Monday, November 14, 2011

Stock Triangle PIcking up Traction; Euro to Correct Higher, then Fall Hard Again

Internals suggest that the usual market participants had better things to do today.  Only 709 million NYSE shares were traded today, surely one of the slowest trading days of the year.  When you combine this with the price action it lends itself more to the triangle alternate count I mentioned yesterday.  With Thanksgiving coming up next week, a week that's typically good for stocks, it's possible we might just float around in a net sideways-to up market for the next couple of weeks.

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With volume so light on today's move, it would seem more likely that today's weakness was corrective, and that a new high is still on the way.  But seeing as that the correction from the Wave i low would be getting quite elongated, along with the unorthodox look of wave (iii) down that's supposed to be underway right now, it means this count is losing steam.  If this count is on track still, I'd like to see a sharp and quick pop to a new high tomorrow followed by a sharp reversal, or the market just fall hard with solid volume (above 1 billion NYSE).  Anything other than that would lend itself more to the below triangle scenario, or perhaps something else entirely.

The sideways action over the past month or so, along with decreasing volume numbers, fit well into the triangle scenario shown above.  If so, this would fit somewhat nicely into the upcoming holiday malaise we should see for the next week or so.  I think tomorrow's price action and internals will be very telling on which of the two above counts are most likely in play.

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One of the reasons the more bearish count is still my top choice at the moment is the wave count in the euro.  The euro appears to have topped and reversed again aftern an exhaustion gap up from Sunday.  The resultant decline looks impulsive, again furthering the case for a top and bearish reversal.  Yet stocks did not follow the euro's intensity to the downside today.  This tells me that perhaps the upcoming corrective euro rally with fall short of making a new high, yet stocks might make a slight pop up to a new high before reversing, creating an intermarket divergence I would see as very bearish.  So I still think it's better to be short the euro here.  And aside from stocks, the past few years the Thanksgiving holiday has been very bad to the euro and great for the US dollar.  If that holds true again this year, it means heavy selling is just ahead for the euro, and the wave count above supports this outlook.



Hyperbole2000 said...

Your triangle is correct.  I have been continuously digging for a pattern to inversely support my FAZ pattern.  After weeks of exhaustive hypothesis testing I may have cracked it. Your (2) wave terminus is actually a 3 wave terminus.  It is going to be followed by a triangle in wave 4 followed by a wave 5 OR your (1) is the wave 4 terminus with wave 5 being the diagonal.  Completion of either of the 5 waves will terminate the C wave of the E wave of a much larger triangle which will terminate the Y wave of a double combination.  This will be the terminus of the 2 wave  leading to the impending 3 wave down of historical proportions.  The X wave down of the double combination that has been labelled a 1 wave by almost everybody terminated at the low near the beginning of August.  The preceding W wave which was mislabelled by almost everybody as the B wave occured at the high near the end of July.  Check it out it feels good.

Richard said...

hey hyperbole2000, could you link a chart of the count you are seeing? As a fellow FAZ holder, I'd like to see your faz pattern if you're willing to share.

Muyllea said...

My feeling is that we will sell off hard in coming days....not many are expecting this :-)

Hyperbole2000 said...

My most recent chart from Nov 9th showing diagonal ( triangle) wave form for the the fifth wave which will complete the WXY double combination 2nd wave.  A impulse 3 wave up of historic proportions to follow (triple digit increase as a minimum).

Hyperbole2000 said...

The DJI inversely correlated to my FAZ dated Nov 14th.  Three variations at the end being: 1) 5 of E of 2 wave already completed (in black); 2)  only 4 of E of 2 completed (in red); 3) only 3 of E of 2 completed (in blue).

All three when 2 wave completed will be followed by the big 3 wave down.

Curiousmind said...

Hyberbole, i am currently holding FAZ too, what is your price target for FAZ with this wav 3?

Muyllra, you are right. Everyone seems to be saying that "we know Europe is bad, but Snta's rally will come regardlessly." i think people will be surprised by a lump of coal instead,just not sure how big the coal is.

Hyperbole2000 said...

I've modified the DJI count as the X wave as it didn't feel right after 2nd thought as the time frame of the preceding W was way to big compared to the Y wave.  Making the X a 3 wave supports the triangle in the 4th wave that I was trying to justify.  I also found a 3rd alternative (in pink) which is the 4th wave being a giant flat.  All alternatives leading to the big bohana 3rd wave down.  What is the FAZ price target.  If the DJI punches through the 2009 low of 6500 that is a 50% drop or 150% rise in FAX putting at a 130. However, it will be a lot of little daily bumps rather than i big bump so lets call it 150.  As well the banks wil get hammered more than the DJI index so lets call it 200 to be conservative.