At today's meeting of the Federal Reserve, Yellen is trying to sneak out the back door without anyone noticing. She is talking about how the jobs situation, which still sucks badly for anyone who actually has to go looking for a job, is getting well enough that she can cut the monthly Welfare Elite (tm) payment down to only $45 billion of newly printed money each month. While it is still $45 billion each and every month of welfare for the already rich, the Fed's balance sheet is so full of overpriced assets right now that anyone with a brain should be trying to get cozy with the door.
Why? Because the Fed is rapidly running out of gas to help not just the elite of the US but the world economy. It's balance sheet is more than $4 trillion worth of basically unmarketable crap. If it was marketable, the fed would not have had to buy it. If it had a market price that would not scream "deflation", the fed would have let the market buy it. It's as simple as that. Sooner or later the Fed is going to need to sell that crap and in the mean time it will be buying less and less of it.
The end game is upon us. If the markets rallied since 2009 due to Fed intervention, what do you think will happen when the fed signals that it can no longer intervene (or at least that it wants to let the market have a temper tantrum to see how bad it gets)? It will be no different than a mother letting the baby cry itself to sleep in the crib, or so the fed hopes. But if you let that baby cry too long and too loud, it could hurt itself and so mommy Yellen will have to come running back in. Or so the markets hope. The fed knows that if it allows a full on stampede to get started then it will have to spend even more money and take even more measures in order to buy happiness again.
All the while, main street is getting angrier and poorer. The new money isn't trickling down like we were told it would. It is getting hoarded for the storm that is coming. The people are showing their anger and it is causing government officials to fear for their cushy jobs. Banks which have mostly avoided litigation are now paying huge fines. Banksters who have almost totally avoided litigation are now being targeted as well. The people are pissed and the people are starting to fight back. The people are figuring out who the patsy really was in this Vegas deal. This is not going to end well. Walk away in May.
Wednesday, April 30, 2014
Tuesday, April 29, 2014
Sold JNUG @ 20.12
I probably sold out early but I didn't like the potential declining double top. This lack of ambition in the stock price in what I would have expected to be a 3rd of C up is uninspiring and since I have $1.09 of profit in hand I decided to take the money and run. I can always jump back in if the shares break out of the new orange trend line shown below. Keep in mind that the original top of channel trend line only had 1 real point associated with it. The other point was not part of the B wave but rather the last thrust on the A wave. It was better than nothing but not definitive. I did not flip short (JDST) at this point. I will wait for it to hit channel bottom and show support there and then go long JNUG again since I think the pattern of 1 larger degree is a bullish A-B-C retracement for JNUG/GDXJ.
Bank of America (BAC) is breaking down.
I saw an article on Seeking Alpha about fortune favoring the bold or some such thing which was bullish on BAC. Naturally I discounted the entire text of the article and went to the chart. By two different counts (normal a-b-c as well as ending diagonal), this looks like the end of BAC's bull market run since the 2009 low. Next support is at $14 and if it cannot hold that then my larger model (scroll down to the monthly chart) will likely be confirmed.
Below is the monthly model showing that I think BAC is tracing out the internal 3 wave moves of a 4th wave triangle. This is a trader's delight and right now the trade is to go short. Your stops are clear: You definitely cover at any break of the upper orange channel line if not much sooner. Personally, a re-take of $16.50 would send me to the sidelines but I am pretty confident that this will not happen. Nothing has changed for the banks. They are still holding onto large blocks of housing debt that will default once housing prices begin to credit-deflate as I believe they must. The fed has been buying all of the crap loans taken on by fannie and freddie since 2009 which is why its balance sheet is such a piece of sheet at 4+ trillion dollars. With their balance sheet loaded to the gills and interest rates already at historic lows, there is no place for housing prices to go but down and that will kill the weakest banks eventually, including Bankrupt of America.
Note that this chart is scheduled to break down into the 5th wave in 2017 (right when the TDAmeritrade StrategyDesk indicator goes nuts with the year as reported on here). If we find support at that red D wave then it would be a fine time to buy the government supported bankrupt banks again. Until then I expect a powerful sell off into 2015.
One more note: the markets might become unsafe for shorts or longs after red "e" above. In other words, our desperate, thieving, corrupt and scam-ridden government might nationalize stock market assets or cause a false flag on Wall St, etc. Put nothing past these moral-less bastards. Anyone who could support the destruction of 9/11 like our government did would go to any lengths to retain power. If you want a model of how things can play out, just look at every other despotic 3rd world $hithole on the planet. We are not there yet only because we are a bigger flywheel. There can be no real hope for change unless and until regime change takes place whereby the single choice system made up of 2 fake political parties is swept away.
Below is the monthly model showing that I think BAC is tracing out the internal 3 wave moves of a 4th wave triangle. This is a trader's delight and right now the trade is to go short. Your stops are clear: You definitely cover at any break of the upper orange channel line if not much sooner. Personally, a re-take of $16.50 would send me to the sidelines but I am pretty confident that this will not happen. Nothing has changed for the banks. They are still holding onto large blocks of housing debt that will default once housing prices begin to credit-deflate as I believe they must. The fed has been buying all of the crap loans taken on by fannie and freddie since 2009 which is why its balance sheet is such a piece of sheet at 4+ trillion dollars. With their balance sheet loaded to the gills and interest rates already at historic lows, there is no place for housing prices to go but down and that will kill the weakest banks eventually, including Bankrupt of America.
Note that this chart is scheduled to break down into the 5th wave in 2017 (right when the TDAmeritrade StrategyDesk indicator goes nuts with the year as reported on here). If we find support at that red D wave then it would be a fine time to buy the government supported bankrupt banks again. Until then I expect a powerful sell off into 2015.
One more note: the markets might become unsafe for shorts or longs after red "e" above. In other words, our desperate, thieving, corrupt and scam-ridden government might nationalize stock market assets or cause a false flag on Wall St, etc. Put nothing past these moral-less bastards. Anyone who could support the destruction of 9/11 like our government did would go to any lengths to retain power. If you want a model of how things can play out, just look at every other despotic 3rd world $hithole on the planet. We are not there yet only because we are a bigger flywheel. There can be no real hope for change unless and until regime change takes place whereby the single choice system made up of 2 fake political parties is swept away.
Monday, April 28, 2014
Sunpower now very likely near peak.
Two opposing models were given in this post with the selection criteria being whether or not the chart broke back up into the 4th wave channel. Well, it did break into the channel so the 2nd model is in effect and the other one can be discounted. We are very near the target price for completion predicted by that model as seen by today's action. There is possible upside to $36 or even $38 but I do not think it will have the horsepower to break out of the top rail to a higher high. That's because this is a 5th wave which should be about the same length as wave 1 given the extended 3rd wave. The left most blue vertical like measures the length of wave 1 of 5. It was cloned and then moved to the start of wave blue 5. The lengths are nearly equal now.
This model is in trouble if the chart breaks above the top rail of the channel. The 5th wave completion would get first confirmation by breaking down the lower rail after hitting 5 waves up. You can see that wave 3 of 5 has already transpired for sure - the gap in blue 5 gives it away. If this model is correct, it could peak and then reverse back downward any day now.
After a very strong run, this one is ready for a breather. Look at the shape of it (so far) as it is rolling over. Again, the chart has not begun a downtrend yet so this is not your average look in the rear view mirror. Making calls about what has already happened is a good deal less risky than attempting to call the action in real time. The only saving grace is that this is not a "gut feel" but rather the application (although with a degree of subjectivity and art) of a system (Elliott waves) that have a pretty good track record in the right hands. If I were long this thing I would not buy puts (insurance) on it, I would dump it like a cheating girlfriend.
Of course, it breaks out of the top of the green channel I would be calling her back asking for another chance! HA!
This model is in trouble if the chart breaks above the top rail of the channel. The 5th wave completion would get first confirmation by breaking down the lower rail after hitting 5 waves up. You can see that wave 3 of 5 has already transpired for sure - the gap in blue 5 gives it away. If this model is correct, it could peak and then reverse back downward any day now.After a very strong run, this one is ready for a breather. Look at the shape of it (so far) as it is rolling over. Again, the chart has not begun a downtrend yet so this is not your average look in the rear view mirror. Making calls about what has already happened is a good deal less risky than attempting to call the action in real time. The only saving grace is that this is not a "gut feel" but rather the application (although with a degree of subjectivity and art) of a system (Elliott waves) that have a pretty good track record in the right hands. If I were long this thing I would not buy puts (insurance) on it, I would dump it like a cheating girlfriend.
Of course, it breaks out of the top of the green channel I would be calling her back asking for another chance! HA!
Have financials really peaked?
In my previous post on FAZ (triple short financials ETF), I proclaimed that it bottomed on March 6th. Turns out that was only the 4th wave and we had one more small wave down to a better looking wave count bottom on March 21st. Oh those pesky 5th of 5ths...
In any case, I see FAZ trying to form a long term bottom right now. The chart below is a very good looking wave count which also shows that the 3rd of 5 was an ending diagonal. As mentioned many times in this blog, ending diagonals are usually 3rd waves these days. After 5 waves down like this the very least we should expect is an a-b-c to the prior 4th. From today's close of $20.90 that represents nearly a double. The old saying is that the banks will lead the way up and so I suspect that banks will also lead the markets down.
Zooming in, it look like wave 1 will be an expanding triangle. If this model plays out, think about the percentage moves we are talking about here in a 2-3 week time frame: they are on the order of 25%. Most people would be happy with that over 3 years much less 3 weeks... But if we get it as shown below (especially the throw over into red 5), bail out as soon as it falls back into the channel, let it plummet again as shown and then jump back in because the next wave will be a 3rd wave.
Again, this is just a model and one has to be wary that it, like any other model, could fail to pan out. That is just the nature of gambling. That's why they call it "gambling" instead of "winning". But that is not to be confused with this being a random guess (a difference which a surprisingly large number of otherwise smart people cannot discern). The model is based on the Elliott wave principle and the fact that the moves have all been 3 wave deals since the bottom. This is the herd milling about on the banks of the river wondering whether or not the crocs are lined up underneath the water waiting to nab them. But with 5 waves of pressure behind them the odds are very great that they will decide to take the chance.
A break below $20 negates this model.
In any case, I see FAZ trying to form a long term bottom right now. The chart below is a very good looking wave count which also shows that the 3rd of 5 was an ending diagonal. As mentioned many times in this blog, ending diagonals are usually 3rd waves these days. After 5 waves down like this the very least we should expect is an a-b-c to the prior 4th. From today's close of $20.90 that represents nearly a double. The old saying is that the banks will lead the way up and so I suspect that banks will also lead the markets down.
Zooming in, it look like wave 1 will be an expanding triangle. If this model plays out, think about the percentage moves we are talking about here in a 2-3 week time frame: they are on the order of 25%. Most people would be happy with that over 3 years much less 3 weeks... But if we get it as shown below (especially the throw over into red 5), bail out as soon as it falls back into the channel, let it plummet again as shown and then jump back in because the next wave will be a 3rd wave.
Again, this is just a model and one has to be wary that it, like any other model, could fail to pan out. That is just the nature of gambling. That's why they call it "gambling" instead of "winning". But that is not to be confused with this being a random guess (a difference which a surprisingly large number of otherwise smart people cannot discern). The model is based on the Elliott wave principle and the fact that the moves have all been 3 wave deals since the bottom. This is the herd milling about on the banks of the river wondering whether or not the crocs are lined up underneath the water waiting to nab them. But with 5 waves of pressure behind them the odds are very great that they will decide to take the chance.
A break below $20 negates this model.
Scraped nearly 7% from the JDST run today.
After coming back from a business trip last Friday I created a trading plan for today which, as fortune would have it, worked out in my favor. My mid level view is that after 5 large waves from $43 down to ~16, JNUG is now in an uptrend which should be a-b-c at the very least. However, the daily fluctuations of JDST and JNUG are so large that it totally pays to day trade the internal bounces of what I believe is the B wave triangle of an a-b-c move which should eventually put JNUG back up at the level of the prior 4th (~$25).
Again, despite the broader uptrend, my model showed that it was JDST's turn for a rally within the triangle. Since JNUG is the real uptrend right now I will use it as a frame of reference even though it was down over 10% at one point today. The trading started at red 2. I suspected that after 5 waves up into blue A that we could have a sideways triangle. A big indicator for me was that wild volatility into wave 4 of A. Those vertical lines often precede a sideways triangle of some kind. In any case, when we did not see a new high at the open on JNUG, I suspected it was reversal day and so I loaded up on JDST very near the open. I did not catch the exact peak selling point in JDST but I still managed very close to 7 percent on the day.
Just a minute or two before the close I then flipped long into JNUG with the assumption that its downtrend will reverse according to the model below tomorrow. The reason I think this is that we can see what looks like a B wave triangle in the middle of what I have marked as red 3. Then comes another triangle lower down which I have to believe is 4 of C. So while I might not have caught the bottom of 5 of C (it might, for example, go down to the blue line so that C of 3 is longer than A of C), I suspect that it is near enough the bottom that it was worth holding overnight.
Here is a close up of today's JNUG action. If tomorrow we see JNUG kiss but unable to break that top resistance line then its back into JDST for me to see if I can catch the ride back down to the throw under. Assuming I am as lucky to see this play out so nicely as I modeled (time will tell, no advance assumptions are being made, simply setting triggers to bail if the model looks wrong), that throw under should represent a very unique near term JNUG bying opportunity because it means that we should see 5 powerful waves up into the C wave with a target price of $25. It could go even higher. For example, the 38.2 fib is $26.28. Again, with this volatile stock, the only way to play is day by day. It can easily move 30% in a single week. Because of this volatility it completely supports a trading strategy whereby you just pick a direction based on some logic and then figure out what the stops will be for minimum loss if you picked wrong. When you are wrong you lose 1-3%. When right, you gain 7-11% as long as you show the required discipline of using stops.
Again, despite the broader uptrend, my model showed that it was JDST's turn for a rally within the triangle. Since JNUG is the real uptrend right now I will use it as a frame of reference even though it was down over 10% at one point today. The trading started at red 2. I suspected that after 5 waves up into blue A that we could have a sideways triangle. A big indicator for me was that wild volatility into wave 4 of A. Those vertical lines often precede a sideways triangle of some kind. In any case, when we did not see a new high at the open on JNUG, I suspected it was reversal day and so I loaded up on JDST very near the open. I did not catch the exact peak selling point in JDST but I still managed very close to 7 percent on the day.
Just a minute or two before the close I then flipped long into JNUG with the assumption that its downtrend will reverse according to the model below tomorrow. The reason I think this is that we can see what looks like a B wave triangle in the middle of what I have marked as red 3. Then comes another triangle lower down which I have to believe is 4 of C. So while I might not have caught the bottom of 5 of C (it might, for example, go down to the blue line so that C of 3 is longer than A of C), I suspect that it is near enough the bottom that it was worth holding overnight.
Nothing is more powerful than people who decide to stop living in fear.
I recently became a fan of a popular TV series. Everyone else on the planet has seen it except for me but at the time it originally came out (and since) I simply did not want to make time for more TV. However, on a recent business trip I talked to a co-worker who told me how good it was and so I decided to watch on Netflix. Of course, that is the only way to watch a series. No commercials. No five minute recap of last week's show at the start of every new show. No need to fill up your DVR disk to the point where other stuff can't be recorded. No getting led up to an important point in the story only to have to wait for next week to see how it turned out. Heck, Netflix even cues them up in order and auto-plays the next episode if you like.
Perhaps by now you guessed from the title of this post that the series is Breaking Bad. Yeah, I know, it's old news to most people. But importantly the series began in 2008, right into the teeth of wave 1 of the financial crisis. The story line reminds me strongly of Gerald Celente's oft-used line that "when people have lost everything and believe that they have nothing left to lose, they 'lose it' ". For Walter in Breaking Bad, that point was getting lung cancer while working two crap jobs that didn't compensate him for his brilliance simply because he was not one of those aggressive personalities who could go market himself well. The world of debt Ponzi based economic "growth" greatly favors the liberal flamboyant, the Hollywood actor, the public personality. I can't tell you how many people who I consider smart in all other ways would tell me that Ron Paul rightfully lose elections because he didn't have enough flair and panache. Never once did these people stop to think that these qualities do not help someone lead a business. Never once did the stop to consider that they are the stock and trade of con men. No, the credit was flowing and so we had to have egomaniacs and narcissists running the show. Not just in politics but at all levels of business. Old Walt just didn't fit the bill so he got passed over and kicked aside.
In any case, after watching most of season 1 and 2, it seems the show it about an awakening that is facilitated by the liberating act of losing your fear. While it delves into the dark drug trade I think it says a lot about the human condition in general. In fact, today's story about a lady who decided to take vigilantism into her own hands is right in line with this. If you read the article you will find out that she stopped the escape of a bank robber by ramming his vehicle with hers. Like Walt, she has bad cancer. In addition, she was driving an old truck. In other words, nothing left to lose. While Celente might say that "she lost it" (and in a way she did), another way of looking at it was that all she really lost was her fear of losing something. Some might not consider that a loss at all but rather a gain.
I expect this kind of thing to play out many times in our society and at all levels in the coming years: people doing unexpected things, some good, some bad, because the collapsing credit has taken away the larger than life prosperity that they were enjoying. In other words, once they are no longer living off of the future generation's wealth (which is what debt based society is actually doing), some feel they have nothing left to lose. Bankers, for example, step off of buildings. People begin taking other kinds of unexpected risks. People taking charge of their lives, whatever that means to them personally. It does not bode well for government which has become accustomed to the ridiculous belief that it can control everyone and everything. That silly notion will certainly prove to be a casualty of the great debt Ponzi bust.
Perhaps by now you guessed from the title of this post that the series is Breaking Bad. Yeah, I know, it's old news to most people. But importantly the series began in 2008, right into the teeth of wave 1 of the financial crisis. The story line reminds me strongly of Gerald Celente's oft-used line that "when people have lost everything and believe that they have nothing left to lose, they 'lose it' ". For Walter in Breaking Bad, that point was getting lung cancer while working two crap jobs that didn't compensate him for his brilliance simply because he was not one of those aggressive personalities who could go market himself well. The world of debt Ponzi based economic "growth" greatly favors the liberal flamboyant, the Hollywood actor, the public personality. I can't tell you how many people who I consider smart in all other ways would tell me that Ron Paul rightfully lose elections because he didn't have enough flair and panache. Never once did these people stop to think that these qualities do not help someone lead a business. Never once did the stop to consider that they are the stock and trade of con men. No, the credit was flowing and so we had to have egomaniacs and narcissists running the show. Not just in politics but at all levels of business. Old Walt just didn't fit the bill so he got passed over and kicked aside.
In any case, after watching most of season 1 and 2, it seems the show it about an awakening that is facilitated by the liberating act of losing your fear. While it delves into the dark drug trade I think it says a lot about the human condition in general. In fact, today's story about a lady who decided to take vigilantism into her own hands is right in line with this. If you read the article you will find out that she stopped the escape of a bank robber by ramming his vehicle with hers. Like Walt, she has bad cancer. In addition, she was driving an old truck. In other words, nothing left to lose. While Celente might say that "she lost it" (and in a way she did), another way of looking at it was that all she really lost was her fear of losing something. Some might not consider that a loss at all but rather a gain.
I expect this kind of thing to play out many times in our society and at all levels in the coming years: people doing unexpected things, some good, some bad, because the collapsing credit has taken away the larger than life prosperity that they were enjoying. In other words, once they are no longer living off of the future generation's wealth (which is what debt based society is actually doing), some feel they have nothing left to lose. Bankers, for example, step off of buildings. People begin taking other kinds of unexpected risks. People taking charge of their lives, whatever that means to them personally. It does not bode well for government which has become accustomed to the ridiculous belief that it can control everyone and everything. That silly notion will certainly prove to be a casualty of the great debt Ponzi bust.
Tom Ridge resigns from Bloomberg gun grab group
Desperate liberal anti gun nut Michael Bloomberg threw $50 million of his own money at a big gun grab (AKA power grab) and it attracted scum bags from both the left and the right. But once they saw what a rabid, desperate, overt anti 2nd amendment liberal extremist Bloomberg really is, they decided that the graft and bribes and corruption was not worth the political risk they would have to accept. It has results in some "sudden" but public resignations of the gun grabbing group.
"Former Homeland Security Secretary Tom Ridge suddenly quit the board of the New York Mayor Michael Bloomberg's new gun-control group Everytown for Gun Safety — the second Republican to resign from a Bloomberg effort this month over concerns about its mission or planned political activities.
All I can say is that I am not surprised. Liberalism has peaked in the US and in the world and the pendulum is swinging back toward conservatism including stupidly extreme old turd right wing crap. It always amazes me how people have to be such $hitheads but I know it's just a given with a percentage of the population.
In any case Bloomberg, the coming collapse of your little gun grabbing group might just save your life in the coming years because I expect more vigilante type activity to happen to people like you who have been controlling the puppet strings of the rest of us. Trust me, you do not want to be shouting "turn in your guns" or even "register your guns" when the people are clinging tightly to them as their last real hope for personal protection during the hard times ahead. I hate to see anyone get hurt but nobody is immune from mob violence in these cases. At least that is the lesson of history on this matter.
"Former Homeland Security Secretary Tom Ridge suddenly quit the board of the New York Mayor Michael Bloomberg's new gun-control group Everytown for Gun Safety — the second Republican to resign from a Bloomberg effort this month over concerns about its mission or planned political activities.
All I can say is that I am not surprised. Liberalism has peaked in the US and in the world and the pendulum is swinging back toward conservatism including stupidly extreme old turd right wing crap. It always amazes me how people have to be such $hitheads but I know it's just a given with a percentage of the population.
In any case Bloomberg, the coming collapse of your little gun grabbing group might just save your life in the coming years because I expect more vigilante type activity to happen to people like you who have been controlling the puppet strings of the rest of us. Trust me, you do not want to be shouting "turn in your guns" or even "register your guns" when the people are clinging tightly to them as their last real hope for personal protection during the hard times ahead. I hate to see anyone get hurt but nobody is immune from mob violence in these cases. At least that is the lesson of history on this matter.
All these years of doing nothing and now the US Justice dept is starting to move in
As usual, while the credit Ponzi is growing, enough palms are getting greased that few get prosecuted. However, as I long time ago predicted would be the case (with proper credit to Prechter of course), now that the credit Ponzi has entered the collapse stage, the law enforcement agencies suddenly find themselves motivated to doing what they should have been doing all along. There are 3 main reasons for it:
- Less corrupt money is flowing due to credit reduction and that means a smaller carrying capacity (bribes, corruption, etc.) for government criminals and their associates. So, like any other criminal enterprise, the criminals duke it out amongst themselves (AKA turf wars) to see who is going to be left standing.
- More public awareness as the sheeple awaken. Those officials that were perhaps not as corrupt as they were lazy are now seeing job openings in their departments dry up and budgets being slashed. As a result, they have determined that they better roll some heads because the public now wants blood.
- Corrupt officials want to throw the attention away from themselves and so they fire up the long dormant prosecution machine and target the weaker elements of the criminal enterprise for termination.
Sunday, April 27, 2014
Apple taking out debt to buy back shares????
OMG this just keeps getting better and better. What is Apple doing taking on debt to buy back shares? Perhaps they are expecting interest rates to rise soon and so they plan on sticking investors with $17 billion in low yielding debt which they use to buy their shares back with. The whole thing stinks to high heaven. These are not the kinds of tricks that an innovation company focuses on. These are for has-been companies who know they have peaked and are now trying to play what is left of their once-leading brand name in order to cash in for the execs that work there.
Anyone who buys AAPL bonds is an idiot.
Anyone who buys AAPL bonds is an idiot.
My model says recent AAPL earnings won't matter to the stock price
AAPL just reported earnings that beat expectations. As a result, Forbes is wondering if it "got its mojo back". Admittedly, $10.1 billion in net profit is nothing to sneeze at for a quarter's worth of work. So why, pray tell, did they announce a massive share buy back and a 7 for 1 split? Real investors, the institutional guys, they know that these moves are how the CEOs attempt to distract from underlying and hidden bad news. GOOG recently played the same game. Share buybacks are what CEOs do in order to spend the company's cash on themselves (they are massive shareholders) when they really don't know what to do next. Buybacks are what you do when you do not have the insight and vision to invest capital. Also, stock splits are intended to draw in the rabble, those with just a few thousand dollars to "invest" (gamble). Institutional investors, those working with your pension funds, they don't care about stock splits. 1 share @ $500 is the same as 7 shares @ $71. They are not fooled by such accounting gimmicks. They know how to do math.
In short, Steve Jobs is gone and AAPL is in trouble despite what the main steam media is spewing. Jobs was the driving force of AAPL. He had the vision and he knew what would sell and what would not. King Steve knew how to motivate and he used both carrot and stick on his serfs. Like it or not, he led his army to battle many times and usually outmaneuvered the enemy. Now they have a visionless bureaucrat running the company and so AAPL is rotting on the tree. Samsung is eating its lunch. There is nothing special about an Ipad anymore nor an Iphone. They should name their next product "Iclueless" or maybe "Igiveup". Anyone can fudge earnings for a quarter or two. They can even pull in revenue for a couple quarters. But AAPL needs real magic in order to drive future stock price gains, and Tim what's his name doesn't have it. Not even close. No vision. Nada.
These comments might sound like loud talk on my part but the chart agrees with me. Since the big 3rd wave peak I count a-b-c into wave 4 which ended at the 38.2 fib retracement and now 5 waves back up are nearly (but probably not completely) done. I expect a peak somewhere in the blue box. That would make wave 5 the same length as wave 1. In other words, I model a failed 5th wave that will result in a declining double top and that is bad news for AAPL shares. I don't think that the 5th wave can do much more than that because of the huge power of that 3rd wave. In other words, there is only 1 extended wave per 5 wave motive sequence and that already happened during wave three.
Time will tell but the smart money knows what a sell off setup looks like and it looks like AAPL. To be fair, Jobs also got the benefit of selling product into a rising credit environment. Tim is faced with managing things in a declining credit market. It makes things much harder when the middle class is now moving back in with parents or going on fraudulent disability in order to make up for declining employment opportunities and reduction in salaries while cost of living continues to climb for most people. Maybe having the latest gadget isn't really as important as paying the rent. And for those that continue to buy the gadgets, maybe overpaying for Ibrainwashed stuff is no longer all that important.
In short, Steve Jobs is gone and AAPL is in trouble despite what the main steam media is spewing. Jobs was the driving force of AAPL. He had the vision and he knew what would sell and what would not. King Steve knew how to motivate and he used both carrot and stick on his serfs. Like it or not, he led his army to battle many times and usually outmaneuvered the enemy. Now they have a visionless bureaucrat running the company and so AAPL is rotting on the tree. Samsung is eating its lunch. There is nothing special about an Ipad anymore nor an Iphone. They should name their next product "Iclueless" or maybe "Igiveup". Anyone can fudge earnings for a quarter or two. They can even pull in revenue for a couple quarters. But AAPL needs real magic in order to drive future stock price gains, and Tim what's his name doesn't have it. Not even close. No vision. Nada.
These comments might sound like loud talk on my part but the chart agrees with me. Since the big 3rd wave peak I count a-b-c into wave 4 which ended at the 38.2 fib retracement and now 5 waves back up are nearly (but probably not completely) done. I expect a peak somewhere in the blue box. That would make wave 5 the same length as wave 1. In other words, I model a failed 5th wave that will result in a declining double top and that is bad news for AAPL shares. I don't think that the 5th wave can do much more than that because of the huge power of that 3rd wave. In other words, there is only 1 extended wave per 5 wave motive sequence and that already happened during wave three.
Time will tell but the smart money knows what a sell off setup looks like and it looks like AAPL. To be fair, Jobs also got the benefit of selling product into a rising credit environment. Tim is faced with managing things in a declining credit market. It makes things much harder when the middle class is now moving back in with parents or going on fraudulent disability in order to make up for declining employment opportunities and reduction in salaries while cost of living continues to climb for most people. Maybe having the latest gadget isn't really as important as paying the rent. And for those that continue to buy the gadgets, maybe overpaying for Ibrainwashed stuff is no longer all that important.
Thursday, April 24, 2014
Amazing volatility in metals and miners juniors - -> Major medium term model change <- -
In yesterday's post I sided with JDST for today's open. I was right in eventual direction but leaving an open stop like that when I had to get onto a plane for a business trip was too much of a temptation for the market makers and they took me out @22.10 before skyrocketing it to 24.55 at the close. Ouch. Not so much the small loss I took but rather the large gain I left on the table. It was my mistake for counting a 3rd as a 5th, something I tend to do more often that I would like. But in retrospect, the count looks clean, not any kind of manipulation. I just was off by 1 wave.
But today's action also shifted the odds toward going long JNUG for now. Why? Because today's action formed a 5th wave up and then an a-b-c retracement back down. The C wave almost kissed the 50% fib. Becase of this, I have to count this move as wave 1 up and 2 down. That means 3 up should be next. Hopefully it will not gap up immediately in the AM so I can get some at current levels.
Below is just the C of 2 wave. It could be 5 waves down and in that case it is just A of C. But I'm guessing that it will be the full C wave. In either case, I expect a move off the bottom near the open and a decision as to whether C is finishing or just A of C. Today looked like it ended with an ending diagonal. Thus, probably just 3rd of 5 of C. With this as my primary model I expect a kiss of the 38.2 and then a bounce down to form a reverse Owl. It might even have a failed 5th wave.
If slv cannot break down its lower support then this cannot be an ending diagonal and the new model is that it must be a 4th wave horizontal triangle. Man are the metals bulls going to be crying manipulation if this plays out. But it will be more like credit deflation forcing people to sell their stuff in order to pay margin calls. If this breaks the upper resistance and then crashes back down as as shown, you should be a buyer after 5 waves down from black 4 and you can treat it as a long term hold if you like because a giant a-b-c back up at the very least. More likely this will be the end of a C wave and so 5 monster waves into the next big metals bull follows over the next 5 years.
This new model is only valid unless and until the red d finds a lower low. I would not bet on it at this point. I would be on the metals and miners to rally quite strongly from here in order to pull in more victims before reversing as shown by the red line. I know I have been hoping that this was an ending diagonal all this time but look how perfectly the chart kissed support and held it yet again. I'm hoping to be able to go long JNUG sometime tomorrow after the 2nd owl ear is formed.
But today's action also shifted the odds toward going long JNUG for now. Why? Because today's action formed a 5th wave up and then an a-b-c retracement back down. The C wave almost kissed the 50% fib. Becase of this, I have to count this move as wave 1 up and 2 down. That means 3 up should be next. Hopefully it will not gap up immediately in the AM so I can get some at current levels.
Below is just the C of 2 wave. It could be 5 waves down and in that case it is just A of C. But I'm guessing that it will be the full C wave. In either case, I expect a move off the bottom near the open and a decision as to whether C is finishing or just A of C. Today looked like it ended with an ending diagonal. Thus, probably just 3rd of 5 of C. With this as my primary model I expect a kiss of the 38.2 and then a bounce down to form a reverse Owl. It might even have a failed 5th wave.
If slv cannot break down its lower support then this cannot be an ending diagonal and the new model is that it must be a 4th wave horizontal triangle. Man are the metals bulls going to be crying manipulation if this plays out. But it will be more like credit deflation forcing people to sell their stuff in order to pay margin calls. If this breaks the upper resistance and then crashes back down as as shown, you should be a buyer after 5 waves down from black 4 and you can treat it as a long term hold if you like because a giant a-b-c back up at the very least. More likely this will be the end of a C wave and so 5 monster waves into the next big metals bull follows over the next 5 years.
This new model is only valid unless and until the red d finds a lower low. I would not bet on it at this point. I would be on the metals and miners to rally quite strongly from here in order to pull in more victims before reversing as shown by the red line. I know I have been hoping that this was an ending diagonal all this time but look how perfectly the chart kissed support and held it yet again. I'm hoping to be able to go long JNUG sometime tomorrow after the 2nd owl ear is formed.
Wednesday, April 23, 2014
Decision time for Metals and Miners.
In this prior post I suspected that the rally on JNUG was corrective but that it was possibly done. Still, I was not sure so I did not bet against it using JDST. Well, the rally was not done and JNUG powered up 9% today at the expense of JDST. And so now we will soon find out whether or not the recent 5 waves down of JNUG was 1 of 5 or 5 of 5. I really do not know but I bet against JNUG today near the close catching it a bit too early (again) @ $22.94. Fortunately that required me to liquidate my TVIX for a small profit before it turned down hard in the afternoon.
Below is the JNUG chart and it shows why I am betting against it and for JDST right now. In short, after 5 waves down it rallied up to kiss the lower resistance line of the triangle from below while filling the gap. This also happened right about at the 50% fib retracement. If it was going to break out then I would have expected that to occur "with gusto" during the 3rd wave. In truth, today's move did break back into the channel slightly so this is far from a slam dunk trade. The chart is being purposefully vague here and leaving both bullish and bearish options open without violating any aspect of the EW principle.
My only (but critically important) ace in the hole here is that I am guaranteed a very small loss if I bet the wrong way simply because my wave count enabled me to buy into JDST so near a significant turn ($22.94 buy point vs $22.20 bottom and then recovery into the close of 22.77). If that sounds like a lot, keep in mind that the bid/ask spread on this is often 15 cents! I don't waste time with limit buys. I just buy at market because by the time you enter your order the action has moved. So the ante into this poker game is almost 1% of your bet. In any case, if this thing goes just one penny below 22.20 then my model is bust and my automatic stop loss kicks in for a manageable 3.3% loss (which is nothing relative to the possible upside here).
It is important to note that a higher high tomorrow very likely seals the deal on the JNUG reversal.
Here are the models from the JDST side. The black numbering (with red subwave numbering) vs. the blue numbering. The black path is bullish JDST/bearish metals and miners. The blue implies that a bottom for M+M is in and that more pain is coming for JDST.
And now a peek at the GDXJ chart from which both JNUG and JDST are derived for a bigger picture look:
Below is the JNUG chart and it shows why I am betting against it and for JDST right now. In short, after 5 waves down it rallied up to kiss the lower resistance line of the triangle from below while filling the gap. This also happened right about at the 50% fib retracement. If it was going to break out then I would have expected that to occur "with gusto" during the 3rd wave. In truth, today's move did break back into the channel slightly so this is far from a slam dunk trade. The chart is being purposefully vague here and leaving both bullish and bearish options open without violating any aspect of the EW principle.
My only (but critically important) ace in the hole here is that I am guaranteed a very small loss if I bet the wrong way simply because my wave count enabled me to buy into JDST so near a significant turn ($22.94 buy point vs $22.20 bottom and then recovery into the close of 22.77). If that sounds like a lot, keep in mind that the bid/ask spread on this is often 15 cents! I don't waste time with limit buys. I just buy at market because by the time you enter your order the action has moved. So the ante into this poker game is almost 1% of your bet. In any case, if this thing goes just one penny below 22.20 then my model is bust and my automatic stop loss kicks in for a manageable 3.3% loss (which is nothing relative to the possible upside here).
It is important to note that a higher high tomorrow very likely seals the deal on the JNUG reversal.
Here are the models from the JDST side. The black numbering (with red subwave numbering) vs. the blue numbering. The black path is bullish JDST/bearish metals and miners. The blue implies that a bottom for M+M is in and that more pain is coming for JDST.
And now a peek at the GDXJ chart from which both JNUG and JDST are derived for a bigger picture look:
Tuesday, April 22, 2014
[SPWR] update
In my most recent previous post on SPWR I modeled a final push into the $36 range in order to finish a triangle. As shown in the original model below, left, the chart then peaked out at $37 and had a big pullback as shown below, right. Anyone who followed my wave model sidestepped a big punch in the face there.
I'm writing today because an alternate model suggests the possibility that there will actually be a higher high. It suggests that the recent peak was really only the d wave of a larger 4th wave as shown below right. Today the chart is at a very critical trading point. If this is a "e" wave throwunder of the structure below, right then it will break back into the channel and form one more peak. That peak will be the real 5th wave. If that wave should occur, it should be formed of a 1-2-3-4-5 impulse wave. So if you are a SPWR lover, buy the break out back into the channel, count 5 waves up that break the top of the structure (perhaps even as high as $45) and then sell, sell, sell because at the very least a massive a-b-c retracement awaits.
If, however, the lower rail is impenetrable resistance then expect more losses in the coming weeks and months for SPWR. Right now this can count either way so it is best to remain on the sidelines and wait for a clear signal. You are not battling over 5% moves here. More like 30% or better in either direction from this point so it is worth waiting to see what is really going on.
I'm writing today because an alternate model suggests the possibility that there will actually be a higher high. It suggests that the recent peak was really only the d wave of a larger 4th wave as shown below right. Today the chart is at a very critical trading point. If this is a "e" wave throwunder of the structure below, right then it will break back into the channel and form one more peak. That peak will be the real 5th wave. If that wave should occur, it should be formed of a 1-2-3-4-5 impulse wave. So if you are a SPWR lover, buy the break out back into the channel, count 5 waves up that break the top of the structure (perhaps even as high as $45) and then sell, sell, sell because at the very least a massive a-b-c retracement awaits.
If, however, the lower rail is impenetrable resistance then expect more losses in the coming weeks and months for SPWR. Right now this can count either way so it is best to remain on the sidelines and wait for a clear signal. You are not battling over 5% moves here. More like 30% or better in either direction from this point so it is worth waiting to see what is really going on.
My EW model for M+M is looking good, S+P finally peaked today.
First off, the success story. Metals and miners are, so far, playing out per my models. JNUG did indeed take an AM dip and then rallied up to $18.70. Both of these moves were pretty well predicted by my M+M model. I summarized today's action yesterday when I wrote:
"...I expect a pullback in the AM which I hope will give me another buying opportunity. After 5 waves down from ~$24 to ~$15.70, I expect at the very least a 5-3-5 movement back up to the prior 4th to around $19. "
JNUG dipped to about $16.50 this morning before rocketing back up into the close. But folks, my model says that this is quite likely an a-b-c retracement. So I hope nobody chased this thing up into the close. I suspect that selling into the close was the smarter trade. Time will tell but after I bailed on JNUG I got back into TVIX @ $6.27 right near the close. JDST would have been the higher leverage play but I want to see evidence that JNUG is entering a 3rd wave down before holding JDST over night. I'll probably wish I had just done it. In any case if we see a pullback in JNUG tomorrow and then a higher high, the model is bust. It will mean JNUG has bottomed and is now reversing higher. I will definitely jump back in if I see that because it will mean that the recent big triangle was a 4th wave, not a B wave. In that case, these past 5 waves down were not 1 of C but rather plain old 5 and a massive move up should be expected after the monster correction since mid March.
The S+P 500 and TVIX have vexed me for several days now but TVIX showed good support today in the $6.20 range. I model that it will begin it's a-b-c bounce upward tomorrow. Notably, the chart was able to break below the lower range of the ending diagonal and then break back up into the channel today and for many people that will mean that it has now reversed its trend. I believe the reversal will be trade-able but short lived. I model the move down to just below the support line as 5 waves, not 5-3-5 which I eventually expect to happen. So I'm calling this 5 of A of 5 as opposed to just 5 of the ending diagonal. Also, I would expect a much larger throw under for TVIX than that little divot. As shown by the chart below (not to scale, just shows the general expected wave structure), the move back up will likely be somewhere between 6.84 and 7.24 (38.2 and 61.8 fibs). It should be powerful and fast enough and convincing enough in order to sucker in more bears before reversing on them one last time for 5 waves down which would be the real throw under. Whiplash is a favorite tool of the markets for shaking off attackers.
Alternatively, that little divot could have been the whole throwunder and now TVIX will skyrocket but I see this as a low odds play. Typically when I see the A wave nub under like that it is merely telling me that it plans to break down to a lower low at some point but that it cannot just do that directly. It has to put on a show of strength and become semi-loved again else there will be nobody in the ETF to shake out at the bottom. What good is a shakeout if nobody gets hurt?? In that case it's all effort by the herd and no benefit. Someone has to get hurt but with the dismal performance of TVIX over the past couple weeks there can't be many big money momo types in it. The trap needs to be baited with honey and I intend to scoop up my share of it and then be out before the trap closes.
As usual, I have my stops in place just 1 penny below today's low. The most I can lose here is 7 cents which is about 1% (assuming no massive AM gap down of course since I am again taking the risk of holding TVIX overnight).
Here is my TVIX model:
"...I expect a pullback in the AM which I hope will give me another buying opportunity. After 5 waves down from ~$24 to ~$15.70, I expect at the very least a 5-3-5 movement back up to the prior 4th to around $19. "
JNUG dipped to about $16.50 this morning before rocketing back up into the close. But folks, my model says that this is quite likely an a-b-c retracement. So I hope nobody chased this thing up into the close. I suspect that selling into the close was the smarter trade. Time will tell but after I bailed on JNUG I got back into TVIX @ $6.27 right near the close. JDST would have been the higher leverage play but I want to see evidence that JNUG is entering a 3rd wave down before holding JDST over night. I'll probably wish I had just done it. In any case if we see a pullback in JNUG tomorrow and then a higher high, the model is bust. It will mean JNUG has bottomed and is now reversing higher. I will definitely jump back in if I see that because it will mean that the recent big triangle was a 4th wave, not a B wave. In that case, these past 5 waves down were not 1 of C but rather plain old 5 and a massive move up should be expected after the monster correction since mid March.
The S+P 500 and TVIX have vexed me for several days now but TVIX showed good support today in the $6.20 range. I model that it will begin it's a-b-c bounce upward tomorrow. Notably, the chart was able to break below the lower range of the ending diagonal and then break back up into the channel today and for many people that will mean that it has now reversed its trend. I believe the reversal will be trade-able but short lived. I model the move down to just below the support line as 5 waves, not 5-3-5 which I eventually expect to happen. So I'm calling this 5 of A of 5 as opposed to just 5 of the ending diagonal. Also, I would expect a much larger throw under for TVIX than that little divot. As shown by the chart below (not to scale, just shows the general expected wave structure), the move back up will likely be somewhere between 6.84 and 7.24 (38.2 and 61.8 fibs). It should be powerful and fast enough and convincing enough in order to sucker in more bears before reversing on them one last time for 5 waves down which would be the real throw under. Whiplash is a favorite tool of the markets for shaking off attackers.
Alternatively, that little divot could have been the whole throwunder and now TVIX will skyrocket but I see this as a low odds play. Typically when I see the A wave nub under like that it is merely telling me that it plans to break down to a lower low at some point but that it cannot just do that directly. It has to put on a show of strength and become semi-loved again else there will be nobody in the ETF to shake out at the bottom. What good is a shakeout if nobody gets hurt?? In that case it's all effort by the herd and no benefit. Someone has to get hurt but with the dismal performance of TVIX over the past couple weeks there can't be many big money momo types in it. The trap needs to be baited with honey and I intend to scoop up my share of it and then be out before the trap closes.
As usual, I have my stops in place just 1 penny below today's low. The most I can lose here is 7 cents which is about 1% (assuming no massive AM gap down of course since I am again taking the risk of holding TVIX overnight).
Here is my TVIX model:
Here is my S+P 500 model:
S+P model says pullback tomorrow, critical test point soon; metals now in opposition?
In this post from last week I admitted holding TVIX from last Thursday into this AM. I got stopped out today (really yesterday since it is now nearly 5am the following day) at the open for a very small loss and then turned my attention to finding an entry into what I believed would be at least a near term bottoming JNUG. More on Metals and Miners (M+M) below.
As for my failed TVIX trade, I am shown by the markets once again that, at least right now (and this could change in the future), ending diagonals are not 5th waves but rather 3rd waves. You can see plain as day in the S+P chart below how the ending diagonal of the 3rd wave slushed into a clear 4th wave triangle and then the 5th wave that ended with a tiny double top. At least that's how I am modeling yesterday's S+P move.
The S+P chart looks like a 3 wave retracement just finished. While it is possible that this is wave 1 of a more bullish run given the multiple bounces at the start of it, this is not the chart character that I expect for that. In fact, this looks like an internal wave of a triangle of some kind. I need more data in order to better characterize it but this is not "off to the races" IMO. This is more like "retracement withering and rolling over". Tomorrow will very likely be a down day for the broader markets but I cannot say if it will be the start of an avalanche of selling or if the selling will find support at the prior 4th and shown below where the black arrow breaks out. Traders should be ready for either path. But nothing can hide the weakness of this bounce in terms of wave shape. Bottom line: markets will likely be red all day tomorrow and TVIX is a safe bet for a near term pop.
Below is the TVIX chart. Note that it is typical for the A of 5th wave to kiss the support line that it will eventually have to break below in order to create the throw under. I model the A wave as having finished today (Monday). Now I think it needs to pop to between $6.90 and $7.10 (the 38.2 and 50% fibs) to form the B wave. Then more selling and a breakdown below the orange support line on 3rd of C of 5. When 5 waves down have completed into wave C of 5 ($5.50-$5.75 estimate range), buy, buy BUY and just hang on for a wild ride. At such low buy in price, a rapid 50% gain is going to be a piece of cake and that's the conservative goal which assumes that this ending diagonal turns out to be a 3rd wave. It might then break down and form a lower low 5th wave simply because as mentioned above, ending diagonals have been 3rds of late.
But hey, 1 wave at a time, right? A 50% gain with high confidence is nothing to sneeze at. Note: the red model line in the chart above assumes this ending diagonal is the end of the 2009 bull market in stocks simply because of the Walk Away in May prediction. This is not my official position, just a possibility. That walk away does not have to begin May 1st! So if this ending diagonal is really only a 3rd wave then there is still plenty of time to create a 4th and then a 5th.
But any way you look at it, there is a great depression in fear. Everyone is complacent and thus not buying crash insurance (put options) insurance like they should be. They are expecting the federal reserve to save them. That is a bad, bad strategy. They got their once in a general banker bail out. It will not happen again. The most likely time to need this kind of crash insurance, by definition, is when nobody is buying it because it means the trade is heavily weighted to the long side. Like an Asian ferrry, when everyone is on one side of the boat they roll over so quickly that nobody can escape.
Switching gears, after getting stopped out of TVIX today, I recovered all of my small losses and then some by switching into JNUG at $15.90 after I counted that it had hit bottom. I was off by just one small wave, 18 cents. I rode it up until near the end of the day where I saw an ending diagonal forming and so I took profits at $16.84. Unfortunately for me, the stock skyrocketed into the close and so I left another 50 cents on the table. But I expect a pullback in the AM which I hope will give me another buying opportunity. After 5 waves down from ~$24 to ~$15.70, I expect at the very least a 5-3-5 movement back up to the prior 4th to around $19.
After that the M+M will have a major decision to make: was this past 5 waves down the full retracement of JNUG's recent run to $43 or was it just 1 of 5. If only 1 of 5 then the retracement to $19 should be followed by a 3rd wave down which should be a real a$$ beating for M+M longs. Right now I'm leaning toward this because that is how bear markets eventually end: capitulation bottoms.
By the way, as the markets were rallying JDST was rocking. As the markets weakened, JDST peaked and did a bearish intraday reversal. So at this point the M+M waves are now again out of synch with the broader markets
As for my failed TVIX trade, I am shown by the markets once again that, at least right now (and this could change in the future), ending diagonals are not 5th waves but rather 3rd waves. You can see plain as day in the S+P chart below how the ending diagonal of the 3rd wave slushed into a clear 4th wave triangle and then the 5th wave that ended with a tiny double top. At least that's how I am modeling yesterday's S+P move.
The S+P chart looks like a 3 wave retracement just finished. While it is possible that this is wave 1 of a more bullish run given the multiple bounces at the start of it, this is not the chart character that I expect for that. In fact, this looks like an internal wave of a triangle of some kind. I need more data in order to better characterize it but this is not "off to the races" IMO. This is more like "retracement withering and rolling over". Tomorrow will very likely be a down day for the broader markets but I cannot say if it will be the start of an avalanche of selling or if the selling will find support at the prior 4th and shown below where the black arrow breaks out. Traders should be ready for either path. But nothing can hide the weakness of this bounce in terms of wave shape. Bottom line: markets will likely be red all day tomorrow and TVIX is a safe bet for a near term pop.Below is the TVIX chart. Note that it is typical for the A of 5th wave to kiss the support line that it will eventually have to break below in order to create the throw under. I model the A wave as having finished today (Monday). Now I think it needs to pop to between $6.90 and $7.10 (the 38.2 and 50% fibs) to form the B wave. Then more selling and a breakdown below the orange support line on 3rd of C of 5. When 5 waves down have completed into wave C of 5 ($5.50-$5.75 estimate range), buy, buy BUY and just hang on for a wild ride. At such low buy in price, a rapid 50% gain is going to be a piece of cake and that's the conservative goal which assumes that this ending diagonal turns out to be a 3rd wave. It might then break down and form a lower low 5th wave simply because as mentioned above, ending diagonals have been 3rds of late.
But hey, 1 wave at a time, right? A 50% gain with high confidence is nothing to sneeze at. Note: the red model line in the chart above assumes this ending diagonal is the end of the 2009 bull market in stocks simply because of the Walk Away in May prediction. This is not my official position, just a possibility. That walk away does not have to begin May 1st! So if this ending diagonal is really only a 3rd wave then there is still plenty of time to create a 4th and then a 5th. But any way you look at it, there is a great depression in fear. Everyone is complacent and thus not buying crash insurance (put options) insurance like they should be. They are expecting the federal reserve to save them. That is a bad, bad strategy. They got their once in a general banker bail out. It will not happen again. The most likely time to need this kind of crash insurance, by definition, is when nobody is buying it because it means the trade is heavily weighted to the long side. Like an Asian ferrry, when everyone is on one side of the boat they roll over so quickly that nobody can escape.
Switching gears, after getting stopped out of TVIX today, I recovered all of my small losses and then some by switching into JNUG at $15.90 after I counted that it had hit bottom. I was off by just one small wave, 18 cents. I rode it up until near the end of the day where I saw an ending diagonal forming and so I took profits at $16.84. Unfortunately for me, the stock skyrocketed into the close and so I left another 50 cents on the table. But I expect a pullback in the AM which I hope will give me another buying opportunity. After 5 waves down from ~$24 to ~$15.70, I expect at the very least a 5-3-5 movement back up to the prior 4th to around $19.
After that the M+M will have a major decision to make: was this past 5 waves down the full retracement of JNUG's recent run to $43 or was it just 1 of 5. If only 1 of 5 then the retracement to $19 should be followed by a 3rd wave down which should be a real a$$ beating for M+M longs. Right now I'm leaning toward this because that is how bear markets eventually end: capitulation bottoms.
By the way, as the markets were rallying JDST was rocking. As the markets weakened, JDST peaked and did a bearish intraday reversal. So at this point the M+M waves are now again out of synch with the broader markets
Monday, April 21, 2014
S+P 500 is right at the 61.8% fib and at or close to end of C wave.
I held TVIX overnight on Thursday because of the chart below. I had forgotten that the markets were closed on Friday for Easter. In any case, I'll sell TVIX and regroup if the S+P gains just 5 points from Thursday's close because it will invalidate my model. I'm not holding anything unless I can make a case for why the deck is stacked in my favor.
But until I get stopped out, I rather like this setup. It's not perfect in terms of wave formation but I can put in a count that shows 5 waves down and then a vee style "buy the dip because that strategy never fails" a-b-c wave back up to the 61.8 fib. The ending diagonal has broken down lower support after a weak (surprising weak) throw over of the top rail. Unless it can break back up into the channel it should accelerate to the downside in the AM. Time will tell but I very little because of tight stops on this one.
But until I get stopped out, I rather like this setup. It's not perfect in terms of wave formation but I can put in a count that shows 5 waves down and then a vee style "buy the dip because that strategy never fails" a-b-c wave back up to the 61.8 fib. The ending diagonal has broken down lower support after a weak (surprising weak) throw over of the top rail. Unless it can break back up into the channel it should accelerate to the downside in the AM. Time will tell but I very little because of tight stops on this one.
Sunday, April 20, 2014
This is my bearish model on M+M - important indicator included.
You can make all the models you want but, like lightening, markets have a lot of leeway in how they play out. You can say what they typically do and suggest this or that but there is always the element of controlled chaos. The best thing you can do is make several models and assign probabilities and triggers to them. The main benefits of doing this are that you are not surprised if the "unthinkable" happens and you are actively looking for signs that it will.
Before I go on, I have to say that the silver bulls are still very loud right now. Many still call for immediate hyperinflation even in the face of metals prices that are not in any kind of obvious uptrend. Metals, especially silver, will be among the first to react to strong expectations of hyperinflation. I don't see it yet.
Eventually the silver bulls will be right - very right. I count myself among that crowd: long term silver and gold bulls. Trade the paper metals and miners according to the waves but buy the physical metal as lifetime savings that can never go bankrupt or be used for bail ins or be taxed away with the stroke of a desperate bureaucrat's pen. I don't care what the day to day price of it is. Even though I modeled the peaks of gold and silver to be peaks, I didn't run out and sell all my physical holdings because you never know at what point the collapse can happen and when it does you will not be able to buy any metals at all and your paper holdings will go worthless.
But I also know that we have a massive deflationary crash to work through. Prechter is not wrong in direction. He has math, history and logic on his side. The only variation will be the exact timing and the degree which nobody can really know. Everyone is building up for it. Government is arming all of its agencies as if they were SWAT. They hope to retain control of the scam after it collapses through the use of force. Hollywood is fanning the flames as well. Look at movies like Hunger Games, TV shows like Revolution, and songs like Adele's Skyfall (James Bond theme). Did you ever read the lyrics to it?
Remember, in the movie, Skyfall was the name of Bond's family estate where grew up in. But in the song it is used in the context of a collapse (the sky is falling so "let the sky fall"). There is also reference to drowning and dreaming which is a common nightmare (the end of the American dream?). It obviously was in synch with the mood of the people since it grossed over a billion dollars worldwide, only the 14th film to do so ever.
But I digress. All I'm really saying here is that metals and miners can still get sucked down in dollar terms (even though they will likely retain their buying power as other things fall in price like real estate).
And now to the charts. I've been following the possibility for some time that the current wave is an ending diagonal but what if it turns out to be a horizontal triangle instead? That would make it a 4th wave, 4th of C, not 5th of C. The result could be as one of the two outcomes modeled below.
I must say, the count of that 3rd wave down (blue 3) does fit very well. But this model gives us an important trigger to look for: how the 4th wave plays out. In the chart below you can see that we are just a short move from kissing that support line. While it may sound strange to say, it would be more bullish in the medium term to break down through it right now than to bounce off of it because if it bounces here then we have to expect that this was only the 4th wave and that after an a-b-c back up into red "e" (which can have a wide range but is more likely $21.50 than $25.50), another wave down will take us to lower lows. If this plays out, that 5th wave should be about the size of the first wave which is where I got the lengths for it from in the models above.
Before I go on, I have to say that the silver bulls are still very loud right now. Many still call for immediate hyperinflation even in the face of metals prices that are not in any kind of obvious uptrend. Metals, especially silver, will be among the first to react to strong expectations of hyperinflation. I don't see it yet.
Eventually the silver bulls will be right - very right. I count myself among that crowd: long term silver and gold bulls. Trade the paper metals and miners according to the waves but buy the physical metal as lifetime savings that can never go bankrupt or be used for bail ins or be taxed away with the stroke of a desperate bureaucrat's pen. I don't care what the day to day price of it is. Even though I modeled the peaks of gold and silver to be peaks, I didn't run out and sell all my physical holdings because you never know at what point the collapse can happen and when it does you will not be able to buy any metals at all and your paper holdings will go worthless.
But I also know that we have a massive deflationary crash to work through. Prechter is not wrong in direction. He has math, history and logic on his side. The only variation will be the exact timing and the degree which nobody can really know. Everyone is building up for it. Government is arming all of its agencies as if they were SWAT. They hope to retain control of the scam after it collapses through the use of force. Hollywood is fanning the flames as well. Look at movies like Hunger Games, TV shows like Revolution, and songs like Adele's Skyfall (James Bond theme). Did you ever read the lyrics to it?
This is the end,
Hold your breath and count to ten,
Feel the earth move and then,
Hear my heart burst again,
Hold your breath and count to ten,
Feel the earth move and then,
Hear my heart burst again,
For this is the end,
I've drowned and dreamt this moment,
So overdue I owe them,
Swept away I'm stolen,
I've drowned and dreamt this moment,
So overdue I owe them,
Swept away I'm stolen,
[Chorus]
Let the skyfall
When it crumbles
We will stand tall
Face it all together
When it crumbles
We will stand tall
Face it all together
Remember, in the movie, Skyfall was the name of Bond's family estate where grew up in. But in the song it is used in the context of a collapse (the sky is falling so "let the sky fall"). There is also reference to drowning and dreaming which is a common nightmare (the end of the American dream?). It obviously was in synch with the mood of the people since it grossed over a billion dollars worldwide, only the 14th film to do so ever.
But I digress. All I'm really saying here is that metals and miners can still get sucked down in dollar terms (even though they will likely retain their buying power as other things fall in price like real estate).
And now to the charts. I've been following the possibility for some time that the current wave is an ending diagonal but what if it turns out to be a horizontal triangle instead? That would make it a 4th wave, 4th of C, not 5th of C. The result could be as one of the two outcomes modeled below.
I must say, the count of that 3rd wave down (blue 3) does fit very well. But this model gives us an important trigger to look for: how the 4th wave plays out. In the chart below you can see that we are just a short move from kissing that support line. While it may sound strange to say, it would be more bullish in the medium term to break down through it right now than to bounce off of it because if it bounces here then we have to expect that this was only the 4th wave and that after an a-b-c back up into red "e" (which can have a wide range but is more likely $21.50 than $25.50), another wave down will take us to lower lows. If this plays out, that 5th wave should be about the size of the first wave which is where I got the lengths for it from in the models above.
From a trading perspective, a bounce here at exactly the indicated location would be a Godsend because it gives us a new reference frame to work from not unlike the key frame of an animation or of a compressed movie. With compressed movies, only the scene deltas are stored. These deltas are relative to a key frame. As the further you get from a key frame, the more artifacts will be in the image. So the key frames occur in the video stream at regular locations in order to refresh the reference point. The same is true in charting.
If we get that reference point then we can be highly confident that we will see a 5-3-5 (a-b-c) move upwards that will likely break out of the triangle just to show that the 4th wave is complete. Once it reverses and breaks back into triangle, that is a strong sell trigger. It would not surprise me to see 5 small waves up to kiss the top line from below, and then 3 smaller waves back down and then a break out on the C wave which then ultimately fails and forms a lower low than blue 3 above.
Friday, April 18, 2014
USLV update (M+M proxy) including possible scenario for flash crash metals wipe out.
Back in this post from Dec 2013 I speculated that Metals and Miners could be in for a nasty ending diagonal. In this follow on post I commented that the model had received a "shot in the arm" by recent trading activity. While the current model for ending diagonal has morphed a bit, the ending price target is similar to before: $34-$36 for USLV. The ending diagonal model seems alive and well in the current chart below.
Or is it? This final wave down is not supposed to be 1-2-3-4-5 which is what it appears to be doing right now, it's supposed to be a-b-c formed of 5-3-5 and that's not what I am seeing. Who knows, perhaps this is just A of 5 and there is going to be a bounce at bottom support that does not break out of top support but rather comes crashing back down for a serious M+M wipe out / capitulation bottom on massive volume. In other words, something like the chart below. It would have to swoop way down, blow everyone out of the water who had any stops at all and just convince people that silver was going to be worthless some day before putting in a serious vee bottom and then skyrocketing back up. This kind of whiplash would have everyone panicking like there was no tomorrow about their metals. Folks, if you see this it is not time to panic sell. Its the time to dump all of your net worth into metals and miners when everyone else is running away.
Importantly, recognize in advance that if this kind of massive washout capitulation occurs there will have to be a cover story for the selling. It will make sense in in some way to the herd but of course it will be bullshit. Whatever fear they muster is only designed to scare the flock in the intended direction. The metals world is not going to end tomorrow no matter what you might hear. People will get shaken out at the bottom like they always do while the smart money just waits for them to panic and then goes in and scoops up the profits.
This is shaping up to be a very interesting summer. If silver does this, what will broader markets be doing? Perhaps it will be a replay of the flash crash but an order of magnitude bigger. All we can do is ride the waves while it plays out.
Or is it? This final wave down is not supposed to be 1-2-3-4-5 which is what it appears to be doing right now, it's supposed to be a-b-c formed of 5-3-5 and that's not what I am seeing. Who knows, perhaps this is just A of 5 and there is going to be a bounce at bottom support that does not break out of top support but rather comes crashing back down for a serious M+M wipe out / capitulation bottom on massive volume. In other words, something like the chart below. It would have to swoop way down, blow everyone out of the water who had any stops at all and just convince people that silver was going to be worthless some day before putting in a serious vee bottom and then skyrocketing back up. This kind of whiplash would have everyone panicking like there was no tomorrow about their metals. Folks, if you see this it is not time to panic sell. Its the time to dump all of your net worth into metals and miners when everyone else is running away.
Importantly, recognize in advance that if this kind of massive washout capitulation occurs there will have to be a cover story for the selling. It will make sense in in some way to the herd but of course it will be bullshit. Whatever fear they muster is only designed to scare the flock in the intended direction. The metals world is not going to end tomorrow no matter what you might hear. People will get shaken out at the bottom like they always do while the smart money just waits for them to panic and then goes in and scoops up the profits.
This is shaping up to be a very interesting summer. If silver does this, what will broader markets be doing? Perhaps it will be a replay of the flash crash but an order of magnitude bigger. All we can do is ride the waves while it plays out.
Perennial loser AMD is now on my "Aggressive Buy" list
I worked at AMD for 14 years. There are a lot of good people there but it always seems that arrogant losers and bureaucrats are put in charge. It's like a socialist organization and I almost choked when I heard (back then) that Dirk (you know who) was referring to the Austin engineering team as "Central Engineering", a very communist theme. AMD was also very early in embracing the "fusion" buzz word which of course originally meant the fusion of government and corporations against the people. Finally, near the end of my time there, I came into work one day to find an expensive color glossy on everyone's desk that repeated the Fascist/Stasi Bush/Obama line of "If you see something, say something". It had a picture of someone who looked like 50s Russian spy on it slinking around.
It has been 5 years since I worked there and I have completely lost touch with the place even though I still know talented people who work there. I do know that some of the most arrogant techno-bureaucrats that were running the place ran off to Samsung to pollute its technology gene pool. So I while I used to know AMD as a technology company very well, I can no longer say that. But I also don't care because the chart is telling me that AMD is due for a big bounce into the coming 12 months.
As you can see from the chart below, AMD got 5 waves up into the A wave and then a 5 wave corrective move into B. I count the early move up off that B as a very sluggish start of a C wave. Investors just were not convinced. To me that spells opportunity. AMD only lost 20 million dollars this past quarter on a GAAP basis and it grew revenue. AMD's fortunes have always been cyclic so I expect more of same going forward.
The red box is my target range which indicates I expect an easy double on the shares from here and perhaps a good deal more. At the very least, C should be at least the same "power"as A. That would move the chart up to about the $10 range. But that would only be ~ the 23.6 % fib which it already tested once. No, I think it blows through the 23.6 this time and hits the 38.2. That price is $17.22 which is 4.6x today's price. For that kind of a potential gain it is worth adding AMD to my aggressive buy list, especially given the long period of hugging the bottom since the 2008 crash.
I'll repeat: the news means very little. The waves mean everything. Try to remember that later on if you rolled your eyes at the prospect of crappy little AMD making that huge of a gain. Yes, it's possible and in fact extremely likely according to my model. Of course, these are just random thoughts, not investing (gambling) advice.
It has been 5 years since I worked there and I have completely lost touch with the place even though I still know talented people who work there. I do know that some of the most arrogant techno-bureaucrats that were running the place ran off to Samsung to pollute its technology gene pool. So I while I used to know AMD as a technology company very well, I can no longer say that. But I also don't care because the chart is telling me that AMD is due for a big bounce into the coming 12 months.
As you can see from the chart below, AMD got 5 waves up into the A wave and then a 5 wave corrective move into B. I count the early move up off that B as a very sluggish start of a C wave. Investors just were not convinced. To me that spells opportunity. AMD only lost 20 million dollars this past quarter on a GAAP basis and it grew revenue. AMD's fortunes have always been cyclic so I expect more of same going forward.
The red box is my target range which indicates I expect an easy double on the shares from here and perhaps a good deal more. At the very least, C should be at least the same "power"as A. That would move the chart up to about the $10 range. But that would only be ~ the 23.6 % fib which it already tested once. No, I think it blows through the 23.6 this time and hits the 38.2. That price is $17.22 which is 4.6x today's price. For that kind of a potential gain it is worth adding AMD to my aggressive buy list, especially given the long period of hugging the bottom since the 2008 crash.
I'll repeat: the news means very little. The waves mean everything. Try to remember that later on if you rolled your eyes at the prospect of crappy little AMD making that huge of a gain. Yes, it's possible and in fact extremely likely according to my model. Of course, these are just random thoughts, not investing (gambling) advice.
Thursday, April 17, 2014
The justice department might just have been implicated in Lois Lerner's little conservative targeting scam.
The federal government finally responded to multiple FOIA (Freedom Of Information Act) requests which tried to get emails and other data that could be related to the recent tyrannical targeting of conservative groups, including the Tea Party by IRS. What they found was that Eric Holder's justice department got requests from Lerner's team to help go after legally (trumped up legal attacks) those who were already being attacked financially by Lerner's corrupt politicization of our tax collection services.
Well no wonder Lerner doesn't want to squeal. She would have to roll over on a huge organization that is not known for being gentle to its adversaries. It's a fair bet that the "justice" department has a small army of trained mercenaries which it uses to attack those who are too difficult to prosecute. After all, one man's justice is another's corrupt tyranny.
This could really turn into a big thing right now. 1 year ago it didn't seem to matter but now that the credit is falling apart globally there are far fewer people who are willing to lie for the establishment and I guarantee you that there will be a good number of them who come forward of their own accord asking for amnesty or a plea deal or witness protection or all three in exchange for their damning evidence against the massive corruption that I know is lurking within our government. After all, this is how all organized crime syndicates eventually fail. No, it won't be different this time.
Well no wonder Lerner doesn't want to squeal. She would have to roll over on a huge organization that is not known for being gentle to its adversaries. It's a fair bet that the "justice" department has a small army of trained mercenaries which it uses to attack those who are too difficult to prosecute. After all, one man's justice is another's corrupt tyranny.
This could really turn into a big thing right now. 1 year ago it didn't seem to matter but now that the credit is falling apart globally there are far fewer people who are willing to lie for the establishment and I guarantee you that there will be a good number of them who come forward of their own accord asking for amnesty or a plea deal or witness protection or all three in exchange for their damning evidence against the massive corruption that I know is lurking within our government. After all, this is how all organized crime syndicates eventually fail. No, it won't be different this time.
TVIX update
My recent TVIX bet turned out to be a couple percent too early into the 4th wave instead of the bounce up from the 5th. Today it sold off another very manageable 2.5% into the 5th wave and then it bounced right at the level of the 5th but could not go lower. So I think the afternoon moves counter as 1 and 2 of the reversal. I just held through the day in the expectation of a good move up tomorrow. If it falls even 1 penny below today's close then I'll dump it and take the loss.
If this model is correct, expect a nice gap up on TVIX (weak broader markets) because it will be a 3rd wave. It will have to make up for all the time it was stuck in wave 2.
What I am actually hoping for is a pop on TVIX at the open and some continued selling on JNUG so that I can sell the TVIX for a small profit and then switch to JNUG for a much bigger one as JNUG does an a-b-c.
Keep in mind that JNUG could pop up huge time pretty much any day now should there be a rapid escalation of the conflict in Ukraine. War has a way of doing that. That Ukrainian situation is not going to end well. Putin is saying that any "run off" elections, etc. done right now by the Ukrainian government there are basically a sham. Of course, Kerry (that blithering liberal moron) is running around doing a victory lap for having brokered a peace deal which disarms the populace. Oh sure, that's going to work. Those people will all trot right down to Russian Confiscation Central and turn in all their guns. HA HA HA HA HA!!! Do you think that if Kerry made some kind of deal with Texas governor Perry for me to turn in my guns that I would do it? NO DAMNED WAY. In fact, and listen well NSA, police and other "authorities", I would take it as a de facto declatation of war. I have an inalienable right to keep and bear arms and I will defend myself from anyone who tries to use force to take them.
If I feel this strongly about it, what about Ukrainians who will actually be needing the guns real soon now? My situation is totally hypothetical. There is only a very small chance that things will get so bad in the US that I will actually have to shoot anyone (small but certainly not zero). But Ukraine???? Civil war is almost a given. Any Ukrainian giving up their gun is a raving moron. And so they won't. "Leaders" can make up all the little rules and deals that they want to but when the herd wakes up as it is doing right now, those rules don't mean anything. Ask the BLM, a federal agency which brought 200 agents, many vehicles and even helicopters to bear on Cliven Bundy. Those federal a$$holes got run off of the Bundy ranch at gunpoint. The government is just a bunch of bullies and blowhards compared to the awesome and unstoppable might of an awakened, organized, ARMED and angry populace. This is true for Ukraine and it is true for the USA. So don't believe for a second that anything is solved over there. Kerry should just resign so that people can stop mocking the fool.
If this model is correct, expect a nice gap up on TVIX (weak broader markets) because it will be a 3rd wave. It will have to make up for all the time it was stuck in wave 2.
What I am actually hoping for is a pop on TVIX at the open and some continued selling on JNUG so that I can sell the TVIX for a small profit and then switch to JNUG for a much bigger one as JNUG does an a-b-c.
Keep in mind that JNUG could pop up huge time pretty much any day now should there be a rapid escalation of the conflict in Ukraine. War has a way of doing that. That Ukrainian situation is not going to end well. Putin is saying that any "run off" elections, etc. done right now by the Ukrainian government there are basically a sham. Of course, Kerry (that blithering liberal moron) is running around doing a victory lap for having brokered a peace deal which disarms the populace. Oh sure, that's going to work. Those people will all trot right down to Russian Confiscation Central and turn in all their guns. HA HA HA HA HA!!! Do you think that if Kerry made some kind of deal with Texas governor Perry for me to turn in my guns that I would do it? NO DAMNED WAY. In fact, and listen well NSA, police and other "authorities", I would take it as a de facto declatation of war. I have an inalienable right to keep and bear arms and I will defend myself from anyone who tries to use force to take them.
If I feel this strongly about it, what about Ukrainians who will actually be needing the guns real soon now? My situation is totally hypothetical. There is only a very small chance that things will get so bad in the US that I will actually have to shoot anyone (small but certainly not zero). But Ukraine???? Civil war is almost a given. Any Ukrainian giving up their gun is a raving moron. And so they won't. "Leaders" can make up all the little rules and deals that they want to but when the herd wakes up as it is doing right now, those rules don't mean anything. Ask the BLM, a federal agency which brought 200 agents, many vehicles and even helicopters to bear on Cliven Bundy. Those federal a$$holes got run off of the Bundy ranch at gunpoint. The government is just a bunch of bullies and blowhards compared to the awesome and unstoppable might of an awakened, organized, ARMED and angry populace. This is true for Ukraine and it is true for the USA. So don't believe for a second that anything is solved over there. Kerry should just resign so that people can stop mocking the fool.
JDST and JNUG
As expected by my model, a 5th wave up did indeed play out on JDST. It didn't count exactly like I stated but the net effect is the same. In fact, I think there might be a bit more upside in JDST before it peaks but I would not mess with it now. The easy money has been made and we should be looking for an entry into JNUG right now. At the very least it has a nice sized wave back up, probably a 5-3-5 affair back to the prior 4th. Well, that was 8 or 9% ago so this is a very trade-able move.
Now, I will be the first to say that wave counts at the 5th of 5 level can be very tricky. I get them wrong quite a bit. So I have learned to buy the bottom of the 3rd wave and then sell the top of the C of 4th and then just wait until I can get some verification.
Also keep in mind that per EW rules these past 5 waves down can be either the full 5th wave down after exiting that nasty horizontal triangle OR they can be just 1 of 5. If only 1 of 5 you certainly do not want to be around for 3 of 5!! JNUG has lost about 30% of its value in the past 6 trading days!! That is some screaming leverage there folks!
In any case, we are no more than 1 trading day from a nice JNUG rally (minimum 10%, likely more). What goes down quickly can rebound just as fast and percentages work in the favor of the long trader. By that I mean, lets say an asset trades @ $30 and it loses 33% of its value (about the same % that JNUG lost). Now it would be $20. Now if the asset climbs back up to $30, the gain is not 33% but rather 50%.
If it sells off on Friday as I have modeled below, just wait for the 5 waves to complete and then buy with confidence or just wait for the end of the trading day and buy in just 30 seconds before the close (they can move these things several percent in the final 2 minutes I have seen - traders don't like holding over the weekend). But that is an emotional response on their part (fear) whereas I would definitely buy into strong selling into the close as long as it looked like the waves were complete. Why? Because it will likely gap up on Monday so that the least number of people possible can get in.
Keep in mind that I modeled this move up in JDST on Tuesday - 2 full trading days ago (which is a lifetime for a stock that moves so quickly as JDST and JNUG do). In that model, today's 5th wave is only 5 of 1. So be on the lookout for an a-b-c back up for JNUG move as opposed to a 1-2-3-4-5 move. If you get 5 waves up, it is likely that the full move down stated in Tues post is done. It should only be a 3 wave movement in order to match the model.
If it is a 3 wave move then mos def buy JDST when it is done because the next thing should be a 3rd wave down, a real doozy in terms of percentage. Keep in mind that if we get that big 3rd wave down then we should also expect a 4th and then a 5th. But those opportunities, as potentially profitable as they might be, are nothing compared to what will be made if the bottom of JNUG is bought on the ending diagonal throw under of the miners because my others models suggest that that would mark then end of the entire bear market in metals and miners. Catching that wave could be a very exciting prospect even with relatively small amounts of cash on the gambling table. Think 10x gains easy to the next major peak.
Now, I will be the first to say that wave counts at the 5th of 5 level can be very tricky. I get them wrong quite a bit. So I have learned to buy the bottom of the 3rd wave and then sell the top of the C of 4th and then just wait until I can get some verification.
Also keep in mind that per EW rules these past 5 waves down can be either the full 5th wave down after exiting that nasty horizontal triangle OR they can be just 1 of 5. If only 1 of 5 you certainly do not want to be around for 3 of 5!! JNUG has lost about 30% of its value in the past 6 trading days!! That is some screaming leverage there folks!
In any case, we are no more than 1 trading day from a nice JNUG rally (minimum 10%, likely more). What goes down quickly can rebound just as fast and percentages work in the favor of the long trader. By that I mean, lets say an asset trades @ $30 and it loses 33% of its value (about the same % that JNUG lost). Now it would be $20. Now if the asset climbs back up to $30, the gain is not 33% but rather 50%.
If it sells off on Friday as I have modeled below, just wait for the 5 waves to complete and then buy with confidence or just wait for the end of the trading day and buy in just 30 seconds before the close (they can move these things several percent in the final 2 minutes I have seen - traders don't like holding over the weekend). But that is an emotional response on their part (fear) whereas I would definitely buy into strong selling into the close as long as it looked like the waves were complete. Why? Because it will likely gap up on Monday so that the least number of people possible can get in.
Keep in mind that I modeled this move up in JDST on Tuesday - 2 full trading days ago (which is a lifetime for a stock that moves so quickly as JDST and JNUG do). In that model, today's 5th wave is only 5 of 1. So be on the lookout for an a-b-c back up for JNUG move as opposed to a 1-2-3-4-5 move. If you get 5 waves up, it is likely that the full move down stated in Tues post is done. It should only be a 3 wave movement in order to match the model.
If it is a 3 wave move then mos def buy JDST when it is done because the next thing should be a 3rd wave down, a real doozy in terms of percentage. Keep in mind that if we get that big 3rd wave down then we should also expect a 4th and then a 5th. But those opportunities, as potentially profitable as they might be, are nothing compared to what will be made if the bottom of JNUG is bought on the ending diagonal throw under of the miners because my others models suggest that that would mark then end of the entire bear market in metals and miners. Catching that wave could be a very exciting prospect even with relatively small amounts of cash on the gambling table. Think 10x gains easy to the next major peak.
Wednesday, April 16, 2014
JDST model: initial crap and then big rebound to a higher high?
Few words necessary if markets open a little red and then do intraday rebound as my models indicate they will.
$COMPX model - watch out for head fake down at the open and then reversal.
I'm long TVIX for tomorrow's open but this new view of the $COMPX has reinforced my view that the weak opening could be a head fake down that will have an intraday reversal which would be a short term (1-3 weeks) overall bullish indicator. So I'll ditch TVIX for several hundred bux gain and then flip to TNA or some other leveraged ETF that seems to be trading in sympathy with the broader indices (JDST might have just done that according to the past few days of trading)
That "Fish Tail" formation is a clear a-b-c. In fact, its more likely a W-X-Y but I rarely bother with that level of EW perfect correctness. I think people get caught up in those details. I also think that it detracts from paying attention to multiple scenarios from both sides of the trade which, IMO, is where the real insight comes from. Getting multiple verification on a model theme is one of the most time consuming but powerful ways to trade with confidence. I see few if any other EW centric sites doing this. They simply provide their bullish or bearish count on whatever they are tracking.
That "Fish Tail" formation is a clear a-b-c. In fact, its more likely a W-X-Y but I rarely bother with that level of EW perfect correctness. I think people get caught up in those details. I also think that it detracts from paying attention to multiple scenarios from both sides of the trade which, IMO, is where the real insight comes from. Getting multiple verification on a model theme is one of the most time consuming but powerful ways to trade with confidence. I see few if any other EW centric sites doing this. They simply provide their bullish or bearish count on whatever they are tracking.
I bought into TVIX just after the close of normal trading today.
As soon as the markets closed I entered my limit order for $6.71 in the after hours trading and got filled. I haven't been saying much about TVIX lately because of the opportunities I had in JNUG but now I see a potentially very powerful short term trade. As always, I could be completely wet about this but it would be a mistake to consider it a random move on my part. Quite the contrary, I saw the setup coming and waited for it like a sniper. Again, I could lose here but not very much since I will use today's close as my stop point. If it gaps down tomorrow I could lose up to a few percent. I'm willing to take that bet based on the following chart analysis.
First, I've flipped over into "end game" mode. By that, I mean that I expect every tricky triangly whiplashly thing possible. The bull is wounded but not dead. It has resulted in confused markets as the bull wobbles around. But the EW rules still apply. It just takes a different slant on what to choose as the top model. TVIX also has a few very interesting aspect which played a big part in the decisions so check out the high level chart below.
All of the history of a chart has to be considered. This chart has been doing 3 wave moves for some time now which is indicative of internal triangle moves. But back at the start of April there was a major break down and then a back test from below (left most blue circle) that failed at the confluence of two major resistance lines. It got smacked down to a higher low (inclining double bottom) and then on the way back up it again paused at that resistance (blue circle second from left). The it peaked at what I have labeled as wave 3 below. Importantly IMO, those peaks point higher and higher and higher. While not part of EW rules and not part of any other TA I ever studied, I have observed that these peaks are often an arrow pointing to an eventual higher high. Even if they peak and then crash like TVIX did into what I labeled wave 4, that pointer is still valid and it increases the confidence that wave will eventually go higher.
Another point is that from the recent bottom @$6.30 I see 3 waves up into 1. Then 3 waves down into 2. Then 3 waves into 3 where that long, nearly horizontal support/resistance pivot line that began back in January seems to have been the divider between the A and the C wave. Then the same thing back down into today's close, also looking much more like a 3 wave move than a 5 wave move. The reason I waited until the close today is so that 5 of C could play out and it certainly did there at the end.
Zooming in to just show the month of April, here is more detail on how I think it could play out. In order of likelihood that I think they will occur:
If instead it takes the blue path then I will probably sell speculatively and take the profits at the center line. If it subsequently breaks out past the centerline I can always buy back in.
The green strategy is least likely but I will know that it has been chosen if the center line is broken out by a 3rd wave. In this case, I will be looking for significant resistance at $7.70 - $7.80. That would form a declining double top that would predict lower prices. However, if it breaks to a new high ($7.87 or more), expect it to go all the way to the top of the up-sloping orange line and then throw over before coming back down.
First, I've flipped over into "end game" mode. By that, I mean that I expect every tricky triangly whiplashly thing possible. The bull is wounded but not dead. It has resulted in confused markets as the bull wobbles around. But the EW rules still apply. It just takes a different slant on what to choose as the top model. TVIX also has a few very interesting aspect which played a big part in the decisions so check out the high level chart below.
All of the history of a chart has to be considered. This chart has been doing 3 wave moves for some time now which is indicative of internal triangle moves. But back at the start of April there was a major break down and then a back test from below (left most blue circle) that failed at the confluence of two major resistance lines. It got smacked down to a higher low (inclining double bottom) and then on the way back up it again paused at that resistance (blue circle second from left). The it peaked at what I have labeled as wave 3 below. Importantly IMO, those peaks point higher and higher and higher. While not part of EW rules and not part of any other TA I ever studied, I have observed that these peaks are often an arrow pointing to an eventual higher high. Even if they peak and then crash like TVIX did into what I labeled wave 4, that pointer is still valid and it increases the confidence that wave will eventually go higher.
Another point is that from the recent bottom @$6.30 I see 3 waves up into 1. Then 3 waves down into 2. Then 3 waves into 3 where that long, nearly horizontal support/resistance pivot line that began back in January seems to have been the divider between the A and the C wave. Then the same thing back down into today's close, also looking much more like a 3 wave move than a 5 wave move. The reason I waited until the close today is so that 5 of C could play out and it certainly did there at the end.
Zooming in to just show the month of April, here is more detail on how I think it could play out. In order of likelihood that I think they will occur:
- Blue
- Red
- Green
If instead it takes the blue path then I will probably sell speculatively and take the profits at the center line. If it subsequently breaks out past the centerline I can always buy back in.
The green strategy is least likely but I will know that it has been chosen if the center line is broken out by a 3rd wave. In this case, I will be looking for significant resistance at $7.70 - $7.80. That would form a declining double top that would predict lower prices. However, if it breaks to a new high ($7.87 or more), expect it to go all the way to the top of the up-sloping orange line and then throw over before coming back down.
Tuesday, April 15, 2014
Miners model from the short side.
In this post from earlier today I showed how miners ETFs had broken down and now I model a decline that likely finishes off their ending diagonal. Once that ending diagonal is complete, I think the entire metals bear since 2009 could likely be complete as well. In any case, I plan to continue playing metals long and short based on waves. This is part of the reason I don't care about the day to day moves of the price of metals relative to my physical holdings. I have a long time before I retire and no matter what the prices do today, it will have a much higher dollar value in the future. I hope physical gold goes back to $250 per Ozt. It would be nice to add to my stack at much lower prices. I'm not predicting that it will go that low but I'm not saying it won't either. I am saying I don't care. If gold is at $250 in a massive deflationary depression then gasoline will be $1/gallon again. It's all relative.
In any case it should be easy to figure out the short side of the miners chart but here it is anyhow. Go in with a plan based on wave count. Pick entry points that will allow you to determine whether or not your model is correct without losing much money (tight triggers). Set the stops accordingly. I am going to try to catch a piece of JDST tomorrow (5 waves up)and then flip to JNUG for that 2nd wave down (a-b-c/5-3-5). That 3rd wave up in JDST should be very financially entertaining. Look how 3 of 1 of C had a gap. I can only imagine what the gap in 3 of 3 of C will look like but typically if the 1st wave has a 3rd wave gap then the gap in the 3rd wave will be larger. 3rd waves generally don't like to be outdone...
In any case it should be easy to figure out the short side of the miners chart but here it is anyhow. Go in with a plan based on wave count. Pick entry points that will allow you to determine whether or not your model is correct without losing much money (tight triggers). Set the stops accordingly. I am going to try to catch a piece of JDST tomorrow (5 waves up)and then flip to JNUG for that 2nd wave down (a-b-c/5-3-5). That 3rd wave up in JDST should be very financially entertaining. Look how 3 of 1 of C had a gap. I can only imagine what the gap in 3 of 3 of C will look like but typically if the 1st wave has a 3rd wave gap then the gap in the 3rd wave will be larger. 3rd waves generally don't like to be outdone...
M+M took a hit today and got rid of the confusion people are talking about with their charts.
I took the day off from trading today in order to sleep in given the level of uncertainty I was having over the very short term and when I got up I saw the technical damage that had been done to metals and miners. It was pretty big blow. Despite my earlier post that suspected the triangle would be a head fake, it is now increasingly looking like an a-b has formed. That is not going to be bullish in any way for metals and miners. As usual there are a couple of ways it can play out but my primary count says we take 5 more heavy waves down on GDX, GDXJ, and JNUG as well as SLV and GLD too before any kind of a bottom is in place. No worries, trading the decline is just fine with me.
If this model holds, the safe way to play is to wait to see if the 5th small wave down occurs on GDX. If so then what should follow is an a-b-c, probably back up to kiss the orange horizontal line from below. Then a massive wave 3 of C of 5 should just beat the living snot out of any gold lovers and then a 4th and finally a 5th (after which the entire sector becomes a screaming, flaming, don't over think it buy).
The best case scenario for new money coming into this game would be to finish the 5 wave ending diagonal that I first warned about back in this post. While I know that metals and miners are going to be a big winner in the long run, I don't fight the waves. This move down was anything but a surprise; I always knew about the potential for it. Now the waves have spoken loudly.
Upon seeing this I wondered what the dollar was doing. You know, that worthless piece of green paper that everyone would kill their mother for. It always amazes me how people haven't figured out the scam of fiat currency yet but the will become quite aware of it in the next five years, if that long. In any case, the dollar chart is seen below and it looks to be very near the completion of a significant ending diagonal. The fundamentals behind a dollar rise here are simple: credit deflation. Most global debts are dollar denominated and as they default (or are repaid), it effectively deflates the money supply no matter what Yellen does. Unless she can pass a law against defaulting, the deflation will come. Credit is 10-15x the size of the monetary base. Of course, if Congress keeps giving out free Obama Bucks to everyone that doesn't really want to work then sooner or later deflation will be overcome and then we will switch over to hyperinflation in which the dollar finally dies. But first we will see a good deal more deflation before the great inflation comes.
If this model holds, the safe way to play is to wait to see if the 5th small wave down occurs on GDX. If so then what should follow is an a-b-c, probably back up to kiss the orange horizontal line from below. Then a massive wave 3 of C of 5 should just beat the living snot out of any gold lovers and then a 4th and finally a 5th (after which the entire sector becomes a screaming, flaming, don't over think it buy).
The best case scenario for new money coming into this game would be to finish the 5 wave ending diagonal that I first warned about back in this post. While I know that metals and miners are going to be a big winner in the long run, I don't fight the waves. This move down was anything but a surprise; I always knew about the potential for it. Now the waves have spoken loudly.
Upon seeing this I wondered what the dollar was doing. You know, that worthless piece of green paper that everyone would kill their mother for. It always amazes me how people haven't figured out the scam of fiat currency yet but the will become quite aware of it in the next five years, if that long. In any case, the dollar chart is seen below and it looks to be very near the completion of a significant ending diagonal. The fundamentals behind a dollar rise here are simple: credit deflation. Most global debts are dollar denominated and as they default (or are repaid), it effectively deflates the money supply no matter what Yellen does. Unless she can pass a law against defaulting, the deflation will come. Credit is 10-15x the size of the monetary base. Of course, if Congress keeps giving out free Obama Bucks to everyone that doesn't really want to work then sooner or later deflation will be overcome and then we will switch over to hyperinflation in which the dollar finally dies. But first we will see a good deal more deflation before the great inflation comes.
