you've been reading here any length of time you know better than that. Just looking for the rally to put in another new high. We may well see that later this week, and then will have to do the analysis to see whether that'll do it or will it need yet a bit more.

As for intraday traders, many seem able to use the ChartsEdge intraday maps and I find them startlingly helpful. Those who cannot seem to get the hang of them or work with them, fine, use something else. When you look at the ChartsEdge map for today (posted just below, early this morning) which they created as the projection for how the day would look after the open - and then compare to the intraday SPX chart (upper right), it sure looks a lot more predictive than any set of squiggles I've seen anyone else put down for likely movements during the day. As I mentioned, the ChartsEdge pattern recognition version even added that stick save at end of day, but it's part of the subscriber site so I didn't want to post that up this morning - anyone can get their own subscription. For what ChartsEdge makes available openly, it's a great resource if you have the judgment to use it as a resource within your own disciplined trading plan.

If you didn't like the way the market actually rose more steeply from the open, compared to the map - just get used to the way the map is pointing to intraday cycles. The cycle obviously rising into mid-day, with weakness after that. That's very valuable information before the market open. There's more information on how to use the maps, and how to react if intraday bias starts skewing the curve intraday, at the www.chartsedge.com/wp site and also at my NB3 site (in links at right).

On the SPX hourly chart below, I've marked in the basic idea of counting out the zigzag bear-market rally, at least the part of it we're working with now. Too soon to say whether we're looking at an EDT or standard impulsive structure for this last move up. It could even turn into a triangle that says the wave "4" marked on this chart isn't done yet, and then start the wave 5. I just wanted to put up something that illustrates the most likely wave count based on everything I'm seeing. There's a good chance that tomorrow, especially if we see a pullback, may be a great short-term buying opportunity into the end of the week.


UPDATE: Below are McClellan charts for the NYSE and Nasdaq. The Oscillator is bouncing from oversold, and the Summation Index remains relatively high though weakening. This relationship is similar, from a technical perspective, to the sentiment perspective that Andre Gratian included in his array of analyses this past weekend: bullish near-term, more concerning around the corner.

ChartsEdge (US equities) map for 9/28

ChartsEdge Market Map BP for Sep28

Posted: September 27th, 2009 |
Author: Mike Korell |
Filed under:One-Day Market Map |
Comments to ChartsEdge »

How to tell if that equities market break is THE break: Trendlines, cycles, projections, and technical analysis with Turning Points by Andre Gratian

September 27, 2009
Turning Points
By Andre Gratian

A 3-dimensional approach to technical analysis
Cycles - Breadth - Price projections
“By the Law of Periodical Repetition, everything which has happened once must happen again, and again, and again -- and not capriciously, but at regular periods, and each thing in its own period, not another’s, and each obeying its own law … The same Nature which delights in periodical repetition in the sky is the Nature which orders the affairs of the earth. Let us not underrate the value of that hint." -- Mark Twain

Current position of the market
Long-term trend - Down! The very-long-term cycles have taken over and if they make their lows when expected, the bear market which started in October 2007 should continue until 2014. This would imply that much lower prices lie ahead. This will not be a straight-down decline, but a series of intermediate-term rallies and declines until we have reached the low point.
SPX: Intermediate trend - Near reversing! The intermediate move which started in March is coming to an end. But we will need confirmation by trading below the main trend line which is currently just a little above 1000.
Analysis of the short-term trend is done on a daily basis with the help of hourly charts. It is an important adjunct to the analysis of daily and weekly charts which discusses the course of longer market trends.
Daily market analysis of the short term trend is reserved for subscribers. If you would like to sign up for a FREE 4-week trial period of daily comments, please let me know at ajg@cybertrails.com

Overview:
Last Wednesday, we saw the indices reverse sharply after touching our 1080-85 projection. By Friday, prices were still declining, but found some support on a secondary uptrend line and held above it until the close. Before we can claim to have made an important reversal, we will need to break that trend line and move lower to challenge the primary uptrend line which ran at about 1002 as of Friday’s close.

For some time I have warned that the longer-term cycles were nearly ready to turn down once again. Perhaps they finally have. We’ll need to confirm this by seeing the SPX breaking significant trend lines and support levels. Several Elliott Wave theorists have been looking for the top of primary wave 2 and the beginning of primary wave 3. Elliott Wave International is one of them, expecting a sudden decline to new lows once it has. Others have a somewhat different count, but with the same results: the beginning of a sharp decline which will lead to new market lows.

Although we may have started a good correction, I will not be convinced that we have made the final high of the move from the March lows until we get some solid confirmation. At the very least, this would include breaking the main uptrend line of the wedge formation. The reason that I need more confirmation is that there are conditions that I look for at important highs that are missing. One of them is relative weakness in the NDX. This is clearly not the case right now. The other is that we did not have enough of a negative reading on my preferred sentiment indicator. I do not know for certain that these are absolute requirements for an intermediate top, but it’s enough to warn me to wait a little longer before deciding on a trend change.

There are several possible scenarios at this juncture. One of them is needing to make one more wave to new highs before we finish the move from 667. Next week will bring more clarity. Let’s analyze the charts.

What's ahead?

Chart Pattern and Momentum

On the weekly chart (ab0ve), the SPX met resistance at an internal trend line which parallels the primary trend line, and from the top trend line of its wedge which it penetrated slightly last week. The price closed above the pink MA and well above the green trend line. There is some negative divergence continuing to show in the histogram and the lower indicator just nicked its uptrend line. It’s the picture of an uptrend which is in the process of an unconfirmed reversal.

The daily chart (below) shows the resistance which the index was facing when it met its projection target at 1080 (pink horizontal line). There was the wedge upper trend line (red), the extension of a former trend line (dashes). At that level, it also met an important internal trend line (dashes) which is a parallel to the primary downtrend line.

Note that the second leg (C) of the larger wave pattern is itself a smaller wedge, and that the current decline has come to rest on the lower trend line of that wedge.

When the index met its target and the trend lines’ resistance, negative divergence was appearing in all three indicators, an ideal set-up for a reversal to take place.

Breaking the secondary trend line on which the SPX is currently resting will bring a challenge to the main trend line and to the 50 DMA (blue). If this happens, the MACD -- which has been losing upside momentum little by little for several weeks -- will be in a position to challenge its uptrend line which is now almost a year long. A violation of that trend line would be bearish.

The hourly chart (above) shows an index which is ready to move up. Two of the oscillators have already turned up and it’s only a matter of the price breaking above the pink moving average and the trend line.

Whether it does or not is, in part, a matter of when the 30-day cycle will make its low. The green asterisk-- which is placed on Monday -- is probably the ideal time for it to do so, but the green line represents the range that its phase has had in the past, so it may have bottomed on Friday, or may not do so until next Wednesday.

If the trend line holds, the combined push of the up-cycle plus the end of quarter window dressing could start a new uptrend. How much strength develops in this uptrend will determine what kind of a top was made at 1080.

Cycles
From the last newsletter: “The longer-term cycles which had been expected to roll over in early August have been delayed, helped by a rash of good economic reports. Nevertheless, it’s only a matter of time before they turn. Perhaps another two or three weeks.” Longer cycles require a longer time period to confirm that they have turned. I have already discussed what would be required for confirmation. If they have, we could be facing a decline which would last well into 2010.

The 22-wk cycle is ideally due to make its low on about 10/13 -- if it does not invert, as it did at the end of its last phase. There are 5 minor cycles which are due to bottom between now and then. With that kind of pressure directly ahead, it would seem logical that the decline, after a bounce off its trend line, would continue into that time frame.

Other cycles suggest a low toward the end of October.

Projections:
With the 1080-1085 projection met, we got the normal reversal which accompanies filled targets. The first downward projection of 1046 has been met and surpassed.
If the secondary trend line is broken and the index goes below the 1035 level, we can expect the next immediate objective to be about 1010.
If a bounce off the trend line takes the index past 1053, it could continue to about 1060 before turning down again; beyond 1060 with good A/D support would suggest a potential test of the highs.



Breadth

The NYSE Summation index (courtesy of StockCharts) does not show much divergence to the SPX.

But its RSI is now showing important negative divergence to the Summation index (SI) itself.

This is bearish and indicates topping action.

The daily A/D index has already given a sell signal, but the hourly is back in an uptrend, and could signal a coming bounce.


Market Leaders and Sentiment

The sentiment indicator (courtesy of Sentimentrader) is near neutral on a long-term basis and somewhat Bullish, short-term.

This is normally not an indication that we are ready for an intermediate decline, but it suggests that a short-term rally may be due.

The relative strength index of SPX/NDX (at left, courtesy StockCharts.com) is mixed and not particularly bearish.

Summary

From the last newsletter: “When it gets underway, the decline is expected to continue well into 2010. We are not quite there yet, but I would expect that by the next newsletter, things will look a little different -- and we will be much closer to reversing!” Things are indeed looking a “little” different, but not much, and although we have started a decline, there is still no confirmation that we have made an important top. Confirmation would entail breaking below the primary uptrend line which currently runs a little above 1000.

Andre

ChartsEdge cycle-based forecasts for the week ahead in (US) equities and gold

The weekly cycles-based forecasts have been issued by ChartsEdge (their longter-term forecasts and additional access for their daily maps by subscription, and their site always included in the list at right):
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Cycles tell a story about this market rally (the more things change, the more they're the same); risky ETFs that may be okay; and other trading topics

UPDATE - Terry Laundry's update at his T Theory site includes a chart and audio comments about a "mystery T" - so don't forget to check it out.

Here's a look at a few other items on the web worth checking out, including a look at certain ETFs for trading, and market charts analysis. Cycles expert Tim Wood has written a basic explanation of how he uses cycles analysis, using the Dow Jones Industrial Average as an example with additional comments on how he sees that (bullish vs. bearish). It's in his Market Observation - Tim W. Wood 09.25.2009, at FinancialSense.com: Cycles and the Big Picture. I keep Tim's Cycles News & Views site in the list at right because his cycles work really is impressive. Here's a quote of Tim's introduction - then you can click on the link to read his full article with the charts he refers to:

I have recently received a few e-mails asking about cycles and their application to the market. So in today’s wrap up I will attempt to present a brief and very simplified explanation of how cycles can be used as a very powerful technical tool once they are understood. I will then apply this simplified cyclical concept to the market.

From a cyclical perspective, the trend is defined by the direction of the cycle of the next larger degree. Also, from a cyclical perspective we work in many different dimensions. In this overview I’ll keep it simple and we will only focus on 3 dimensions. The key is to isolate and study each cycle of each dimension so that the direction and expectation of these cycles can be known. The identification of these cycle lows is definitely outside of the scope of this brief overview as it would require extensive writing and study on your part to do this subject justice. All I want to do here is simply present the concept of using cycle highs and lows of various degrees to show you the concept of how we can work in the various dimensions to identify important turn points. I will apply this concept on a very elementary basis and without the aid of indicators or statistical timing bands.

The first dimension that I work in is the long-term. Please see the diagram below. The red trend lines are representative of the long-term cycle. The overall trend is obviously up when this cycle is advancing and is down when this cycle is declining. These lows are identified using timing bands that have been developed through historical norms, the price action of each cycle of smaller degree and the help of price oscillators that have been specifically timed and developed for each cycle. Once a long-term cycle low is identified and confirmed we then know that the trend is up. We can then use the declines into the lows of the cycles of smaller degree as buying opportunities.

Here's another article, this one's a little more immediately bearish than I'm feeling right now, but hey - if it's just a week or so here or there, it's pretty close anyway, and this one has a bunch of neat charts: Multi-Year Bear Market Appears Ready to Return -- Seeking Alpha, 9/26/09.

And a good article about certain ETFs including FAS, FAZ, DTO, UNG, VXX/VXV, and some others: Defending the 'Most Dangerous ETFs': A Response to Don Dion -- Seeking Alpha (I think it's dated 9/25/09).

And check out the posts at our UBTNB3 blog, including Brian's (kalkgrun) chart showing LIBOR sparking up (link at right side of the page).

ADDED: And this weekend's sentiment and technical review from Todd Salamone and Rocky White at schaeffersresearch: Monday Morning Outlook: Despite Long-Term Uptrend, Bearish Sentiment Prevail, 9/26/09.

If you need more time to pack a parachute, you may get some: Objective Elliott Wave update by Tony Caldaro

The Elliott Wave methods can be very helpful for determining projections, trend change areas, and just the probabilities for whether and when moves may be complete. While some EW'ers may say the rally's over (yes, I read that update) - and while that may be true for for some indices or countries - Tony Caldaro sees a probability that the U.S. major equities indices aren't topped out yet. Using his Objective Elliott Wave which he updates at his Elliott Wave Lives On site (always included in the sites listed at right), he's discussing where he sees the S&P 500 index vis-a-vis the expected rally top. I've learned to have a lot of respect for Tony's work. Besides, right now it's agreeing rather neatly with Terry Laundry's T Theory comments; and, Andre Gratian separately has some projections in mind that don't say the rally's exactly over. I guess I like it when methods seem to be coming together ... Obviously the OEW count would change if the DPX fell under - but that certainly hasn't happened yet. And Tony's count looks right to me, for what that may be worth! Let's see what he's saying in his weekend update:
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the Elliott Wave Lives on
by Tony Caldaro
September 26, 2009
weekend update

US markets stumbled this week after release of the FOMC statement at 2:15 on wednesday. Rates remained unchanged, but the FED extended mortgage and agency bond pricing support. The initial reaction was a 15 minute pop to a new uptrend high at SPX 1080. Then the market sold off hitting a low on friday at SPX 1041. Economic reports were mostly higher, but lower than expectations. Leading indicators rose, as did FHFA home prices, new home sales, consumer sentiment, and jobless claims were lower. Existing home sales dropped, as well as durable goods orders. For the week the SPX/DOW were -1.9%, and the NDX/NAZ were also -1.9%. Asia was -1.5%, Europe -2.0%, and the Commodity equities -1.3%. Bonds display a loss of 0.3%, but yields declined 15 basis points. Crude lost 8.9%, Gold lost 1.7% and the USD gained 0.4%.

LONG TERM: bear market
For the past twelve months the market has been on a wild ride. On 25Sept08 the SPX closed at 1209, on 09Mar09 SPX 677, and today 25Sept09 SPX 1068. This represents a 76% swing from SPX 1209. The only historical comparisons we could find were Sept 1937-38 a 55% swing, and May 1974-75 a 65% swing. Which is quite interesting considering many are suggesting comparisons between the 1937-1942 bear market, and the end of the 1973-1974 bear market. Economically, the years that followed each of the two previous swings were inflationary, and included many social disruptions. War in the former and oil embargoes in latter. Despite the volatility the SPX/DOW are closing in on the typical Primary wave B bear market retracement level of 50%. While the bull/bear market debate continues, let's review.

Since 1929 there have been only four periods of time when the US market lost nearly 50% or more of its value: 1929-1932, 1937-1942, 1973-1974 and 2007-2009. In OEW terms these four instances are considered to be either Cycle or Supercycle waves. Historically, the time it took to end these bear markets was between 23 months and 60 months. In the first two periods, a 50% decline was followed by a 50% retracement, then the market retested or broke the previous lows. In the third period, the shortest, the bear market ended on the 46% decline. Our bear market started in Oct 2007 at SPX 1576 and by Mar 2009 hit SPX 667, for a 58% decline in 17 months. Since then the SPX has rallied to 1080, for a 45% retracement of the bear market in six months. Nothing unusual in comparison to the first two time periods. During the third period (1973-1974) which was again 23 months. After the 46% decline into the 1974 low, the market started impulsing in five waves structures. The first wave up retraced 46% of the bear market in 3 months. The second wave up was also three months long, and the total retracement was then 64% in seven months. In comparison to our 2007-2009 bear market, the first wave up appears corrective and retraced 32% in three months. This second wave up, also corrective and still ongoing, is nearing its third month, and the total retracement thus far is 45%. The bull market liftoff in 1975 looked quite a bit more bullish than our current rally from Mar09.

Examining the 2007 bear market thus far. The decline from SPX 1576 to SPX 667 took the form of a zigzag. We labeled it Primary wave A of a three wave ABC Cycle/Supercycle bear market. This zigzag subdivided into three Major waves: Major A Mar08 SPX 1257, Major B May08 SPX 1440 and Major C Mar09 SPX 667. Both Major waves A and C were five wave structures, and Wave B was a counter trend rally. At the lows we expected a 50% bear market retracement (SPX 1122) or a 50% rally, in the form of another zigzag to complete Primary wave B. Then Primary wave C would take the market down again to either retest the lows (1937-1942), or break the lows (1929-1932). We continue to hold this view.

MEDIUM TERM: uptrend hit new high SPX 1080
In review of Primary wave B we noted that it is taking the form of a zigzag: Major wave A Jun SPX 956, Major wave B Jly SPX 869, and Major wave C underway. The internal structure on Major wave A was also a zigzag, with Intermediate waves A and B simple structures, and Intermediate wave C a detailed five waves. The current uptrend, Major wave C is also following the same scenario: a simple Intermediate wave A and B followed by a detailed C. When making fibonacci comparisons we arrive at SPX 1158 if Major wave C = Major wave A, and SPX 1141 if Int. C = Int. A of Major C. Also at SPX 1122 the bear market has retraced exactly 50%. In addition to these price relationships we have OEW pivots at 1090, 1107, 1133 and 1168. Therefore, it is quite clear that there are a cluster of price relationships from SPX 1090 to SPX 1168, with the mean at SPX 1133.

Another recent observation is a cluster of turn dates over the past twenty years. The 1990 low occurred on Oct 11th, the 1998 low Oct 8th. Then we had the 2000 high on March 24th, the 2002 low on October 10th, the 2007 high on Oct 11th, and the 2009 low on March 6th. The months of March and October have played a key role in the past two decades. If we assume this trend will continue we would expect Primary wave B to end around the second week of October. Possibly between the 8th and the 13th, since the 10th and 11th fall on a weekend. If numerology is your game, Primary wave A ended on Mar 6th at SPX 667. Then Primary wave B could end on Oct 13th at SPX 1133. Food for thought.

SHORT TERM: Support for the SPX remains at 1041 and then 1018, with resistance at 1061 and then 1090. Short term momentum put in a negative RSI divergence at the SPX 1080 wednesday high, and then went extremely oversold on two occasions into friday. Counting from the Intermediate wave B low at SPX 979 in mid-August. The market rallied five waves up into late-Aug completing Minor 1 at SPX 1039. A 47 point pullback followed to complete Minor 2 at SPX 992. On wednesday Minor 3 completed a five wave structure at SPX 1080, and now the market has declined 39 points to SPX 1041 as Minor 4. The market is sufficiently oversold on the hourly charts, and nearly so on the daily charts. If this Minor wave 4 is similar to the previous one in May, it may bounce around for a fews days before ending.

There are two key points to observe in the coming week. First, should the top of Minor wave 1 at SPX 1039 be overlapped, then a potential ending diagonal triangle may be underway. Minor waves 1-2-3-4 should then be considered as Minor waves a-b-c-d of an abcde ending diagonal. Both counts are being followed on the SPX hourly chart. The second point, should the 1018 pivot be reached that would increase the probability that Primary wave B has already ended. The market dodged that bullet recently when the OEW 990 pivot held in early September. Quite a lot to think about in the coming weeks.

FOREIGN MARKETS: TThe Asian markets were -1.5% on the week, with Australia (+0.5%) displaying the only gain. Both China and Japan remain in downtrends.
The European markets were -2.0% as both England and Germany declined. Both still in uptrends.
The Commodity equity markets Brazil and Canada were -1.3%, again both declined but remain in uptrends.

COMMODITIES: Bonds display a 0.3% decline on the week, but yields declined 15 basis points. Still expecting about a 3% yield on the 10YR bond.
Crude made lower lows in its downtrend, -8.9% on the week. Still expecting $50 Crude in the months ahead.
Gold ran into Comex options expiration -1.7%. Uptrends remain in place for Gold and Silver, oversold short term, and still expecting $1100 Gold soon.

CURRENCIES: The downtrending USD (+0.4%) gained against the uptrending EUR (-0.1%), but lost against the uptrending JPY (+1.8%). The USD appears to require another push lower to complete the multi-month downtrend. The EUR is getting close to our fibonacci target as well.

NEXT WEEK: A busy economic week ahead as G-20 concludes this weekend: Case-Shiller, final revision to Q2 GDP and non-farm payrolls. The week starts on tuesday with Case-Shiller and the Consumer Confidence reading. Wednesday we have the ADP employment index, the Q2 GDP revision, and Chicago PMI. On thursday the weekly Jobless claims, Personal income/spending, ISM manufacturing, Construction spending, Pending homes sales and Auto sales. Then friday the Payrolls report and Factory orders. As for the FED vice chairman Kohn addresses the CATO institute on wednesday, and FED governor Tarullo testifies in the Senate. On thursday, FED chairman Bernanke testifies in Congress regarding regulatory reform. Certainly halting the advancement of the HR 1207 resolution is numero uno on his mind. Also on thursday the Foreign exchange rates report. Best to your week!

NOTE: At the begining of the month we added Natural GAS, Silver and expanded our currency coverage. In addition to the USD index, the EURUSD, JPYUSD and CADUSD, we added AUDUSD, GBPUSD, CHFUSD, ZARUSD and the following currency cross pairs: GBPJPY, EURGBP and EURJPY. Unfortunately some of the pairs are inverse to FOREX pairs, but this is out of our control (stockcharts). This week we added Wynn Resorts WYNN to our stock list, Jacob C. will be tracking it.

CHARTS: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1606987

Chart of the Day is reminder of ongoing drop in core asset - home prices

It seems many markets may classify bearishly as completing, or already completed, a "b" wave up that positions them for lower levels. The housing and real estate markets look like they fit into this description. Below is my weekly chart of the real estate ETF, called IYR, showing that it's turned down after testing its 50% retracement to an interim 2008 swing high with the sharp rally. Slightly higher are $48.38 which would retrace 61.8% back to that, and $51.18 that would retrace 50% back to IYR's all-time high. It's possible that IYR can struggle higher to at or slightly above $52 before finishing. The 50% level, in addition to being a Fibonacci number, is also a classic amount for an Elliott Wave "b" wave to retrace. NOTE - the IYR price has already reached a symmetry of the second rally leg to the first part of it (so it can be a symmetrical ABC). If it falls under $37 before making a new high, it's mostly likely finished already. Otherwise, if it does make new highs, then the $48.38 and $51.18 areas would likely finish it.

Also below is a chart and discussion from "Chart of the Day" with a bearish-looking outlook on home prices. What does all this imply?

That the decline by real estate off the recent rally top is either the first step down in a move that will retest and likely fall beneath the lows. Or that it's a temporary pullback before making one more higher wave up, before it's ready to roll over. Either way, not something that whets the appetite of position investors. Nor does it make me want to run out and buy actual real estate on the theory that "it's bottomed and this is the best time to buy."

Remember that the "Chart of the Day" uses inflation-adjusted dollars. Of course, what this also implies is that if the dollar actually rises (shock!), then the realized current values will get dragged down by that deflationary factor alone. That's one reason why the "Chart of the Day" looks even more bearish than the charts people normally use for understanding real estate prices.

Chart of the Day - Home prices resume decline
September 25, 2009
Today, it was reported that the median price of a single-family home dropped 2.3% in August. The stock market sold off on the news. For some perspective into the all-important US real estate market, today's chart illustrates the US median price of a single-family home over the past 39 years. Not only did housing prices increase at a rapid rate from 1991 to 2005, the rate at which housing prices increased – increased. That brings us to today's chart which illustrates how housing prices are currently 30% off their 2005 peak. In fact, a home buyer who bought the median priced single-family home at the 1979 peak has seen that home appreciate by a mere 4%. Not an impressive performance considering that three decades have passed. Over the past two months, single-family home prices have resumed their decline and remain (until proven otherwise) in an accelerated downtrend.

Chart of the Day is provided without warranty of any kind and accepts no responsibility for its accuracy or for any consequences of its use. Journalists and bloggers may post the above free Chart of the Day on their website as long as the chart is unedited and full credit is given with a live link to Chart of the Day at http://www.chartoftheday.com

Is the equities market fracturing a sign of something more? Weekly preview comments of Raymond Merriman

Raymond Merriman has issued his MMACycles Weekly Preview Comments for the upcoming week. His site is always included in the list at right - let's see what he's saying tonight. I'm particularly interested of course in addressing whether "the top is in" or is there another, last wave up which can be indicated by some methods for a top in another week or so ... But there are other big issues to think about too. So let's see:
=============

Comments for the Week beginning September 28, 2008
written by Raymond Merriman

Review and Preview

The stock market finally broke last week. When slow moving planets as far out as Saturn and Uranus make an exact aspect, it can take up to 12 trading days before a reversal in some financial markets unfolds. In this case, it took six days afterwards. The third passage of the 45-year opposition aspect occurred on September 15, but it wasn’t until Wednesday of last week (September 23) that many of these indices finally began to break down. And now we watch to see how far this decline will be. Will the Dow Jones Industrial Average plummet about 2000 points in the next 3-4 weeks as it did in the first two passages of November 4 and February 5? Or will the decline be mild this time, given that the opposition took place during the retrograde Mercury time band (September 6-29), a cosmic phenomenon that oftentimes fails to produce the same results observed during prior geocosmic instances?

It is also interesting to note that not all world indices made new cycle highs last week before the break on Wednesday-Thursday. In Europe, the London FTSE and Swiss SMI indices did top out last Tuesday, September 22. But in the case of the Netherlands AEX and German DAX, the high last week was slightly lower than the highs of the prior week, thus creating a case intermarket bearish divergence in the part of the world. In Asia and the Pacific Rim, none of the indices we track made a new cycle high last week. The highs of September 17 held in the Australian All Ordinaries index, the Russian MICEX index, and Hang Seng of Hong Kong. Japan’s Nikkei index still has August 31 as the date of its high for this cycle. All these were tested last week, but none took out the prior highs. Yet in the Americas, all four indexes made new cycle highs last week. The DJIA, NASDAQ Composite and Merval of Argentina all made highs last Wednesday, while Brazil’s Bovespa made its cycle high on Tuesday. More disturbing than the cases on intermarket bearish divergence is the fact that the momentum oscillators in most of these markets are all turning down now too. But once again we have to ask: is this for real, or will be another fake out and trick of Mercury Rx, the cosmic trickster?

Other financial markets also broke last week, including precious metals, crude oil and foreign currencies against the Dollar. In fact, the key to understanding all of these moves is the possible reversal in the Dollar. As Saturn prepares to begin its hard aspect to Pluto October 29, 2009-August 21, 2010, in degrees that hit the chart of the Sun-Pluto opposition of Federal Reserve Board chart (December 23, 1913), there is reason to think that the U.S. Dollar is on the verge of an impressive reversal towards more strength, or a complete breakdown.

Short-Term Geocosmics

The idea that geocosmic signatures might be supportive of a strengthening in the US Dollar this week were discussed last week in relationship to transiting Venus too. As stated last week, “The next day (September 20), Venus will leave Leo and ingress into Virgo until October 14. Since Venus rules values – like money or currency – it is possible bankers could begin to initiate activities to support the Dollar, which is once again on the precipice of falling off the cliff, and starting a crisis.” The Euro and Swiss Franc may have ended important trends with their new cycle highs last Wednesday.

This week is important for many reasons related to Financial Astrology. First, Mercury ends its retrograde motion on September 29. This also begins yet another time band of heavily populated geocosmic signatures, lasting though October 16. In fact, in those 18 days, there are eight important aspects. Of most importance, however, may be the translation of Venus to the Saturn-Uranus-Pluto T-square of October 9-15. Readers will note that the Sun just finished this same translation September 17-23 and that coincided with the highs for the year in most world equity indices, and the break that happened right at the end. The first thought is that perhaps the move down that just began could end October 9-15. But then a closer look at that period will reveal that the Sun will trine the Jupiter-Neptune conjunction October 10-16, while Jupiter ends its retrograde motion and goes stationary direct date on October 12. These later signatures would appear to be bullish, for the nature of Jupiter and Neptune is akin to “irrational exuberance.” However, as pointed out before, sometimes so much Jupiter and Neptune can coincide with periods of panic and hysteria, even when in a favorable trine aspect. Since the technical picture seems to be deteriorating, traders must be alert to this possible manifestation. And, as always when Neptune is in the picture, there is the possibility of questionable manipulative activity going on behind the scenes, devised in order to create an illusion of support that is not truly there.

Longer-Term Thoughts

Last week’s column approached the topic of national security and military possibilities, given the reversal in policies related to the shelving of the missile defense shield plans for Central Europe. I would like to elaborate on that a little more from the point of view of Mundane Astrology. In this study, Mars is the planet that relates to the military of a country. By progression, Mars has now turned retrograde in the chart of the United States (July 2, 1776), as of mid-2008. Mars will remain retrograde for approximately 78 years, which implies that the historical thrust of the USA military policy is entering a long stage of reversal. The collective urge to be less military-oriented, and more oriented to efforts designed to attain an era of world peace, is likely to grow as Mars is retrograde in the USA chart. But at the time of the progressed retrograde, both the “hawks” and the “doves” will likely commence a powerful schism in the USA psyche. The decisions of the past two weeks show this duality at work. Not only is the USA foregoing the building of the missile defense shield in Central Europe – a clear symbol of Mars retrograde – but it is now also going to re-evaluate its war strategy for the conflict in Afghanistan. Just a few weeks ago, it was called a “War of Necessity.” Now there is a re-evaluation going in as to whether or not to send more troops to the battlefield, as originally planned. This too is a symptom of progressed Mars retrograde, and the change of mind happened as well under Mercury retrograde. Generally-speaking, decision as important as this made under Mercury retrograde will, be altered again.

But what I mostly want to point out this week is that transiting Mars will enter its 26-month retrograde cycle on December 20, 2009, and it will last through March 10, 2010. The USA could be in a very critical credibility period at that time regarding its military intentions and policies. I see two possibilities here. Either the War in Afghanistan is about to take a major turn in military offense, with the purpose of turning to tide around by Christmas, or else these changes will be stalemated until around that time, and then a major military offense will begin. As a Mundane Astrologer, the more successful course would probably be the former, and then complete the missions before Mars goes retrograde. The danger is continuing any military offenses after Mars turns retrograde, for one can get bogged down in frustrating delays and resistance that turns the momentum around. More troublesome, however, would be the start a military offensive after Mars goes retrograde, for one of our rules is that whoever is the aggressor under Mars retrograde is usually the loser.

The United States, and in fact the entire world, is on the verge of entering yet another powerful geocosmic period. It is building up to Mars retrograde, but even this is just one of the many signatures within the greater umbrella of the Cardinal Climax, involving the T-square of Saturn, Uranus and Pluto that is in effect 2008-2015. This can be a very dangerous time, with the potential of seeing anything from a very destructive military conflict to yet another severe financial crisis. Or it can be the turning point, turning from the fear of war and terrorism to a movement that has the potential to lead to a prolonged period of world peace. We are in the thick of it right now, and it will be most interesting, as students of geocosmic studies, to see the military developments that unfold between now and mid-December, especially coming out the USA.

Announcements

The September issue of the MMA Cycles Report, and its companion the MMA Japan Cycles Report, was issued last week. If you subscribe to this report and were not able to log in to our web site to download it, let us know at once and we will email you a copy of it. This report covers our longer-term analysis of the U.S. stock market, precious metals, crude oil, currencies, Treasury Notes, and grain markets. For subscription information, please go to SERVICES at www.mmacycles.com. Also note that if you subscribe before October 15, you will lock in current rates before our prices increase. Save big bucks and subscribe now for the next year.

Speaking of lower rates…. All of our subscription reports will be increasing after October 15. Not only that, but right now our once-a-year fall special for some of the MMA subscription reports is currently going on! If you are an active short-term trader, you will be interested in the special offer now for MMA’s Weekly and/or Daily Market reports. If you order a year’s subscription to any of these reports with the 2010 Forecast Book prior to October 15, you will receive a 10% discount off the current price. After that, the prices for our daily and weekly reports will increase by 20-50% and the discount period will come to an end. The full MMA Weekly report, for example is currently $1000/year, and will increase to $1500/year after October 15. But prior to that, the cost will be 10% off $1000, or $900, if ordering with Forecast 2010. The MMA Daily Update report currently costs $2500.00/year. With the 10% discount, it is available for $2250.00. After October 15, the yearly subscription will increase to $3250.00. Additionally, by subscribing now, you will lock into these current rates for future renewals too! These reports represent the only way I keep in touch with traders on a daily or weekly basis. The weekly report provides in-depth analysis of the DJIA, S&P and NASDAQ futures, Euro currency (cash and futures), Swiss Franc, Dollar/Yen cash and Yen futures, T-Notes, Soybeans, Gold and Silver. On October 15, we will also add Crude Oil. The daily reports cover all stock indices listed above, as well as futures in Euro, T-Notes, Soybeans, Gold and Silver. Subscription to the daily report also includes the weekly report. For more information, go to http://www.mmacycles.com/services, or call our offices at 1-248-626-3034. In the words of one of our subscribers: “I recently subscribed to your weekly report and am finding it to be excellent and a very useful companion to the MMA Cycles Report. I can't imagine now managing my investments without them.” Save big bucks and order now, before the special offer ends in two weeks.

It’s that time of the year again! Pre-publication orders for next year’s annual Forecast 2010 Book can now be placed. And once again there will be a discount to those who order before October 15. The retail price of the Forecast 2010 Book will be $55.00 this year. However, for orders placed before October 15, the special pre-publication rate is $45.00 (plus postage). Although 2009 is only approximately half over, the 2009 book has already been one the most accurate of all that have been written in the past 33 years. A list of many of those forecasts outlined in the 2009 book that have already come to pass is listed on our web site at www.mmacycles.com. And the critical reversal dates given for at least three of the markets have been extremely accurate, including the high and low of the year in many markets. As always, the book is published and mailed out around December 15. Please note that the Forecast books have sold out by the end of February in three of the past 4 years. So, order now and save big bucks, and also make sure you reserve a copy before they sell out! Once they are gone, they are gone. There are no second printings. This year we are pleased to announce that you may order the Forecast 2010 book in five other languages besides English, as follows: Japanese (http://merriman.jp), Dutch (www.markettiming.nl), Spanish (www.mmacycles-spanish.com), German (www.mma-europe.ch), in Serbian (www.mma-balkan.com), and in Russian at www.urania.ru. These same sites also offer our weekly column in their respective languages.

The DVD of the Financial Astrology workshop in Chicago is now available for purchase. The cost is $175.00 and includes a workbook of the graphics used in the class. Some people learn best with visuals like DVD’s, on courses like this one, and others learn best from books. But this workshop clearly lays out the basic methodology of combining cycles studies with geocosmic studies to forecast market trends as well as critical reversal dates for any market. The emphasis in this workshop was on the U.S. stock market and Gold. To order, contact our office at 1-248-626-3034 or email Amber at ordersmma@msn.com, or to go our web site at www.mmacycles.com.

We are pleased to announce that the Spanish publication of “Basic Principles of Geocosmic Studies for Financial Market Timing” has just been completed. This first edition in Spanish will be in print in 10 days. For more information and ordering, please contact www.mmacycles-spanish.com.

I am oftentimes asked for recommendations of a money manager who uses my methods, since I won’t manage other people’s money. The thing is, almost all money managers I know use their own systems. But many subscribe to my services and share my thoughts about the future of the economy, various financial markets, and how to position one’s portfolio along these lines. One money manager who subscribes to our services that I would suggest for those looking to structure a longer-term portfolio, such as a retirement account, is Duke O’Neill of Boulder, Colorado. He can be reached at dukeoneil1@gmail.com, or 1-(303) 817-8263. For those looking for a professional trader of commodity and futures contract might consider Ted Lee Fisher at ted.fisher@comcast.net. Ted is a legend in financial futures and has a seat on the CME. Both are very knowledgeable of the tools I use, of the way I am looking at markets, and yet each makes their own decisions as to exactly when to enter and exit any market.

Our weekly comments can now be read in Russian at www.urania.ru, Japanese (http://merriman.jp), Serbian (www.mma-balkan.com), Spanish (www.mmacycles-spanish.com), German (www.mma-europe.ch), French www.lecochonsideral.info, and Dutch at (www.markettiming.nl).

We are pleased to announce our new official Japanese web site at http://merriman.jp. Here you can read our free weekly report in Japanese every week. You can purchase several of our books and subscription reports in Japanese, including or new weekly Gold report, Cash Currencies report, and both the MMA Cycles and MMA Japanese Markets Cycles reports. If you read Japanese, please feel free to check out this new site, created by Toshi Nippou Ltd. of Tokyo.

We are also pleased to announce the formation of our new Weekly Cash Currencies Report in English. This report will cover our weekly analysis of cash Euro Currency, the Dollar-Yen, and the Euro-Dollar markets. For further in formation on this new subscription report, please visit www.mmacycles.com, and look under SERVICES.

The German version of “Merriman on Market Cycles: The Basics” is now in print. It is also a revision of the earlier work in English. For more information on this book, please go to our German web site at http://www.mma-europe.ch/.

We have added a valuable new feature to our web site. Now, on the very front page, you can get a daily update on the weighted values of the Solar-Lunar cycles for the Dow Jones Industrial Average and the Silver market, via the studies conducted in “The Ultimate Book on Stock Market Timing Vol 4: Solar-Lunar Correlations to Trading Cycles,” and “The Sun, Moon and Silver Market: Secrets of a Silver Trader.” These are the studies I use personally for short-term trading of stock index futures, ETFs (like DIA and Silver fund), and Silver futures. Anything over 100 means it has an above-average correlation to reversing from an isolated high or low if it forms that day. The higher the value, the more probable the reversal. To see these daily values, please go to http://www.mmacycles.com/, and just check it out on the top of the page.

Disclaimer and statement of purpose
The purpose of this column is not to predict the future movement of various financial markets. However, that is the purpose of the MMA (Merriman Market Analyst) subscription services. This column is not a subscription service. It is a free service, except in those cases where a fee may be assessed to cover the cost of translating this column from English into a non-English language.

This weekly report is written with the intent to educate the reader on the relationship between astrological factors and collective human activities as they are happening. In this regard, this report will oftentimes report what happened in various stock and financial markets throughout the world in the past week, and discuss that movement in light of the geocosmic signatures that were in effect. It will then identify the geocosmic factors that will be in effect in the next week, or even month, or even years, and the author’s understanding of how these signatures will likely affect human activity in the times to come. The author (Merriman) will do this from a perspective of a cycle’s analyst looking at the military, political, economic, and even financial markets of the world.

It is possible that some forecasts will be made based on these factors. However, the primary goal is to both educate and alert the reader as to the psychological climate we are in, from an astrological perspective. The hope is that it will help the reader understand these psychological dynamics that underlie (or coincide with) the news events and hence financial markets of the day.

No guarantee as to the accuracy of this report is being made here. Any decisions in financial markets are solely the responsibility of the reader, and neither the author nor the publishers assume any responsibility at all for those individual decisions. Reader should understand that futures and options trading are considered high risk.
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Please note: This is not the same as our service titled "MMA Weekly Comments and Recommendations on Financial Markets" which is available by subscription only.

Banks buffetting to a "b" wave top on a beat of their own - bearishly

Recently I've been pointing out that the banking index ($BKX) has chart resistance in the area and slightly above about $50. Also that Tony Caldaro's count for the regional banking index (its ETF being KRE) already logged in a "b" wave top, with the ETF more matched to $BKX - KBE - closing in on its own "b" wave rally top. (Thanks to Tony for his KBE chart below, under my $BKX chart - you can find all Tony's charts via his public charts link from his Elliott Wave Lives On site, in the sites list at right.) The wave pattern I find more ambiguous for the $BKX and KBE, than that for the broader market. Specifically, it's possible to count both $BKX and KBE as either done, or having another final wave up still to go. The negative divergence in the indicators signals that either way, investors should be thinking about taking profits off the table (and the more aggressive, selling short) on the next bounce which might have a time frame of early October.

The wave count suggests at least a retest of the lows, and a real probability of new lows. Fundamentally it's conceivable with the looming prospects of commercial real estate dragging down banks' balance sheets. And this talk of the FDIC going hat in hand for good banks to loan it bucks for bad banks (I guess a Ponzi plan is okay if it's the FDIC with actual intentions of repaying the bagholders). Brrrrr!

ChartsEdge (US equities) maps for 9/25

ChartsEdge Market Maps for Sep25
BP map and Pattern Recognition map (with notes below)
Posted: September 25th, 2009 |
Author: Mike Korell |
Filed under: One-Day Market Map | »

Thanks again Mike and ChartsEdge! Today we might find out if the SPX goes under 1039.47. If it does, then I can't recommend being seriously long until and unless it bounces back above that. Risk would be that such a bounce is only a wave 2 pullback up. Makes it tough for swing players and in a way that might be the game. For what it's worth, I believe there's one more wave 5 up which Tony I think calls a minor wave - whatever it's called, notice that Terry Laundry also suggests a bounce to around 1089.

So careful out there, happy market navigating, and happy Friday! Bet we're going to see yet another Friday close that leaves questions unresolved, so fodder for another set of weekend analysis and review!

For that bullish feeling, check out RINO which has traders charging

When Trader Brian who's posting nowadays at the UBTNB3 site (see links and site feed at right) and tweeting - under the moniker, "kalkgrun" - first mentioned RINO, I'll admit I thought it was a biotech probably focused on flu prevention or remedies. Might be a waste of the name, except that this China-based maker of waste disposition, environmental protection equipment has traders charging ahead like rhinos! A rhinoceros has bulk like a bull, and its stubborness helps it charge and break through with just one massive horn (compared with a bull's two). It's Rino International (Nasdaq: RINO). Brian tweeted again today about volumes, so check those out on the daily and weekly charts below.

So you say, it's too late and the money's been made after it zoomed up from a penny? Well, Investor's Business Daily likes the fact it's built a base at/above $12 - read Paul Whitfield's article on this, at http://finance.yahoo.com/news/Rino-Shaping-Its-First-Base-Above-$12 (9/22/09). Holding this stock as a position underpinned by this base therefore also makes sense as a KI$$ position too! Browsing about, I also learned that the Motley Fool folks like RINO because of insiders buying and holding substantial stock in it. From an Elliott Wave perspective we should allow for the possibility that it's embarking on a large third wave up to come. If that's the case, then it really should not fall under $11 or $12, so that's a logical area to stop out if the situation changes. Interesting that the parabolic SAR just turned positive on the weekly - but it isn't my favorite indicator so let it just be part of the positive indicators. So thanks Brian "kalkgrun" - the volumes generated as traders charge into RINO may be signaling that this beast will be charging ahead for a long time to come ...!

Are U.S. Treasuries getting ready to surprise to the upside?

Treasuries have been moving sideways for quite a while now. Often it means consolidation before another move up - although when it occurs underneath the 200-day moving average, it can be "churning" before another leg down. Those who are bearish with short positions, however, may have to stop out and/or switch to go long if Treasuries break upward. The TLT daily chart, below, shows the indicators reflecting enough strength still to point upward. I've been thinking $101-102 is a reasonable objective even though a higher rebound is possible. The monthly chart of $USB, also below, shows that Treasury bonds really haven't broken long-term support - again justifying a cautiously positive view for the near-term.

Fundamentals are concerning for the long-term, of course. But for now, it's a matter of comparing alternatives. Some players might be TMAR'ing profits from the equities, commodities, and non-dollar currencies rallies. Might some of that get parked in Treasuries until the markets provide another set of great buying opportunities (probably at lower levels)? That could be a way of "packing a parachute" using terminology like Raymond Merriman did a couple of weeks ago. Thanks to nakedcapitalism, we've also got the word that PIMCO's bond guru is seeing things that way - Bill Gross: Sell Risky Assets and Buy Treasuries (9/22/09).

ChartsEdge (US equities) map for 9/24

ChartsEdge Market Map for Sep24
BP map (see my own notes below)
Posted: September 24th, 2009 |
Author: Mike Korell |
Filed under: One-Day Market Map | »

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Thanks again, Mike and ChartsEdge! This is their "BP map". Their "Pattern Recognition map" is also available at the ChartsEdge subscriber site (check the link in their weekend email if you're a subscriber).

Welcome to the day after Fed day! As I write this, the futures look consistent with testing around those 1050-1057 levels. I'm thinking the "wave 4" the SPX is working out, per Tony Caldaro's OEW counting, is likely to remain above 1039.47 and probably get support in this 1050 area, though that 1041 level is available if needed, below. I gave the reason for my thought on this, in the post here last night.

How 'bout that oil price?! Remember when I posted recently about it going into a wave 2 down? Looks like that's proving right, so use the "Oil" label to refer to that, including target levels. Looks like Gasoline is traveling the same path. (Don't know if it's the same for coal - KOL -but be careful in case it is.). There's news about how shale reserves of natural gas in the US alone will greatly add to NG reserves, and in some applications including electricity generation, natural gas can displace at least some coal usage, depending on the price relationships at the margin. Still - if this really is just a wave 2 pullback, then a wave 3 up will be a great ride in oil and gas (maybe coal, if the pattern fits). We just don't want to be at risk in case the pattern turns more bearish, so no harm in stopping out longs and looking for a good reentry point at lower prices.

Gold continues an interesting discussion especially when charted in currencies other than the dollar. We'll continue to eye the dollar, and don't forget Treasury bonds which should have some upside ahead. So - remember to "measure twice, cut once" while honoring stops as well as letting working trades run to at least initial projections before tightening stops and/or TMAR ... and happy market navigating!

When TMAR strategy helps traders pocket profits in both directions, we double-check S&P 500 rally AND the dollar's levels

It's all about trading at this stage of the rally - not so much about trying to invest according to fundamentals (what some tech-heads call "funny-mentals"). If that wasn't clear before today, this afternoon's volatility drove the point home! I'd tweeted not only some levels the rise could project to, but also support levels underpinning that - which obviously, at least the big boyz and galz were taking very seriously, so I hope my tweet-readers did too. If you were fast enough to use them for a short play on the round trip down, then you were able to pocket profits in both directions. Where does all this leave us now?

The ChartsEdge weekly cycles forecast had pointed down after a rise early in the week, so from that perspective, a drop wouldn't have been out of order. The ChartsEdge daily map suggested rising, which we got - most of the day. My understanding of Elliott Wave probabilities is that we can be expecting the pullback or consolidation, which I've previously said recently is common toward the 26th of each month anyway. And then a likely 5th wave up which might merely poke a slight new high - or might hit up toward 1107 area (despite my thoughts on resistance in the current area) - with a completion peak at end of September, early/mid October, which may work with Andre Gratian's projections, and should satisfy Terry Laundry's T Theory projections too. It'll be great if it all comes together!

I'm borrowing Tony Caldaro's SPX hourly and US dollar index daily charts (thanks again, Tony! - check out his site in the list at right) to show his wave count which has a lot of merit. I see support about 1050 to 1057, though Tony's update (at his site, use site link or feed at right) mentions other levels ... and I know Andre Gratian is separately reviewing projections to his subscribers. Clearly for Elliott Wave analysts, if this is going to become an ending diagonal triangle, it needs to continue dropping fast (though in a zigzag fashion normally) to poke slightly under 1039.47 SPX. I'll be a bit surprised if that happens, yet not displeased because it can be a very telling (and tradable though ziggy) structure. The reason I'll be surprised to see 1039.47 broken before the final wave completes this rally peak, is that a classic EDT has the middle wave (called either "c" or 3) shorter than its initial wave (whether called "a" or 1). Since only and EDT would also have the wave1/4 overlap caused by poking under 1039.47, then either I'll expect it's an impulse structure that remains above 1039.47 until finishing the rally peak, or something else is happening. Now, EDT fans, don't give up - I do rather expect and EDT wedge for the final fifth wave that should start once this 4th wave pullback/consolidation is done - we're just not quite there yet. Meaning - if the SPX does in fact move under 1039.47 before we identify one more wave up completing the peak, then the "something else happening" would probably be quite bearish. But c'mon, aren't we likely to see the QQQQ's test $43.30 area, before it's over?!

Also, if the SPX pokes under 1039.47 tomorrow, psychology will probably start changing, even though the EDT would give bulls a chance or two to cash out their positions at better prices, which can still range back up between 1080 and 1090 even though price wouldn't hang around there too long.

Remember when Raymond Merriman made a comment recently about taking profits quickly? We saw it today and it may well set the tone for the next week or so. After that will be interesting too, but let's see for sure how to navigate this wave we're in now. My passed mentor had a phrase, "TMAR" - take the money and run! If you see me using it, you'll know what it means.

Finally, the dollar dropped under that prior swing low support, so now I'm eyeing those Finonacci levels I've mentioned again recently: 74.75, and 73.58. I'll take either, and we'll know by reaction - pattern and volumes - which one is going to put in an important low. Probably right about the time equities chop into the peak of this rally, don't ya think?!

(all the sites I've referenced are in the sites list at right)