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Since Tim loves EWT and can't go 24hrs without poking the bear, I thought I would post the EWT chart for the next couple of days.
I will repost this chart in a couple of days to show the POWER of EWT … odds are Tim will refuse to post it due to the public embarassment it will cause him (LOL). (Editor's Note – not so! If you or anyone else out there can make good predictive use of this technique, I'm all ears! – Tim)
Cheers … Leaf_West
If you listen to many of the market analysts discussing the dollar and its relationship to the metals, or to the equity markets, it seems as though there is much confusion. The confusion is due to seeming “correlations” between the dollar and “risk” assets that are no longer holding true. In fact, many were expecting that a rally in the USD would coincide with a decline in metals and the equity market. But, we have recently been witnessing a break within these correlations.
It is for this reason that I continually stress that each chart MUST be analyzed on its own, and it is faulty analysis to base a significant amount of your analysis of a particular chart purely on what another chart is doing. This leaves an analyst in a befuddled state when the seeming correlations disappear just as easily as they initially appeared. This is what is now happening to many in the financial world, as they scramble to figure out what is happening.
Editor's Note: I will be away in {major U.S. city} at the {financial noun} Show the rest of the week, so Sparky will be doing the update on Wednesday and Friday. See you next Monday!
The wave status remains {descriptive adjective} to us and shows {small integer} waves from the {name of month} low. The market has been in a {uppercase letter} wave pattern with a rare {geometric shape} terminal wave that is in the {superlative adjective} stage of completion (EWT, page {double-digit number}).
The explosive and unprecedented rally from last October is a {three lowercase letters} terminal wave. This is key since {ordinal noun} waves are always ending waves.
Sentiment has reached another extreme with over {high double-digit integer}% of respondents bullish, a level not seen since last {month name}. Measured in "real money" terms, equities have actually been in a bear market since 2000 ("real money" defined as the ratio of the Dow Industrials to the price of {noun of perishable grocery item}).
The rise in {noun: metal} has been a {three hyphen-separated single digits} wave, so it's most likely next move is {directional adjective}, indicative of a {ordinal} of {higher ordinal} wave.
We will keep you apprised as the waves continue to unfold and reveal themselves.
I posted a chart last night on twitter that I'll start with today. It's a look at the very rare candlestick setup we've seen on SPX in the last two days, with the strong punch through the upper bollinger band on Tuesday, and then SPX opening and closing above the upper bollinger band yesterday. I have four instances of this happening since the 2009 low. Two marked a short term high and two were just a short way below. This is a respectably bearish setup and I've put the stats for what happened afterwards on the chart:
My post will be a bit different today. As I have mentioned frequently, the current move up from the December low on SPX hasn't delivered much in the way of decent overall trendlines, so I'm going to present the consensus view from the EWers, who have had an impressively good handle on the current move up. You'll have to excuse my amateurish EW labelling and chart, but while I always keep an eye on the EW view, it isn't my thing really, and I rarely mark up an EW count on a chart.
I know that elliot wave counts are anathema to a lot of my readers, but like any form of analysis you get the best results from the best practitioners and I have a lot of confidence is the ones I follow. The shallow retracements on trendline breaks that we have seen on the current move up from the mid December low are also strongly characteristic of wave 3 moves I've seen in the past, so the overall thesis is reasonable, though I don't much care for the idea that SPX is going to rise much higher, as that seriously weakens the case that we are still in a bear market:
