"All human activities have three distinctive features: pattern, time and ratio - all of which observe the Fibonacci Summation Series" (R.N. Elliott - "Nature's Law - the Secret of the Universe" - 1946)

Saturday, December 29, 2012

Elliott Wave analysis of a weak stock market (Italian FTSEMIB Index) compared with a strong stock market (German DAX Index)

In Europe,  the strongest stock market is the DAX index but it is close to a long-term resistance (- 6% from multiple top)

Instead, the Italian Stock market is very weak (- 67% from top) and it is:
 a) in the hand of the Fiscal Cliff and the possible wildcard that Geithner could play if President Obama fails to reach an agreement with the Republicans; the US President, although recently re-elected, can not afford a rise in taxes on the lower-middle class who voted him nor a potential default, and his opponents know this and are holding firm, but I think (or maybe I hope) that American politicians are less defeatist than Italians and that they find a honorable solution to avoid devastating consequences on the markets;
b)  in the hand of Mario Monti, who is preparing for parlamentary elections; he likes to markets that hope in his government with the Democratic Party but without the radical-left.

However, FTSEMIB has a considerable potential compared to DAX ; it is in a sort of  bullish "head and shoulders", with an accumulation area formed in the last three months that has a good potential to push the market higher (even to + 40%).

 According to Elliott Wave, FTSEMIB index is in minor wave 3/c/y of intermediate wave (a)/(w) of primary up wave [C]/[Y] .

Many leading stocks are drawing interesting medium and long term reversal patterns and some tinny stocks (eg Banca Profilo, Falck, Tiscali, Gruppo Editoriale l'Espresso) are capable of exceptional performance (even in the face of a risk of loss equally impressive ...).

Since the end of the previous bull market cycle (May 2007) we could be near the most interesting market juncture, better than that of the summer of 2009 (that was the classic "V bottom" that few traders and investors have been able to grasp).

 At this point there are two possible strategies for those who have not already long positions:

1°) if the market retraces in an orderly manner, buying leaders when and if the stochastic daily falls again to the 20 AND with a minimum of 50% retracement of the previous bullish wave if this is wave 2 or 38% for those in Wave 4; this hypothesis could occur if the Fiscal Cliff goes wrong but not too much;

2 °) if the market immediately breaks to the upside, buy the congestions's breakout; this hypothesis could occur if the Fiscal Cliff will have an imminent resolution.

However, we must always remember that, until proven otherwise, the long-term trend is still bearish and that, for now, FTSEMIB IS NOT IN A BULL MARKET LIKE DAX.
Some respected technical analyst considers this phase of Italian Stock market as that of 1995-1996; I would wish me (saw what happened from January 1997 to 1999) but I do not agree; in that context, the market was in a bullish cycle and the intermediate uptrend was more structured and powerful of this one;  the pattern that formed (a saucer) was perfect and even I, that was a novice trader (at that time) , was able to interpret it correctly.

One thing at a time; in the meantime, let's see if there will be a market's breakout and if we can climb in time with decent prices to avoid a stop loss in a possible pullback , then once we are on the market, if it's a decent uptrend, everything may become easier, we raise the stop and .... hope (for lay people) or pray (for believers).

Have a good weekend and Happy New Year!



Friday, December 28, 2012

SPX - Turning point of minute or minor degree

Yesterday key reversal point;
now we have to understand if it is a wave w of minute degree, then only a rebound in the downward minor wave x , or if it is the final wave y of  x , then the bullish corrective minor wave y is beginning.
These two scenarios have the same odds.
Have a great trading day...with care!


Thursday, December 27, 2012

SPX - Index close to the "Cliff"

The constant "come up and down" of the last month could be finished; with the break down of the rising channel , upside potential seems compromised.
The market is not yet fully reflects a solution on the Fiscal Cliff, so if there was not a decent one, stock indexes may fall, but if there was very good one, they may rocket.
For me the last upward wave is one of the the darkest corrective pattern in recent years (I have not yet found a reasonable Elliott wave count...) ;
from a few days, it seems to prevail the alternative scenario (top reversal wave w  on December 19) , that would be a confirmation of a decisive and massive break-down of 1410-1412 area.
Utmost caution!
Have a great trading day...with care!!!


PS: sorry, the first chart was changed after 5 minutes from the post because it contained an error label.

Tuesday, December 25, 2012

Elliott Wave Analysis of EUR/USD, USD/JPY, GOLD, CRUDE OIL

 I restart to post after a brief illness.

it has been exceeded the 38.2 Fibonacci retracement's, so the upward trend continues; the bullish scenario is an impulsive wave 1-2-3-4-5 of wave [c] .



Usd/Jpy seems to be in an extended wave 5 of (c)
now we have to be very careful because the alternate count prevails in case of the breakout of 85.52, so the historical downtrend that has lasted over 30 years would end.
However, before moving on to this second scenario, we need strong confirmation.


or gold is near the end of wave (2) or the alternative count will prevail.


Oil is in a sideways pattern since 2 months;
wave 2 may already be over or may extend upward as far as 93.9/94.2 area.
This is not a good market for trading.

My best wishes for a Merry Christmas !

Friday, December 21, 2012

SPX - The second bullish wave appears in progress

The market has moved as expected;
wave [b] seems to be over close to a Fibonacci price and time cluster (see 5 minutes chart), so the wave [c] of a zig-zag pattern appears in progress.
This is generally a good opportunity to make low-risk trading  (I opened a long position on UPRO @ 89.75); a confirmation is required with the breakout of 1448.
Alternative scenario (Alt:) ; yesterday's bottom is only the wave w of [b]
Have a great trading day...with care!


Thursday, December 20, 2012

SPX - Waiting for a new bullish wave

As it happens from weeks, the index has reached a new top and has retraced below the previous one, a situation not typical of impulsive waves, so I continue to validate the hypothesis that the rally from 16 November is a corrective wave.
Yesterday SPX has finished the wave [a] of minuette degree, with an impulse 1-2-3-4-5, and now is ending the wave [b] with a complex zig-zag (potential targets: 1434 or 1428), so I'm waiting for the beginning, today, of wave [c] .
The alternatives are so many that it makes no sense to list them...
Have a great trading day...with care!



Wednesday, December 19, 2012

SPX - New count

Quick update
New count.
Today possible completion of an impulse wave [a] and start of wave [b] of  z of w.
Have a great trading day...with care!


Tuesday, December 18, 2012

SPX - Strong rebound

Due to the strong oversold on all intraday oscillators that signaled a cycle's bottom of several degree, the equivalent alternative scenario that I mentioned in the previous post has prevailed; the index has made what appears, for now, a rebound labeled like wave [x]  with the third wave c/y in progress.
The new first alternate scenario considers the possibility that the top of 12 December is not a wave w of minor degree, consequently the structure in progress could be the second x of a complex w-x-y-x-z.
Given that the level of confidence of these counts is low and that the structure of the waves is not yet clear and it does not convince me, I prefer to wait for a clearer pattern before trading.
The breakout of 1439 level requires new counts.
Have a great trading day...with care!


Monday, December 17, 2012

SPX - Still downward but the outlook worsens

The weekend is an important time to analyze the market without the stress of trading and the passing of prices.
After many failed attempts to break to the upside, the market reversed to the downside.
Looking at the daily chart, Wednesday there was a shooting star on a cycle's peak and the top could be of minor degree, so in the short-term, the trend remains bearish.
Analyzing the intraday chart (3 minutes), the structure of the bearish movement seemed to be a impulsive until half sitting, then the failure to bounce brings me to consider a double zig-zag with the waves [w] and [x] finished and the [y] in progress, but the strong oversold in the oscillators suggests a rebound, so the alternative scenario (wave [w] is bottoming)  has a similar odds.
The pattern is not clear and the risk is too high; it's better to wait for clarification.
Have a great trading day...with care!


Charts : Daily - 60 min - 15 min - 3 min


Saturday, December 15, 2012

The power of the Elliott Wave Principle

 ELLIOTT WAVE and FIBONACCI RATIOS are great tools to detect with good accuracy the direction of the trend and also the potential key reversal points.


Do not believe it?

Read below my Elliott Wave analysis of the SPX in the last year

(limited to the junctures useful for the short term trading)



According to my preferred scenario, in mid December 2011 
the market is in a deep correction of minute degree within
a minor uptrend of an Intermediate Uptrend.
In pre-market post of December 19, 2011 , 
I predict the end of the bear market on that day @ 1200 ,
and the beginning of a new uptrend.

At the end of that session, SPX bottoming @ 1202
and that day began a bull market that will last
more than 4 months with an increase of 18% !

This is my December 19, 2011 post:
SPX - Tomorrow could be the key reversal day, otherwise...

....1200 price area and time between the end of 19 and the early of 20 december, is magnetizing the market's action. It's hard to say that the market has bottoming; the structure seems completed... well, or tomorrow is a key reversal day to open a long position or it's necessary to look for a different scenario...


The next day, December 20, 2011, in the pre-market post I wrote:

SPX - Today the third wave starts

.... The Fibonacci's price and time clusters has worked like magic (see the purple line in 10 m and the yellow dashed line in 60 m) Targets? It's too soon to say. As of today, all balanced retracements, in terms of price / time / patterns / cycle or momentum, are good for open long positions.I think that this rally can go on for a few weeks so (today and) tomorrow may also be right to invest in ETF and in stocks selected with Canslim method of William O'Neil and The Wave Principle (always with stop loss).


I remain bullish for two months during which the market achive a rise to over 13%  !
in the opening session of March 5th I sell my long positionsone month before the top, but with a price error of 3.85!

On the market's Top of April 2, 2012
my preferred overview is still bullish;
I become bearish 7 trading days later,

with an error of - 3.77% from the Top 
2° GOOD CALL, with a price error of 3.77%
and a time error of 7 day!
in the pre-market post the April 12, 2012 I wrote:


.....according to my new favorite hypothesis, the last top in 1422 marks the end of the y minor wave of (w) intermediate wave. ...Possible targets: first 1340, second 1290 (Fibonacci price cluster).... I will open short positions on bounces or on bottom's breakdowns...

SPX reaches a second lower Top 1 May 2012
and will begin a deep correction of - 10% in a month.

The day after I become bearish! 
with zero error in price and time!
In the pre-market post of 2 May 2012 , I wrote:

SPX - Missing another downward wave

The last bullish wave began on April 23 looks like an impulsive wave, and if so,
would have ended yesterday, so it should start another bearish wave...
When the minor bear market ends June 4, 2012, I am still bearish,
but I become bearish 3 days later;

with a price error of 3.82% and time error of 3 days!

in pre-market post the June 7, I wrote: 
SPX - Bullish corrective wave
.....it seems also started the bullish corrective x wave of minor degree.
I wait for the pullback of wave 2/b to open a long position....

The market goes up 11% to a 1st TOP in 14 September,
and I remain bullish all the time,
and reaches a 2nd TOP Friday, October 5;
the next day, I change my outlook from bullish to bearish!
with price error of 0.92% ,
even if with a time error of 15 session (:-/)!
Monday, October 8, 2012, in the pre-market post, I wrote: 
SPX - Correction in uptrend
 ....friday x wave is completed ; now the market is in y wave of a complex sideways pattern.

The drop ends with a bottom Friday, November 16, 2012 with a decline of 8.6%
the next day,in pre-market post Monday, November 19, 2012,
my preferred count becomes bullish.

with a price error of 1.27% , IN PERFECT TIME ! 


SPX - Rebound in progress

The market is experiencing a rebound near the 0.618 Fibonacci retracement of intermediate wave (y).
.....the market has reached a bottom of intermediate degree and begins a new uptrend (wave (z)

This is proof that using the Elliott Wave Principle is possible to predict the trends and also key reversals with incredible accuracy.
Of course, perfection is impossible in any situation and to err is human but, as Frost and Prechter wrote ,"the Wave Principle is unparalleled in providing an overall perspective on the position of the market most of the time";
so, even if the counts will prove to be different later (we thought that a top was of minute degree instead it will be of minor degree, or we thought that a wave was an impulse 1-2-3-4-5 and after appears like a corrective triple zig-zag w-x-y-x-z), the real power is to identify the direction of the trend because     "it is often possible for an Elliott analyst to make money when he is in error".
Finally, one thing is to be able to predict the trend in a timely manner, another thing is to gain investing his own money.
A trader must have also the correct psycological and behavioral approach, and a good money management system.
And in some periods, we are more in tune with the market (and with ourselves), in other less.
In "Elliott Wave Principle", Frost & Prechter wrote:
" Although it is the best forecasting tool in existence, the Wave Principle is not primarly a forecasting tool; it is a detailed description of how markets behave....The primary value of the Wave Principle is that it provides a context for market analysis. This context provides both a basis for disciplined thinking and a perspective on the market's general position and outlook. At times, its accuracy in identifying, and even anticipating, changes in direction is almost unbelievable ".

Friday, December 14, 2012

SPX - Correction in progress

Yesterday there was the decline expected but too deep, and the breakdown of 1418 changes the main scenario;
take over the hypotheses that the last top complete a w-x-y of minute degree, and the downward move from 1438  is a 5 wave sequence  to complete the wave [a] of zig-zag x .
Today should start the bounce of [b] wave.
Alternative scenario: the downside is more extensive both in time and in price because the last top closes a minor wave W and began the wave X .
 Have a great trading day...with care!


Thursday, December 13, 2012

SPX - The first attack on the resistance has failed

Bad session yesterday.
After a good breakout in mid-session, the SPX has reversed and closed near the bottom, belying my re-count intraday; the first attack on the 1434 resistance has failed.
I trade a lot using, as pattern setup, the ascending triangles and the Cup with Handle, and last week I have seen too many of these patterns fail and this is a sign of underlying weakness; Bulls do not have enough conviction or enough munitions to break and maintain positions.
Counts are always unclear but it is possible that we have reached a top of wave [w] of y (double zig-zag pattern).
Important the seals of the supports @ 1424 and especially @ 1418 (Fibonacci price cluster: see 15 min. chart below).
Today Mike Sinibaldi wrote on Twitter: "Permabulls: please post a impulsive count since 11/16 low. I'm dying to see it."
I agree with him, and I wrote in my post on Saturday, December 8 (Elliott Wave Analysis and the KISS principle).
This is and remains a bear market rally, we have to understand of what degree (and what complex pattern it is, maybe a double or a triple zig-zag)
Have a great trading day...with care!




Wednesday, December 12, 2012

SPX - Upward, but resistance is strong

After the extended period of sideways congestion, today the market has achieved the expected breakout, interrupted by strong resistance @ 1434, which is also equal to the Fibonacci's extension 1.618 * (i) (you can see my Tweet).
So it's confirmed the first scenario (1°) shown in the post of Monday, December 10;
now, we could be in wave 3 of [a] / [w]  of   y ;
the first alternative is that, with the pullback of end of session, is already over the first wave Alt: [a] and the Alt: [b] is in progress.
Have a great trading day...with care!