8/30/11

We are presented with a quandary.

The market appears at though it still needs a Submin v up to complete Minuette (v) and thus Minute [c] of Minor 2.  But RSI (not shown) and MACD don't look too thrilled about it.  Slopes have been decreasing, and where I marked the end of (iii) (if it is the end of (iii)) has it less than (i).

I think we are in a fifth wave - third waves do NOT move in diagonals which this clearly is, the market having fallen markedly below its 1214.28 interim high--and more importantly, closing below it.  The wave (iv) is sharp and not typical of fourth waves, but alternation is a guideline not a rule.

The futures have fallen to less than the equivalent of the sky-blue line - while I am not concerned unless they open below it, it's still an indicator of impending bearishness.  Upside potential is now only 1237.43 (where (v)=(iii)) and at this rate it may struggle even to hit 1228.  It should be pointed out that, if I am right and the 1220 top is Submin iii, wave v (and therefore (v) and therefore [c] and therefore 2) are limited to 1229.18.

It is therefore highly likely that I will open a short position tomorrow.  With a tight stop, mind you, but...

8/29/11

The triangle count is broken.  Theoretically it could still be a fourth wave down of some kind, but the primary count is still Minor 2.

My target for Minor 2 is 1248.  Why?  Because it's high, and therefore is likely to get the most people on board the bull train before crashing down.  There are already bears "defecting" to the bull camp; the "P[3] up" counts are being trotted out, etc.  This is wave 2 behavior.  More importantly, though, 1248 is the point at which C = 1.618*A. 

On the other hand, one could make a decent argument that wave (iii) has already ended - Submin i finished and ii happened as a "weekend wave" and we opened already in iii of (iii); Submin v traced out an ending diagonal with Micro [3] shorter than Micro [1].  If this is the case, then two things are true about the count:  {1} Micro [5] cannot be longer than Micro [3] - it breaches at 1210.85, less than a measly point away from its current value (notably, as I type this, futures are down slightly), and {2} since (iii)=(i) at 1213.94, (iii) would have to be shorter than (i) and thus (v) shorter still.  This would not, however, invalidate a 1248 high - so long as wave (iv) doesn't retrace below 1207.04.

8/26/11

That was a fun trading day.  I sold off my SDS, which I had bought yesterday morning at 23.85 with SPX in the upper 1180s, at 25.78 with SPX in the lower 1140s.  Given what the market did in the subsequent few minutes, I find this to be a relatively good trade.  (SDS bottomed Thursday morning at 23.73, and topped out this morning at 26.06.)  Makes up for my abysmal Wednesday trading.

I figured that the most likely counts were that 1190 was either {1} Minute [a] of 2, {2} Minuette (c) (or Minute [c]) of a Minute [iv] (or Minor 4) triangle, or {3} Minuette (ii) (or Minute [ii]) of Minute [v] (or Minor 5), though this last count was even less likely on the grounds that the move from 1120 parses far better as a "five".  All three of these counts suggested a move down to at least the 1140s region, which is why I sold off where I did--I figured it was bottoming.  Well, that and I didn't want to have any active trades open should the stock market be closed on Monday due to damages from Hurricane Irene, which is a distinct possibility.

The potency of the bounce off 1135 suggests that we are not in the triangle; if we are then we need a B-wave to go much further down than the 1168.62 afternoon low (and the triangle walls are closing in fast), or we need to finish up what would be the most pathetic excuse for a C wave ever.

Another alternative, however, is that we are still in Minuette (c) of [iv] (or, if you prefer, Minute [c] of 4).  C=A with this wave, considering the bottom of (b) to be 1121.09, would bring it up to 1205.50 - a possible larger ascending triangle.  This count seems to work well with the timing, particularly if we reach that towards the Monday close/Tuesday open (add one day for every day markets are closed), since it would be the same length, time-wise, as (a) - slightly over five days.  You'd then have a three-or-four-day trip back down to the channel line (which would then be around 1140) in the first few days of September, then your wave (e) up, then the wave [v] down all the bears have been waiting for.

The primary disadvantage to this count in my opinion is that it would require wave [1] of c of (c) (the impulse from today's lows) to be the longest, but there's nothing saying that can't happen, so long as [3] is longer than [5].  Nevertheless, my primary count is it's still Minor 2 up.  In such a case, I expect C=1.618A, or a target of just shy of SPX 1250.  A breach of 1101, of course, invalidates Minor 2 as happening now.

8/25/11

The market just aims to confuse at every opportunity, doesn't it?

The bull count suggests that we are in Minor 2, or a Minuette (c) of [iv] (or if you prefer, Minute [c] of 4) that initially acts like a Minor 2.  We do appear to be in the "handle" stage of a cup-and-handle.  There is, however, a caveat:  It doesn't look like (c) down of [b] (for the Minor 2 count) has happened yet, which would have downside to about 1140.  A low of ~1140 also works well as a target for (d) of Daneric's Minute [iv] count.

My expectations are either that we "gap and crap" with the gap up to around 1170 forming the right shoulder of a H&S, then down to 1140, or that we open down in which case I will probably sell off the SDS that I bought today.  (Near the day's high, for once.)  The move down felt impulsive and the B (or 2) seems rather weak, and this move is definitely of the same degree as the move up from 1121.09.

The bear count, of course, is that the 1190 high today was Minuette (ii) of [v] (or if you prefer, Minute [ii] of 5).  I tried to display this in a 1-minute chart, to make better sense of this wave pattern.

It definitely seems as though many heads-and-shoulders could complete in a third-wave bearish impulse down.

At any rate, I think we probably will at least return to the 1140s.

8/23/11

Obviously, my count from yesterday was invalidated... sort of.

I went long SSO today.  A few minutes before close.  So tomorrow when the market opens down 30 points you can all laugh at the stupid little Keller boy and say "I told you so."

Anyway, why did I do it?  Because the third of the five waves up to the 3:10-ish interim high of 1160.57 was the shortest.  Thus, it could not be wave 3, but rather was almost certainly wave 1 of 3.

I have a bull count and a bear count:

The bull count is that Minuette (v) of [v] of 1 traced out an ending diagonal and that what I had as Micro [A] of iii yesterday was really Submin iii itself.  In such a case we are currently tracing out Minute [a] of Minor 2.

Minor 2 could theoretically retrace all the way back above 1300 (78.6% retracement is 1302).  A target for Minute [a] of 2 is the blue line, which served as support throughout much of [iv] and very likely will serve as resistance now.  If that is met tomorrow, it coould act as the top of a cup for a cup-and-handle pattern.

The bear count is that we are still not done with Minuette (iv).  If this is the case, the red lines will provide resistance.  There are some other counts out there - one common one is that my Minor 1 is really just Minuette (b) of [iv] of 1 with (c) up to come, but a Minuette (c) of [iv] would for all intents and purposes act like a Minute [a] of 2.

The point is that all of these counts at least require a 4-5 up of the same degree as this morning's initial rise, and as such I am short-term bullish going into the night.

8/22/11

The difficulty in figuring out what the wave count actually is would seem to indicate that we are in Minuette (iv) of [v].  On the other hand, the wave count is too torturously "three'd", wave 4 is grossly out of proportion not only with wave 2 but with waves 1 and 3 as well, and the movement since Friday's open has held, more or less, to a parallel channel.

The problem is that it has happened in threes:

  

Overall it is behaving as though it were in a 3-3-3-3-3 diagonal, sloping downward.  This is an ending diagonal (NOT a leading diagonal) and very likely means we are currently in Minuette (v) of Minute [v], on our way headlong perhaps to a double bottom.  The alternative is that it is an ending diagonal comprising Subminuette v of (i) of [v], but I find this unlikely.

The bottom channel line passes through 1101 and 1096 on Wednesday.  Wednesday is also 34 trading days from July 7 which I hold to be the orthodox top of Intermediate (C) and thus Primary [B/2].  It bears watching and could foretell a reversal.  There are also several significant Fibonacci events towards the end of August/beginning of September:  89 trading days since the May 2 price high, as well as 55 calendar days since July 7.  And then there is Pebblewriter's 87 day cycle, which hits the Friday immediately preceding Labor Day weekend.

Another thing that supports a Wednesday end to Minor 1 is that gold is approaching some Intermediate-level Fibonacci resistance levels (see Daneric's recent blog post).  If indeed Minor 1 ends on Wednesday, one of these days would be a logical end either for Minor 2 as a whole or for Minute [a] of 2.

There are some wavers who insist that a double bottom or truncation of Minute [v] is highly unlikely simply on the basis of it being Primary [3].  I disagree; the only thing this really means is that Intermediate (5) almost certainly will not truncate, and Minor 5 of (3) and Minor 5 of (1) probably won't either.  But Minute is three degrees down from Primary; the status of it being a third or C wave of Primary degree probably has little bearing on what Minute [v] must or must not do.

8/18/11 - Options Expiration Eve

There will probably be no post tomorrow.

We have three competing wave counts today.  The market either finished (a) of [iv], (i) of [v], or the entirety of [v] itself closing out Minor 1.

I believe it is working on Minuette (i) of [v], down to about the 1010-1025 area.  The arguments in favor of Minor 1 having ended are compelling, though - for instance, if it did, Minute [v] would be 1.236x the length of a Minute [i] that bottomed at 1295.98 so long ago.  And then of course it is opex tomorrow.

On the other hand, there is also an inverted cup and handle formation that looks to be starting up, which is more conducive with a Minuette (ii).  Also, it's only opex tomorrow, after which time it's as far away from opex as it will ever be.  With a weekend in between.  120 SPX points in one day is a tall order.  And that's without mentioning the death cross on the 10 minute chart (55 and 233 EMAs).

Fifty points in one day, however, is not that tall an order (heck, it's what we lost today), and would have the handy advantage of re-testing the trendline from 1170.74 (which on my chart crosses through Submin ii of (c), Micro [2] of iii of (c), iv of (c) (all of [iv]), and i of (1) of [v], as well as filling the huge gap down.  All three of the wavecounts support upward motion tomorrow, so I wouldn't be surprised to see an up day.

KRAP fell 95.72 to close at 1397.09, breaking its previous 1408.02 low set on the 8th and going down to a level not seen since the distant era of... two months ago.

8/17/11 - I Still Hate Fourth Waves

I have no idea what the market is doing right now.  It made a new high, I got back into SDS near the day's low which was a bad move on my part.  No doubt wave [iv] is doing one of those convoluted WXYXZ type of corrections that I don't have any hope of figuring out until there is SOME confirmation that wave [iv] is actually done, which there isn't yet.

Thus, the below chart is skimpy on Elliott wave labels but bulky on trendlines:

Notice the thick burgundy line running from the bottom.  That line is the channel line running through the Minute [iii] low and the interim low of 1118.01.  This line intersects the trend line from the two intraday lows on August 12 at the exact time and price of today's 1184.36 low.  It is reasonable to surmise that if we are in a WXYXZ correction, the 1118.01 was the first X (Minuette (x)) and today's 1184.36 low was the second X (Minuette (xx)).  In which case Z up is due and shorting, as I did, is probably not the best of plans, at least not yet.

Or is it?  Because the slope of every line connecting each set of two new highs starting from the 1125.34 low (which is Submin a of (x) if the WXYXZ count is right) has been becoming less steep as time goes on, shortening the wedge.  A flat line from today's top intersects the burgundy Friday morning at around 11:30; extrapolating the most recent "new high to new high" line to the intersection of the burgundy yields Friday afternoon at 3:30 at a price between 1215-1220 (naww, they wouldn't, would they?).

The light blue trendline represents a more bullish view; it intersects the burgundy sometime Wednesday at around the upper 1240s.  Even here, this does not invalidate the wave as Minute [iv].

The point is that time appears to be running out for the uptrend unless it can break hard above the blue line.  And the clock runs out on opex day itself.  Enough time has passed since the bottom now that any top followed by a major break down is likely to represent the top of Minute [iv] rather than merely Minuette (a/w) of Minute [iv].

And for fun,

KRAP closed down today at 1492.80, but is still well above the June 13 interim low my pet index made before it skyrocketed like the numbers on a thermometer do this time of year (with apologies to my Southern Hemisphere readers, for whom it's the opposite time of year).  Still, you can clearly see the 5 down 3 up it made from its August 1 all-time high.  Also, if you count the waves in the rise from June 13 to August 1, there are 21 of them.

8/16/11

I hate fourth waves.  You know that fifth wave is coming, you just don't know when.

Yesterday morning I went long SDS at 23.85 per share; I closed the position this morning pre-market at 24.22 per share.  Probably better if I'd held off until 1:08 p.m. to sell off, but I didn't.

The main sticking point, I think, is the 3-wave rise Monday morning, which is the same sticking point that makes many wavers think May 2 can't be the top.  (To be fair, I'm one of them; I call it Minute [x] of Minor 4.)  You could make an argument that Micro [1], [2] occurred in the last thirty minutes of trading on Friday the 12th (indeed I will show a 1-minute graph of that day soon), but then you'd still have Micro [3] on three Submicro waves up.  I attribute this to weekend/overnight waves which didn't manifest themselves properly in cash trading.  If you had a market that was open for trading 24/7/365, you'd probably get a wave count that makes more sense.  The MACD seems to be behaving like it's a third wave, as well.

Admittedly, it doesn't look like a textbook wave [iv], but then again it doesn't really look like a textbook anything else, either.  It's a convoluted correction, but that's exactly what you expect from a fourth wave.

However, today appears to be up-down-up-down with lower highs and lower lows, almost in the same fashion as the start of Minute [iii].  This may not be all that surprising, as we'd expect Minute [v] to take less time, so its leading diagonal or 1-2-1-2s are running faster.

What makes us so certain it's Grand Supercycle [III] that ended?

Because Prechter's ultra-large-scale wave count says so?  But Prechter also told us to short silver at $20, which was a poor suggestion ($45 would have been better).

It's pretty clear that the Dark Ages were a social-mood downturn at very high degree.  But the Dark Ages proper didn't stretch all the way to the Renaissance; there was a period called the High Middle Ages in between.  Prechter calls this Submillennial ONE, with Submillennial TWO the general turmoil of the 14th century; submillennial THREE is an extended third wave.

But just because third waves can extend doesn't mean they do.  Let's look at the 14th century more closely.  What we notice is that the late 14th century is characterized by the inception of positive events - the Union of Kalmar, the start of the Italian Renaissance.  But the middle 14th century in particular is rife with all sorts of wars popping up all over the place.  (Granted, the preceding few centuries had a lot of them, but wars took a long time to wage in medieval times, and if it's a Grand Supercycle [I] there's stil probably a lot of leftover lingering from the Dark Ages.)

Arbitrarily, we'll look at the year 1337.  This is not because of some Internet slang involving this particular number, but rather because the Hundred Years' War started then.  Now, wars typically don't begin at the pinnacle of an upward (grand) supercycle, but somewhat later.  So we'll put this twenty years back, in 1317 - about the time of a major famine.  (Now, said famine is probably more attributable to climate change in the form of the Little Ice Age than social mood, but...).

Backdate a Fibonacci 233 years from 1317.  Where do you end up?  The year 1084.  Now let's take a look at the Wikipedia articles for the 11th and 12th centuries.  On the page for the 11th century (year 10xx), the word "treaty" appears just three times.  That's it, three times.  On the page for the 12th century (year 11xx), by contrast, the word "treaty" appears twenty times.  Battles and wars obviously continue throughout, but they seem to become less prominent as the 12th century progresses.  The 13th century has a lot, but most of these appear to be related to the Crusades, which are something generally different and seem to be more on the lines of giving the knights and other soldier classes something to do on the grounds that they face little existential threat.  Overall if I had to live in medieval times, I'd probably pick sometime in the 1200s.

Now, what is generally thought of as Grand Supercycle [II] - the bursting of the South Sea bubble and the subsequent economic depression - ostensibly lasted about 64 years, from ~1720 to ~1784.  64 years from 1317 is 1381 - a turbulent time with peasant revolts and similar, but also a time in which changes were beginning to occur in the form of the Renaissance.  But second waves, if that is what this is, are sharp - let's estimate a nice Fibonacci 34 years, putting it at 1351.  Holy crap, that's about the time the Black Death ended!

Add the Fibonacci 233 years to 1351, putting us at... 1584?  No, too many wars ending and scientific/cultural works being done.  But 377 years therefrom is... 1728.  Uh-oh, that's pretty darn close to the South Sea Bubble bursting.  And a Fibonacci 55 years from that is 1783, just about the ostensible end of Grand Supercycle "[II]".

But the South Sea Bubble burst "early", in 1720, fifty-five years from which is 1775.  Okay, so the American Revolution didn't actually start until that year, but you can feel the percolating social mood of the downturned Supercycle (c) in the years prior, and what was that they said about wars sometimes post-dating the actual social-mood Supercycle bottom?

Now, 233 years from 1775 is... 2008.  Um... I'll just leave it there.  But look at this:

Grand Supercycle [I]:  ~233 years
Grand Supercycle [II]:  ~34 years
Grand Supercycle [III]:  ~377 years (Prechter's Grand Supercycle [I])
Grand Supercycle [IV]:  ~55 years (Prechter's Grand Supercycle [II])
Grand Supercycle [V]:  ~233 years (Prechter's Grand Supercycle [III])

In this case, I hope the bulls, or at the very least the bearish-but-not-quite-as-bearish-as-this Prechter, are right and this is "only" Grand Supercycle [IV] (or even Cycle IV of (V) of [III/V] on our way up to V to close out the Grand Supercycle).  If not, well... let's just say that a "21st century solution" to things may not exactly be as pleasant as it currently seems.  And that's not a good thing.  Not by a long shot.  This count makes Prechter seem optimistic about the near future.

(Also, if this is the case, we need to seriously reconsider the "Submillennial" degree name, as there seems to be nothing sub-millennial about it.  In such a case I recommend it be scrapped entirely.)

8/12/11

By the standards of the past few days, the market is effectively unchanged.  Remember way back when 1% was a significant move?

What I had labeled on yesterday's chart as Subminuette vii of (c) could not have been a third wave, as it was shorter than waves v and ix.  Today's essentially sideways motion clarifies this somewhat, as it affords the probability of waves iii, iv, v, and vi actually being Micro [1], [2], [3], [4] of an expanding Subminuette iii, whose wave [5] expanded.

The listless motion today speaks volumes to today being a fourth wave - and a fourth wave within a fourth wave, at that (specifically, iv of (c) of [iv]).  Counting the mini-waves of a fourth wave is a brutal task at the best of times, and considering this is most likely Grand Supercycle [IV]... oh boy.  Five-minute MACD is near zero, which is very unhelpful.

Given this I would expect another sideways day on Monday, this time closing slightly down.  The wave count is technically not invalidated to the downside until 1141.98, though I'd exercise caution near 1156.39.  On the upside, a breach of the trendline running through the 1188.64 open and the 1189.04 high suggests Subminuette v is underway, and it may be time to get out of longs and into shorts.  Invalidation by my wavecount is 1295.92, but several other wavecounts have invalidation points at ~1257.

My count would call for a truncation if [v]=[i] in length, but likely targets for [v] are in the 1025-1070 range (union of various lines from, in some cases, as far back as 1996).

KRAP was up 26.25 to close at 1555.34.  Everything but CROX was up; LULU was up 8 percent.

8/11/11

DISCLOSURE:  I made a trade today.  I now have approximately half my position in SDS, the ultra-short S&P ETF.  The cost at execution was 24.27/share; my break-even-after-sell price is 24.43/share.  I acquired half the position today as a hedge against Minuette (c) and thus Minute [iv] already being over. If this is not the case, the targets for the SPX's Minute [iv] high are ~1215 and ~1250, and I will increase my position in SDS there.

The downward push has violated Intermediate (B) to such a significant extent that it is virtually impossible to consider this a leading diagonal.  As a result, I am 99% confident this is an impulse wave downward, one in which we have yet to have our wave [v].

Let's just go ahead and call 1101.54 the Minute [iii] low, since we made a higher low, both it and the reversal upward got a bit too big for their Bollinger britches, and there was significant divergence.  The intraday mega-swing, which the conspiracists predictably attributed to manipulation from whoever they think is manipulating the market, is clearly potent enough to be Minuette (a), followed by a clear 3 waves down for (b).  Having breached 1172.53 in the late hours of trading, it is safe to say Minuette (c) is underway.  What is unclear, however, is whether it has finished.

Minuette (a)=(c) is still at 1191.75, which we did get reasonably close to.  The point is that we now have satisfied the minimum for (c) and that we have consolidated for a few days now which is long enough to allow Minute [v] to start.  (This is why I disliked the notion of Minute [iv] having finished at the close on Aug. 9 - bear markets move fast, but not that fast!)

KRAP was up 64.79, closing at 1529.10.  All five components were up.  It, too, looks like it's forming wave C up.

8/10/11

Ah, wave [iv], how crazy you can be.

The market is, I believe, setting up a bear flag at Minute degree in preparation for wave [v] down.  This means Minuette (c) of [iv] is still to come.

There are far too many overlaps for me to consider the move from 1172.53 to 1125.34 impulsive, so I have labeled it Submin a.  Submin b appears to be a WXY correction - the move from 1130.29 to 1159.78 is clearly three waves.  This in itself suggests but does not require that the move not be a wave 2 - while wave 2s can be WXY(XZ)s, that structure is more typical of 4th and B waves.

Subminuette c appears to have only had 11 waves so far.  This suggests a possible slight gap up in Micro wave [12] overnight which is filled in wave [13] to culminate Submin c and thus Minuette (b).  I think Minuette (b) will probably bottom around 1112 (c = a) or 1109 (.886 retracement of move from 1101.54 to 1172.53).  There is also an inverse head-&-shoulders setting up, a regular head & shoulders having been fulfilled by this afternoon's downdraft.

For what it's worth, I am all in cash.  If we approach or surpass on Minuette (c), I will enter a short position for Minute [v].  If today's low is the bottom, (a)=(c) happens at 1191.75.  If we break 1083 on the other hand then either [iii] is not yet finished or [v] has already started, which could be potentially problematic.  If we break tomorrow, it is probably that [iii] has not yet finished.

Lastly, KRAP was only down 28.37 (to close at 1464.30), and LULU was actually up on the day.  KRAP has completed 5 down from its August 1 high, and it definitely looks as though this correction down is a B wave with C up to come.

8/9/11

I am fairly sure we are in Minute [iv] now and that the hyperextending Minuette (v) has now ended.  At the very least, we have surpassed several previous lows, which means that at the very least the overnight futures bottom was the bottom at several degrees - possibly not Minute, but at least Minuette.  Note that today also breaks out of the parabolic decline the index had entered.

My count is as follows:

Recall that by my count the Minute [i] bottom was at 1295.92.  If 1295.92 is breached before another impulse wave down, this count is invalidated.  There is, technically, no downside invalidation until the SPX equivalent of DJIA 34 (the Great Depression low), which at the DJIA/SPX ratio of ~8-9 is approximately four.  If that breaches, then the 2007 top was Grand Supercycle [V] ending the Submillennial-degree impulse wave, not simply [III] of it, and things are worse than even Prechter is foretelling.

And now it's time to play a game called "Fun with Trendlines."

Notice in particular the black trendline, which starts at Minor 3 of (A) and hits approximately the peaks of the upward corrections within Intermediate (B).  That line crossed today in the 1080-1090 range, which is exactly where the cash-equivalent of the SPX bottomed out in futures overnight - followed by a rally.

I think the trend lines are approximate locations for the terminations of subsequent waves, though of course I may be wrong.  The light blue line could very well be the end of Minute [iv] - indeed it seems to be full speed ahead for it.  This would be followed by Minute [v] down perhaps to the red line - this would mean a truncation, but as Minute [iii] traveled too far too fast a truncation is perfectly reasonable.  The darker blue trendline, then, is a potential retracement for a quick-and-dirty Minor 2.

If Minute [v] doesn't truncate, it probably will test the black line or the (not-shown) trendline running through the bottoms of Minor 4 of (A) and Intermediate (B).  Could the market be trying to set up a head and shoulders on a large scale?

8/5/11

To try to figure out the optimal wavecount for Minute [iii] (which I speculate is now finished), I circled instances of overlap in the corrective up waves that StockCharts.com deemed important enough, on the 10-minute chart, to put price labels on.

The heuristic was simply "if you just had a 1-2 and there's an overlap, go to the next smaller degree" - and, of course, subdivide when it's obvious subdivisions would be necessary; it would be ludicrous to propose, at least in retrospect, that Minuette (v) bottomed out at 1216.16!  Minute [iii] thus had an extended fifth wave, which meshes with the alternate count I had up on August 3. 

Minute [iii], assuming it is complete, spanned slightly under three times the length of Minute [i] on an arithmetic scale (1165.32 would have been the perfect length extension).  Three is, of course, a Fibonacci number.

The logical retracement targets for Minute [iv], as shown on the chart above, are 1233.44 and 1275.64.  Moreover, if C=A of this wave, this suggests a target of 1240.67, nicely above iii of (v) of [iii].

KRAP was down slightly (slightly by yesterday's standards, anyway), sort of like the S&P itself.  It sold off 3.37 to close at 1528.91.  LULU was way down, but CROX was way up and the two nearly counteracted each other, and GOOG and CMG countered much of the rest, so basically you could almost say it technically sold off on AAPL to a certain extent.

9/29/08 - excuse me, 8/4/11

Hope you weren't long Dendreon (DNDN).  If you were, well... your stop triggered.  No, I don't care what your stop was; it triggered.  (Unless it was a stop-limit, then it probably didn't.)  If you were leveraged long Dendreon, then... hope you had a nice margin call.

Anyway, the markets decided that the pathetic, miserable excuse of a crash they had been making the past several days was insufficiently crashworthy, and decided to really plummet this time.  The S&P fell 60.  The Dow, over 500.  The Nasdaq, 136.  The RUT, nearly 46.  Oil?  Brent fell to under 108, and WTI to under 87.  Silver?  Dropped $3.50 an ounce, back under $40.  Everyone's favorite shiny yellow metal, the one that goes up if Bernanke so much as utters a syllable that sounds like it could be "Q", "E", or "3"?  Yeah, even that was down today.

My pet index, like just about everything else save the dollar, VIX, and short ETFs, was down.  By 94.50 points, to be exact, closing at 1532.38, its lowest value since - well, July 14.

No EW chart today.  I am reconsidering my wave count in light of the crash - if that was Minute [iv] already, it certainly was short for a Minute [iv] compared to Minute [ii] (of course, then again, Minor 2 of (C) of [B] was much shorter than Minor 4 of (C) of [B], but...).  More than likely, Minute [iii] isn't done yet (or alternatively, it's a degree higher and this is Minor 3 not Minute [iii]).

The 2.618 length of what I have as Minute [i] (which may in fact be Minor 1) is 158.55, which would take us all the way to 1188.45, a level nearly unthinkable only a few days ago but which is now just 12 SPX points away.  If it decides to extend further, I might have to pull out the logarithmic scales.

8/3/11

I expected the market to move up early yesterday before falling to its final target of Minute [iii].  It did just that.  It overshot somewhat, falling to 1234.56, which was a ways under the 1249.01 target.  The reversal seemed potent by the standards of the last several days, and MACD went further positive than it had since the Minute [ii] top, which lends further credence to the idea that Minute [iii] is over.

If this count is correct, we should be in Minute [iv] now, which should not penetrate 1295.92 - or if it does (except for just barely), then it is a diagonal and Minute [v] should be longer than Minute [iii] which would likely indicate a Minor 1 low of under 1200.

As it stands, the 38.2% retracement off the current low stands at 1276.36.  The 50.0% retracement is at 1289.56.  Both are likely stops.  The 61.8% is at 1302.89, which is a likely retracement if the diagonal count is in progress.

The KRAP was up 20.69, closing at 1626.78.  All five components were up.  It may, however, be forming the right shoulder of a head-and-shoulders pattern....

Also, there does appear to have been a slight negative correlation between UUP and the SPX over the past three months (stocks go up = dollar goes down), but the correlation is slight (R^2 = 0.34).  On only fifteen trading days over the past three months has the dollar moved in the same direction as the S&P 500, albeit it has done so on four of the past eleven days.

8/2/11 - Batten Down the Hatches

Yesterday I expected that the SPX would move upward a little in Submin ii before reversing intraday in Submin iii.  There was no such upward movement; the 1288.62 reached yesterday afternoon remained unbreached.

My chart yesterday did predict, however, that we should probably move lower today.  And we did.  Substantially, and in spite of the debt deal being reached.  (A debt deal that, it should be pointed out, does just about nothing, and under which the debt still grows to $21 trillion by 2020... but $21 trillion is better than $30 trillion, I suppose.)

Today's decline, especially the last hour of it, had a very "capitulation" feel to it, which is characteristic of a wave 3 (and I do have this as Submin iii of (v) of [iii]).  Given the uncertainty of figuring out exact wave counts in that sideways opening to this decline, it might actually be iii of (iii) of [iii].  Note that the breach of the 1258.07 June 16 low invalidates a few intermediate-to-large-scale wave counts (e.g. the Minor 4 triangle).

However, Minute wave [iii] now is 92.95 points in length, 1.535 times the length of my Minute [i].  At 97.99 points in length (corresponds to SPX 1249.01), it will be exactly 1.618 times Minute [i] and this is a logical spot for the end of Minute [iii] (though by no means the only possibility).  If this is the case, Subminuette iv should be starting soon, and might take the form of a gap up (we ARE a bit outside our Bollinger bands) followed by a reversal back down in Subminuette v.  1274.73 is the critical value for the Submin count.

Minute [iv], when it starts, should not exceed 1295.92 which is the Minute [i] low.  Note that at the current levels, a 38.2% retracement would take Minute [iv] to 1288.77; from 1249.01, this retracement would be 1285.57.  Neither would breach.

Also, KRAP down 47.53 at 1606.11.  All components fell 2% or more (well, okay, AAPL fell 1.98%, but...).

8/1/11

The market decided to close down today on Potential Armageddon Eve, though it did stage a nice rally in the afternoon.  This works nicely with the wave count.

 I have two wave counts up.  Either we finished Minuette (v) and thus Minute [iii] today, or we only finished Subminuette i of Minuette (v).  If this was Minuette (v) completing, then Minute [iii] comprised 71.37 points downward compared with Minute [i]'s 60.56.  While this is good - wave 3 was longer than wave 2 - the ratio is not overly close to a Fibonacci ratio (unless you consider 0.849 overly close to 0.886, but I don't).

For this reason, my preferred count is that Submin i of (v) of [iii] completed, and the rally we had since midday is Subminuette ii.  This wave, though of smaller degree, can actually correct further than Minute [iv] could - Minute [iv] is limited to staying below or just slightly and briefly penetrating the Minute [i] low of 1295.92, whereas the .618 Fibonacci retracement - just the .618 retracement of Submin ii is 1294.81, with the .786 at 1300.33 and the .886 at 1303.62.  In addition, the MACD indicates we've already gotten to overbought conditions short-term, which suggests the sharp retracement characteristic of wave-2s.

Of course, there is also the possibility of a leading triangle where [iv] would overlap [i], and given the triangular shape of the start of the downturn from 1347, this possibility cannot be discounted entirely.  I still think 1295.92 is a level to watch, though.  And certainly a pop above 1303.62 would necessitate a rethink of this wavecount.

The KRAP reached new highs - mostly on iPads and yoga, but all five components were up.  It currently stands at 1653.64.