DOW : The Great Dow Highs of Summer 2007

[drbubb]

I reckon quite a few of us on GEI are looking for Turning points around here:

 

I'm watching this.

SPX Chart

It's sitting above the 377DMA on slowly rising volume.

Copper is approaching the 200DMA from below on low volume.

Copper chart

SPX:

I want to see it Turn down today, or at least before the end of this week.

 

I am doing my very best to Call the major turns in the market:

 

+ Silver: We nailed the high at $50, and then bought near the lows,

 

The jury is still out on:

 

+ Gold: which came in a few days later than I expected it, but is hovering close enough to retest the highs, or even head higher

 

+ SPX: was called within a few hours of the actual top, but again: the jury is still out.

 

Bonds and the US dollar may be turning too. Watch for the dollar to shoot up, if stocks slide from here

[chazza]

I think we have seen 5 waves down in both the US and EU markets now.

 

S&P count: 7th July is the truncated top of the 2yr bear rally. i 18th july, ii 21st July, iii 8th Aug (1119.28) {i think the new lows @ 1101.54 are part of an expanded flat for b of a of 4}, iv 17th Aug - 5 wave diagonal, v 19th Aug 1122 - failing to make new lows however tests the bottom of the downmove channel perfectly. wave a of (ii) 1st Sep and we have just seen the wave b low at 1140.13, testing the bottom of the recent upward channel.

 

SX5E count: Very similar. However the low yesterday could well have been the end of (i) down or could be a b of an expanded flat (ii) correction. If its (i) it gives us a new low on lighter volumes and some nice divergence on RSI etc. Also seeing greater bearishness despite less selling - classic wave v?

 

Now looking for retrace to around 2475 Stoxx 50 and 1250-1260 S&P.

 

Thoughts?

[nbarter]

I think we have seen 5 waves down in both the US and EU markets now.

 

S&P count: 7th July is the truncated top of the 2yr bear rally. i 18th july, ii 21st July, iii 8th Aug (1119.28) {i think the new lows @ 1101.54 are part of an expanded flat for b of a of 4}, iv 17th Aug - 5 wave diagonal, v 19th Aug 1122 - failing to make new lows however tests the bottom of the downmove channel perfectly. wave a of (ii) 1st Sep and we have just seen the wave b low at 1140.13, testing the bottom of the recent upward channel.

 

SX5E count: Very similar. However the low yesterday could well have been the end of (i) down or could be a b of an expanded flat (ii) correction. If its (i) it gives us a new low on lighter volumes and some nice divergence on RSI etc. Also seeing greater bearishness despite less selling - classic wave v?

 

Now looking for retrace to around 2475 Stoxx 50 and 1250-1260 S&P.

 

Thoughts?

 

Certainly possible, but my preferred count remains as on my chart below, that is we are currently in the 5th wave down on the main markets. I am keeping an eye on the MSCI World Index as that often produces great waves and that suggests another leg down is needed if this is to trace out 5 clear waves. Some markets (e.g Nasdaq 100, DJTA) have already traced out 5 clear waves, both starting in July as with your count. The count I have on the S&P though does of course see the 2 year bear market rally ending on the 2nd May.

 

Anyway, that is my preferred count and this coming week should quickly resolve this as if this is right we should see a very weak beginning to the week.

[nbarter]

I think we have seen 5 waves down in both the US and EU markets now.

 

S&P count: 7th July is the truncated top of the 2yr bear rally. i 18th july, ii 21st July, iii 8th Aug (1119.28) {i think the new lows @ 1101.54 are part of an expanded flat for b of a of 4}, iv 17th Aug - 5 wave diagonal, v 19th Aug 1122 - failing to make new lows however tests the bottom of the downmove channel perfectly. wave a of (ii) 1st Sep and we have just seen the wave b low at 1140.13, testing the bottom of the recent upward channel.

 

SX5E count: Very similar. However the low yesterday could well have been the end of (i) down or could be a b of an expanded flat (ii) correction. If its (i) it gives us a new low on lighter volumes and some nice divergence on RSI etc. Also seeing greater bearishness despite less selling - classic wave v?

 

Now looking for retrace to around 2475 Stoxx 50 and 1250-1260 S&P.

 

Thoughts?

 

Certainly possible, but my preferred count remains as on my chart below, that is we are currently in the 5th wave down on the main markets. I am keeping an eye on the MSCI World Index as that often produces great waves and that suggests another leg down is needed if this is to trace out 5 clear waves. Some markets (e.g Nasdaq 100, DJTA) have already traced out 5 clear waves, both starting in July as with your count. The count I have on the S&P though does of course see the 2 year bear market rally ending on the 2nd May.

 

Anyway, that is my preferred count and this coming week should quickly resolve this as if this is right we should see a very weak beginning to the week.

 

[chazza]

Yup the price action on Friday suggests that we may be seeing the real wave 5. I was leaning to my previous count before as to see a lower low on the US indices the Euoropeans will suffer a truly horrendous week.

[chazza]

Yup the price action on Friday suggests that we may be seeing the real wave 5. I was leaning to my previous count before as to see a lower low on the US indices the Euoropeans will suffer a truly horrendous week.

 

Well i'm leaning back to my original count. European indices could have but in a very bearish wave b of (ii) giving us new lows, with the expanded flat as a (ii). Alternatively the new low could count as a v of (i) with a very truncated 5th of v and in (ii) now. Given the moves in the US markets Im favouring the expanded flat.

 

US indices dont look as if they are in a 5th wave down, could still be a 'iv' but my original count of truncated 5th of (i) then a triangle on the S&P for b of (ii). The strength in the Nasdaq suggests a wave (ii) to me...

 

Potential for a big retrace in Nasdaq, 61.8% ish in S&P, 50% in Eurostoxx.

[nbarter]

The Bradley turn i mentioned in my post above of the 29th August (for the 30th) worked a day late, the S&P making its most recent high on the 31st August. The current move down looks to be the 5th wave i have been looking for, though time will tell. Monday (26th) is another minor Bradley turn date.

[nbarter]

The Bradley turn i mentioned in my post above of the 29th August (for the 30th) worked a day late, the S&P making its most recent high on the 31st August. The current move down looks to be the 5th wave i have been looking for, though time will tell. Monday (26th) is another minor Bradley turn date.

 

 

Well, we got the 5 waves down in most markets (FTSE is an exception) since the May highs that I mentioned a few times that I was looking for (especially clear in the MSCI World Index which is reassuring).

 

Since then we have had a big correction, reaching ther 50% to 62% retracement in many markets in super quick time (about 4 weeks since early Oct lows). So we have the ideal price retracements, the only downside is that time wise it took place somewhat quicker than you would normally expect compared to the time to get to these lows from the May highs. But these are not normal times and time is second to price so it's not a deal breaker. So, we could already be very close to the top of this whole bounce. Plus, tomorrow (28th) is a Bradley turn date, which sometimes work a day either side. We could, therefore, be on the cusp of a buy the rumour, sell the news turn. The Dow is currently trading out of hours at 12040. The FTSE at 5670. Both a big jump on yesterday's levels following the euro deal. Hence i have gone short this morning.

 

Finally, we have another indicator - i am going on holiday for a couple of weeks to S Africa where i won't have access to the markets, such times often frustrate me by being action packed :-(

[John Doe]

Finally, we have another indicator - i am going on holiday for a couple of weeks to S Africa where i won't have access to the markets, such times often frustrate me by being action packed :-(

 

Yep, I must say you do seem to pick your moments well

[nbarter]

We could be on the cusp of another turning point.

 

Quick recap. Markets generally formed a pretty good impulsive looking five wave down over the May to early October period, and then rallied strongly. Suggesting that further weakness was to come once that correction is/was over.

 

I then mentioned the turn date of the 28th October above, which although shortish on the time front may well prove to be the start of the next leg down. So far so good, markets powered into it, putting in their most recent high on the 27th Oct (a day earlier as i alerted to) and then fell sharply before recovering somewhat and then stair stepping lower over the last ten days in a series of lower highs, hinting at a decisive move coming shortly in one direction or the other (my bet being down).

 

Tuesday and Wednesday (22nsd/23rd) is the next Bradley turn date. So this coming week could set in train the trend for some time to come, so tread carefully. One other thing to watch for, the day before Thanksgiving (23rd) normally has a positive bias.

 

My bet is that although the length of time the market took to correct the May to early Oct was relatively short (the rest of Oct), price wise it reached normal retracements and so surprises are likely to be on the downside from here on; so, if you are long keep a close eye on developments this week. If we get a bit of a bounce Monday then i will add to my shorts.

 

Edit: the other two markets i really like in this bearish scenario are shorting silver and shorting the Can dollar against the US dollar.

[chazza]

The moves dont seem too impulsive the past 10 days or so, does this concern you at all DD?

[nbarter]

The moves dont seem too impulsive the past 10 days or so, does this concern you at all DD?

 

Its ok so far as whilst a choppy pattern it has been a series of lower highs and lower lows so as long as it resolves by an accelerating down trend before any more meanginful correction it will be ok pattern wise. Today's weakness is in line with this. But will be interesting to see what tomorrow's/weds turn dates does and thanksgiving.

[jerpy]

Its ok so far as whilst a choppy pattern it has been a series of lower highs and lower lows so as long as it resolves by an accelerating down trend before any more meanginful correction it will be ok pattern wise. Today's weakness is in line with this. But will be interesting to see what tomorrow's/weds turn dates does and thanksgiving.

 

Today was FTSE what 7th or 8th straight down day, due a turn?

[nbarter]

We could be on the cusp of another turning point.

 

.....

 

Tuesday and Wednesday (22nsd/23rd) is the next Bradley turn date. So this coming week could set in train the trend for some time to come, so tread carefully. One other thing to watch for, the day before Thanksgiving (23rd) normally has a positive bias.

 

My bet is that although the length of time the market took to correct the May to early Oct was relatively short (the rest of Oct), price wise it reached normal retracements and so surprises are likely to be on the downside from here on; so, if you are long keep a close eye on developments this week. If we get a bit of a bounce Monday then i will add to my shorts.

 

Edit: the other two markets i really like in this bearish scenario are shorting silver and shorting the Can dollar against the US dollar.

 

We got our answer pretty quickly. The markets started the week weak and didn't look back (the weakest Thanksgiving week since 1932). Instead of marking a turn, the turn date i mention above led to the acceleration phase (as was the case with the late July turn).

 

Rigger, we could get a short term bounce soon, but my bet is that if one does come along then it will just be a correction.

 

We should be in the 3rd wave down now, usually the biggest and strongest part of the market trend (the same as the May to Nov 08 part of the 07-09 leg down. If i am right on this, 2012 will be just horrible economically and stockmarket wise with the 2009 lows at risk (I am looking for them to be broken before this down leg is over even if that is after 2012).

 

My USD/CAD long is going steadily, my silver short is flattish for the week, but hopeful of a strong move soon.

[jerpy]

 

Rigger, we could get a short term bounce soon, but my bet is that if one does come along then it will just be a correction.

 

 

My USD/CAD long is going steadily, my silver short is flattish for the week, but hopeful of a strong move soon.

 

Strangely for the first time in a good while I am becoming tempted to take short term long positions, must be santa on his way.

 

Hope you get your move I've been itching for so long to buy (more)Silver, but keep waiting a further spike down.

[jerpy]

Strangely for the first time in a good while I am becoming tempted to take short term long positions, must be santa on his way.

 

 

Not the only one either...from the bard Robbie November 23rd 2011

 

I actually think a lot of shares have been re-rated to what is a fair level not an inflated one, so bargains are beginning to appear.

 

Another point is that the more it goes down at the back end of Nov and early Dec, the best chance we have of a massive Santa rally! In fact i feel pretty good because I think there will a lot of money to be made next month. I am waiting.

 

http://www.nakedtrader.co.uk/ more pearls to follow on the thread.

 

http://www.greenenergyinvestors.com/index.php?showtopic=2687

[nbarter]

The huge bounce this week as the central banks took their coordinated action rather suggests my reckoning that we were already in the 3rd wave down from the late Octber highs is wrong. The size of the retracement of the falls since late oct could be just a correction with a 3rd of a 3rd about to start, but i think the chances of this are low. More likely is that we get a bit of weakness early next week followed by another push up to those late Oct levels and just beyone to complete an ABC of the falls since May.

 

On the FTSE 100, for example, i am looking for a move up to between 5747 and 5800 before armageddon starts.

On the S&P, between 1292 and 1304.

 

Time wise, anytime between next week and the end of the year.

 

If this pattern does unfold, i.e if the tight ranges mentioned above are hit over the next few weeks to Christmas, then i will definitely back up the truck and short the indexes and re-enter my failed USD/CAD long.

 

[nbarter]

..... before armageddon starts.

 

Where will this armageddon take us? Between 400 and 600 on the MSCI World Index is my guess

 

[Van]

That is one SCARRY H&S top forming. The downside projection from the neckline (abount 750) on a logchart gives downside target around 450-500.

[nbarter]

That is one SCARRY H&S top forming. The downside projection from the neckline (abount 750) on a logchart gives downside target around 450-500.

 

Yep. This index normally gives the clearest patterns and is the one i use to check my count on UK and US markets looks right. I guess it gives such clear patterns because of its global nature, so it really picks up on global social mood rather than be biased by national events. It also strongly suggests Asia will be going down with the West for a while and will not be able to buck the trend, initially at least.

 

Once it hits the target area below 600 i will be looking to invest in Asian stock markets. The A wave lasted from October 2007 to March 2009, so a time match for the C wave would take us to the end of 2012; suggesting a rapid loss of value when this 3rd wave gets going (ideally around the 28th Dec turn date). If we escape 2012 without a crash i would be very suprised.

 

Edit: The A wave reached the price area surround the bottom of the previous 4th wave - a common pattern. The C wave may reach the price area of the previous 4th wave of a lesser degree - the price area surrounding the 1987 crash (c400). This is the price area i mentioned a few years ago as being my really bearish target for many indexes in the West.

[drbubb]

The huge bounce this week as the central banks took their coordinated action rather suggests my reckoning that we were already in the 3rd wave down from the late Octber highs is wrong. The size of the retracement of the falls since late oct could be just a correction with a 3rd of a 3rd about to start, but i think the chances of this are low. More likely is that we get a bit of weakness early next week followed by another push up to those late Oct levels and just beyone to complete an ABC of the falls since May.

 

On the FTSE 100, for example, i am looking for a move up to between 5747 and 5800 before armageddon starts.

On the S&P, between 1292 and 1304.

 

Time wise, anytime between next week and the end of the year.

It will not be easy to "beat" the usual tendency for a Christmas rally.

But I cannot rule that out.

 

I bought quite a few puts yesterday, and will have to stay very alert next week

[Van]

Yep. This index normally gives the clearest patterns and is the one i use to check my count on UK and US markets looks right. I guess it gives such clear patterns because of its global nature, so it really picks up on global social mood rather than be biased by national events. It also strongly suggests Asia will be going down with the West for a while and will not be able to buck the trend, initially at least.

 

Once it hits the target area below 600 i will be looking to invest in Asian stock markets. The A wave lasted from October 2007 to March 2009, so a time match for the C wave would take us to the end of 2012; suggesting a rapid loss of value when this 3rd wave gets going (ideally around the 28th Dec turn date). If we escape 2012 without a crash i would be very suprised.

 

Edit: The A wave reached the price area surround the bottom of the previous 4th wave - a common pattern. The C wave may reach the price area of the previous 4th wave of a lesser degree - the price area surrounding the 1987 crash (c400). This is the price area i mentioned a few years ago as being my really bearish target for many indexes in the West.

 

Can you recommend a good book on Elliot Wave?

I am wary of Prechter though as he seems hellbent on predicting global deflation.

[nbarter]

Can you recommend a good book on Elliot Wave?

I am wary of Prechter though as he seems hellbent on predicting global deflation.

 

Cant say i have read many. The main reference i use i am afraid is Precheter and Frosts 1978 Elliott Wave Principle, which ends with a super bullish forecast so you wont have his super deflation scenario to worry about. That came years later.

 

Glenn Neely also wrote a book on EW, which added to Elliott's original work with new patterns, but not read it. I will one day, but from the little i have seen of Neely's work it seems even more complicated and even contradictory to some of the original Elliott patterns so wary of muddying the waters.

 

If you just want a flavour then can probably find plenty of free material on the web.

[nbarter]

On the S&P, between 1292 and 1304.

 

Time wise, anytime between next week and the end of the year.

 

If this pattern does unfold, i.e if the tight ranges mentioned above are hit over the next few weeks to Christmas, then i will definitely back up the truck and short the indexes and re-enter my failed USD/CAD long.

 

 

The markets are nearing a big turning point IMO. Hopefully a little more upside before the biiig falls.

 

Two scenarios which i will post a chart on soon if i get some time - either the markets continues rising to the target areas mentioned above (On the S&P, between 1292 and 1304) or rise only a little more to hit a downsloping trendline that coincides with where, I think, the 200SMA is (1260ish). Don't forget the 28th Dec turn date.

 

Vix has fallen loads, weirdly, so puts are cheap and worth a flutter on Vix itself IMHO - could see a big spike soon.

 

Finally, my silver shorts are doign nicely and looking to add to them shortly. Was taken out of my can/US$ position a few weeks ago, but looking to get back in and short the Can if the can$ strengthens just a little more.

[nbarter]

Will the FTSE turn down shortly from the upper trendline area? - today the trendline is about 5563 - and the market was just 10 points below this 20 mins ago. Today is a major Bradley turn date. If instead it powers through this area, then the upper trend line shown on the chart below around 5800 should contain it.