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In April 1930 everyone thought the market crash was over and the economy was in a “V” shaped recovery. Equities were flying and some of the zaniness of the 1920’s was returning. A financial crisis then hit Europe and the true leg of the depression started. Does that sound familiar to anything you have seen lately?
If that is the case then I have put together the chart from early 1930 along with where I think we are if we are going to repeat the patterns of the past.
Dow_1930
Look at the chart below. When the Dow crossed this trend line the trading bots all stopped buying, at the same time, and then they started selling, all at the same time.
A trend line of import
The Dodd bill was interesting though…
Today continued the high-volume-market-down-low-volume-market-up trend. 60% of the volume on the NYSE was down today although the primary indicies eeked out another up day. Advance decline is also waning. Liquidity is disappearing. Anyway I wont bother with a EW count today, as nothing has really changed. I will just give a few of my more Macro (i.e. Longer Term Charts). Enjoy!
Another Long Term Dow – Quad chart
Russell 2000 LT Quad
The latest Russell 2000 Trading Chart
A Long Term VIX
AUD/USD Channel
If I had a dollar for every chart I have drawn over the past few months that showed that this rally had ended then… well lets just say I would have, at least, made some money in the last few months.
Today, as my 6 month old son decided to have a rare morning nap, I have wasted a few more hours drawing a few more charts that show that this rally is on its last legs. They all use the Dow Jones Industrial Average. Here goes:
A Monthly Chart going back to the 1987 low and Drawing some Fib Fans
Now a Monthly, with Arithmetic scale, with a error channel.
Now a weekly chart with Fib Retracements from the 2002 low to the 2007 high
Now a 3 day chart, with Fib retracements from the important 2007 and 2008 highs to the 2009 low
Now a daily chart showing an error channel of the rally
Several attempts to re-enter the channel this week, including 1 puncture. Next week is key.
Long Term Chart
Short Term Chart
For those of you who are following my Dow Industrials Call then I thhough I would let you know that we managed to punture the Bear Channel this morning. Clearly it bounced out, however a puncture is a sign that it will probably try again. Charts below:
1 Minute view:
And th 60 days view
This is not the day the teddy bears have their picnic. Today’s NYSE a/d was 5.34/1 which is the strongest advance since July 15 2009, although on embarrassingly low volume.
My count for the Russell 2000 is already blown. I’ll do a new count for the SP500 over the weekend and the VIX count looks like it needs a complete refresh.
When it comes to Elliot Wave the Dow is still considered the master index, as it better reflects sentiment, so let us continue to look at the macro view that I have been publishing lately.
First the long term View
Long Term
Now the last few years
Then the last 60 days.
Notice how the Dow crossed the line today, the first time since Jan 19. This means that, for the bearish case to remain intact, the dow need to go down on Monday – back into the bear channel, and go down hard. Otherwise we could be looking at another uptrend.
This is the chart I put together last weekend with this weeks prices added. The key inflection points were all there.
I like the google search feature, as it auto fills in the most popular searches based on what you have allready typed. I liked this one… I also liked the phrase “Why did the DOW go down last week after I ate a sandwich?” … Amazing what people will use for causality – must work for CNBC.
So today started like every other Mutual Fund Monday – Overnight spike in the futures on low volume. It then spent the day being faded. It looks like the Dow had a lot of trouble breaking through the wall that it created from Mid November. Without decent up volume it will have difficulty breaking through this wall – see chart:
Dow Resistance wall
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