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Nasdaq

Hamilton

nasdaq apr 13 2018

Just to complete the parade of indices, here is the Nasdaq. We have a picture here of two vector equal downward legs in a row with an intervening a-b-c . One could be wrong but the conclusion of least resistance is that this is a running flat, 5-3-5, running because it is slightly upward sloping. This alone gives us cause to be very careful in wholeheartedly embracing the bear scenario at this point in time. This is particular so because the moves in the Nasdaq are pretty large and not just marginal increments. Each down leg constitutes roughly 12% so there is still a long way before a new high will be reached, if at all. The bounce from the second low looks to be corrective for now, arguing the opposite!

As usual time will tell.

An example of this structure can be found in RDS.B Royal Dutch to mention just one. This one is downward sloping. MS is another;

rds.b april 13 2018

RUT 2000

Hamilton

rut april 12 2018 brut april 12 2018 s

The last month or two have, if anything, been most annoying. The degree of ambiguity is stunning and the ultimate resolution is probable still a few weeks away.

What we have here is the Russell 2000, one of the broader indexes in the U.S.  In the left chart the move from about 1000 to 1600 – nice Fibo ratio, by the way – makes it plausible to presume that this is a 5th wave from the lows of March 2009 of roughly 350, see below;

RUT april 12 2018 vb

Then the chart on the left displays, at first blush, what looks a hell of a lot like a triangle. Today we seem to be completing wave d of that triangle. So all that is left is a small e and we could get a thrust up of about 200 points.

All legs within a triangle must be 3-wave affaires. To me it is not perfectly clear that they are. Superficially waves a and c “look” like 5-wave affairs  but there may be a small wave at the top too many. The waves b and c are unequivocally 3-waves. So it is still possible to count this as a series of 1-2s, in which case we will accelerate downward fast.

Given this uncertainty only a fool would hold a long position if you look at the big picture. There is a lot more downside than upside so you will have to be very nimble in an environment where, for all we know, Stormy Daniels may become the next attorney general.

Dow and S&P again

Hamilton

dow april 11 2018

The action over the last few days has met at least one expectation and that is that , so far at least, the index has not been able to cross the downward sloping line.

After some 20 plus years of involvement with EW, there are still a number of things that are above my pay grade – which, by the way, is zero given that this blog is free. As far as I am concerned there is a fairly distinct diagonal starting at about the beginning of march and lasting for about a month. Normally – that is 90% of the time -  that would constitute a C wave in a simple A-B-C corrective structure. It is complete! There are exceptions however as shown below;

Image result for leading diagonal vs ending diagonal

This one is going up rather than down but that is immaterial. Use your imagination. We are, in this scenario, at the 2 and about to embark on wave 3 of C. Notice that these diagonals as so called “impulse or motive” waves subdivide as 5-3-5-3-5 structures as opposed to 3-3-3-3-3. I simple cannot get that degree of detail, after the fact, to verify that that is indeed the case. Like I said, this is above my pay grade. Moreover this blog exists solely for entertainment purposes and should never be construed as giving advice.

Time will tell and keep your eye on the red line. Below is the somewhat less ambiguous situation with the S&P;

S&P april 11 2018

BA again

Hamilton

BA apr 9 2018

Here is Boeing once again. From $99 it moved to $371 in just two years. That is very impressive. For 2017 it was the best performing stock in the Dow, and because of its high cap. value it had a disproportionate impact on the index. Given all of this it does not seem unreasonable to think that the stock might need a correction, one of those “healthy” ones that in the end supposedly  rejuvenate the stock.

What we got so far is three months of ups and downs that barely make a dent in this rise. What is more worrying is that the pattern is not bearish, see below;

ba correction smallba correction large

The second larger wedge is part of an irregular a-b-c. Both corrections are essentially complete so new highs, much to my surprise, might still be possible. I would not trade on it.