EWI changes wave count to match mine (and other important stuff).

Since the horse has now left the barn, EWI's STU changed its count today to reflect that the ending diagonal was actually the 3rd wave which is what I suspected back in posts such as this one on the matter.  I followed that up with several posts indicating that the pullback looked like an a-b-c retracement and that the recent move up looked decidedly motive.  I warned people in a "hyper-critical trading alert" that crossing back up into the channel should be viewed as a critical breakout event which shorts should not ignore and that such an event would cause me to reclassify the current wave as the real 5th.

I did hold out hope that it would be a short stroke 5th for the DJIA thus leading to the potential for a Dow Theory sell signal on the next big wave down.  However hope is not a plan and it never was intended to be one.  Today the DJIA closed marginally higher than the Sept 19th high and so did $COMPX even though the S+P 500 just missed the mark and the NYSE composite ($NYA.X) actually only made it to the 78.6 fib.  Keep in mind that $NYA.X actually began its breakdown a couple weeks before the major indices.  I believe that $NYA.X is ahead of the major indices by an entire wave.  $NYA.X experienced wave 1 down and the recent bounce was really just wave 2 back up.  It's next wave down will be a wild ride because unlike the DJIA and $COMPX, it will be a 3rd wave down.

One of the most important charts you will ever see is presented below IMO because it will tell you when the great stock market crash of 2014-2015 has officially begun.  Look how $COMPX gapped up today above both of the ending diagonal rails and it did it right at the vertex of the triangle.  I model that confluence of trend lines to now be critical support.  You can just sit on the sidelines until that support gets broken and then buy into TVIX for rapid gains because breaking back down through it will VERY likely signify that the market has stepped into an elevator shaft.  Nothing is of course guaranteed but this is really one of the highest confidence models that I have ever presented. 

To be safe, if $COMPX falls below that vertex and then stops falling at ~4525 and subsequently re-takes that point then get out of TVIX because it will likely mean that this wave that just played out was possibly just 1 of 5.  I do not see that to be likely at all, especially given the telltale state of $NYA.X already likely being into wave 2.  But never say never and always have triggers. 

Here is the big count for $COMPX as I see it.  Expect more upward action to be likely into next week before some "unexpected event" hits the news which sends the herd southward.  Maybe it will take up to 2 weeks but I think not more.

So, bottom line, sell TVIX above the vertex and buy it back below.  Once the collapse begins it will have to be strong enough to shock Yellen into questioning her cut-off of the QE.  It is possible that she will do this if stocks peak in the next 2 weeks and then reverse into a free fall wave 1 down.  Remember, we can still have a 2nd wave vee after 1 is complete because we have not even begun wave 1 down yet.  But if that happens then I model it to not be as strong as what we just observed and it will eventually result in a lower high no matter if the bat faced disposable fed turns QE back on or not. 

I personally believe that the market's "taper tantrum" will not only test her (as I indicated several times in these pages that she must face her 6 month test soon), it will likely force her to reconsider the shutdown of QE.  In other words, she will be so afraid of the stampede that she will try to signal that she will reinstate QE.

But this is where things will go completely south on her because interest rates will begin to skyrocket and she will completely lose control of the bond market.  So it will become a choice of saving the economy or saving the government's ability to attract creditors at low rates and she will choose the government because there really is no fed independence.  As a result, she will have to back down from her QE(infinity) hopes, just like all the other liberals I have been reporting on have had to back down on their recent oversteps.  It is all related folks, there will be no decoupling in this matter. That is the socionomic aspect of it but Greenspan himself gives us the fundamentals behind why this will happen and the details are in this article in the form of two passages found therein. 

The first is a quote from "The Maestro" which is short and sweet and to the point: The Federal Reserve is sitting on "a pile of tinder.".  Well, if the fed is supposed to engender confidence, let me tell ya, I'm not feeling it from Greeny.  It's almost like he's trying to create a controlled burn with these types of comments.  I mean, when one of the most respected fed chairs says something like that, who can have confidence that the fed has any tricks left up its sleeve??

The second is just as revealing: "Politically... Fed independence ... will continue to be, the subject of one-sided political pressure, thereby significantly limiting the FOMC's range of discretion. In the early 1990s, for example, Senator Paul Sarbanes proposed legislation to remove FOMC voting power from the admittedly hawkish presidents of reserve banks. And earlier, during the years 1980-1983 when the Federal Reserve was acting to reign in an explosive inflationary imbalance, then-Chairman Paul Volcker was under severe attack. If it weren't for the support of President Reagan, anti-independence legislation would certainly have been forthcoming."

Greeny is warning us that as soon as the fed outlives its usefulness to the con men running the show, CONgress will take over the money supply as Japan's Abe did.  At that point, get the fuck out of the dollar because CONgress will use it to buy votes in a way never done before and CONfidence will be lost in the green paper, forever. 

So first we have to have a 9-11 style collapse of the banking / debt system and this will be massive deflation.  Then government will eventually massively inflate or even hyperinflate the currency.  These things are coming because they have been baked into the pie a long time ago.  When I realized this years ago I even gave it the name "supernova economy" to account for the collapse and then the massive expansion of inflation, most of which will simply be caused by people giving up on the already inherently worthless dollar.  Now you know why my life savings is in gold and silver coins even though I know that there is presently a strong model which suggests that gold could deflate to $750 before the massive inflation begins.  Models are just models!  But gold and silver coins are not models or fiction or dreams.  They are money because society has always said that they are money across civilizations and through out time.   By choosing to own them, I refuse to comply with the government's pump and dump plan to leave me penniless in my old age!