Fuck'n A Cotton.  Fuck'n A.  Here is where I'll be residing.  Charts as follows through trading view. No need to update charts as the links are the most recent you'll find.  Verbage is, well......  verbage.....


ST
https://www.tradingview.com/chart/0LgkFwjn/




IT
https://www.tradingview.com/chart/chQpbHbM/






LT
https://www.tradingview.com/chart/chQpbHbM/

PSYCH! FOOLED YA!

Seriously though, there is an update, just not where you'd expect.

http://www.deepwaveanalytics.com/baslounge/?p=13

MANAGING EXPECTATIONS AND FOURTH WAVES

To call the past couple weeks a whipsawing mess would be understating the obvious.  As you cast your eyes over to the right at the long term chart, the expectations are for a fourth wave here and up to this point it has not disappointed.  Fourth waves are typically complicated messes with fits and starts in both directions which challenges even the best of trading systems.  This is where weaknesses begin to show in the seemingly never ending run of the third wave.  Bulls pin their hopes on another leg to the upside and bears pin their hopes that the top is in.  Ultimately they both turn out to be right and wrong at the same time as the fifth wave ensues higher.  At that point bulls become jubilant and the bears disillusioned only to have the tables turn soon there after as the fifth wave ends and a more substantial decline begins.  The expectations of fourth waves from a minimum perspective should be similar to the same degree second wave in time and/or price.  At present it is easy to see that we are very early on both. 

Next visiting the ES chart, something interesting has happened.  At both the all time high pivot (3) and the next major pivot low 'A', they were not visited by the cash markets.  Typically when this happens it is not long after before the cash markets play 'catch up' and finds these price points. 

 

 

Taking both these into consideration, it would seem the most logical of Elliott Wave structures to cover both the time perspective and hit both of the price points that the cash markets have been left out of would be either a flat or an expanded flat.

 

 

So if you've felt a little frustrated over the past couple of weeks, don't be too hard on yourself, that is what fourth waves do, frustrate.   Keep your head up and your risk down.



FIVE OF SIX INDICATOR TRIPS SEVENTH SELL SIGNAL

A new toy I've been playing with is the MMTW (% stocks over the 20 day moving average).  I've noticed when this thing exceeds 70% it has a tendency to predict relatively accurately an eminent decline on a cross back below the 70% mark.  Today was that day.  Last post we were tracking a diagonal which was initially thought to be the fifth wave of the sequence, but only turned out to be wave v of the third wave.  Wasn't the first time I've been off by one and I'd be willing to put up a pretty sizey chunk of change on a wager that it won't be my last either.  Below is a combination of the S&P 500 and the MMTW.

On the long term S&P chart to the right the MACD is currently close to issuing a sell signal and the histogram has been slowly bleeding off momentum as the price action has muddled along sideways over the past week or so.  Short term looked like three waves into the highs which would indicate a flat or something of the like.  I'm currently looking for a five wave down sequence to complete the decline, but it would appear to just be kicking off the third wave and with the other indicators indicating the bears may have the ball I like the short side here.  Initially (last night) I wasn't very confident in this count, but it seems to be playing out well now so this is what I'm sticking with unless a curve ball gets thrown into the mix. Getcha' some!

BEARS DO SOME TECHNICAL DAMAGE

The past week has been nothing but tracking a structure, a diagonal to be precise.  This structure shows up at the ends of moves as momentum wanes and finally gives way to a spectacular change in trend.  Friday was that day.

The above general structure appeared in multiple markets and from the standpoint of one wanting to short, all that was required was patience.  Not all the markets busted channel support, but it is evident that the small caps are going to lead this decline.  Exhibit A  The Russell 2000.  The decline at a minimum has another 20pts to go before it catches any sort of trendline support.  Although it reclaimed the lower trendline and closed within, but the damage is already done.

The Nasdaq Composite also pierced support opening the door to continued downside.  I'm expecting all the posted charts to find the 23.6% retrace at a minimum, but more than likely will at least find the 50% mark at which point we'll need to evaluate the shape of the decline to see if it is impulsive looking or not. 

The Dow Jones Industrial Average is currently playing ping pong between multiple trend lines but I fully anticipate downside resolution and a similar 50% retrace.

Finally the S&P 500 which has more of a channel structure as opposed to a diagonal, but it works exactly the same although it is not quite as obvious as the rest of the charts.  No technical damage as of yet, but I fully expect that to change early next week.

All in all it seems the markets want to do some correcting, so it would be best to stand aside for the time being if you are of the bullish sort.

LATE NIGHT RAMBLINGS

From a simplicity standpoint, this chart speaks volumes to me.  The contained price action within the channel virtually screams that we have not had a fourth wave to any major degree as of yet, which would also give weight to the nested, not third wave unwinds in the NYA and the SPX.  However, we are smack in the middle of the zone where a wave C extension from the 2011 lows (green 2/B) would separate itself from a full blown third wave rally which would be just shy of 5000 on the Nasdaq Composite.  I would be very comfortable stating that I believe this year will be capped by the 138% mark noted in the extensions table and unless you are a trader, you might as well chalk the entire year up as 'no growth' to your portfolio.

BEARS BLOW IT................. HUGE!

The complex corrective structure on the RUT played out perfectly with a 1% gap down, but after that, the bulls showed up en masse and put a floor under the market and added a rocket to price action.  Ultimately the RUT exceeded the 1144 line in the sand for a nested decline set up and locking in a three wave decline.  I had ditched a more bullish interpretation of the SPX a couple of weeks ago when the decline got deeper than I had anticipated.  As a fault of my own, I didn't wait for the count to prove itself invalidated by overlapping a point that would violate the rules that govern Elliott Wave structures.  The NYA was the chart that had me favoring the original more bullish interpretation as a result of the would be wave (3) in the SPX failing to make new highs in the NYA.  Below is a pictoral of the discrepancy.