Black(ish) Friday

Black Friday numbers were not too bad (not great, but not bad either). SPX takes another strong bounce off support and the Nasdaq keeps making higher highs and higher lows.

I still think we are range-bound / trading higher for the next month (yeah Silly Season).

Side of Mashed Potatoes

Sideways and volatile is right. Large gap downs will be filled back up. Recall Dubai World about this time last year? Huge overnight gap down and was filled back up? Same deal with the North Korea artillery strike. The market is filling that gap as we speak. It just doesn't want to break down yet.

So my count is below. Is it an ABC zigzag? or ABC(DE) of a big triangle? I layed the case for a sideways move. http://marketthoughtsandanalysis.blogspot.com/2010/11/silly-season-is-coming.html.

Silly season is upon us. Setups that look like they have a lot of downward potential (and we had several last Nov/Dec) will hit support and bounce off IMO. I am really skeptical of a strong down move prior to December/January at this point. The bears had one good shot at the very beginning of November and that opportunity was blown.

I think being very bearish right now is not the right call. Which is too bad for me :( But at least I can be a cautionary tale, at least to the trading shorts :)

Happy Sidewaysdays

New holiday saying for the market. Move is going right back up. I doubt a breakdown before Black Friday numbers and depending on the level, I think it wants to hold sideways for the rest of Nov and quite likely most of Dec.

Yessir, silly season is upon us.

Silly Season is coming

I have a nagging thought that as we advance into silly season, the market just won't want to break down. Here are two interesting looks at the wave structure that may suggest something sideways for awhile.

Back up

Well the impulsive count down possibility that I showed the last 2 days is gone. So we have a 7 wave move down (== corrective) from the top with a sharp reversal. But based on some MA crosses on the 60 min chart (and the fact that it bounced off the 50 day MA [almost], and retraced back up to the 20 day MA) leads me to believe that the correction down is not over yet.



Update on Gold Count

A Nice QE comparison

I have made my thoughts on QE pretty clear (http://marketthoughtsandanalysis.blogspot.com/2010/10/some-thoughts-on-qe.html).

I believe that QE is not an inflationary event (I believe there are likely inflationary events to come in the future giving us a stagflationary-like landscape [large macro deflation against which monetary policy will flail against creating upward pressure on real assets {and no, equites as a general asset class are not real assets} which will further choke economic growth], but QE has nothing to do with that).

The Pragmatic Capitalist has a great chart comparing the current QE announcement and rally as compared with the Japanese prototype back in 2001. Very interesting indeed.

http://pragcap.com/revisiting-japans-reaction-qe

Jacks

Count so far

Do you like apples?

Well we got a breakdown, so how do you like them apples?

(Groans at the bad pun / Good Will Hunting rip-off)

I was skeptical about a 1-2,1-2 setup, but I am perfectly happy to be wrong :)

So Far....

The count is very ambiguous. Here are some thoughts. I am leaning toward corrective (double zigzag down) at the moment.

Them's the gaps

Every single large gap down over the past year has been immediately back filled. Based on the open this morning there was no reason to expect anything different, and today didn't surprise.

Nothing really to report. Still have huge divergences, still have price advancing into severely overbought territory.

What would be very interesting would be a large intraday reversal tomorrow. The count down is not impulsive, but assuming my revised large count theories are correct, this next Minor wave down should amount to a B wave and be very confusing. There is something about Tuesday's move down (discounting the all-too-obvious [and expected] gap filling today) that seems like the harbinger of a trend change.

Old Don binv is chasing windmills again probably.

Still have crazy divergences

NYMO setup looks very much like the April setup. We will see.

Nice to See

Last wave counts like a 5 and the move down looks like a set of 1-2(s) down with acceleration.

Has a Minor sized down wave finally begun?

Wind

As in 'this wave is winding up'. Not wind as a synonym to breeze. Although Bernanke is blowing a lot of hot air trying to inflate this market ... again (http://www.hussmanfunds.com/wmc/wmc101108.htm)

Regarding the count, here is what I have for the wave from the end of August. I don't see anything particularly compelling here.

Last week I was counting it as an impulse wave because the move from Early October looked very much like and Ending Diagonal. But now with the gap up above the trendline, that count is broken. And IMO there is not another impulse count in its place. The move since Early Oct is very overlapping and I do not see any clean (or even unclean) impulse count there. You really have to stretch things to try and make one fit.

This count is not great. It has something like 5 running flats in it. However a running flat is marked by a strong wave on either side of it and we have that in spades. So right now I don't see this as an impulse but a very strong corrective wave.

I guess it doesn't matter because up we go. We are starting to hit some long term resistance right now. Lets see if Bernanke can jawbone us through that too.

Long Count for Nasdaq 100

crush had some very good comments and observations regarding the NDX and suggested I take a look. I don't recall ever doing a long (multiple decade) count of the NDX (I have of the SPX, the Dow, the NIKKEI, Gold, the US Dollar and a few others). I think based on the strength of the move now, I think a retrace to the 50% level (after a pullback, we are quite overbought on a daily chart) might not be unreasonable. If this count is correct, there would be a decent amount of wave proportionality (or as much as can be expected in a highly corrective and volatile market) and would hit a Fib retrace at some solid resistance.

Worth pondering at any rate.

And yes, I am still firmly in the "no new secular bull market here" camp.

The Large Count

Like I said in my last post, the P2 count has been invalid for a few days. The Nasdaq 100 made new recovery highs a few weeks ago (but it is a fairly narrow index). The Nasdaq Composite did so yesterday and the Dow Industrials did so today. Based on this gap and move, I fully expect the SPX to set new recovery highs also before turning down. It is only a couple of points away.

So the relevant question is: what is the overall count?

It is not a completed P2 (obviously), and with a higher high I am doubting it is Primary 2 at all. The move is going on for too long. I talked about other options many months ago for awhile (the last update being in August: Where we are: The Long Count and some thoughts), and that would be a Cycle degree X wave.

First, I do not buy the count off the bottom in March 2009 as a five wave impulse: (see Another Impulse Wave Study: A Look at the 1974-1975 Low and Rally and Not All Five-Wave Moves Are Impulses: A Short Treatise on Elliott Wave). And I will not regurgitate all the macro reasons that go against a new bull market here. If you are interested, these thoughts are all recent and valid: The Big Picture: Technicals and Macro. In short, I think the secular direction is still down.

But with new recovery highs, the picture is not as bearish for the intermediate term. And I think it deserves an update:

Yep yep yep yep

This move is too strong for the 5th wave of an ED. The overthrow is way too high. So I no longer favor the count. The market gapped right above the likely terminal where everything would be in a nice proportion.

The P2 count has been invalid for a few days. The Nasdaq 100 made new recovery highs a few weeks ago (but it is a fairly narrow index). The Nasdaq Composite did so yesterday and the Dow Industrials did so today.

Based on this gap and move, I fully expect the SPX to set new recovery highs also before turning down. It is only a couple of points away. That is the next major resistance hurdle.

Usual Fed Day Shenanigans

Large up and down from yesterday. I think it fits very nicely as A - B (expanded flat) - working on C up for 5 of the Ending Diagonal.

My attempt

I have seen a lot of counts attempt to explain the move of the last 2 weeks as a very distorted impulse wave. And I really don't see it. It reads as clearly corrective to me, yet the price is winding up and narrowing and the volume is dropping. This just jumps up and down screaming ¡ Ending Diagonal !.

Well it does to crazy uncle binv anyways .... and yes, I am laying off the sauce
.... sort of (hic)

Hmmm...... maybe not.

Today ending up really looking like a three after all. Tough to make an impulse out of this and a 1-2, 1-2 down looks ridiculous.

Based on this, an up day tomorrow would not surprise me.

I am inclined to call it

I am inclined to call it done. This is the type of breakdown that I have been looking for. Clear up day that reversed sharply. There will be a long reversal candle today (assuming it closes anywhere near here). Clear breakdown out of the Nasdaq wedge.

.... This might have some legs! (or rather this rally might have finally lost its legs)