Tuesday, February 12, 2013

Stock Market outlook dated 2/12/2013

If a tree falls in the forest and nobody is around to hear it, does it make a sound? Of course it does, but hear this:   

The weekly chart I posted in my last blog [linked] remains intact, but I have a new chart for you. Reminds me of the rally we saw after the flash crash, and the same fear remains. Fear of Primary wave 3, in a multi-decade correction.  

Can wave "E", throw-over in a false breakout? Yes. Is it worth risking 1 red cent, betting on that breakout. No, because of the risk to the downside in a possible primary wave (3). We aren't gamblers, we look to reduce risk. We don't base our trades on the hope that every snap-back rally is a "recovery", as the mainstream media would have you believe. Who do you think owns the media? The same sharks who own Wall Street.

There has been a lot of trash talking, between Elliotticians' over the rally of the past 4+ years, but the fact remains, Primary Wave (2) is not ruled out, and even those who are hanging their hats on a primary wave 3 are probably underestimating the possible outcome.

In P-3 we can expect many funds to go to 0 (zero). Of course most money managers scoff at this prospect, because a 70 year bull market - in what was most likely a supercycle wave 3 - is all we have ever known, but those who ignore the history of booms and busts, do so at their own peril. One thing I think all Elliotticians can agree on is that we will see a primary wave 3 in our lifetimes.    

Bullish impulses are typically followed by equal periods of consolidation. In this case 39 years (equal to wave V of 3 between 1974 and 2014). Assuming this correction started in 2000, and If my math is correct, I'll be a ripe 77 years old, when wave IV concludes. Think Japan. Think real estate, which cycles every 25 years. The housing recovery I called for in MP-I is over.

For the time being, until I see a breakout to all time new highs, we remain cautious, and even then, I see wave "d" theory coming into play, in a reverse symmetrical triangle. Not much is known about these climatic patterns, and triangles in general are tricky.

In March of 2011: I hypothesized in my memoir part 1 (MP-I [linked] , , and others seem to agree; wave d may end in a new market high. What comes next would be a catastrophic wave "e".
This chart borrowed from: http://elliottwave5pointzeroreboot.blogspot.com

Whether you are looking to implement a plan to hedge your portfolio, or you are a swing trader, there's no reason to follow the herd off the cliff.

We are not investment advisers. "Buy and hold", strategy has resulted in 0 gains over the past 13 years. 

We seek to time the market, by calling major market reversals, and then appropriately trade the resulting reversal, into the next major market reversal.

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  1. With all respect Antony, the SC degree Triangle you have may not work as "E" wave crashes can be Truncated. One thing that will not work is any wave count in GSC degree.
    Including the hopes of a wave three decline in Primary degree. GSC degree is a myth. GSC degree wave counting needs many 5 wave sequences in Primary degree, yet not a single complete set has ever been confirmed, by anyone. 5 wave sequences flow quickly into one another as a set, and any 5 waves in Primary degree should have completed a long time ago.

    Not a single chart in the DOW 30 has a great looking Primary degree Impulse heading down anywhere. In 2009 the markets crashed deep and this depth matches the price levels of 1996. The Nasdaq hit 1996 price levels in 2002 but it did not do this in 2009.

    The previous 4th wave of one lesser degree that GSC degree wave counters, (Elliotticians) are after is not a 4th wave at all, as it is a wave 1-2. It only takes a stroke of the pen and GSC degree wave counts become obsolete.

    No GSC degree Elliottician has ever checked or reviewed that all wave threes are extended. In the general markets the third wave is always the longest wave, and once we create a extended Idealized Submillennium degree 5 wave Impulse, we can see that we are still decades away from hitting a GSC Degree wave 3 top.

    The wave count that GSC degree wave 1-2 starts at is also seriously flawed as it has the characteristics of a 4th wave as well. Even the 1970's bear market is questionable as a 4th wave in Primary degree, as this would extend the 5th wave as well. The guideline of a previous 4th wave of one lesser degree can and has failed before. Gold is a prime example that this strong guideline can fail and all the markets are setting up for this guideline to fail again. It would be a sick joke if the markets played another trick on us and our present rally is just a big Triangle "B" wave top. If this is the case then we may get our one and only 5 wave sequence in Primary degree ending a big Flat pattern. Either way many times in the past, years ending with a 4 and a 5 are very bullish. 1945,2005, 1995, 1925, 2015? 2025? Even when we get to 2018-2020 we will get a 4-5 year or longer bull market, as we climb up with solar cycle #25 once more.

    The stock market price level crash of 2009 retraced to the previous solar cycle bottom of 1996 and it has never crashed lower than two solar cycles since 1932. GSC degree wave counters are trying to tell us that the markets will crash through 5 solar cycle price levels. This will never happen.

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