Market Timing Update (11/21/11)

[EOD] Stocks -
Stocks have satisfied the minimum requirement of at least an initial low. That is, a five waves decline from the recent high (Chart 1, purple).

It's possible that the correction to the Oct. advance is also complete at today's low (Chart 1, gray). Is it possible to count the rebound from today's low as an impulse wave? Possibly - see Chart 2.

On the bearish side, there should be at least one more lower low to complete the retrace-down (Chart 1, blue) or wave (i)-down of [iii]-down (Chart 1, red).

As a result, today's low is a key pivot.





[1111am, 1228pm] ES squiggles -
[11:11am] Approaching the end of an impulse or the end of the 3rd wave of an impulse.
[12:28pm] Given wave development, the red 3 should now read (iii) of [iii] of 3. Stretched?










[1020am] NDX update -
Bull (green) and bear (red) counts. The bearish count has the rebound terminating with a triangle. Expect a small degree bullish (i)-up or bearish(ii)-up next under these counts.

[945am] INDU squiggles -
Five-down from the recent nominal high.


[720am] ES, DAX update -
ES counts well as a completed/near complete five-down from its Nov 13th high.

MTU Weekend Ed. - Keep it simple (11/18/11 Close)

Intermediate term update

Stocks have met the minimum requirement for a counter trend rebound since the October low (Chart 1). The bust of a much discussed triangle may offer confirmation of another meaningful down-swing:
1] wave (3)-down  of [3]-down or [A]-down of cycle wave c-down  (Chart 1) or
2] wave (C)-down of [X]-down of a mid-term correction to the Hope Rally (Chart 2 blue).
3] wave (C)-down of [2]-down of a cyclical bull market (wave five) (Chart 3, blue).


It's probable that the decline since the October high may be a partial retrace of the October advance,  given the October breadth thrust and still shallow retrace of key international stock market benchmarks (see Hope and Resistance (11/11/11) ).  Chart 2 (green) and Chart 3 (purple, green) illustrate the potential  for another advance to recovery highs once the correction to the October advance is over.

Near term outlook
As it was the case during the Jul-Oct sell-off,  transports continue to offer more trackable wave structures since the October low (Chart 4).

With this past week's decline, stocks have now met the minimum requirement for a net partial retrace of the October advance (Chart 4, non-extended purple and green),  in terms of wave structure despite the lack of a lower low in many indexes.

Potential for a (much) deeper pullback exits (Chart 4, extended purple, blue, red).  In this case, the rebound off this past week's low is a small-degree wave B or wave ii rebound, which may or may not be complete (Chart 5).

This past week's low is likely a key pivot on the bearish side.  The high on Nov 15th is likely a key pivot on the bullish side.

Market Timing Update (11/18/11)

[10:45am] INDU squiggles -
Five-up in INDU and possibly in Transports - not so obvious in SPX) - raises the odds of low being in place or a 2nd wave rebound. See worst case scenario counts in yesterday's update.










[925am] ES squiggles -

Potential pop and dump.
If the impulse wave count (black) plays out, expect a bullish pop (wave 5-up) and dump (wave 2/B retrace) for the cash market.
If the corrective wave count (red) plays out, expect a weak pop to account for ES overnight advance and then dump.

[910am] FTSE, DAX update -
DAX looks more bullish than FTSE, unless both are tracing out an LD-down.


[735am] ES update -
And here is a larger count to pair with the squiggle count (7am entry). See 2nd chart below. If black B, this is a wave [iv] rebound. If green B, the low is in or this is a wave [ii] rebound for wave C extension.
[7am] ES update -
Flat or impulse up from the overnight low.

Market Timing Update (11/17/11)

[P.S.] Worst/Best case scenario -
A thought experiment of the worst/best case scenario for bulls and bears is useful at this juncture. In this section, the words primary/alternative are used only to indicate left and right portions of a complex label, without indication of likelihood.

Let's start with the easier-to-count chart of transports (Chart 1).
The worst-case count for the bulls and the best-case count for the bears is the primary red count - today's low is (i)-down of [iii]-down as indicated.

The worst-case count for the bears and the best-case count for the bulls is the alternative red count and the green 4.  Both counts have a zigzag completed at today's low and call for a (near) immediate rise to new highs.

The rest of the counts are sandwiched in between these two, such as the further downside potential of wave C.

Now moving on to the more complicated chart of the Dow (Chart 2).
The worst-case count for the bulls and the best-case count for the bears is the purple count of a string of 1s and 2s. Today's low is [3]-down of i-down of (iii)-down of [iii]-down as indicated. 

The worst-case count for the bears and the best-case count for the bulls is blue count where a zigzag completed at today's low.   A (near) immediate rise to new highs is expected.

The rest of the counts are sandwiched in between these two, such as the further downside potential of wave C.

Given the divergence between transports and the rest (higher high in TRAN), I think that odds favor Nov 15th high being the start of an initial or final decline.

[EOD] Stocks -
While the low of terminal/initial decline could be in, there could be one more small-degree 5th wave before it completes.  Because on a squiggle level, it looks better if there would be a wave 5 decline following a wave 4 bounce (Chart 1), depending on where wave [ii]/[b] actually topped (Chart 2).



[1250pm] Chart clean up (INDU) -
Triangle dies, potential EDT (bullish) or LD (bearish) survive. See chart.










[1110am] Count update (TRAN, INDU) -
Transports continue to offer clearer waves. The much discussed triangle survives SPX by less than an index point and ES my 2 index points.


[707am] ES update -
potential triangle and EDT or wave C/3 down.

Market Timing Update (11/16/11)

[EOD] Stocks -
Transports continue to offer some clarification of the wave structure (see the 125pm entry). Chart 1 updates and shows that the sell-off into the close is either the start of the next swing down (red, bearish) or a small degree [ii]-down of 5-up (blue, bullish).  In the bullish case, blue-3 is shorter than blue-1.  Thus, if blue-5 should be capped (solid green line) if not already topped.

Chart 2 updates the various tracking counts on INDU.  Note that the much discussed triangle survives as of today.

Chart 3 (right) illustrates some bullish squiggles.  The point is that price actions are not necessarily bearish, but it's prudent to leave ample room for (much) deeper declines.  The Nov 9th low is a key marker.





[125pm] Transports update -
The "clearer" structure in transports may help clear a few waves. Map it into SPX if one wants to do so. The red B to the right of the chart should read X to pair with the red W.










[955am] INDU update -
End of a larger triangle (blue)? post-triangle thrust of a smaller triangle (red)? or None of the above (purple)? - see Chart 1. Squiggle count in Chart 2.


[710am] DAX, ES update -
There are too many potential triangles. It's prudent to leave room for further declines, as [c]/[y]/(iii)-down.

Market Timing Update (11/15/11)

[EOD] Stocks, A tale of (too) many triangles -
The first chart on INDU illustrates.
[Green - bullish] could be working on an LD off the October low.
[Blue - bullish] a potential triangle as X-down from the October high may have ended at today's low or with one more decline as (c)-down of [e]-down.
[Red - bearish] today's rise could be concluding [b]/[ii]-up with [c]/[iii]-down to come shortly. The proposed [b]/[ii]-up is itself a triangle-like structure. If one is a purest, odds favor [b] over [ii] under this interpretation.

The second chart shows the squiggle count on ES from today's low. So far, we have a zigzag-up with potential for it to morph into an impulse wave advance.


[2pm] INDU squiggles -
Potential EDT? And from a bearish perspective, end of wave [b]/[ii]-up?. From a bullish perspective, initial impulse of the post-triangle thrust. See the 2nd chart blow and the chart to the right.
[1pm] INDU squiggles -
watch the bearish count of an expanded flat x, and the green trend-line. Otherwise, breaking out upwards.


[1140am] DAX update -
The week is young. But there's a decent looking five-up from today's low in DAX.


[740am] ES update -
Momentum of truth for the potential triangle. Triangle or not, a bunch of threes so far, so leave room for small and large wedges or even a bearish triangle [b]-wave (red trend-line).

Market Timing Update (11/14/11)

[EOD] Stocks -
See the 330pm entry for squiggle counts. Today's decline has met the minimum requirement for a wave E-down of a potential triangle in stocks. At the same time, there's room for further pull-back with today's low as wave (w). The chart to the right presents the larger count.

[330pm] ES and INDU update -
zigzag down so far. Is it 1/2/[i]/[ii] - up (larger degree, green INDU) or down (smaller degree), abc-down or w-down? See charts.


[1150am, 1240pm] DAX and INDU squiggles -
1150am- Little movement in DAX. Corrective or LD decline in INDU.
1240am - INDU approaching potential trend-line and fib support and potential end of an (initial?)  ABC decline.



[7am] DAX, ES update -
see the weekend commentary, Hope and Resistance (11/11/11) for details.