Like most of the major equities Indices are in very bullish mode since 2009 low and it seems nothing could go wrong. All the "Fundamentals" point to many profitable years ahead.
In fact I have hear a presentation from notable commentator suggesting 2009 will is a generational low ie will not be revisited ever in his life time. I think he is in his fifties. He has shown many charts in his presentation boasting over 30 years of real life experience in the technical analysis of financial markets. Therefore many stock that are languishing at 50% of the retracement of the 2000 high to 2009 low are heading to retest their all times high.
If he is correct about these retesting their all time high, then I think they are running short of time.
From my chart you can see that we are only couple of months away fro forming truly forming a generational "TOP" that really is unlikely to be retested for more than generation. In fact we might spend another 15 years or so cascading down before forming a lasting low at a level likely below 2009 low.
So the wind will change may be by Early Sept to late October with SP500 hitting 2000 zone and could spike into 2030 area.
Could the end of Tapering and prospect of rising interest rate be the catalyst? I wonder.
I have posted the following comment only because your prognostication is calling for a > 3 standard deviation move relative to a 15 year measurement. This is an extreme outlier series of events. A linear scale distorts the magnitude of the price moves over this length of time. Markets may move in a linear progression in the short term, however they do not on longer time frames. Most CMT's as well as the NY Institute of Finance CMT program advocate using (semi) log scaling. Can you please explain to those tuning in here exactly what a RSI is, why it is relevant here, how it is calculated and its weaknesses? You seem to be using it as a tool and a confirmation of your analysis. This would be important to the members that are new to this site and investing in general. I urge all to understand what is posted here are opinions not necessarily facts. These opinions could play out as forecasted or not.
DanV
⋅
Almost a week since publishing this chart. Whilst, there are many fundamental arguments for the market to continue higher which you all know well, I am asking of 2000 is the barrier proving to be the major top. As an update on the chart I have zoomed in enough to give you a look at the entire last wave up, but still show the internal counts in details and it seem to me we have possibly complete final 5 waves of this rally which mean we should or have already started the anticipated decline which should provide additional evidence as it unfolds. Here is the chart.
dionvuletich
⋅
I agree with your analysis but am not sure the first decline will be shallow... 2000 and 2007 had sharp drops followed by sharp rises possibly to make a new high (divergent) do you agree with the idea that this is possibly still a large expanded B wave in a long term 3 or double 3 pattern - similar to 1970's secular bear market (we are definitely in a secular bear market since 2000 - fed tinkered bear market, but still a bear market) I am already preparing to short and short nasdaq right now and dax...
DanV
⋅
Well like many I had been viewing this as possible wave B from 2007 and in some correlated charts that might still be the case. However, as I was preparing to publish the above chart, I had examined FTSE100 (UK Index), DAX, SP500, DJI, Dow Transport and few others. I am of the opinion that wave B likely hood at least in nominal term is now far stretched and would be called into question if we have any more upside. Therefore, my conclusion is that we have Sept 2011 as low for triangle wave 4 and since then it shows perfect wave 5 consisting of rising wedge 3-3-3-3-3 and which is very close to or has completed. SP500 touching 2000 I think is the prime example of major top at round number with all counts almost complete at several Fib projections and extensions. So whilst sharp leg down as you describe is not completely out of question but I think we are more likely to have larger abc zigzag down at leat to retest 20019 low or make lower low. Hope this helps.
dionvuletich
⋅
Yes, I agree... the SP500 looks like it just completed a 5th wave ending diagonal in my view with a throw-over to boot - which makes it even better... I am looking to short that as well... on a rally...
I am not an elliott guy - and only understand the basics (up to flats, 3's triple 3's etc) and I don't use elliott wave for trading... so excuse my bad terminology but I guess the question is from a longer term perspective, do you think we are in the end of a wave three or a the end of a wave B?
I believe the rally from 2009 looks corrective, due to deep pullbacks, low volume and lack of fundamental support (conflicting data) and suspect the rally is the end point of a Wave B flat or expanding triangle similar to 1973 on a log chart that will lead to either a longer term double or triple tree with a triple 3 triangle more likely... till we get rid of excesses and let the market normalise?
My trades are not looking for gigantic targets right now and only back to channel supports, but if it drops hard and rallies to new highs I will be scouring to look for open ended profit targets to the downside and building a longer term short position
If it goes lower than 2009 I would be a very happy camper... =)
btw ftse is at long term resistance in giant triangle (quarterly chart)
dionvuletich
⋅
btw I am struggling with your vie re the 2011 low being the low of a triangle..? first time I have heard of it being used in that manner... from what I can see the 2011 high to low is an A-B or 1-2..?? can you explain? (purely out of interest)
DanV
⋅
In wave 4, Wave B or Wave "X" you can have what is know as contracting triangle with each swing made up of 3 minor swings known as 3-3-3-3-3. So this would assume that 2000 top was larger degree wave 3 and then abcde triangle having low in 2011 from when the final 5th leg commenced. This is coincidently a rising wedge in many indices some very clear ans in others not so but nevertheless noticeable. Hope this helps.
dionvuletich
⋅
I agree, that is possible... I would think a rising wedge on a quarterly chart scale is very unlikely, (although i just traded one 8hrs ago on euraud) with other analysis tools...
FTSE is the only long term chart I think fits a contracting triangle formation reasonably well, I believe it would be a stretch to call them ending diagonals/ contracting wedge - whatever it is termed... just yet, on teh DOW it is a near perfect Expanding triangle from 2000, on the SP500 it appears to be extended, but still looks like a 3 wave advance so far which is either corrective or impulsive and the Nasdaq is forming a bearish gartley on the quarterly chart right at the 78.6%
I am currently short the DAX and Nasdaq as I mentioned above, but am not ruling out another rally to new highs, and as I mentioned above the first pullback is often sharp following by a 3 wave advance to new highs..
If it did that I would absolutely love to short it again and it could be the start of the macro decline you mention or possibly lead to a wave 4 decline which is still going to be a large % move
Either way, i appreciate your post and totally agree with the charts above, just not necessarily the wedge concept - yet...
DanV
⋅
Thanks for your comments. We will let the price action unfold what is in store.
johnrfraser
⋅
Hi Danv, David Alcindor recommended you as an EW expert for your opinion on wave structure in BTC, where we're at in terms of 1s, 2s, 3s, As, bs and Cs and so on, so I thought I'd drop you a link in case you might want to offer an opinion. Thanks a lot, John
tradingview.com/v/HM51GS2Y/