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Monday, January 4, 2010

Monday updates

Bears, please close your eyes before looking at the next chart!!!

I am throwing this count out there because it has been on my mind for a long time. I expect to be fully ridiculed, and even get some threats of my home being burned down by the bears for presenting this count. LOL

I have refered to this as my inflation count in the past (and even kept the chart under lock and key), but never thought it was even a slim possibility, until now. What has always intrigued me about the count is the fractal nature it possesses, an expanding triangle for both wave 4's. The bad news is we would be looking at new all time highs very soon, before another major sell-off, but with the way the FED is printing money, I can envision this playing out now. the risk of inflation driving equities higher for now, then when The FED starts to raise the short-term rates and applying the brakes, a major sell-off ensuing as investors start worrying about profits being guided lower with the cost of capital increasing.

I also could lay out an alternative scenario with the banks and mortgages.


Do or die time now for the SPX, we have arrived at some very heavy resistance with many highs and lows made at this level, if the bulls can push through here resistance will be lighter towards the top. Bears need to hold the line now!!
After the close, It was fascinating watching this chart today, I posted a link down below at the beginning of the day to share the chart. The SPX really respected the fans today and ended below the most bullish fan.
Something that should be concerning to the bulls was that as the indexes were making new highs, the VIX was complacent and never did make a new low. Also as the market was making new highs the number of individual stocks doing so keeps dwindling.
I have no count on the SPX that I am comfortable with besides a very bullish scenario, a 1-2 up. But we are going to need some very serious follow through for that to happen, with some higher volume. The SPX was contained by the trendline of resistance from the October and November highs and until that gets breached with authority I am leaning bearish.
Breadth for the day ended at 4.13:1, advancers, a very respectable number if the volume followed suit, which it did not, volume was very low for the day.
The day ended with negative divergences showing on the indicators, while the SPX was making higher highs, the RSI, STO, and the MACD where making lower highs. A short-term bearish signal.
10:44, So far the SPX has been stopped at the trendline!!!!

8:30, This is not a very good sign for the longer term bulls, as the indexes are making new highs today, we are seeing fewer individual stocks making new highs. That should not be happening in a healthy bull market!!!

8:01, The SPX is now testing the upper trendline of resistance, if this gives, there is quite a bit of upside until it runs into the second trendline.

7:48, This is a very possible count on the SPX, a 1-2 completed as I mentioned last Thursday. The bulls also have breadth in their favor today, 4.94:1, advancers. This is the highest readings the advancers have had in the last month.

6:46, Here is a bullish count for the Russell, unfortunately it will not work on the other indexes. Wave 4 entered wave 1 on the SPX during last Thursdays sell-off at the close. The Russell also made a new high this morning.

Click here for an updated look at the Fib fan chart, and please vote!!!
6:36, The SPX opened gap up, and reclaimed the bullish Fin fan.

5:53, Glad to be back!!!
Hope everyone enjoyed the holidays!!!!


  1. Good post.

    On the RUT, do you see your 2. wave as a triangle, which would be more of an A., B. with 5 waves of C. in progress. This would make your i, ii, iii, iv, v = C. instead of = 3.

    That was the count I was tracking on, but can see it both ways.

  2. Hello Michael,

    best to you in 2010.

    Good analysis, and glad that you are back.


  3. Michael
    I really think they will TANK the next 3days
    but the snap bacl will be just as strong on the 8th & 11th

  4. col, great inflation chart, and scary as #$@@ !!!!!!!

    many believe we no longer have a real market that reflects social mood, and with the new technologies, passed and by-passed laws, and our (taxpayers) monies, the futures market is the govt's ( via the fed? gs? et al? ) playground...

    that being said, a technological revolution rivaling the arrival of the auto in the 20's, and computers and the internet more recently, most likely in the bio-nano fields (hey, wanna live to 150, and enjoy it? ;-) would probably be more than most of us could ignore and still feel bearish -

    add a secure strong dollar, extended belief in possible peaceful co-existences, and there's a chance for a "managed" new-capitalism

    but i doubt it ;-)

    like the movie says, "show me the money!" - or in this case, the sustainable scenario like above, that would keep people peaceful enough to swallow a suspect rich man's equities market

    i guess there's always lotto - lol !!!!!!!

    but after today's boredom breaking decade starting 1st monday of the year market day, an extended multi decade inflation chart was just the right thing ;-)

    thanks col

  5. I like your first bullish count..
    I think that is how it will play out and by that time all Perma bears will have turned bulls and will have grown big horns.

  6. >>Bears need to hold the line now!!<<

    There are hardly any bears left..Line will most likely be crossed.

  7. Hey Col! How are you bro! On this count: the C leg is a 5, and the internal structure needs to be a 3-3-3-3-3. I know you are just throwing it out as a hypothetical, I just don't see how the C leg could be reasonably justified as a three. Just offering up a counterpoint.

    Thanks man!

  8. binve beat me to the punch. i was just going to comment on the same thing regarding wave c counts better as a 5 vs a 3 wave structure. interesting view point nonetheless.

  9. what a stupid count. why showing such crap? you just lost my respect.... shame on you!!!

  10. Seeing daily advertisements run on our state controlled media certainly can make someone doubt. It is undoubtedly the most effective way to brainwash everyone. Elliott waves are a good way to disguise true nature's intent, this being to pick a natural born leader. This leader is picked to guide the herd to safety. There is no Elliott count or anything else that tells "this leader" what is about to happen. This leader simply knows. The market will not go up much longer.

  11. wow! i like yor long term count, michael!
    btw: thx for visiting my blog!!