Saturday, January 14, 2017

Pro-Trump Volume Bump on a Maggot-Infested Garbage Dump

When last I reported the Elliott Wave count assigned to the S&P 500's counter-trend rally off March 2009 bottom was as follows...




Subsequent developments, however, necessitate this modest adjustment...




Wave (b) of B now marks its end at the S&P 500's early October 2011 bottom, rather than at its June 2012 bottom. As such, the S&P 500's October 2011 upside, "outside month"—a rare occurrence—now marks wave 1 of (c) of B. Fitting Elliott Wave guidelines, then, is a 3rd wave—in this case wave (c)—beginning with a rare "outside month" to the upside. Third waves typically are the most "dynamic" Elliott waves.

(Likewise, wave 2 of (c) forms a "running correction", and thus too reflects the dynamic quality of the Elliott third wave that is wave (c) of B.)

Development of five waves forming wave (c) of B now reveals clear indication of technical degradation contrasting component waves 2 and 4 (see RSI and MACD). This is typical in a 5-wave move higher. Also typical is wave 3 coinciding with the best technical readings occurring over the course of the 5-wave advance marking wave (c) of B.




December's huge uptick in volume is the first reason why wave 4 of (c) might be best seen ending in early November 2016. Wave 4 takes the form of a complex correction following wave 3 of (c) peak in July 2015, and is accompanied by volume tending to diminish right up to early November. Likewise, RSI early November dipped below its low earlier in 2016 when wave 4 of (c) reached its lowest S&P 500 reading. Taken together, coincident technical measures suggest wave 4 of (c) likely marks its end early November 2016.

(re: wave 4 of (c) having a "running correction" quality like wave 2 of (c), this is another demonstration of an Elliott 3rd wave's dynamism. Also we see a "like from like" manifestation in corrective waves 2 and 4 of wave (c) of B. Similarly, since Y2k peak—from which time a major Elliott corrective wave has been forming—both major "B" waves higher—2002-2007 and 2009-2017?—have lifted indexes into new record territory taking the form of a 5-3-5 "zig-zag." Another "like from like" manifestation, even as the Elliott Wave Principle's "alternation guideline" otherwise is evidenced over the entire duration of the corrective wave whose beginning traces back to Y2k peak.)

You might recall that in addition to volume persistently diminishing over the course of the market's counter-trend rally off March 2009 bottom, short-term peaks over the course of the advance were often met with a volume spike. December's spike likely is similar, and quite possibly another beast altogether. Look at it this way. Never during the market's advance off March 2009 bottom was there evidence of a "wall of worry" healthy markets display during their ascent. This would be evidenced by volume increasing as indexes move higher. Now, all of a sudden, "someone" evidently is worried. Never mind the well-tuned mechanism capable of snapping up a relative surfeit of massively over-valued trash while bids are pushed still higher. Been there, done that since March 2009 most emphatically. Now, however, "someone" has dumped an elevated volume of holdings. This "someone" in all probability understands that Brexit ventures chaos, a movement only more assured with a weighty supporter, Trump, now US President.

I will refrain from speculating when wave (c) of B might complete. Well enough is objective voice warning that a banking system built on Ponzi finance propped by the most under-capitalized, highly correlated "insurers" in history (yawn ... it's the derivatives, stupid!) finds my current Elliott Wave perspective remaining convinced that the moment of truth portended by all my prior ruminations looming as large as ever.

Upcoming wave C [down] still projects major indexes sinking to levels last seen in the 1987-1994 period. In case you are unaware or have forgotten from 1929-1932 the Dow Jones Industrials lost 89%. From 2000-2002 the NASDAQ Composite lost 82%. Plainly, index levels last seen in the 1987-1994 period are not out of reach.

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© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.

Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.

Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.


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Monday, September 21, 2015

Will 2015 Witness TWO Major Market Reversals?

1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144... starts the Fibonacci sequence.

According to the Elliott Wave Principle, major market turning points frequently occur at instances in time that are some Fibonacci number from a previous major market turning point.

For example...

2015 is a Fibonacci 8 years from 2007, a year marking a major market top.

2015 is a Fibonacci 13 years from 2002, a year marking a major market bottom.

2015 is a Fibonacci 21 years from 1994, the very year an Elliott 5th wave extension commenced, which, as I indicated earlier this month, marks the very area to which major indexes are likely about to collapse (see my Urgent Stock Market Forecast of September 3, 2015).



There's the picture I painted in that dour piece, describing an Elliott corrective wave unfolding in complex-to-simple fashion since Y2k .

The big question I have is whether 2015 will mark both a major market top and a major market bottom.

After giving this question some thought I find no good reason to suppose the likelihood impossible. A couple good weeks finding markets as liquidity challenged as the open on Monday, August 24, 2015 probably would do the trick.

I'm not pounding the table saying this course of events is likely. Only suggesting it is, indeed, possible, and for all the reasons I have already given.

Otherwise, 2018 is a Fibonacci 89 years from 1929, thus lending some sight to a seemingly more reasonable duration over which Ponzi's EM undressing might develop (the likes of whose commencement came in the lead-up to capitalization of the BRICS Development Bank).

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© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.

Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.

Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.


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Sunday, September 13, 2015

Ponzi 911

If you doubt me analysis suggesting a "run on the bank", so to speak, is to be a concerted affair whose one of many consequences could prop the unseemly hair mop placed atop the Republican party, then at your own peril do you ignore the purpose-filled run on the BRICS that has been gaining a huge head of steam ever since formal capitalization of the BRICS Development Bank earlier this year.
So far, it’s a different type of crisis—market tumult in the face of global QE, in the face of ultra-low interest rates and the perception of a concerted global central bank liquidity backstop. It’s the kind of crisis that has so far been able to achieve a decent head of steam without causing much angst. And it’s difficult to interpret this bullishly. If Brazil goes into a tailspin, it will likely pull down Latin American neighbors, along with vulnerable Indonesia, Malaysia, Turkey and others. And then a full-fledged “risk off” de-risking/de-leveraging would have far-reaching ramifications, perhaps even dislocation and a collapse of the currency peg in China. China does have a number of major trading partners in trouble.
Credit Bubble Bulletin, September 12, 2015
...And a $5 trillion shadow banking system to boot(!), the likes having been largely inflated in the aftermath of 2008's derivatives crash epicentered in London.

Which brings us to "the most sweeping reforms of the financial industry since the Great Depression"—Dudd Frankenstein. Remember its principal purpose? Prop up derivatives markets (whose securities are the backbone of shadow banking systems)!

China, and emerging markets more generally, were the mechanisms through which this was accomplished. This prop's unraveling cannot be stopped. Such is the problem with Ponzi schemes, and the post-Bretton Woods global banking system is built upon the largest in history...

P.S. Next depth $SPX should shortly sink to is 1400.

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© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.

Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.

Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.


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Saturday, September 05, 2015

Whiffs of The Unwind

Today we feast on a few select quotes from this week's Credit Bubble Bulletin titled, "The Unwind."
"I see discomforting confirmation that the current historic global monetary fiasco’s disaster phase is now unfolding. It is within this context that readers should view recent market instability."
Definitely rhymes with my "In other words, yesterday's 'extreme' very well could be today's 'you ain't seen nothin' yet.'"
...speculative “hot money” flows have reversed course. Global deleveraging and de-risking have commenced. The fallacy of “liquid and continuous” markets is being exposed. Faith that global central bankers have things under control has begun to wane. And for the vast majority in the markets it remains business as usual. Another buying opportunity.
Sort of rhymes with "there isn't 1 in 10,000 who even vaguely imagines a decline of this magnitude is remotely possible."

Make it 1 in 9,999.
Crowded Trade Dynamics ensure that a rush for the exits has folks getting trampled.
Okay, so you'd have to be practically blind not to see this coming. We did here. Several years ago.
Today, a Crowd of “money” is rushing to exit EM. The Crowd seeks to vacate a faltering Chinese Bubble. “Money” wants out of Crowded global leveraged “carry trades.” In summary, the global government finance Bubble has been pierced with profound consequences.
Like I said the other day, Doug Noland concludes the "global government finance bubble"—the granddaddy of them all—has popped. What this means he explains in a sentence...
I just fear we’ve reached The Unwind phase where throwing more liquidity at the problem only exacerbates instability.
Case in point China. Rescue acts that worked yesterday today are failing. Soon to join the ranks will be every central bank on the planet. That is why I have persisted calling them hopelessly insolvent. That is why I have made satire of NASA's Mars Curiosity Rover in relation to lenders of last resort being ALL IN.

My case for "China Bash" and connection with Trump finds some interesting circumstance here to consider...
To see China’s “shadow banking” assets balloon to $5 Trillion has been nothing short of astonishing. Then there is the explosion of largely unregulated Credit insurance throughout Chinese debt markets – and EM generally.
Unregulated credit insurance. Wanna guess how that ends? How many of those hedge funds Trump bashes do you suppose have American pensions tied up in China's shadow banking system? Just wondering because pension plans likely to collapse in the upcoming period then might have an easier, far away scapegoat. And almost as far away from London as possible!

(In other words, is the Trump Tax on hedge funds a smokescreen?)
From my vantage point, market action points to serious unfolding financial dislocation in China. It also would appear that a large swath of the leveraged speculating community is facing some real difficulty.
Hedge funds are among "the leveraged speculating community" no?
There still seems little recognition of the seriousness of the unfolding global market dislocation. It’s destined to be a wrenching bear market – at best.
Get Smart, Homer.

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© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.

Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.

Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.


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Friday, September 04, 2015

Trump on a Mushroom Cloud?

What's this? Another Ben Franklin sighting?

Trump's vow not to run a third party campaign should he fail to gain the Republican Party nomination for president of the United States is interesting.

BANG! Just like that. We have confirmation turmoil and chaos is not such a far-fetched prospect in a venture to grease the wheels for the only candidate with proven skills needed to steal the last shred of goodwill remaining from a party (and quite possibly a republic) at whose apex is Abraham Lincoln. This, evidently, is the plan, with Trump set free yesterday to reveal the intention of his backers.

Shall we assume these only dabble in the stock market? Yes, let's.

As I see it, Trump has benefactors with deep pockets, and he is the chosen chump to take over a party whose goodwill obviously is spent. To my knowledge he didn't offend anyone making his pledge yesterday, so mission accomplished.

Now about that market...

The first five waves down to hell are completed. The 5th of these five was a so-called "failure." So, a corrective wave to these initial five waves down might see the market holding up a few days. My particular Elliott wave view sees the first part of this corrective wave unfolding at the start of Wednesday's trading and lasting into Thursday's peak.

Which is not to suggest the market's further lurch lower couldn't possibly be imminent. I wouldn't be surprised if Tuesday coming delivers even more volatility than the past two weeks have. The market's correction of its initial stumble whose bulk hit ground zero on August 24th might in fact be over for all I know.

Which possibility brings this warning...

Pay no mind to what appear deeply oversold technical measures. Occurring so early in a decline whose lead up was the poster child for "choking on garbage", it is little surprise conditions have turned so quickly negative and are reaching what is fairly called a "notable extreme."

In other words, yesterday's "extreme" very well could be today's "you ain't seen nothin' yet."

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© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.

Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.

Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!