Market Timing Update (6/8/12)

[EOD] Stocks -
Primary count is that wave C-down (Chart 1, blue) is likely the next swing.










[1055am] SPX/ES update -


[7am] ES update -
Overnight support around 0.382 retrace.

Market Timing Update (6/7/2)

[EOD] Stocks -
We have a reasonably well formed zigzag decline from the day's high. Whether it is a small-degree 4th wave pullback or can morph into a larger 2nd wave decline (Chart 1 blue) or even something more bearish (Chart 1 red, Chart 2 purple) remains to be seen. See charts.



[1015am] SPX update -
Here are the SPX cash index counts to match the ES counts. Larger counts and squiggles. See charts.


[730am] ES update -
Larger counts and squiggle count from the low.

Market Timing Update (6/6/12)

[EOD] Stocks -
The most obvious counts are (1) a bearish five-down from the April high ended at the June low (Chart 1, pink) and (2) a bullish ABC correction from the May high ended at the June low (Chart 1, black). Please see the [710am entry] for minor bearish alternative counts (wedge, triangle, flat).

Chart 2 presents squiggle counts on SPX since its late May high.


[1230pm] SPX squiggles -
SPX squiggles since its late May high. See the 2nd chart below.
[1125am] ES squiggles -
Potential five waves up from the low in ES. ES is approaching w5 and w1 equality. see chart.


[710am] ES update -
Chart 1 shows the larger tracking counts. Top counts are
(1) at least a near term low is in (green, blue, red)   (2) the wedging lower is yet to be completed
Minor counts are (1) B wave consolidation is still in progress  - triangle, expanded flat (blue alt)
(2) The green [c] is itself a bullish terminal triangle still developing.

The more exotic counts are based on the recent visual three-wave decline from the May 30th high.

Chart 2 shows the squiggle counts from the nominal low.

Market Timing Update (6/5/12)

[EOD] Stocks -
SPX/ES presents a potential EDT into the close, which likely is wave 5-up off the overnight low.
The bearish count of a zig-zag rebound, likely a small degree wave 4, off the June low is complete.
The bullish potential of a 1/2/[i] setup requires follow through buying.
See charts.



[10am] SPX squiggles -
see the 2nd chart below.
[745am] ES update -

Market Timing Update (6/4/12)

[EOD] Stocks -
Whether this afternoon's rebound is only a small-degree 4th wave or the start of an upswing remains to be seen. Chart 1 shows the larger tracking counts.

Chart 2 presents the top three tracking counts for the entire Hope Rally, likely a cycle wave b-up as labeled.
(red) The Hope Rally topped at/around black label number 3 (with a truncated 5th wave).
(green) The Hope Rally is to end at black label number 5.
(blue) The Hope Rally is to end at black label number 7.
Please see C/c-apitulation (stocks and bonds) (6/1/12) for additional discussion.



[1020am] ES squiggle update -
Squiggles from the overnight low, bull and bear counts. See the 2nd chart below.
[7am] ES update -

MTU Weekend Ed. - C/c-apitulation (stocks and bonds) (6/1/12 Close)

U.S. stocks broke down on Friday in reaction to a recent string of disappointing data. It is interesting to note that the latest sell-off was triggered by fundamentals rather than by a technical level breach which took place in mid-May.

From an EWP perspective, the market is likely at a juncture facing
[1] a major Capitulation with a sustainable bullish move ahead (Chart 1, green and black)
[2] a minor capitulation with a temporary (but meaningful) bullish rebound ahead (Chart 1, pink)
[3] a point of recognition with a sustainable bearish move ahead (Chart 1, red)

Chart 2 shows how these top scenarios fit into the structure of the Hope Rally as discussed in Inside Week (5/25/12). In Chart 2, the black labels would be associated with the major Capitulation count whereas the red labels would be associated with the minor capitulation count as well as the point of recognition count.


However, price actions in U.S. Treasuries appear to suggest that scenarios associated with some degree of capitulation is more likely. Chart 3 presents a long term picture of the 10-year benchmark Treasury yield.  Please note that UST10Y yields are
[1] approaching the bottom of a channel dating back to the mid-1980s, and
[2] completing a potential long term zigzag  as well as an intermediate term potential EDT:  five-down for [A], some messy consolidation for [B], and an ending diagonal triangle (ABCDE) for [C].

It should be noted that the more bullish count (i.e. the major Capitulation scenario) now faces key challenges.  While neither is crippling to the bullish case (see below), the burden of proof has clearly shifted.  The key challenges are

[1] We now have a visual five-wave decline from the nominal high in SP500 (Chart 1, pink), as well as in many other benchmark indexes.  According to EWP, the sell-off to date is likely only the initial decline with at least another meaningful sell-off to come once a potential rebound is over.   The counterbalancing development is that the Dow actually made a new recovery high at its May top, raising the odds of a truncated high in SP500 and hence the odds of the black and the green counts in Chart 1.

[2] We now also have a failed upward breakout with respect to a very long term resistance area in SP500 (Chart 4).   The counterbalancing potential is that the market can always try again to break out upwards. The long term resistance area (around the low 1300s in SP500)  would be even more formidable than before this time though.

Market Timing Update (6/1/12)

[220 pm] SPX update-
A visual five-down from the nominal high.











[9 am] DAX update-
[840 am] ES update (post NFP)-
ES took out its May low following a weak NFP. Chart 2 shows a potential expanding EDT with uncertain odds.


[825 am] ES update (pre NFP) -
It's the first day of of June. ES gave up after kissing the prior trend channel support and is now testing its May low. The bullish count would be an LD rise followed by an ABC decline if the May low holds. The top bearish counts are a small-degree 5th wave decline or wave C of a zigzag off the orthodox high. Let's see how markets react to the jobs numbers.