Tuesday, March 31, 2015

[JDST] update

Regardless of missing chart data that showed up a day late, at first blush the first model at the backlink ended up being essentially correct.  Here is that model:

Just keeping things at a very high level, the chart below seems reasonable.

But when I zoom way in, the confidence level in this view drops quite seriously.  Most notable is that very first wave which, from a high level, looks like a slam dunk small motive.  But in the count below I had to put blue 2 as shown lest blue 4 overlap with blue 1.  Well, that change ripples through the count to product the one shown below.  To be honest, I do not know which will be correct.  But the nod has to go to the JDST chart below until we get more data to work with.  This is very subtle trickiness which I almost glossed over before.

Note: it could also be that green 5 is really only w3 of 5 so if we get a small head fake up at the open tomorrow, be careful because this thing likely needs to retrace to green 4 at least before heading up much higher.

Bottom line, the JDST count below is now my primary count.  If this is correct, JDST should move quickly down past green 4 as JNUG will be in wave 3 up.

[JNUG] update

The model at the backlink was broken today.  New model is below.  There are actually two ways I can read this chart so there is a bit of uncertainty over the longer term.  I could read it as 5 down OR that the big triangle of Friday the 27th was a B wave which bisected the A and C waves.  Since we have a pretty clear 4th wave HT which finished around noon and then sold off into the afternoon with 5 waves down which looks like the end of red C.  Then we had what appeared to be 5 small waves back up right into the close which took back most of the loss on the day.  The chart hit resistance at the horizontal which was the tip of W3 so I think that is 1 up.  Thus I expect a small pullback as shown and then at least the red and more likely the green or blue paths.

So I do not yet see compelling evidence that the big JNUG reversal has occurred.

Since metals prices drive the miners, and since silver is the most volatile of the metals, here is the SLV count.  It could have just finished an expanding wedge by stopping mid channel on the E wave as shown.   This model expects an AM move up for metals tomorrow as well but the question will be whether it has the force to break out of the top rail (thus making it likely the early stages of a 3rd wave up) OR whether it remains a 3 wave move which then halts at resistance thus forming a DDT and then heading south again per the red path.

I usually have a pretty strong feeling on which path will be taken but I see energy on either side of the equation or, perhaps said just as correctly, no conviction on either side.  It still looks like volatility to me, the herd waiting in a holding pattern for a sign of some sort.  bottom line, I'm holding JNUG overnight but will get stopped out easily if SLV cannot break out with some kind of conviction tomorrow AM.  By this I mean I will keep bumping my stops up as JNUG rises and then probably sell at market when it kisses that top rail and then only buy back if it can break out that rail.  What would be nice would be a gap up above that rail at the open.  That would be a clear short term hold signal for JNUG.

Feds go after Lynn Tilton for stuff they know she has been doing since 2003...

Today's little slap in the face of liberals is the news that Lynn Tilton, outspoken and "flamboyant" investment magnate, has been charged with fraud by the formerly toothless and sleeping SEC.  She is accused of "concealing" poor performance (AKA lying to her clients/cooking the financial statements) of high risk loans.  The article says that she has been doing this since 2003 and that such behavior has resulted in "wrongly collection" of $200 mn.  I think this is the end of Lynn Tilton's money management career.

Inquiring minds should be wondering why the SEC finally decided to go after her only now?  Why not 10 years ago when the behavior first started?  Why are all these skeletons being dragged out of the closet not just for Tilton but for many who once thought they were untouchable?

Oh yeah, the article makes a point out of telling us that she is 55 years old as if that has any bearing on the news...

Missing data from last post [JDST]

At the backlink I showed the model below along with the commentary "as you can see from the red horizontal, a higher high was made than green 5 so this is not likely the peak".

I checked again just now and got the following chart.  As you can see, that little gap of missing critical data now appears.  Of all the data they could have chosen to withhold, that piece that they did withhold was the only one that mattered in determining whether to hold over night or not.  Coincidence?  Whatever.  How come coincidences never seem to happen in my favor?

In any case, the top model is now that JDST formed a WC which suggests that JNUG could be entering a 3rd wave up right now.

Monday, March 30, 2015

[JNUG] [JDST] update

First JDST.  In the most recent post I suggested that wave 3 might be in progress due to a 5% move up during pretrade.  It actually rose 10.29% by the close so I think that is good evidence that it was 3 or C.  More evidence of this is how it gapped above the center tine of Andrew's pitchfork as shown in the first chart below.  That was not an accident, the herd knows that support/resistance line is there.  It's like a line in the sand that it either comes up against and is repelled from like an invisible electric fence or jumps over like a child jumping cracks in a sidewalk.

Zooming in, here is the wx-centric count which most EWers will not understand since it is proprietary to me.  In short, we had a w3 that could have been wc (and thus reversal imminent) but as you can see from the red horizontal, a higher high was made than green 5 so this is not likely the peak.  What would not surprise me at this point would be a 4th wave HT as shown.  IFF this occurs, the near term peak should be at around $12.90 or $13 ish as shown and that would be A of E of 4 of the large 4th wave HT that I first suggested could be forming back on March 24th.

IFF this instead turns down and breaks below the top blue rail shown below BEFORE tracing out a clear 4th and 5th then the odds increase that the top is in.  I did not draw that path in but it could easily become the top model based on tomorrow's action in metals.  For the record I will say that silver has retraced 38.2% of its recent move and so this would be a fine place for metals to turn back up hard if that's what they are going to do.  Tomorrow will probably let us know if this is A of E of 4 or if another, more JNUG bullish pattern is forming.

New readers (and there are many of you judging from my exponentially rising page hit count), please note that the above model does not have to play out!  It's just a model.  It's nothing more than a safari guide telling those on safari that the herd often moves in a certain way throughout the day.  The science part of it is that the herd has to move.  The herd cannot stay by the watering hole all day because the food there has already all been eaten.  The herd has to go to pasture at some point.  Also, the herd cannot bed down in the pasture at night or it will be easy prey for the lions.  So it has to head to the bedding grounds at night. 

The artsy part of it is the observation of the very small things which give clues and thus increase odds of making this determination or that about what will happen next.  The value of the written model is that it allows us to compare what is happening in real time to the model.  Reality will either resemble the model or it won't.  If it does, you hold your position and then you have a good idea where to sell.  If it violates the model, you sell for a very small loss while giving more clues about what is likely to happen next.  In this way having the model is deterministic and thus mechanical.  Thus it allows the intelligent use of stop loss orders so that you don't have to sit in front of the screen.  It's always going to be a form of gambling though because that is the nature of the stock market and you will never change that.

In any case, here is the JNUG backlink with model chart below.  This was from Monday AM.

With the benefit of an end of day snapshot and higher level of abstraction (60 minute), we could be seeing an inclining double bottom here.  Of course it could always go lower and if you look at the pointers circled in red they suggest a trip all the way back to the 84.1% fib is possible.

I'm pretty sure that something a bit unusual will turn out to be the case with this chart when looking back in the future.  That whole move from the 11th to the 25th was not a normal motive wave IMO.  It looks more like a rising wedge.  So I guess we should expect the market to be very tricky near a major turn but this 61.8 fib is about as low as I like to see a normal retracement happen.  So if we can catch a small bid at the open tomorrow I will buy the first dip and then put my stop below today's low of $16.85.  I caught most of the rise up into the peak and missed pretty much all of the downside since then so if I have to give up a little on a stop loss here then that is just the price of gambling.

If this does not catch a bid at the open then we can still count it as red 5 and blue 3 or C if it drops to the 70.7.  All you can do in this situation is buy a dip and then use stops just below the buy point.

[INTC] update

At the backlink I provided this model:

Here's the recent snapshot whicheven completed the little final spike down into blue 5 that I modeled would happen and since has bounced to $33 for a microsecond (i.e. enough to satisfy the EWP requirements but not enough for anyone to actually sell anything at the $33 price point) in what is so far a 3 wave movement.  In fact, it is much more than a 3 wave movement as this chart includes extended trade (read low volume) transactions. This is why the vertical is double wide, there is more than one stroke in there.  But for now I think it likely aggregates into an a-b-c to about the level of the 38.2 fib.

If this model continues to be right then a trap door is about to open up underneath Intel shares.   If Intel down drafts like that, and I believe that they will, the broader markets will not just ignore it.  If Intel is hurting, the consumer is likely clamming up and it will not be long before recession begins.

I want to say for the record that the stock market is emotionless.  During the boom, it just kept going up and up and up to an almost sickening degree given the PE expansions, margin debt expansion, share buybacks not only using cash but also in many cases, using debt, all fueled by the idea that the Wizard of Ozt actually controls the economy.  Folks, I cannot say it any more clearly: a con looks real until it doesn't and then everyone wonders how they were ever fooled by it in the first place.   When this scam lets loose to the down side it is going to be sickening in a negative sense.  It will just keep falling and falling and the more someone says the bottom is in the harder it will fall.

Some will say they never saw it coming, others will say they saw some signs but ignored them, others will be very loud and liberal and shouting for the Fed to save us again (Krugman et al.) but none of it will change anything.  As exuberant things seemed to the upside, so will they seem dismal, depressed and hopeless to the downside when the recession turns into a depression and everyone thinks hope is lost.  Reversion to the mean is going to be very, very mean.

This will be the time to be on your guard against government USING the opportunity to wage war which is always viewed as economic stimulus for the monied elite.

[WHZ] update

At the backlink I had high hopes for WHZ but pretty much zero tolerance for holding it if the key support level did not hold (and it didn't).  I provided the chart below with the following unedited commentary:

...stop out at anything below the 38.2 fib. ...

The thinking was that the gap above the 38.2 would either be a breakout or a head fake so buy the breakout but then sell if the key support level could not hold.  Again, it did not hold so that model went bust and EWers reading and heeding my blog would have avoided any real loss at all.

Fast forward to today.  I think it is nearly time to buy in this region (probably at the close today) and then look for, at least, a 3 wave move to the level of the prior 4th.  If I'm wrong about thinking this is 1 of 5, the chart will blow past the prior 4th.  But if I'm right we should see 3 small wave that would tell us to bail out because following that we should expect to see a big gap down into 3 of 5.

Of course, if this happens in WHZ then expect something similar in USO.

[UVXY] update

At the backlink I clearly modeled a dip in UVXY of the nature that we have since received.  He is the chart from that link.

Note we are now in the target range for re-entry of this trade.  The count could be per above where we are getting close the the bottom of the 5th wave or it could also be viewed as the red count below and I suspect that the chart will leave it ambiguous as it often does at major turns.  So while I think an inclining double bottom is very possible, it could also make a slightly lower low to perhaps the $13.60-$13.80 range.

Either way, the way I see it right now there is an 80% chance that we see $20 or higher within 2 trading weeks and there is a 20% chance that blue 5 below was really just 1 of 5 and red 1 below was really just 2 of 5.  In that case this could go all the way down to $10 before finding the real bottom.  But again, I see that as low odds and, importantly, as long as the chart does not make a lower low than blue 5 then the odds still favor the 80% scenario.  If, however, the chart goes below blue 5 then I would lower the odds to 70/30 and begin to look at it very carefully because we could, in that case, still be working on 3 of 5 down.  So one prudent trade would be to buy here at $14.25 and then stop out 1 penny below blue 5.  Then go about your day and let the market do all the work while you do something else with little risk.

[JNUG] has now pulled back to the 61.8 fib

The current move down is likely either a w3 which will soon bounce up to perhaps the 50 fib and kiss it from below OR it is the full pullback from $23.   Conventional wisdom count is that the wave up from March 11th was wave 1 up.  If that is correct then this pullback to exactly the 61.8 could be the a-b-c pullback which will lead to higher highs.

Nobody knows the future and I am now tracking both potentially bullish and potentially bearish models for JNUG.  The key for me right now is the formation of this falling wedge which happens to be exactly at the 61.8% fib.  So I bought JNUG speculatively at $17.05 and will hope for at least a buck of a bounce from here regardless of whether there is more southing to be done before the real bottom is in; it's unlikely to go straight down.  Note that the 38.2 fib bounce of the 10 minute model (lowest chart of this post) starting from the top of the b wave would be to ~$19 and that would also fill the gap.

So, when the bounce comes I will determine if it is a small scale a-b-c or whether it has legs and that will give me more clues as to whether I dump for a small profit or I average up if this breaks out of the 50 fib in 5 waves.

I'll say it again because I know it is so easy to forget: drive for show, putt for dough. In other words, it's all good and fine to have a top level model that attempts to predict things a few days, weeks, months or years in advance but I make most of my money and avoid most of the risk by watching the intraday moves like this one and then moving only when there is a high odds setup like this one appears to be.   I'm not saying this won't eventually go lower; I don't know if it will or not and neither does anyone else.  But I do think some kind of bounce is likely here and it could either be a 3 wave small one or something much much bigger.

Zooming in a bit, here is a good shot of what looks like a potential WC

[JDST] 3 or C is likely in progress [JNUG]

In the very early pretrade, JDST is up 5%.   That gap up has to be part of a 3rd wave.  In the backlink I indicated that I didn't count 5 full waves up yet.  That was based on not using the extended trading data in the count.  In hindsight I should have used the extended trading data for such a near term wave count.  Below is what the chart looks like with the extended trade data through Friday.  As you can see, with extended data enabled, the low of the 26th is lower than that of the 25th and thus Thursday was 5 waves up and Friday was a-b-c back down to wave two and then 1 and 2 of wave 3 up.  The AM gap today should be 3 of 3.  So I will wait for that to play out and then buy the a-b-c pullback into wave 4 and then ride wave 5 up into the $12.75-$13 range.  That's when this should get interesting because that is when we get a new odds reading on how JDST will finish out its 4th wave HT's E wave.

IF JDST breaks that top rail shown in the backlinks in an a-b-c fashion and then comes back down into the 4th wave HT channel, the odds will be very significantly with those who buy JNUG with both hands at that point. 

Sunday, March 29, 2015

The one thing that bothers me about [COPX]

In the backlink I provided a count that seemed like it could end at $5.50.  Over the weekend I studied the COPX chart a bit more and what worries me about my count is the way way this peaked recently.

As you can see from the extreme zoom in below, this thinly traded ETF did not begin its decline with an obvious motive wave down.  In fact, it could easily be counted as 3-3 and then still working on the next wave.  I don't know quite what to make of it anymore and so I want to be on record as having low conviction in a 5.50 price target.  If this is corrective it could fill the gap and then reverse. So that is what we should be looking at here - strong support on the gap fill - as a big hint as to what is likely  going to occur next.

Of course, nobody knows the  future, it's all just a matter of odds, blah blah you've read it a million times now blah.

Conservative surge in French exit polls.

Today the Firefox BBC news plugin flashed this interesting teaser:

The corresponding article strongly suggests a change is neigh for management of liberal central (AKA France).  Socialism has provided too many "rights" to the consumers of that country, all at the expense of the producers.  As a result, the producers have gotten overwhelmed and beaten down with liberal socialist policies, laws and public sentiment.

Many producers in France are tired of this.  The Farmers have been protesting artificially low prices for milk and other produce for a long time now.  The bureaucratic parasites have completely infested that country and the people there have two and only two choices: get rid of them or eventually collapse.

Of course, the herd doesn't change direction without some impetus and the fact is that France is already in a notable decline.  Some kind of major collapse is already baked into the French cake.  I still remember the days when people would talk about the power players in Europe as being "Germany and France".  But this stopped about 1.5-2 years ago.  Now it's all Germany this, Germany that.  France is no longer even an honorable mention in the power pyramid.  This is all the sign that you need to know in assessing the real decline of France and it is a lot worse than meets the eye.

Before the collapse of the Global Debt Ponzi, a term which I have always loved because of the associated acronym "GDP", people will not be talking about PIIGS as much as they will be talking about the creditors to PIIGS.  In other words, France and Germany, in that order, will also swirl the bowl.  They "sold" things to PIIGS who cannot repay.  What cannot happen will not happen and when the PIIGS default, which they eventually must, France and Germany will finally be understood for what they really are which is the key operators of the European vendor finance scam.  All that stuff they "sold" to deadbeats was never really sold.  It was given to the consumers of other countries so that French and German oligarchs could claim they were industrial geniuses and thus deserving of billions in personal wealth.

Now here is wisdom for those who can think:  Those oligarchs did not build the stuff that was "sold" to the PIIGS.  It was the French and German people who did the work.  Generally when you work to build something you should get the benefit of it and when you don't then something is very wrong.  The net effect is to swindle you out of your labor which is a form of slavery.

French and German workers did not receive the products they built.  Those products were shipped to people in other countries while the French and German corporations received IOUs (called Euros) in return. 
  •  Update: Thinking people will want to know this: how did those foreigners actually end up with the products?  By what mechanism were they not only not consumed by those who produced them locally but in fact made even more expensive by the act of having to export them?  The answer is simple: manufacturers wanted to charge high prices but the German and French people could not pay the asking price.  So cheap credit was offered to deadbeat PIIGS and of course at that point no price was too high to ask - there would always be someone who would borrow the money to acquire the goods because the "buyers" never had any ability or intention to repay.  This chased the prices of these German and French goods up and kept them out of the hands of locals who would not go into massive debt in order to afford them.  This is the scam of a fractionally reserved money supply.  It allows the economically dead to vote on the market price of goods and services not just at par with the economically living but in fact to have a much larger say in the matter.  In this way it is no different than political socialism and in fact the two concepts are highly related and in fact mutually required.
 These corporations ran up big debts creating even more production capacity to serve foreign customers who could only consume using debt.  Now they are in debt to the gills and cannot afford to service the existing debt, much less take on new debt.  At some point this will be realized as a massive reduction in consumption which will kill the corporations which grew up on the backs of this artificially enabled consumption.  That is when the oligarchs of Germany and France will have the massive layoffs of their workers and then themselves eventually default on the loans that financed all that foreign consumption.  The governments of France and Germany will then bail out the banks which loaned all this money.  So the people of France and Germany will not receive the products but they will eventually end up paying the bill.  Payments of this magnitude are never made in real money but rather in blood and terror.  There will be wars to settle who owes what while the corrupt banking elite laugh at the sheeple for not figuring it all out.

This is at least how the elite all hope it will work out.  They hope that they can distract people with wars against a trumped up enemy so that the people will mindlessly follow in the name of security.  But wars are liberal in nature and true conservatism will reject them.  I sense a global wave of conservatism underway and so I have some hope that the people will not fall into the same traps as have worked so many times before.  Remember folks, every motive wave, after 5 waves up, has at least 3 corrective waves.  And when the correction begins, it is sometimes very difficult to tell if it is a correction or a major trend reversal.  They typical thinking is to assume it is only a pause in a larger trend but the more people who believe this is the case, the more likely that it is actually a reversal.  I am seeing early signs of a serious trend reversal in global liberalism and so I have hope that instead of being tricked into wars with other people that the people will instead begin a war on their own liberal leaders.

The recent headlines from France support this emerging new perspective.
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