Apr 3

My 60-minute system issued a sell signal this morning just after 10 am. I also think this is the end of the current up wave and that we are in store for a decent correction. And no, I don't think this is the 'top'. I think this is just a correction and the cyclical bull market will continue.

For anybody who cares, here are my wave counts:

Dec 4

60-min system rolled over and issued a sell today. Current thoughts as to what is going on:

Nov 28

The 60-min System buy signal that was issued Friday 11/16 is still intact. I am still of the opinion that the recent low is a pause before more selling off occurs. Current thoughts:

Nov 16

I still think we are in the middle of this Intermediate Term correction and not near the end of it. Daily chart is still suggesting more downside if I am looking for the correct setup. The 60-minute system issued a buy this afternoon and we are very oversold for the short term. If the market is trying to stage a bounce here, it might try to retest the 200 DMA before continuing down:

Here is my current best estimate for how this wave is playing out, for anybody that cares:

Nov 1

60-min System moved from short to long yesterday morning.

For anybody who cares, here is my current thinking about what's happening:

Oct 16

Man, the last month has been gut-wrenching for both bulls and bears. Crazy reversals with spike tops and bottoms on little to no divergence. But with yesterday's reversal at a key support level (and retest of the March high which now looks like some strong support) and a gap and run up today, I think the correction is over. Here are my thoughts:

Oct 1

Crazy move up and crazy reversal. Current best guess:

Sep 27

This move up is too strong for yesterday's micro-count (the 15-min chart) to be correct. Here is my revised count:

Sep 26

Current thoughts:

Sep 20

I think this might be what's going on:

Sep 14

Based on the recent strength, I don't think we are near the top of this Minor degree wave up. I think the market may try to pause and consolidate the breakout, but I think we will have another slower move up before a Minor degree correction.

Here are my current thoughts. And for how this fits with my most recent long term projection, see this post (with lots of links to previous long term projections): Update on Long Term Projection (08/17/12)

Aug 21

Best guess as to what's going on

Aug 2

Another monster reversal last week invalidated the short setup that I discussed last Tuesday. A buy signal was issued last Friday which turned around and a sell signal was issued yesterday right after the FOMC announcement. Lots and lots of volatility. Since June, the cycle for each period has been about a week and a half with lots of movement in between. Which means that it has been tough sledding for the 60-minute system which doesn't turn quite that fast and so the market is almost acting like negative feedback for the system.

So is this move up done? I honestly don't know. But the 60-minute system is back on a sell. And this move up still counts like a big overlapping mess. Here is my best guess (which is admittedly pretty bad recently) at a count:

July 24

The projection for the continuation of the move up that I discussed on Wednesday and the subsequent turn seems to have worked out. So with that a sell signal (sub-cycle top) was issued on the 60-minute system on Friday and we finally got a Down Cycle signal today on the 60-minute system to correct the Up Cycle signal that began on June 8. This was a pretty average Upcycle duration and so if we have an average Downcycle duration, it will last somewhere around 15-20 days.

Based on the performance of the 60-minute system this year, feel free to use that as a contrarian indicator if you wish :)

May 23

What a crazy couple of days. However these gut-wrenching moves have a potential corollary, in recent history even. The move out of the May 2011 top.

Here is what that looked like:


Here has what has unfolded so far:


Is the correction done? I give a little better than even-odds that it has. Like I said Saturday, the 1290 target has been met, and that this week needed to rally or at the very least stop crashing. That was not a prognostication, but merely an observation of what needed to happen this week to keep the Long setup which has been open since Oct 11 on my Daily Trend System alive. And we had a huge scare 'redux' again today but a strong rally into the close.

Which means that so far a turn looks to be occurring exactly where it was needed. So for this corollary to play out, the bulls need to make significant progress in confirming this breakout Thursday-Friday. We we see if they can manage it.

Here is my current best guess at a count:

May 9

We got a sub-cycle bottom signal today on divergence with my 60-minute system: https://twitter.com/#!/binve01/status/200275729206878208.

There is a lot about the short term that looks compelling from a pullback perspective. Also the 'analogy' chart that was discussed on May 2 has a more complete look to it. Also notice the lower orange PPO indicator. It did not go into divergence at the top of the wave like it did at the 2010 and 2011 tops.


The next section is my current EW count. Feel free to skip this section if you are not interested.

First is the count of the most recent correction. And I see two sharp 7 waves down with a complicated/messy 3 wave up in the middle:


Zooming out is the count up from the Oct low which was discussed Apr 10 (and no, it's not an impulse):

Count since the October low where the waves down to the ~Subminuette/Micro degrees are identified.


Now, I am sure I will get comments about my counts. That these W-X-Y's don't follow the EW orthodoxy (to which I say the orthodoxy is completely incorrect: http://marketthoughtsandanalysis.blogspot.com/2011/08/regarding-tops-and-sloppy-misleading-ew.html#comment-276329829). Or that all these W-X-Y's are 'unhelpful' and complicating what could be counted as simpler wave forms.

I disagree on both counts. The fact is that the structure of this wave at nearly all degrees of trend has been distinctly three-ish ever since the March 2009 low. And for anyone who is looking at the waves objectively, we can see threes even in the move since the October 2011 low. You really don't get impulsive waves until you drill down to the micro/submicro degree. It is all right there, plain as day:


The fact that I don't suffer from the affliction where I try to shove every sharp wave into an 'impulse box' means that I am seeing the waveforms more objectively than the greater EW community. It is precisely this view that allowed me to call the top last May when the rest of the EW community was looking for another wave up to finish the 'impulse': Regarding Tops and Sloppy / Misleading EW Practices.

Zooming out again is my 'near-term' daily chart.


And here is my 'longer-term' daily chart.

Apr 10

Current EW count for anybody that cares.

First up is a 2-year chart. As I have said on many occasions, tops are processes and bottoms are events. The PPO(14,13,10) in the upper pane is good at finding bottoms, which was another reason why I called the October low in near real-time (see Revisiting the Large Count). But this indicator is too fast to capture the rolling-over 'process' that is associated with tops, and the PPO(34,89,21) in the lower pane is much better suited to that task.



Drilling down to a 1-year chart to see the Minute degree waves at work.



Count since the October low where the waves down to the ~Subminuette/Micro degrees are identified.



Now, I am sure I will get comments about my counts. That these W-X-Y's don't follow the EW orthodoxy (to which I say the orthodoxy is completely incorrect: http://marketthoughtsandanalysis.blogspot.com/2011/08/regarding-tops-and-sloppy-misleading-ew.html#comment-276329829). Or that all these W-X-Y's are 'unhelpful' and complicating what could be counted as simpler wave forms.

I disagree on both counts. The fact is that the structure of this wave at nearly all degrees of trend has been distinctly three-ish ever since the March 2009 low. And for anyone who is looking at the waves objectively, we can see threes even in the move since the October 2011 low. You really don't get impulsive waves until you drill down to the micro/submicro degree. It is all right there, plain as day:



The fact that I don't suffer from the affliction where I try to shove every sharp wave into an 'impulse box' means that I am seeing the waveforms more objectively than the greater EW community. It is precisely this view that allowed me to call the top last May when the rest of the EW community was looking for another wave up to finish the 'impulse': Regarding Tops and Sloppy / Misleading EW Practices.

But even despite these observations, I am sure I will get more comments telling me that I am wrong / don't know what I am doing than those that actually agree. And you know what, I am fine with that. In fact, I am better than fine, I am ecstatic. I love being the minority opinion. I love suggesting things and making observations that the crowd is missing. So I am extremely comfortable and happy in my 'wrongness'.

Mar 1

Here is my current EW count for anybody that cares.

Before looking at it, let me be very clear: I am *NOT* calling the top of this wave. There is absolutely *zero* evidence that the trend is over. You can talk about divergences until you are blue in the face, but in bull markets, specifically at the beginning of strong bullish continuations (which is exactly what this is) divergences do not matter. This market will wind higher to the frustration of everybody who tries to call a pullback.

I am just looking at this particular spot, and doing some wondering aloud. That's all. ... Why this spot?

1) From here: We started a new 60-minute cycle on Dec 23, making the current cycle 64 days long. Out of 67 60-min cycles since 2001 the average duration for a cycle (which is both the upcycle half and the downcycle half) has been 56 days. And the upcycle half of the current cycle is already longer than then average duration, which makes this rally 'mature' from a cyclical perspective.

2) First Wave relationship: Move from Dec 20 to now is ~1.62 times the move from Nov 28 to Dec 7. This relationship is tucked inside a larger relationship.

3) Second Wave relationship: Move from Nov 28 to now is ~1.00 times the move from Oct 4 (the bottom) to Oct 27.

So what I am saying is that there are a lot of favorable relationships from a wave perspective for a turn in a rally that is statistically overdue for a correction. That is not a prognostication, just an observation.

With that, here are my counts (again, just what-if's):



But keep in mind what I said here:

I formulated my study in the following way: Assume that my main indicator (which has not yet topped) tops right now due to a pullback (which would be met with a downcycle on my 60-min system). What would be the odds that this price peak would also be 'the top' of the current Daily upcycle?

The stats are pretty compelling: Since 1982, 18 of 20 cycles (90%) made higher price highs after the initial peak and rollover of my main indicator.

Which means that the odds of the next price peak being 'the top' are pretty small, at least from my viewpoint.

Again these are statistics, not prognostications .... past performance is no indication of future results ... yadda, yadda, yadda.

So in short, I think the next pullback (whenever it happens) is not a 'short it and forget it' type event. I think it will be a dip that will be worth buying.

If that is the case, and if this pullback does happen to materialize here, then my first reaction would be that it could look something like this (nice support zone right around 1300-1280):

Jan 16

Current EW count for anybody that cares. If we get a pullback this week, then I think it could be a retest of the breakout. And yes, I do think it would end up being a good dip to buy.

Dec 23 - Happy Holidays!

First: Happy Holidays! I hope everybody reading this has a wonderful Holiday season.

Second: Some analysis.

I continue to see this move as bullish for several reasons.

1) The daily chart setup continues to be valid

I am referring to this study: Dec 8 - Daily Cycles, Looking for an Edge. This setup continues to be valid and the last 3 days has made the setup appear to be more likely on my daily indicators

2) 60-min statistics are very compelling

As I said on Tuesday a 60-min buy was issued. Today I got a confirming signal from one of my secondary indicators. And this has happened in a very specific way. I ran a study on my cycle system and since 2001 there have been 67 similar setups and 93% of them led to higher highs (typically several percent higher). Again, these are stats not predictions, but it is a very compelling stat.

3) Very bullish seasonality for not only the week before Christmas but especially the week after

See: http://www.bespokeinvest.com/thinkbig/2011/12/23/market-performance-during-the-last-week-of-the-year.html

4) Closed above the 200 day MA

This is a nice confirmation for point 1 above and a bullish way to end the day before the Christmas stock market break.

5) Closed above the downtrend line

The downtrend line that the market has been unable to breach for the last 5 months was finally surmounted today. And that's not bearish.



Third: Some eggnog ... with a very healthy shot of whisky. Time to start drinking :) Happy Holidays!