Saturday, October 31, 2009

Objective Elliott Wave update on the SPX and other financial markets - by Tony Caldaro

We're fortunate to reference Tony Caldaro's weekend update from his Objective Elliott Wave site (links below, and always at right). Let's see what illumination he brings to the markets today - it's very helpful for making sense of the action we've been seeing!
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the ELLIOTT WAVE lives on

Market analysis using proprietary Objective Elliott Wave techniques
October 31
REVIEW

Despite a surge in Q3 GDP (+3.5%) and generally otherwise neutral economic reports the US stock markets plunged: SPX/DOW -3.3% and the NDX/NAZ -5.0%. This week's drop was the largest since the week of May 11th in the SPX/DOW, and the week of Mar 2nd in the NDX/NAZ. There were improving economic reports in housing prices, durable goods orders, the Chicago PMI and consumer sentiment. The weekly jobless claims were neutral, and declining reports in consumer confidence, new homes sales, personal income and consumer spending. In other markets Asia was -3.9%, Europe -3.7% and the Commodity equity markets were -5.7%. Bonds gained 0.9%, Crude lost 4.4%, Gold slipped 0.9%, and the USD (+1.2%) rallied against most currencies except the JPY (+2.2%). In the week ahead ISM, Auto sales, the Payrolls report and the FOMC suggests another volatile week.
LONG TERM: bear market
A five year bull market unfolded between Oct 02 and Oct 07. During that period of time the SPX rose from 769 to 1576 or 105%. Then the SPX entered a bear market, where it has remained, (in OEW terms), since that time. Please recall I have noted that the months of Mar and Oct have been creating significant turning points for several decades. From the SPX 1576 Oct 07 high the market dropped to SPX 667 in Mar 09. A total market loss of 58%, wiping out the entire five year gain in just 17 months. This 50% plus loss confirmed that this wasn't just a common bear market, but one of Cycle or even Supercycle proportions. Historically there were only three other occassions in the past century when the market lost about this much value: 1929-1932, 1937-1942 and 1973-1974. These are the three Cycle waves of the past century. Cycle waves typically unfold in three large waves. We label them Primary waves A, B and C. Primary wave A usually creates a 50% loss in total market value. Primary wave B usually retraces 50% of the entire decline, and many claim a new bull market is underway. Then Primary wave C resumes the bear market and bottoms near the Primary wave A low or much lower. These types of bear market can last anywhere from 23 months to 60 months.
During the Oct 07 to Mar 09 decline Primary wave A formed a detailed zigzag (5-3-5). We labeled the zigzag as three Major waves: A SPX 1257, B SPX 1440 and C SPX 667. The details can be found on the SPX weekly chart. Within a few days of that low, we suggested a completed wave structure for Primary wave A, and projected the potential for a 50% retracement Primary wave B (SPX 1122), which is between our two long term OEW pivots: SPX 1107 and SPX 1179. Last week Primary wave B hit the SPX 1107 pivot for the first time after a seven month rally. On Oct 19th the SPX hit 1100, and on Oct 21st it hit SPX 1101. This week the market turned sharply lower. The wave structure during the Primary wave B advance took the form of a complex zigzag. Zigzags are quite common in bear markets. We again labeled this zigzag with three Major waves: A SPX 956, B SPX 869 and C SPX 1101. At the current high the SPX had retraced 48% of the entire Primary wave A decline. History, when interpreted correctly and truthfully certainly repeats. Once OEW confirms a downtrend, which should be soon, the most logical objective would be for the SPX to retest Major wave B at SPX 869. This would only complete the first wave down of Primary wave C. It's still a bear market.
MEDIUM TERM: uptrend in jeopardy
As noted above Primary wave B unfolded in three Major waves to complete a complex zigzag. What made it complex was that both uptrends, Major waves A and C, unfolded internally as double zigzags. Bear market rallies are certainly not bull market impulse waves. Bear markets teach the finer points, with a myriad of complex patterns, of the Elliott Wave. Bull markets then allow the EW technician to put that knowledge to maximum use. The details of this complex Primary wave B zigzag can be found on the SPX daily chart. Both Major waves A and C were seven wave structures. The first three waves, a 5-3-5 zigzag, we labeled as Intermediate wave A. Intermediate wave B then became the fourth wave, and the next three waves, another zigzag, completed Intermediate wave C and each Major wave. Notice the symmetry between Major waves A and C. Also notice the negative divergences at every Intermediate wave high on the daily chart, and the negative divergence at both Major waves on the weekly chart. When one calculates the fibonacci relationships between the waves, as we noted last weekend, the following relationship stood out. During Major wave A, Int. C = 0.618 Int. A at SPX 956 and during Major wave C, Int. C = 0.618 Int. A at SPX 1097. It certainly appears Primary wave B should have concluded at SPX 1101.
SHORT TERM
Support for the SPX is at 1018 and then 990, with resistance at 1041 and then 1061. Short term momentum was oversold at the close on friday and displaying a slight positive divergence. Each of the rallies during both Major wave A and C were five wave structures. The early ones in Major A were diagonal triangles, and then after that simple impulse waves. At the early October SPX 1020 low we anticipated one more five wave rally to complete the entire Primary wave B structure. It unfolded exactly as labeled on the SPX 60 minute chart. When negative divergences accompanied that fifth wave on all timeframes, from the very short term up to the weekly charts, and it ended at a long term OEW pivot. We alerted that an uptrend top may be at hand to conclude Primary wave B. Every uptrend, during this entire bear market, has ended at an OEW pivot. Now that the decline appears to be underway and is impulsing downward, we are starting to get downtrend confirmation from other indices, sectors and indicators. Currently Spain's IBEX, Canada's TSX and Japan's NIKK are in downtrends. This is the first downtrend for Spain since the Mar 09 low. As for the sectors: Housing HGX, Banking KBE, Utilties XLU and the Semiconductor index SOX are in downtrends. This is the first downtrend in the XLU since Mar 09. Along with various stocks that are in downtrends, see pages 15-20 in the link below, we have observed the following indicator signals. The put/call ratio hit its highest daily level since Nov 08, the advance/decline ratio topped with a negative divergence, and the UP/DN volume hit its highest weekly level since 2000. The popular VIX is now in an uptrend, and as Matt in our OEW group pointed out, today was the largest one day surge in over five years. The current 30 reading implies a 2% daily volatility range. The short term count remains unchanged: wave 1 SPX 1074, wave 2 SPX 1096 and wave 3 possibly ending at SPX 1034. The internals of wave 3 is a nice five wave structure: wave 1 SPX 1075, wave 2 SPX 1092, wave 3 SPX 1042, wave 4 SPX 1067 and wave 5 possibly SPX 1034. Once the downtrend is confirmed by OEW we will apply the proper wave labeling with wave degree etc. on the charts. Best to your trading!

FOREIGN MARKETS
The Asian markets lost 3.9% on the week, all indices were down, and the biggest loser was India's BSE (-5.4%). NIKK in confirmed downtrend.
The European markets lost 3.7% on the week, all down also with the biggest loser Germany's DAX (-5.7%). IBEX in confirmed downtrend.
The Commodity equity markets lost 5.7% on the week, again all down with Russia's RTSI (-7.7%) the biggest loser. TSX in confirmed downtrend.
COMMODITIES
Bonds gained 0.9% this week. Bond yields remain in an uptrend, but not confirmed by bond prices yet.
Crude lost 4.4% on the week, but remains in an uptrend. Crude was quite overbought recently so it could pullback some more.
Gold lost 0.9% in a volatile week. Should be in correction mode along with Silver (-7.7%), but should hold the recent low at $1027 spot.
The USD gained 1.2% for its best week since June 1st. That's the last time the EURUSD (-2.0%) went into a correction. The JPYUSD was +2.2%.
NEXT WEEK
A very busy week ahead, which will probably add to the volatility. On monday, ISM manufacturing and Construction spending at 10:00. Tuesday, Factory orders and Auto sales. Wednesday, ADP employment index and ISM services. Thursday, the weekly Jobless claims, Productivity and Unit labor costs. Then of friday, Non-farm payrolls, the Unemployment rate and Consumer credit. Yes, it's FOMC week too. On monday FED associate director Greenlee testifies before Congress at 11:30, then FED governor Tarullo gives a speech at the UofMD at 3:00, and the Foreign exchange rates are reported and tuesday the FOMC meeting begins and on wednesday the FED releases their statement. Best to your weekend and week!

VIX jumps for new uptrend channel, borrowing existing trendline on its long-term bigger-picture chart

The VIX popped above resistance yesterday and looks like it's established that it's uptrending again. Congrats to Mike on your VIX 30 calls! That said, it's also pushed above the upper Bollinger Band, and very close to its 200-day moving average. Just as interesting, on my weekly chart it's also revisited with a kissback to the former uptrend support line that it broke when equities went into the second rally leg up. My sense is that this uptrend line will become useful again to help define the new uptrend channel. On any pullback of the VIX, we should see it get support along a new parallel support line.

For any pullback, it will also be reasonable to see the Bollinger Band midline become a support area, which should help define a new uptrend for the VIX.

Stock indices have been running opposite the US dollar but that's neither guaranteed nor always true

Increasingly I'm seeing others puck up on the inverse correlation between stock indices and the US dollar. That doesn't make it wrong - I've been pounding on that inverse correlation for months. But let's realize it isn't always true. The US dollar led the stock markets down during 2007 as you can see on the weekly chart at bottom. More recently, there have been brief times when they haven't moved exactly opposite (top chart below), but they've generally moved that way. Let's take a moment though, to think why the dollar might drop AND equities drop, since that DID happen before. When investors outside the U.S. see the value of their U.S. holdings go down, they don't necessarily buy more - they may instead sell, to stop yet more losses.

Recently there have been heightened fears that the dollar may plunge to new lows. And it might, there's no guarantee it won't; especially with fiscal policymakers and decisionmalers who seem bent on doing all they can to devalue the dollar. I'm just pointing out that we cannot simply assume that busting the dollar down to new lows will help our stock markets. If it happens, it could cause investors holding our stocks in other currencies, to pull out their support in search of more rewarding investments.

The other alternative of the US dollar strengthening - it's almost difficult to think how it could, given the efforts underway to run the dollar printing presses with fiscal and debt/spending policies. Unless it's just a cyclic or wave function, probably accompanied or rather caused by investors becoming more risk averse and selling equities to raise more cash - could strengthen the dollar at least temporarily. Well - it isn't my goal here to really get into economics or fundamentals. My main message for investors and traders is, don't just take for granted that the inverse correlation will continue indefinitely or at all times. Any trend or tool only works until it doesn't, and some thoughts (even if not fully complete) about what's going on can remind us to avoid getting stuck in any assumptions.

Friday, October 30, 2009

Financial markets' turmoil precursor of what happens as perceptions shift: Raymond Merriman's weekly preview comments

Here are Ramond Merriman's public weekly comments of fascinating financial astrology (interspersed with cycles and economic commentary) which you can find, along with his other articles and services, at his Merriman Market Analyst site (always in the list at right here):
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MMA Comments for the Week Beginning November 2, 2009
Written by Raymond Merriman

Review and Preview


World equity markets made a complete about face as the Sun left Libra last week, and started its month-long trek through Scorpio this week. They sold off, and even the benevolent Venus trine Jupiter Wednesday night could only lift the market up strongly for the one day that followed. Even that was on the back of the positive GDP numbers in the United States, the first in several quarters, which signals the end to this recession that started in December 2007. By Friday, stocks market shrugged off those favorable GDP numbers and Venus-Jupiter love fest of Thursday, as many fell to their lowest level in three weeks. The Dow Jones Industrial Average, for instance, was up 200 points on Thursday, but down 250 on Friday, closing nearly 300 points below 10,000. Weren’t they just celebrating 10,000 as finally having been conquered again on the TV market stations? This is not a good sign.

In tandem with stocks, precious metals and foreign currencies also fell against the US Dollar. So did Crude Oil. None of these markets made new highs last week, after doing so the week or two before. In fact, they all sold off to multi-week lows by the end of the week. As suggested before, we are in Scorpio now, and the focus is all about debt. It’s hard to be optimistic about the future when you have to think about the heavy load of debt still present today.

Short-Term Geocosmics

The Sun’s month long ingress into Scorpio wasn’t the only geocosmic factor of importance last week. Saturn also moved into Libra on Thursday, October 29, where it will remain until April 7, when it retrogrades back into Virgo for a little more than three months. Saturn is exalted in Libra, and both Saturn and Libra pertain to issues of fairness and justice. In classical astrology, Saturn in Libra is a strong and potentially positive position. It inclines one to measure all sides of an issue, and to make a choice that is well-considered and wise. It favors leaders who are calm, mature, and take their time to come to a decision that is just. But Libra is also a cardinal sign, and cardinal signs rules action. In fact, four of the five furthest-out planets in our solar system (Jupiter, Saturn, Uranus, and Pluto, not to mention the Moon’s North Node), will all be in the early degrees of cardinal signs sometime in 2010, having recently left the “thinking” mutable signs. What does this mean? Well, I think it means that the USA president will move from a stage wherein he takes a lot of time to consider all things (well, may things), and will soon move into a phase of great action, for better or worse, depending on your point of view. He won’t be “dithering” much longer, as suggested by his critic and former Vice-President Dick Cheney. But he may not act in a manner that pleases his far left supporters either, for Saturn in Libra is about as “centrist” a position as can be imagined in Mundane Astrology. It is, after all, the halfway point through the zodiac. Saturn here is apt to be more pragmatic, and less ideological. But with Pluto in Capricorn being squared by this Saturn in Libra, it is also very political and savvy. I think the next few months will witness a remarkable transformation in the leadership style of Barack Obama, one from contemplation (or “dithering”) to action, one from a very liberal ideologue to a surprisingly more centrist leader who wants to move things forward with more broad-based support. In the process, he may lose some of his current supporters, and they won’t go out gently.

But back to short-term geocosmics. The translation of Venus in trine to the Jupiter-Neptune conjunction, October 28-November 2, did not produce a top as suggested. In fact, the markets are selling off into this translation zone, which is not a good omen for the future. But the translation ends with Monday’s full moon, followed by Neptune’s station from retrograde to direct motion on Wednesday. That could produce a reversal – unless the strong presence of Neptune correlates with hysteria and panic. If it does, the markets could be in trouble all the way into the first passage of the Saturn-Pluto waning square, which takes place November 15. Since Neptune is one of the co-rulers of crude oil, this may be a market to watch closely this week too for clues. Neptune also rules rains and floods, and this is one of the problems for farmers trying to harvest their crops late in the season. They can’t get the machinery out in the fields, and there is danger of losing much of this year’s crop, which would be consistent with Saturn square Pluto.

Longer-Term Thoughts

Last week’s column discussed the insider trading and market manipulation themes of transiting Neptune over the NYSE chart. In that column, we stated, “It is no coincidence, according to the principles of Financial Astrology, that the biggest insider trading scandal in decades was alleged last week against hedge fund giant Galleon Group. What may be more surprising is that this maybe just the tip of an iceberg, for usually under such transits, the revelations are not exposed until 1-2 years afterwards.”

Indeed that seems to be the case, as the front page of Wednesday’s Wall Street Journal headlined “Ex-Chief of AMD is linked to Galleon.” The article states, “A criminal case… alleged an unnamed Advanced Micro Devices, Inc. executive shared confidential information about the chip maker with a defendant in the case. The AMD executive is Hector Ruiz, then AMD’s chairman and previously the company’s chief executive.” This probe is starting to widen. With Saturn coming up to its first of three waning square aspects in mid-November, there may be more high ranking leaders of the business community pulled out and pulled down.

But this is just part of an even bigger problem related with Pluto in Capricorn, 2008-2024. Pluto rules debt, but debt is really nothing more than money in today’s world. You can’t have one without the other, but the hope is that they are somewhat balanced. Pluto also rules “deals behind the scene.” They are “behind the scene” for a reason. Those involved don’t want others to know what they are doing. Thus Pluto relates to the element of “secrecy.” In the mundane world, Pluto rules banks, investment houses, and taxing agencies of the government (i.e. IRS). Basically it represents those institutions that deal in OPM – Other People’s Monies. Thus again we have debt issues, which pertains to Pluto.

Capricorn and its ruler Saturn, on the other hand, pertain to the Government, as well as big business in general. So what can happen when Pluto is in Capricorn, and squared by Saturn? Well you can create instances where the line between government, banks, and big business becomes very unclear. They can be all connected, rather than separate, and “deals behind the scene” can take place by representatives in each of these areas. We see this today, for instance, as the USA Government now has taken a controlling stake in banks, insurance companies, and automobile companies, with health insurance companies possibly next on the docket. The USA government has also appointed a pay czar to set compensation schedules for executives of these firms who are now partly owned by the government, but really owned by the taxpayers of this country. The problem is that these cases (and these positions) become potential conflicts of interest, as the temptation to corruption – ala bribery, or payment for financial favors – increases immensely. There is a reason why there is separation of church and government, and the same should possibly be true with business and banking with the government. But today, for instance, a case can be made that the USA Central Bank – the Federal Reserve Board – has now become the fourth branch of government, as suggested by David Wessel in the sub-title of his excellent book “In FED We Trust” (2009, Crown Publishing Group). Another example of the blurring of lines this creates is in the form of campaign contributions, or lobbying efforts, by large banks and corporations with elected government representatives. Literally, votes and/or political influence can be bought, and that is something Pluto in Capricorn won’t tolerate for long.

With Pluto in Capricorn, there is bound to be an increasingly intense demand for honesty and integrity by all of these parties, and a demand for a more formal separation of influence of government leaders from big business and banks. As Pluto moves further and further into Capricorn, first squaring Saturn for the next 9 months, and then in square to Uranus 2012-2015, this issue is apt to become the basis for many more exposures of corruption. What will be surprising is how far up the corporate ladder, and how deep into the U.S. Government, this conflict of interest goes. Heads will roll, because when Uranus squares Pluto, it will fall in an exact T-square with the USA’s own Sun square Saturn, at 11-14 degrees of Cancer and Libra respectively. However, that’s about 4 years away. In the meantime, it’s like a tidal wave that is just beginning. Once again, the only way to survive in business, banking, or government, is to be totally honest – and maybe a little lucky. Pluto in Capricorn is not a good time to be dishonest or corrupt. Everything comes out, and no one gets away with anything in the end.

Announcements

If you missed out on the special pre-publication rate for the English version of Forecast 2010, know that the special discounts are still in effect through the end of October in other languages. These include: Japanese (http://merriman.jp), Dutch (www.markettiming.nl), Spanish (www.mmacycles-spanish.com), German (www.mma-europe.ch), Serbian (www.mma-balkan.com), and Russian at www.urania.ru. These same sites also offer our free weekly column in their respective languages.


You can still pre-order next year’s Forecast 2010 book before it comes out December 15. And it is a good idea to order it before then because you will want to be in the first mailing that goes out, in order to make sure you receive it before Christmas. After the first week of December, new orders received may not get processed and distributed until the first mailing is completed, which usually takes 3-4 days. Additionally, these books have sold out by February in three of the last 4 years, and there are no reprints. When they are gone, they are gone, although you may be able to purchase them on “after market” web sites for about three times the retail price. Now that 2009 is nearly over, we can look back and see that the 2009 book has been one of 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 markets have been extremely accurate, including the high and low of the year in many. As always, the book is published and mailed out around December 15.


We have another event coming up. The annual world webcast of Forecasts for 2010!!! The “Virtual On-line Discussion and Forecasts for 2010 with Ray Merriman!” will take place on Sunday, December 20, 2009, starting at 1:00 PM EST (that’s 6:00 PM, GMT, or 10:00 AM in Los Angeles). Via the modern technology of Vibation, Inc., you can log onto this discussion on current markets (both long-term and short-term outlooks) and the political-psychological climate for 2010, in the comfort of your home or office. All you need is a computer with speakers. You hear and see the live presentation and see the charts on your computer screen. You will be able to ask questions directly to Merriman, and hear those of others. The cost for this private discussion is $45.00. If you are interested in being part of this unique live webcast, go to our website at www.mmacycles.com (it may not be up for couple of weeks or so). Or drop us an email (ordersmma@msn.com) or fax (248-538-5296), or call us at 1-248-626-3034. Instructions to log into this event will be sent upon making reservations. Reserve early (before December 15), for space is limited.


For all of our subscribers in the Boston area, you may want to mark down two dates early next year. February 26, 2010 and March 1: On February 26, “Forecasts for 2010” with Raymond Merriman will be presented at the NCGR conference on “Planetary Revolution: Geocosmic Alchemy II, taking place February 25-28, at the Hyatt Regency Hotel in Cambridge, featuring 60 world-class astrologers. For more info, contact www.geocosmic.org, or call 212-838-6247. On March 1, 2010, in Cambridge, MA, a private meeting with MMA Subscribers will take place 1:00 PM – 4:00 PM. No cost to subscribers, $295 otherwise. Hyatt Regency Hotel, Cambridge, MA. Contact us at 248-6260-3034, or ordersmma@msn.com to register for this special event. Attendance is limited to 15 subscribers.

We are indeed back on for a special private meeting with MMA Subscribers in New York City too, on December 22, starting at 6:00 PM (not 7:00 PM as originally mentioned), and lasting until about 8:30 PM. If you are interested in attending and having a place held for you at this gathering, please let know as soon as possible, as seating will be limited to 10 people. Upon your reservation, we will inform you of the location for this very special gathering. Again, the cost is $295.00. However there is no charge if you are a subscriber to our daily or any of our weekly subscription reports, or a yearly subscriber to MMA Cycles or SOS reports. There is nothing as exciting and informative as a gathering with MMA subscribers (to me), because they come from very interesting walks of life.

If you are an active short-term trader, you may be interested in our Weekly or even Daily Market reports with short-term trading recommendations. It is the only way I keep in touch with traders on a daily or even weekly basis. These reports give 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, Corn, Soybeans, Wheat, Gold and Silver. 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.”

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 also have our new CD available: “The Cardinal Climax 2008-2015: Investment Opportunities and Dangers.” This 75-minute CD outlines the most powerful geocosmic configuration of our lifetime: The Cardinal Climax of 2008-2015. This presentation examines the historical, long-term geocosmic signatures that are present 2008-2015, how they correlated to economic crises in the past, and how they will likely impact various financial markets and investment opportunities this time. In fact, many of the themes are already underway. Approximately 75 minutes, with PDF file of charts used: $25.00 plus postage.

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 Capstone Capital Wealth Management, 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.

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.

Copyright MMACycles 2007-2009; you may link to this site or page, but you may not distribute these texts in any way (by email or otherwise).
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Don't like market's direction? Just wait a day! - what's next?!

Bears had Wednesday, bulls had Thursday, bears had today ... right? Well the markets do move in waves and we've just seen some sharp ones! Only nimble traders with margin could make money on both directions that fast! And even with that flexibility, it's not easy to be psychologically agile enough to suspend "funny-mentals" and just trade those levels, waves and trendlines -


So is the market oversold again or just a horrid monster to be sold, sold, sold? During the day I was tweeting about the idea that the market is getting ready for a wave 2 up. But checking out Tony Caldaro's update this evening at his the ELLIOTT WAVE lives on site, I see he's considering the wave structure more like calling for a smaller 4th wave up (UPDATE: added Tony's SPX hourly and daily below - thanks Tony!). Perhaps that would project to SPX 1047 or higher, then lead to wave 5 down testing to or under 1020 to complete the larger first wave down.

What about indicators? The CPCE made a huge spike, and the TRIN along with its moving averages mounted yet higher today. Obviously an oversold market can get more oversold. But traders can't assume on the other hand, that we don't get a 4th wave rally early next week. It wouldn't be uncommon to see a flat ot triangle, either of which will have traders feeling whipsawed once again. Note to Mike - thanks! what a week! If we get that 4th wave next, then I'll expect positive but choppy action retesting between 1047 to 1067, before rolling over late next week and the following - just my best guess right now.

At some point the pattern may still start looking like a head-and-shoulders pattern - will see, let's not force it. If and when it does, it may carry a h&s target to approximately that 982 level, or deeper. We'll see how it goes! Meantime, you're probably in the mood now for a VERY SCARY HALLOWE'EN - so have fun with your family and friends this weekend!

ChartsEdge (US equities) map for 10/30

ChartsEdge BP Chart for Oct30

Posted: October 30th, 2009 | Author: Mike Korell |
Filed under:One-Day Market Map | No Comments »


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Thanks again, Mike and ChartsEdge!

Oooooooh ........ scary, kids ...! Are we going to see a "Nightmare before Christmas"?!!


There are good reasons to think so! But - Unlikely to see that today - and whether the equities indices go higher or lower next week depends on the wave count near-term. With new money for the new month expected, the next part of movement down may not be immediate. But there are reasons to think we don't see the SPX able to get above 1067 (though if it does, there's resistance at 1072 and especially 1077, 1082!), and to expect the next real objective lower about that 982 level I mentioned here recently. So the trend is likely to be generally down to mid-/late November (Thanksgiving?), followed by some type of "Santa rally".

I'll tweet as and when possible today - but we may just see a consolidation or churning movement today. We may test 1062 and perhaps 1057 - and will be watching to see what kind of wave pattern manifests with movement down and back up. As always - careful, and happy market navigating!

Thursday, October 29, 2009

Technical trading of markets: SPX 1067, or "When we play by the rules we make money" - indeed!

Trading on technical analysis really does work - as I posted yesterday, we knew we had the cyclic low for Wednesday, the TRIN was very high, and Terry Laundry's 55-dma target originally for 1037 which I commented for 1042 (and as of last night was at 1045). Plus the SPX looked like 5 waves down at least for one part of the move. My statement was that 1057 was a reasonable target, and if higher then partial TMAR would be a way and then trail stops. After identifying 1057 as reasonable, I stated: "There can be counts that would take the SPX higher, to and past 1060 to about 1067, but TMAR about 1057 on 1/2 and trailing stops looking for more is likely a disciplined way to approach it." And intraday I was able to tweet, pointing out that after 1057, then 1052 should give support; and it never needed to even test that, so it was on up. Worked like a charm, right up to tickling Tony Caldaro's 1061 pivot stretched up to 1066.83 (pivot +6). Also Andre Gratian's subscribers got his technical takes and charts. All in all, the technical rules showed the context was bullish for a reaction rally. As they say, "When we follow the rules, we make money!". That statement's from an old ad (for Investor's Business Daily (IBD), perhaps?) but I've always liked that statement because it's true. Probably one reason why military types tend to do very well with trading.

Now we've got to be very careful as 1067 SPX is strong resistance (anyone thinking h&s possible?), and the VIX traced back to its 50-dma. If we see over 1067, we're thinking of the SPX' 20-dma and 1072, 1077 again. But for now - enjoy your evening!

UPDATE, PS to Mike: The shoulders of a head-and-shoulders usually should be about equal in price but need not be exactly the same. As Stockcharts.com's Chart School puts it so eloquently, they can be "out of whack" - http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:head_and_shoulders_t. I agree, I'd think more will start seeing that as a potential pattern if we get much higher. But it's one way to measure a next wave down, even if the SPX triggers on Monday without a move much higher. One clue to remember is that volumes picked up during the drop, and weren't as high today even though the advance/decline statistics looked good. That's concerning no matter what you call the pattern.

ChartsEdge (US equities) map for 10/29

ChartsEdge Pattern Recognition Chart for Oct29

Posted: October 29th, 2009 | Author: Mike Korell | 
Filed under:One-Day Market Map | No Comments »



Wednesday, October 28, 2009

Triangulating on gold? Revisiting the alternative views on its prospects

I noticed a couple of days ago that EWI was showing as part of their free content, a triangle in oil. They didn't show the rest of what they believe about the Elliott Wave context (meaning, what happens next after oil made a thrust upward from that triangle). Hey, even I'm not trying to drill that down to detail, just showing my concern that oil ran into substantial resistance on the monthly chart, so not sure I want to abandon a bearish "B" wave possibility for it yet. But this is all a prelude to revisiting another dollar-sensitive commodity, gold. (Well there's also agricultural commodities, and DAG has fallen smartly after I tweeted recently that it looked ripe to pick, and AGA should be ready to benefit instead.). I marked a triangle on my gold weekly chart when I also showed a new uptrend parallel channel. Now gold has fallen to the bottom of that channel line. It didn't get to the 1097 level that I'd measured for a triangle target. You can see there are support levels such as around 980, obviously 1000-1007, not to mention this channel.

The deeper message is that I haven't totally abandoned a "B" wave idea for gold either! Frankly, gold would have to rise past 1200 before I'll feel more confident that we can leave that possibility aside. Meantime, I consider it an excellent reason to keep trading it on both sides, following the indicators, support/resistance lines, and near-term waves. Another KI$$ approach that's simpler and less nimble can be to remain long unless it loses major support from 980-1000.

Equities dove to place interim cyclic low in afternoon as SPX got close to 1037 interim goal

While the ChartsEdge map suggested movement up after the open, it just wasn't that way - hence, one of those (fortunately rare) days when it didn't prove useful. As typical when that happens, it became obvious quickly, that's when you set it aside and look elsewhere. For Andre Gratian's subscribers, that naturally meant reading his updates about his expectation the low would be toward the end of the afternoon. As the day went on, one of Andre's emails said:
From: "Andre Gratian" <ajg@cybertrails.com>
Date: October 28, 2009 2:56:19 PM EDT
Subject: Market Update
....
This is why you have to allow for the time component to achieve its objective as well. And since it can vary by a couple of hours, in a sharp decline this can be more than a couple of points.
....
Andre

Others may have been counting waves or using other methods. Myself, only sorry that family matters kept me from more participation (and didn't want to give away Andre's cycle thought). But using our "string" still worked, with 1057 failing over to 1052, later 1047 repeatedly, and finally tickling 1042. Pretty close now to Terry Laundry's 1037! That's one reason why we're not looking for lower than that right now, along with the idea that today's low would produce a bounce into later this week.

And yes, the SPX lost the 1050 level - which did produce a struggle but once it was lost, that was a factor in the sinking farther below it. But as dicey as it is to trade against the (new down-)trend, we should expect some reaction. The VIX popped beautifully but approached resistance. And the TRIN confirms the market is short-term oversold; its 10-day moving average closed well over 1.20, at 1.44. Have I turned bullish? Hardly! But now that the market proved it's in bearish mode, let it have a reaction pullback. No matter how you handled today's action, a bounce will be the next good opportunity to sell for another wave down. Or, for those preferring to stand pat on swing trades short from last week, you may be just as glad to hang tight with those down into the 3rd or 4th week of November (at which time, the markets may start to try a Thanksgiving-to-Santa rally). That's probably a good time frame for seeing the entire big first wave down playing out, basically a 4 to 6 week time frame in total.

UPDATE: a reader asked my target for a reaction rally. Looks to me like a retest of 1057 is a reasonable objective - kinda guessing right now that can be a small 4th wave, then down to 1037. Unless we open weak and tag 1037 first - actually 1057 would still be a reasonable goal from there. There can be counts that would take the SPX higher, to and past 1060 to about 1067, but TMAR about 1057 on 1/2 and trailing stops looking for more is likely a disciplined way to approach it. JMHO as they say. Later, after a reaction rally/consolidation, the SPX is likely to test 1020 and bring a retest of that Fib approx. 982 into focus.

8:20 pm UPDATE II: Uh Oh! Here's what Terry Laundry says at his daily update page - "Oct 28th Comment: Market appears to be headed directly to the lower green envelop at S&P 955.". Hmmmm! Another reason to think that a reaction may not exceed 1057!

Tuesday, October 27, 2009

ChartsEdge (US equities map for 10/28

ChartsEdge BP Chart for Oct28

Posted: October 27th, 2009 | Author: Mike Korell | 
Filed under:One-Day Market Map | No Comments »




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Thanks again Mike and ChartsEdge! Folks - I'm real busy these days with family matters so cannot spend much time commenting. Let's just say that whether and how you play the indicated cycle low today depends on your trading timeframe and style. Like if you're in VIX calls, you already know I suggest TMAR profits, you can always re-enter them at better prices maybe Friday or Monday assuming we get the nice bounce which can be a long equity scalp play for many traders. And, November options will need to be rolled over to December or January anyway (unless you're playing by selling calls and profiting from vanishing premium). I don't have time and this isn't really the blog to focus on detailed options trading tips (try Schaeffer's and/or Phil's Stock World). I just want to point out, rallies do happen in downtrends so think about whether, or how, you want to play. Many swing players using ETFs or plain shorting indices will just leave in their short positions - if you're short from when I pointed out the diagonal ending the probable "B", then you've got profit cushion anyway. Also, taking partial profits to TMAR and lock in some while raising cash for some reloading later on can be a great strategy. These are all questions I can't answer for you. But as a mindful trader, you should be asking yourself.

And remember we haven't even officially confirmed by breaking under the early October lows yet, at least not in most sectors. There are also key levels to watch. There's 1050 which I think will be defended at least temporarily. And the 1037 (maybe 1037/1042) that's the midline target Terry Laundry identified. A bounce from intraday today can postpone reaching those numbers.

I'm thinking the VIX and dollar have been swimming in unison, but will that change short-term? Keep an eye on both. Meantime, careful out there - happy market navigating!

Since Jeremy Grantham adds his voice to the "equities topped" warning, shouldn't you be listening?!

Technical views led us to warn that last week's high looked like a matured "B" wave crest for equities, which also fit with analysis by Tony Caldaro, Andre Gratian, Terry Laundry, and others. And I've pointed to yet others increasingly sharing this view, such as Tim Wood and Richard Russell. Now, Prieur du Plessis wrote this review of Jeremy Grantham's current views on equities - which are surprisingly very similar to ours: "Grantham on the Markets: '860 Is Fair Value for S&P'" -- posted at Seeking Alpha, http://seekingalpha.com/article/169047-grantham-on-the-markets-860-is-fair-value-for-s-p. I say "surprisingly" because Jeremy Grantham incorporates fundamentals whereas the approach we typically take here rests on technicals. (Given that even financial market prices are driven by supply/demand!). It seems he expects a correction that will be deep and unpleasant, but not violate the March lows. The review doesn't go into his projections for after that, except to hint he sees seven lean years. (If those started in 2007, then fits with the timing views of Andre Gratian and likely others.). Naturally I'll be interested to play the long side of the rally after such a "C" wave type correction (whether or not it violates the March lows). That rally may be called Tony Caldaro's Primary B wave - if it's a "flat" wave pattern as Tony's suggested, it will probably retrace at least 90% of the way back to the 2007 peak. Whew! But as always, first things first. And the main point right now is, the respected Jeremy Grantham has issued this caution. So add this to the list of bearish cautionary flags flying!

Transports weakening further and likely to test 3250-3430 area

The transports index is relatively weaker as it's already below the swing low comparable in time to the S&P 500 index's key 1050 support. In fact, the transports are challenging their early October lows with bearish-looking indicators. You can tell from the charts below that there's price and volume support, and prior broken Fibonacci on the monthly chart, around 3430. Add in the 200-day moving average plus even more volume support as shown by the volume-by-price bars, and the support zone looks like the range from 3250 to 3430. Its P&F chart at bottom shows that it hasn't yet triggered a breakdown from support. But it won't take much more price weakness to make that happen - so keep an eye on for whether it breaks under its early October low.

"Animal spirits" of the Nasdaq too subdued to give much boost to equities right now

The Nasdaq's substantial underperformance today goes along with the likelihood that the equities rally crested out last week. Below is a chart of the QQQQ. There's a common idea that Nasdaq strength shows the kind of "animal spirits" when investors and traders are more open to risky investments. Conversely, when the Nasdaq lags, it signals more risk aversion, which isn't good for equities in general. Probably not surprising then that TLT did better today (even though it's been looking weak lately). Notice that the semiconductors (SMH chart below) are really weak too - the combination of stochastics and on-balance volume (OBV) indicators is on the edge of making a very bearish move. That's likely to occur if and when the SMH falls under about $24.50 and especially $24.00. It's sobering because for a long time, the semiconductor sector has been considered a leading indicator.

I've also included below the chart showing that the percentage of Nasdaq stocks remaining above their 50-day moving average has fallen under 50%. And the Nasdaq-to-S&P 500 ratio chart at bottom (NDX:SPX) shows that this ratio is rolling over. All in all, today's negative divergence is part of this picture suggesting that the "animal spirits" are likely to continue turning negative and drag equities generally lower. This doesn't mean we won't get reaction bounces, such as the one we're expecting from tomorrow into the end of this week (remember, new month/new money!). But it does suggest that such bounces are likely to be counter-trend, corrective waves.

ChartsEdge (US equities) map for 10/27

ChartsEdge Pattern Recognition Chart for Oct27

Posted: October 27th, 2009 | Author: Mike Korell | 
Filed under:One-Day Market Map | No Comments »




=============

Thanks once again, Mike and ChartsEdge!

Folks, after a large range day like yesterday, it isn't unusual to have a followthrough day that moves at least a bit further in the same direction.  There are some indications of a cycle low on Wednesday. And Terry Laundry posted his update last night saying he expects the SPX to continue to his band midline before a swing-tradable rally (my interpretation) - right now that midline being at 1037, but I'm thinking if the market can delay a bit, maybe 1042 will be a workable goal by the time we get there.  Especially since picking off an extreme is quite tricky in trading so one way is to reap most of a move, TMAR, then use the time to re-assess and plan and await the next trade entry, which may be some time (based on your trading timeframe and style).  If we see the low of the move tomorrow, that should also be a good time to TMAR any November VIX calls to lock in profits that will vanish with a reaction rally later in the week (not "advice" but just pointing it out!).

We know that the area around 1050 is important and may be defended, hence choppy.  Under yesterday's 1067, using our simple "string", has us thinking in terms of 1062, 1057, 1052, then eventually 1047, 1042, and maybe 1037.

The $XJY has been getting closer to likely support at 108, so (even as the euro and dollar index are under watch for a trend change) we'll need to see if the yen strengthens again for another wave up.

So as the CNBC pundits speak about how "we have to get the earnings up" and batter challenging questions at analysts who point out the bearish factors - let's tune out the noise, reflect on what we're seeing in the charts, and take this market as it comes.  Careful out there as always (they won't always be as easy as yesterday with the map) - and, happy market navigating!

Monday, October 26, 2009

"Uptrend in Jeopardy" per Caldaro and others: Respecting waves of all sorts keeps one's perspective on financial markets

I'm glad that I was able to point to a possible wave crest last week as equities reached that high, and despite the volatility in both directions after that on Thursday and Friday - and today- it looks like that may indeed have been the top. I've also pointed out it needs to be confirmed; but that's looking closer now. Tony Caldaro states in his Objective Elliott Wave update this evening (site link, and feed, both at right) that the uptrend is in jeopardy. He also added that: "The six month downtrend in the USD index appears to have ended.". Now, I was pounding the table about the US dollar ($USD) months ago, pointing out its inverse correlation to equities. Sure, I was early in trying to pick a dollar low, but those swing lows did produce swing-trade reaction highs in equities. Others have increasingly been charting the inverse correlation too. I will say, the dollar still didn't tap the $USD 74.75 level I've described, but equities are close to confirming they're topped out. It will take a break under the early October lows to make it conclusive (as already done in biotech sector). We're just as likely to see a push upward before we get that in the SPX, perhaps later this week as indicated by the ChartsEdge weekly forecast. (Speaking of which - their daily map converged with their weekly sure made a profitable easy day for daytraders! I'd tweeted about under 1085 and 1082 pointed to 1077 and 1072 - I should have added 1067! But I bet my regular readers knew that under 1072 brought 1067 into focus.)

Below are a chart of the $USD - remember, Andre Gratian also pointed to this in his update here yesterday. I haven't marked off the waves - I can think it finished the one last wave I was looking for after it lost 77.92 (though a little more confirmation in it wouldn't hurt either). Below that is an indication of the kind of waves I was also riding in my main meeting today. Also a very nice way to keep perspective!

Sunday, October 25, 2009

ChartsEdge (US equities) map for 10/26

ChartsEdge BP Chart for Oct26

Posted: October 25th, 2009 | Author: Mike Korell | 
Filed under:One-Day Market Map | No Comments »




[Ed.- changed time stamp to appear top of page Monday morning.]