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Thursday, February 15, 2018

Stock Market Technical Analysis Update 2/15/2018

"The Elliott wave principle is a form of technical analysis that finance traders use to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology."

Over the past week we've seen seen market sentiment turn from extremely bearish, to bullish, as you would expect, but this is no time to become complacent.

Broader Market - S&P 500 $SPX

Yesterday morning we saw a sharp little pullback - at the open - followed by a continuing rally into an extended wave 5, which confirms exactly what I was seeing in the charts on Tuesday. See the annotations on the chart below.

Wednesday I was preoccupied. tracking a 2.6% rally in oil, so I wasn't able to confirm that the breakout in equities, is indeed wave 5, until taking a closer look at the charts this morning.

Of course, momentum slows in wave 5, but you can expect the market to continue to melt up into Options Expiration Friday, where most bearish traders (short sellers) will ultimately capitulate. Markets could even hold up into next week, but this depends largely on when the final target is taken out. What you're really looking for here, is for bullish sentiment to peak out. Bullish traders know this, so you can expect them to continue hammering the market higher.

At this point, I'm quite sure, this is only the first leg up in an extended bearish consolidation pattern, and the second leg up will be even more powerful than the first. Certain indices could ultimately even break out to new all time highs, but that remains to be seen. If my analysis if correct, and so far I'm 5 for 5 - including yesterday's snap-back rally in Oil - since the market bottom was put in - I suspect the next leg up will coincide with the end of the first quarter (window dressing season), and possibly even extend into April, where volatility typically picks up again. As of today volatility remains relatively high, and this presents a great trading environment.

Future targets are proprietary, but make a $1000 donation to this website, and I'll be happy to accommodate you for the next 30 day.  Communications can be made through twitter messaging, LinkedIn, email, or even by phone.

Have a great day,


Tuesday, February 13, 2018

February Stock Market Pullback 2018 - Advanced Trading Techniques

February Stock Market Pullback 2018  - Advanced Trading Techniques

After doing this for many years, I've learned to rely on a variety of indicators, and charts, to determine market direction; market sentiment (charts), Fibonacci ratios, tracking separate sectors, heavily weighted stocks, cyclical stocks, and even foreign markets, to name a few. It requires a tremendous amount of due diligence to keep track of it all, and thinking outside the box. If this were not so, then anyone could do it, consistently.

Not to sound arrogant, but my level of expertise, and the multi faceted system I've created, goes beyond most peoples comprehension. It would take a book to even scratch the surface... but I can offer you a glimpse into what I do, and how I do it, by explaining what I'm seeing in the chart below, and consider the weight this chart gives, to the bottom I recently called in US markets. Think of it a preponderance of the evidence. If the German market took out the target, as expected, then that says a lot. It's a tell. It means the route in global equities has come to a halt. If the Elliott Wave Theory agrees, and the (lower) $VIX level agrees, and foreign markets agree, and sentiment has changed, and the rest of it, then we're not guessing where the bottom is, we're confirming it.

You're looking at the 3 year German $DAX:

1. The most obvious thing this chart should tell you is that the index continues to channel up in a bull market. The trend remains intact. I touched on this point in a recent blog at You gotta know how to read long term charts, short term charts, how to read the $VIX. You must me able to accurately chart several different timelines, organize them in folders, and archive your charts, so you know where to look, when the short term charts are a mess. To give you some idea... 99% of my charts are still intact. 

2. The previous rally (into the recent new high) confirms Elliott Wave "B", as I pointed to in several US markets, including the $SOX, over the weekend. A "head-fake" rally in wave "B", is always followed by a powerful wave C. In order to know this, you'd have to have a good grasp of Elliott Wave Theory, something I've been studying for years. It's not a magic bullet, but I rely pretty heavily on it, because it works.

3. The $DAX pulled back into a key Fibonacci retracement target, where it landed at the bottom of the channel. We're not guessing at the bottom here. It's obvious. May not be so obvious when you're looking at the S&P chart, alone, and this is why I (literally) chart 50 different things.

4. When support breaks, the market is sold, and this is exactly where you also want to be a seller. When the action fell out of the triangle (marked wave "B"), and took out the October 2017 high broke, investors rushed to the exits. Once support at 12,950 broke, selling accelerated. This is where you sell, not guessing at where the top might be. Laying out support levels is simple for most seasoned technician, but selling them - when they break - comes down to knowing how to trade. I don't spend enough time talking about trading, because I don't do a lot of trading. I predict future market direction, which more often than not, only requires following the trend, and identifying support and resistance. I can offer you key levels, but trading those levels is a different ballgame.

5. This is how a powerful wave C looks. If it's a primary wave (C), it can turn into a crash. But this isn't how reversals into a bear market ever begin. If this was an extended market crash, then this would have to be the 1st wave/ leg down - wave 1, (or possibly wave A), and wave 1's (in a bear market) don't look like a crash, or act like a crash. Wave 1 looks like a pullback, which is inevitably bought. This is basic Elliott Wave Rules and Guidelines stuff. Each wave leaves it's own signature. Nobody suspects a crash in wave 1! It's not until wave 3, that investors become aware that the trend has changed. Similar to what we saw in 2007. Everyone bought the dip, and didn't realize the trend had already changed, and many were left chasing a suckers rally.Still today, you hear folks referring to "the crash of '08", when it actually started in '07.

To conclude, and make things clear, this looks like a simple A-B-C correction, on the $DAX, and that confirms the reversal in global markets, and we're only getting stated, as markets continue to build a base, at support. If support breaks then you can start calling this a crash. Maybe this turns into part of a larger corrective pattern, down the road at some point, but let tomorrow worry about itself.


Market Update 1/12/2018 - The Idiots Guide to Calling Technical Market Bottoms

Where to begin?

It's been an incredibly exciting 2 weeks, since the last time I updated this blog, but there's just no time to create lengthy blogs, with the $VIX trading above 20. Things move fast, above $VIX 20.

Firstly: While most folks were worried about a market crash, which has still yet to materialize, and probably won't, because there is no crash, other than in Oil, perhaps... BitCoin rallied 25% off the lows, after calling this market bottom.

$BitCoin - Before...

$BitCoin - After...

Wall Street is a shell game. Bloomberg pundits - who have their own best interest at heart - first scare you out of the BitCoin trade (reporting: "it could be headed to $1000"), and then then run it up, while taking the broader market down. Always watch what the other - hidden - hand is doing.

Picking up where we left off in the previous blog. We saw the market still trending up on a 60 min. Chart. Well that chart broke, soon after... and that was your cue to sell. When the trend is no longer your friend, you're only left with hope, and fear, and we've seen plenty of that lately.

Once the trend broke we traded rather flat for 2 days, but just before the close on Tuesday Feb. 1st, I was seeing "red flags". I thought we might see another bounce, before a crash, but that didn't happen.
 I had been warning folks to hedge themselves, with some "short ($STOXX600) contracts", for some time, and those who took my advise, saved themselves plenty.

Another clue that the shit was hitting the fan, was the breakout on the $VIX, which had been trapped in a range - consolidating in a bullish down-turned wedge for nearly 2 years! I believe this proves I was right all along; "the market is rigged". The powers that be, had been shorting the $VIX in order to press the market higher, and higher, and higher still, until it finally collapsed. The $VIX short sellers got squeezed, with the $VIX rising 100% on Monday. There is no other explanation.... What's also clear to me, is that they were using the leveraged $VIX funds, to hammer the $VIX down. Result was a massive short squeeze in the $VIX. I've always warned traders not to trade the $VIX, for this reason (it's simply too volatile). Hopefully they learned their lesson, and we'll see less manipulation in the future. Wishful thinking..! 

I know I called it a crash earlier, but there really is no crash. I heard that Jim Cramer called this a "flash-crash, and the destroy Trump media would like it to be a crash, but as someone who anticipated the so called flash-crash, and caught the massive rebound, and sold it, and continues to sell the broader market into an eventual retest of the lows, which didn't occur until a couple months later (around July 1st).... That trade was my ultimately my "claim to fame", so I can tell you from experience, this was no flash crash. This was a washout, as traders panicked - with the Dow down 1600 - but it really doesn't amount to much at DOW 26,000. This plunge only ranked 99th percentage wise, while the Flash Crash shed 998.5 points (about 9%), in only 35 minutes. It's not even in the same ballpark....

Of course no-one could anticipated a one day drop like the one we saw (on Monday). It was "ridiculous", as I tweeted at the time, and we caught a nice 1000 point rally, the very next day. Looked like it was trading into a wave 4 at that point, so we took profits, and watched the market give it all back. 

Calling the ultimate bottom took me at least couple tries to nail down precisely. Ultimately the market traded into an extended wave 5 (triangle), where momentum slowed, and I called the bottom, as well as the subsequent breakout, in real time. This coincided with the $VIX falling below support around the 38 level. There was plenty more reason for the market to make a major bottom right there, but I've already given you everything you need to know, in order to recognize a tradable market bottom


This was pretty much like calling any other market bottom, and it reminded me of 2008, because of the high volatility. I have 10% more experience now, then I did back then, but it was a good refresher course.

I also pinned down the bottom in the US Oil Fund $USO about the same. The oil chart scares me, because it's still in a down-turned (bearish) channel, and is it's going to continue to fall into a wave 3, that will look like a crash. If oil breaks out of it's death spiral, fine, but the risk reward is not good for the oil bulls.

Another call, I'm proud of - but has nothing to do with calling market bottoms -  was to advise my clients to give up, and "get out", of  $REITs. It can be hard to be bullish one day, and bearish the next, but when the charts break, it's time to sell. If you were lucky enough to get out on this bounce, congratulations!

 Of course, the worry warts, are still asking themselves, "is this the market bottom", and struggling with charts, which ain't worth a lick.

Look, We've  been enjoying the rally of the past 2 day's, before selling into yesterday's close, and looking to shake the weak hands - at support -  before we're off to the races again, but this blog is about calling market bottoms, and looking back in our rear-view....  

I'm no longer providing many real-time market updates on twitter. Too many trolls, and too few donations to this blog. I feel that I'm ready to move on to bigger and better things. It was a good run, but I need better exposure....

Of course, in the meantime, I'll continue to provide charts to the folks who continue to make regular donations to this blog.

If you'd like to connect on LinkedIn, that's where you'll find me, doing what I do best.