Nasdaq Composite – C wave looks to be in finally

After a long drawn out C wave that appears to be a diametric, or ending diagonal pattern, a substantial retracement finally seems likely.  I would like to see it stay below 1875, in other words put my stop loss there on a short trade (or contingency stop with put options).  I am still in the process of making a F-L-H-L chart for the COMPQ intraday for the most recent rally.  It is extremely time consuming, but I should finish soon.

8:52 AM

Nasdaq update

Sorry, I still haven’t gotten around to the chart.  But basically 5/29 to 6/05 looks to be an ending diagonal with a failed 5th.  If the Composite can stay  below 1865.95 (37.08 QQQQ), it is more likely to be confirmed.  Monday’s EOD rally may possibly be a B or 2, probably not complete yet.  More this week…

10:44 PM

Wave count Nasdaq

I believe the third leg of a Zig-zag is nearing completion.  Although the triangle final three didn’t play out in traditional fashion,  I don’t think it is safe to assume that the sideways period from 5/08 to 5/29 was a downward correcting triangle, although it could technically be labeled as such.  Instead of labeling the 5/08 to 5/29 period a-b-c-d-e, I am considering the possibility of labeling it x-a-b, with a small triangle b wave from 5/20 to 5/29.  The C wave should have completed yesterday.  This could be part of an ending diagonal, or a larger triangle final three, or just the end of the third three in the form of a Zig-zag.  I will post a count this evening.  The final three triangle scenario alluded to previously looked good, especially in the SPX, but failed to move to the downside of the coiling pattern that formed, and thus never confirmed a trade.  More later…

1:54 PM

*I’ll try to post that count tomorrow, can’t get to it today…

QQQQ medium-term outlook

The charts above use a slightly different method of charting prices (advocated by Glen Neely).  I call it the ”First or last high or low method”, it is explained in Mastering Elliott Wave. I am not a subscriber to any Neowave service, nor am I a subscriber to any of Elliott Wave International’s materials.  I do so in the spirit of unbiasedness.

Market shenanigans

Today’s action had an obligatory reaction near the .618 retracement (QQQQ specifically).  There is definitely the possibility of a larger triangle ending for this current pattern, making it a triple three.  The two zigzags labeled in the last count here, leading up to the predicted current move to the downside, which may be the second X wave before a triangle for the “final three”.  If that is the case, the recent rally would be the “A” wave of the triangle.  I will post the specific labeling later, but I’m working on something else right now.  The reason I’m suspecting the current move is an ”x” wave  is because the recent small sell-off doesn’t look impulsive.  We we know more depending upon how the .618 retracement level is further respected.  If I am right it will be  rangebound for a little while ( 2 weeks or so), perhaps giving more people time to belive that: “the market is consolidating at higher levels” and will have more upside, just prior to a fierce drop.  There is also the possibility that the current rally is part of another zigzag or a flat.  It’s up in the air right now, and much like the drop at 35.20, it probably won’t be apparent until immediately preceding the move.

9:14 PM

May 4th prediction follow up…

The Nasdaq-100 ETF is down 5% since the top prediction on May 4th.  I expected $35 or possibly the $35-$36 zone to be the topping area for the complex corrective wave or impulsive wave upwards.  I believe $35.20 was the mark.  Put options are up huge; profits should be trailed or monitored if not already taken, or partially taken and trailed.  How will we know if this was the impulsive or corrective variant?  By the current retracement, if it persists.  Of course, the basic rules of EW state that W1 cannot be retraced by more than 100% by W2, so that will be a clue.  Otherwise price action and sentiment will guide market observations.  The $vix appears to be moving up off the level posted in the May 8th post.

3:34 PM

Don’t forget the RSS feed

Just a reminder that there is an RSS link on the right hand column that will feed into your RSS reader.

De-conditioning the partisan thought process…

I don’t like to talk politics, this is a trading site.  But we must discuss some things, and I look forward to any input from readers.  The so called conservatives today are up in arms about government spending, throwing tea parties and having a fit.  To them I ask: where were you when gov’t tripled under G.W. Bush?!  Now that its the other side doing the ludicrous spending, they want to protest.  And without even debating the legitimacy of the spending on the most recent wars, realize that domestic spending also increased substantially during the last “conservative” tenure.  The truth is, it doesn’t matter who does the excessive deficit spending, it leads us to the same place.  Outlandish gov’t spending and careless monetary practices by the Federal Reserve got us into this mess.   Why people trust that it will get us out is beyond me.  We need to move past childish finger pointing; its not ok to sell our country to foreign creditors no matter which side is doing it.  Re-inflation seems inevitable at this point, the Federal Reserve ( a private entity I remind you) and our Federal govt have already put the policies in place.  I think that the only thing that is currently hindering the jump start in the cost of everything (inflation) is the timidity of the general populace.  They are doing what they should have been doing all along, saving and thinking about the future.  A rising stock market and a news media eager to exclaim that we have “turned a corner” could probably get the public’s spending juices flowing again.  I can’t say for sure that it will happen, but it would not surprise me if such was the case in the next year.  As for protesting and politics, stand up for the right thing, no matter who’s watch it is on.  De-conditioning the partisan though process is the first step towards realizing the hypocrisy of our system.  Ron Paul was the only candidate that would have been worth voting for, in my opinion.  The difference between Republicrats and Demublicans is a handful of social issues, fiscally they both are content to sell us down the river. 

2:33 AM

   

Watching the VIX

The AAII poll has crept back up into majority bulls (~1.3 bulls/bears).  Remember these twoposts?  Those were pretty spot on.   Here is the $VIX charts referenced in those posts, and what ended up happening:

Now we need to see how far any possible retracement can go in the broader indexes, or if  they can rally past retracement status.  Nasdaq-100 ETF put options gained quite a large percentage yesterday (May $35 puts were up over 100%).  I am certainly expecting at least some sort of retracement soon in the index (from that ending diagonal count posted yesterday).  Any short positions from the most recent   recommendation should be trailed or monitored closely, if trades are still on.  It rarely pays not to take a quick options profit in the closer months.  For other short positions or further out trades, the count is still working and more downside could be ahead.  Look at where the $VIX is sitting longer term:

2:03 AM

Update on previously posted count

Recent price action has confirmed my statements from Monday, however a more traditional ending diagonal has formed.  The prediction from the previous count still stands, although with this slight alteration.  Of course, as with any count, price action needs to continue to confirm it.  One of the flaws with this count is that a running triangle would not be expected to precede a terminal pattern, but in real world counting few things align perfectly with preconceived notions.

4:40 PM