What type of markets do 4% up days happen in?

I will give you a hint: it's not bull markets.

Huge up days are most likely reactions within bear markets. We had a shitload of them in P1.

So as a bull, days like today (despite a nice bounce to kick the bears in the crotch for a few hours) are *not* what you want to see. Besides, the bears got wise and started wearing a cup.

Addition - very nice chart

The Larger Count, with a P2 Placement that I Like

On April 27th, I was showing a possible count with 3 Minor Waves up from the February low, which could have served as the last Intermediate wave in P2: Boring Title #5

But what P2 did exceedingly well was to put the doubt into the mind of every single bear. I never had any doubt that this was a bear market rally, but every time I thought we had a legitimate top for P2, the market spat in my face. I started playing around with Cycle Degree X counts. But I was always adamant that this was a bear market rally. I NEVER bought the "new bull market" theory that has been gaining momentum. See these posts: Not All Five-Wave Moves Are Impulses: A Short Treatise on Elliott Wave and Another Impulse Wave Study: A Look at the 1974-1975 Low and Rally

But still, even after I counted (yet another) possible end to P2 on April 27th, I hemmed and hawed and I doubted myself. I wrote this on May 1st in this post: Reviewing the Larger Count

I would be more than happy, ecstatic in fact, if last week marked the top of P2. And if the move this next week and especially the week after that develop *decisively* downward impulsively, then I think we have the makings for a major trend change (which would make this bear **very** happy). This is the option that I am showing here: Boring Title #8

But this fine (but unfortunately busy :( ) Saturday morning I am reviewing the larger count structure. I had proposed this count last month: Update on My P2 Projection. I was drifting away from it since this "wave from hell" took us nearly to the 62% retrace, I really thought that this could be the top of P2 (and like I mention above it could)

... But it also could not. Lots of "Sell in May and go away" talk seems to coincide with the wave ending, so this is a compelling spot for a top. but it just seems too obvious now. Too many people are expecting it, so my Spider-sense is unfortunately tingling (that, or I need to switch to Selsun Blue)

In short, I doubted the possibility of a top and showed a sideways wave for the next 3 months before a top in July.

And there are some legitimate reasons for counting it that way

1. No divergence on the Advance/Decline Line
2. No divergence on the New High / New Low data
3. Minimal divergence on the weekly indicators
etc.

.... But EVERYBODY was looking for divergence. Many people have been looking at high/low data.

So I find it very apropos that the market flips all of us a bird and crashes, more or less, out of the blue.

P3 will be fast and furious. I think, as bears, we just had to wait for the opening salvo of P3 to mark the end of P2. I think (in retrospect) it was always going to come without warning. And now that we have it, we can get back to the business of what the Elliott Wave Principle is really meant for .... counting impulse waves

So just one thing to keep in mind, within extensions Wave 2s tend not to retrace as deeply as they otherwise would. Wave 2s are typically deep and fast retrace waves (50-78.6%). In extensions they are more typically 38.2-50%.

I am not offering advice here, but what I am saying is that I usually wait to buy wave 2 retraces at 62%. Within P3 I will be more aggressive with entry shorts and give myself a margin of safety should the move go up past my entry before resuming violently down.

I think the next few years are going to be very interesting. Good luck to all!!!

Update on the Dow/Gold Ratio and a few more Gold Ratios

Here is an update on my Dow/Gold Ratio chart. The original post, with a *very* detailed explanation of what the DGR means, and what my projections are for both Gold and the Dow can be found here: The Dow / Gold Ratio





Here are some other key Gold Ratios and the historical and relative performance. I had said that I would write a dedicated post about these someday, but I didn't. The chart is pretty self-explanatory though.

Question the Answers

Lots of questions right now:

Has P3 started? I lean heavily toward "Yes", so does the VIX: Impressive VIX

Is the current wave down we are in over? That's the easy one.... NO

What degree is the current wave down? That is very tough. From this projection: Reviewing the Larger Count, I have a target of the support zone of 900-950 for Intermediate 1 of P3. So if this current wave form ends around 1070 or so in the next couple of weeks, it might only be Minor 1 of Int 1 of P3

.... now that is a serious scenario to ponder. P3 will be a lot about "breaking the broken system", and if HFT driven volatility becomes the norm we have some tough times ahead.

Timing short term bounces can be deadly in that type of a market. I will be looking for swing trades and give myself some more margin than I otherwise would. Moves can travel past your positions before resuming violently down.

.... I wish I had "Kinder Words" for you ... (yuk yuk)

Impressive VIX

Simply .... wow.

If we are in the throes of Int 1 of P3 (which I think is likely given the events of the last 2 weeks), the VIX is definitely substantiating that opinion. For Int 2, there will be a pullback in the VIX, but I doubt it will go past the long term line of action.