From the folks at EWI………seems worth considering……could this be the end of the Trump rally?
First published Sat Nov 19 for members of ElliottWaveTrader.net: Two weeks ago, I noted that we had a completed pattern to the downside in the equity market and it was time for the equity market bulls to step up. And, boy, did they ever. Now, it is time for the metals bulls to do the same. But, it seems I cannot find them.
Last weekend, I noted that the bulls have gone into hiding. This past week, they were scared even further into their shell. Yes, bullish sentiment in the complex has dropped to almost nothing. For those that review market sentiment readings, you will know that we have almost no bulls left in this market, or at least bulls who are willing to admit it. That is often a strong indication that we are bottoming, and not collapsing.
I also noted in my last weekend report that, if our pattern was going to hold for potential bottoming in the complex, we would need to see a “bounce” early in the week, which would then likely lead to a lower low later in the week. The market has followed through quite nicely with this bottoming pattern thus far.
I was tidying up some things in my home office today, and I noticed a couple of binders that I hadn’t looked at in years. They were labeled “Tim’s Trading Tome” volumes one and two. In them were hundreds of pages and charts I had collected in late 2008, 2009, and 2010, Early 2009 of course, was the bottom of the market, and we began a multi-hundred-percent climb (in the case of some stocks, multi-thousand-percent) climb.
Naturally, though, on the heels of the financial crisis, there were plenty of popular publications that were saying it was the start of something much bigger. Here’s a snippet from one we all know:
by Avi Gilburt, ElliottWaveTrader.net
After recently hitting our 5th anniversary at Elliottwavetrader.net, and now exceeding 3000 members, I have learned quite a lot about market participants. For example, the one thing that hurts investors the most is when they lie to themselves or allow others to lie to them.
The problem is that there are so many fallacies accepted as gospel in the financial world that it causes investors to continually be looking the wrong way. And, worse yet, “analysts” without any analytical depth (or ethics) fall back upon these fallacies, which allows them to be inappropriately propagated even further throughout the market.
When I was in 5rd grade, my teacher had a sign hanging at the front of the room which said “put brain in gear before engaging mouth.” I would like to slightly modify this sound advice to fit our purposes in the financial markets: “put brain in gear before engaging pocketbook.”
by Avi Gilburt, ElliottWaveTrader.net
First published Sat Oct 15 for members of ElliottWaveTrader.net: We have many analysts and commenters posting many different perspectives on the metals for years. Some view them as a terrible investment and others view it as the only reasonable investment. I am not going to discuss the merits or fallacies contained in both of their perspectives, but I would like to simplify the potential in the complex for the average investor.
You see, this complex is not that complex at all. Sentiment is what controls this market, and when sentiment reaches an extreme, the market shifts in the opposite direction. That is what we are patiently awaiting at this time.
Currently, our wave structure suggests that we can see one more lower low to complete a 5th wave in a c-wave of this wave ii pullback. While I certainly can be wrong in this assessment, this is my higher probability wave count at this time. And, as long as we remain over support, I will maintain this count and expectation.
by Avi Gilburt, ElliottWaveTrader.net
First published Sat Oct 8 for members of ElliottWaveTrader.net: I am going to begin this update with a very simple proposition: get your shopping list in gear, as the time to buy is upon us.
Last weekend, I noted the following:
As far as the actual charts are concerned, I still see nothing that suggests this correction has run its course. Yet, every time the market provides even the slightest rally, many in the market begin getting overly bullish. Yet, many of the sentiment readings I have been seeing in the metals are dropping to levels approaching that which can propel us into the heart of the 3rd wave higher. But, I still think there is room lower in those sentiment readings before a final bottom is struck.
As far as immediate support levels to watch, last week’s low in GDX and silver are quite important to the continuation of the b-wave triangle. But, ultimately, the line in the sand for me resides at 123.75 in GLD, 25.35 in GDX, and 18.60 in silver. A break below these levels provide us with a high probability signal that we are within our final drop to complete this correction in the metals complex. But, as long as we remain over those levels, we may continue to see whipsaw before those final lows are struck in the coming weeks.
The market resoundingly broke all those levels as we have been expecting, and dropped in the heart of a 3rd wave in the c-wave down this past week. And, when the market completes the heart of a 3rd wave in a c-wave down, it tells us that what remains in this correction are only 4th and 5th micro waves. That is what we view as a bottoming process, wherein the market develops the positive divergences we need to see at lower lows to set us up for the next rally phase. But, it also represents the point in time when most begin to really turn bearish the complex, and begin to believe that we will break below the January 2016 lows. Bearish sentiment will likely be extreme, and that is further confirmation of the bottoming process we want to see.
This now has me turning to my 144-minute silver chart. This chart has been the best bottoming indicator in the complex. We have caught every smaller degree and larger degree bottom in the market using this chart. What we are looking for is the completion of a 3rd wave down, and the start of the positive divergence set ups as the market strikes lower price levels. For now, this chart suggests we “should” see at least one more lower low before this correction has run its course. And, I believe that the next lower low on a positive divergent bottom is a strong buy signal for our next major rally phase that we are expecting. But, as a caveat, I do have to note that Friday’s slightly lower low was made on a positive divergence, but the pattern to the downside just does not look complete.
Now, onto the bigger degree charts. There is a change I have decided to make in the larger degree silver and gold charts. I have decided to align those counts with the one in the GDX. That means I have modified the counts to align as i-ii set ups in wave (1) of a much larger degree 3rd wave in the complex. And, in silver, it means I am counting the rally off the lows as a leading diagonal. While this does not really change our upside expectations into 2017 (as long as we hold support), it just slightly changes the wave degree I have designated to the current chart action.
Today we sold off into the 4pm EST close at 2175ES (E-mini S&P500 Futures) as we had into Fed minutes for tomorrow Wednesday at 2pm. That’s the first time in a while where we ended the day at the lows.
Is that a bearish sign? And what happens next?
Well, if what happened today is a 4th wave, then it’s possible to have an a-b-c 5th wave up according to the red line.