At the start of T12 and T13, we saw the following pattern:
1. Divergence between the NY Advance Decline line and the S&P.
2. A fairly sharp correction in the S&P after the divergence.
3. The S&P moving to higher highs before starting to its descent into the center post of the Ts.
Start of T12:
Start of T13:
The reason I bring this to your attention is because the NYAD is currently showing bearish divergence with the S&P 500. If we are to get a correction soon as suggested by the Money Flow T, what you are seeing may well be the start of T14. This would be true even if the S&P goes on to make higher highs after the correction. This would not be true if the NYAD goes on to make higher highs.
Of course, the bearish divergence we are seeing could only be temporary, and prices as well as the NYAD could both blast to new highs soon thereby invalidating the T14 theory. But I thought I would bring the bearish divergence between the NYAD and SPX to your attention since this is the first time we are seeing it, and highlight the potential ramifications.
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I'll just post these 3 charts. As I find that they could be very timely at this point in time. The JNK has not diverged with the general market until now. The XVG is the Valueline geometric and it is at or near it's long term fib 62 pct retacement. The monthly chart of AZO speaks for itself.
ReplyDeleteThe JNK Diverges with SPX,Dow in Dec http://www.screencast.com/users/ETFtrader/folders/Default/media/fa3ced01-1ac1-49bc-a632-ac722096fa67
The $XVG The perfect pattern top 62 Fib http://www.screencast.com/users/ETFtrader/folders/Default/media/6530242a-fc3f-42ac-a936-fd40c70c4841
The Parabolic rise in AZO,monthly chart.http://www.screencast.com/users/ETFtrader/folders/Default/media/009863e6-06e5-4551-9b14-d94216c66a7f
Parker, good presentation on the divergence of the AD line from the higher prices. I saw this too and it seems to be confirmed by similar divergences in daily RSI and McClellan Summation Index. The weekly AD and RSI seem to confirm this but not the weekly MSI. Also, what keeps the Fed from eliminating the left side of the T by providing another $trillion that would otherwise need time and a decline in order to build up? What's another $trillion when the alternative is bread lines?
ReplyDeleteThanks ETFtrader.
ReplyDeleteSeems like JNK has been leading SPX this year. E.g., Bearish divergence at January high. Bullish divergence at July low, etc.
Forward
ReplyDeleteThe Fed could well destroy this potential start to T14. That's why I said it was a "potential start"!
Hi Parker,
ReplyDeleteWould like to add you to my Blog favorites?
Here is my Triple witch thoughts.
http://trendsby3.blogspot.com/
Jerry
How's the spam filter working today ? I don't see my comment posted earlier .Thanks
ReplyDeleteTrying again.
ReplyDeleteParker,
Thanks for the great info and dialog you provide.
RE: The Elliot Wave count that we will begin a wave 3 down. ( I realize it’s not necessarily your opinion) I don’t buy it. That would suggest a price very, very significantly below the 2009 lows. That’s a huge doom & gloom forecast. Besides that, the ‘ABC’ from 2009 doesn’t “look right”. It’s impulsive wave action and doesn’t have the right proportion for an ‘ABC “
I’m not an expert on EWT but I see the current 5th wave ending any day and not above SP1300.
The ABC that will soon begin will either correct the 5 waves up from July 2010 and terminate at/or above SP1000 or
The action since May 2010 top has all been corrective of the 5 waves up from 2009 lows. That is, the drop from May 2010 to July was an A, the current move is a B and the C will soon begin ending around SP 700. This C leg will also sub divide into an ABC
So, the A leg coming will the give way to a B leg up into the Feb/ March 2011 time frame. The C wave will then begin either ending at 1000 or 700. Depending on how far the coming A down is should give us an indication which level will be the ultimate low.
jasinhbca
ReplyDeleteYes - your original comment was in the spam folder. Sorry. Thanks for pointing it out.
And thanks for sharing your views on Elliott Wave!
Parker
ReplyDeleteI was working with your Parker Sentiment Indicator this afternoon, and it looks like it is setting up another short term negative divergence with the SPX.
And the negative divergence from the July peak in the Parker continues to grow. It think this is what is normally called a "Major" divergence.
http://stockcharts.com/h-sc/ui?s=$NYAD:$CPC&p=D&yr=0&mn=6&dy=0&id=p90287960482&a=210303548
Bill
Bill
ReplyDeleteI agree. The Parker Indicator shows a cash build up line starting in late July with multiple divergences. Another reason I would not be surprised by a correction soon.
Terry called a new bull move in equities a "foregone conclusion." Considering this is a coming at the highs and the countless other commentators who have become bullish in the last couple of weeks, I think the bullish exuberance index and equities are at some sort of high. Maybe we wont go down now cause no one is around but I imagine beginning of the year might bring some havoc.
ReplyDeletejasinhbca,
ReplyDeleteHere is my take on Elliott wave count from the March 2009 low:
http://market-innovations.com/gfx/insights/2010/chart1212.gif
It is a 62% correction of the 2007-2009 collapse IMO that will end next week.
Norm
thanks parker...i like the time similarity between the start of t13 and potential t14 also - good to note
ReplyDeleteNorm,
ReplyDeleteThanks for posting that. Your scenario would then suggest a C wave well below the 2009 lows, correct ?
Your wave "a" ending in April 2010 is where i am counting the end of wave 1 from 2009 low. I'm sure you realize that my second scenario previously mentioned would be that the correction about to begin is wave 2 down to 700.
I hope i'm right as that would only be about a 40% drop !
If that does happen then i would expect an X wave and more sideways consolidation for several more years as more people abandon equities and the Shiller 10 year pe ratio falls back to reasonable levels.
Either way we both are looking for a drop very soon.
jas
ps I'm holding QID - dbl short nasdaq
jasinhbca,
ReplyDeleteI have studied financial bubbles going all the way back to the Tulipmania in the 17th century. Invariably the panic down side of the bubble wipes out the mania up side. I believe the mania began in Decemer 1994 with the S&P 500 @ 460 so I expect to see that price level again.
Another way to project post-bubble price is to simply multiply the bubble top by 20% and prices will go below that number. For example: Tulipmania top 10,000 florins bottom 100 florins; South Sea bubble top 950 pounds bottom 120 pounds; 1929 Crash top (DJI) 381 bottom 41; Nikkei bubble top 39000 bottom (?) 7000; Tech Bubble NDX top 4816 bottom (?) 795. The S&P 500 topped at 1576 in 2007 -- 20% is 315!
Norm
Thanks for providing that perspective, Norm. I certainly see how your EW count fits in w/ that.
ReplyDeleteMy take is that the bull that ended in 2000 is similar to the bull that ended around 1965; don't have the exact date in front of me.
That market didn't break , i believe, djia 1000 for about 17 years; until 1982. I consider the tech com bubble as already being corrected in the Nasdaq and the other averages to be in consolidation for several more years.
Again thanks for sharing your research ! I will watch for that possibility as well now.
Market is strong. We just breached my 1240 target, now there is nothing stopping us from going much higher.
ReplyDeleteIf today's TRIN (ARMS) closes below 1, it will generate a second ARMS warning, back to back to the first one, with just a single day having a reading above 1.
ReplyDelete5-day and 10-day Trin are extremely overbought.
This is precursor to a sharp correction, not a precursor to an advance.
My guess is that the Null Echo effect, will come in spades this week, which is quadruple expiration week.
In addition, the following article indicates that the EU is going to stick it to the bond holders of national debt of countries which get in trouble.
http://www.bbc.co.uk/news/business-11978495
When everyone is looking for it, it never happens.
ReplyDeleteMarketlive,
ReplyDeleteSo are you saying that Terry and Parker have attracted too many followers for their forecasts to lose their effectiveness?
Jasinhbca
ReplyDeleteActually, the market top you are referring to occurred January, 1966 at Dow 1000. The Dow then recovered to 1003 in 1971, but did not break 1003 until Summer of 1982.
I remember it well.. I was hired by Merrill Lynch in January, 1966, then by Paine Webber in 1982. The most exciting 16 years of my life... Not!
Bill
Achilles - I am saying that everyone that trades is looking for a top and Bears are still hoping for "the day" when they will be proved correct. Terry flipped again (but that is standard). The obvious trade is to be bearish based on the economy. The more difficult trade is to be long and ride the wave. Hence higher prices..my 1240 Breakout is proving to be timely today.
ReplyDeleteAs of 10:30 am CST, NY Advancing Issues are down 17% today while the S&P is up 4 points. The divergence between price and the Advance-Decline line continues.
ReplyDeleteI understand today, Monday, Dec 13, is a Bradley turn date for the market. Does anyone here have experience with the Bradley model? I also understand the Bradley model often nails turn dates, but doesn't tell you what the trend will be when it arrives at the turn date.
ReplyDeletejoe
Parker, the buy program that has generated the 45% slope up on your 30 minute chart is buying only those shares needed to keep the S&P moving up. Until the market breaks down on volume, the price AD divergence will continue until volume shuts down the program. This is pure program manipulation. Nothing more. Likely the Fed, with Goldman's help, creating wealth effect for holidays.
ReplyDeleteHunt
ReplyDeleteI don't doubt you. But the remarkable thing is just last week we were talking about whether the Advance Decline line was "broken" because its rise had been unabated.
So, this divergence between S&P and NYAD is significant not only because it led to some sharp corrections in 1998 and 2007, but because it affirms the NYAD line as an indicator worth watching.
Hunt -
ReplyDeleteAs long as you believe it is a conspiracy the market will undoubtedly go a lot higher until you accept it. It is always a conspiracy when it rallies and always correct when it goes lower?
Joe,
ReplyDeleteThe last Bradley turn was November 16 and it was a bottom. The next one will arrive on December 26 +/- 4 trading days (Dec 20-30). Bradley turns are not necessarily THE cyclical top or bottom in the market. Simply a turn that may or may not be important in the overall perspective. It's just another tool in the toolbox.
http://www.amanita.at/FAQ/FragenzumBradley-Siderograph/Bradley-Siderograph/
Marketlive,
"It is always a conspiracy when it rallies and always correct when it goes lower?"
The answer is absolutely this is the case. The people large enough to influence the market significantly (I would say that the Fed and it trillions would qualify here) want the market to go up for a number of reasons. One would be to help their Wall Street buddies/masters unload their shares. Another would be their stated belief that a rising market supports the economy. Put on your tinfoil hat and I'm sure you can come up with other reasons but I doubt you could find one reason they would want the market to tank right now.
Norm
Parker,
ReplyDeleteThanks for pointing out that NYAD and SPX are diverging at the top. Technically speaking, the divergence is not official, until they both turn down.
$NYHLR has formed a triple top in Oct'09, Jan'10, and Apr'10. The most recent top in Oct'10 is a lower top.
Parker - you said the other day that the EW count showing this area around 1245-50 as a "C" top was the only way you could see us getting a Null Echo Low...
ReplyDeletedo you have any ideas what we are looking for
the dollar is firming a bit and finding support here
problem is my indicators are ALL positive with the exception of my $NYHLR:$NAHLR which could be as early as 3 months (which oddly corresponds to your April/May date).?
a dow close below 11451 would leave todays move unconfirmed in terms of the transports
ReplyDeleteParker
ReplyDeleteThe 30 minute chart has blown its credibility.. now it looks like the hourly is tracking most accurately
http://stockcharts.com/h-sc/ui?s=$SPX&p=60&yr=0&mn=0&dy=15&id=p90774999272&a=217222331
The divergences continue to build, A/D, A/d 10 moving average, Parker Sentiment among many, and now today, with the Dow and SPX up, the Dow Transports are down. It seems the Bond market does not believe the rally, as it seems to have caught a bid. Seems not every sector is on board with this move.
Maybe the Fed really does not have the power to move all the markets in correlated moves.
Just say'n!
Bill
Parker
ReplyDeleteI just wanted to add that not every investor is trying to make a profit with a Sell signal. There are other concerns for many......for instance, some people don't want to lose the profits they have gained, and are concerned more with capital loss than they are with lost opportunity.
Bill
good observations Bill - it's just such a crap shoot right now trying to make sense of this with the FEDROIDS PUMP
ReplyDeleteBKX is forming a bearish candle at hard resistance - don't think we can get a sustainable advance unless the financials get back to april highs...http://stockcharts.com/h-sc/ui?s=$BKX&p=D&yr=0&mn=10&dy=2&id=p37237136350&a=211382353
ReplyDeleteInteresting hourly chart Bill. Looks like we just broke slightly steeper trend line support dating back to November 30.
ReplyDeleteyeah baby...
ReplyDeleteParker,
ReplyDeleteHow do i setup the cumulative adv/decl line on stockcharts instead of just net daily number?
MONDAY, DECEMBER 13, 2010
ReplyDeleteto see his charts: http://carlfutia.blogspot.com/
three peaks and a domed house - update
As you know I think the stock market's action during the past year has been following George Lindsay's Three Peaks and a Domed House pattern. I last commented on this phenomenon in this post.
Above you will see a schematic of the typical three peaks and a domed house pattern. I think the April 2010 top in the Dow was point 7, the third peak. The July 2010 low was point 10, the bottom of the reaction which separates the three peaks from the domed house. Point 14 was the August 25, 2010 low. The importance of point 14 is that in a typical formation the top of the domed house, point 23, develops about 7 months and 10 days after point 14. This projects a top in early April, 2011.
At the moment I think the market is in the midst of the "five reversals" part of the domed house, points 16-20. This is typically an extended trading range with a slight upward slope. I am guessing that the early November top was point 15, the November 16 low was point 16, and that a top is developing now which will be point 17.
March S&P E-mini Futures: Today's range estimate for the March '11 contract is 1233-1244. I think the short term trend is still upward. Next upside target is 1250 which is strong resistance. I think a drop of 50-75 points is imminent. Once it is complete the market will resume its advance to 1300.
nicksmithcal
ReplyDeleteUnder "Chart Attributes" there is a section called "Type." Default is "Candlesticks". If you click on it, you get a drop down menu. Choose "Cumulative."
"Using Put/Call Open-Interest to Predict the Rest of the Weekby admin on December 13, 2010"
ReplyDeletehttp://leavittbrothers.com/blog/?p=3808
Jon,
ReplyDeleteThanks for the link. Interesting and very helpful analysis.
We now have 2 Arms Warnings back to back, with a single day (a week ag Mon) with Trin above 1. These two warnings so closely spaced should be a very strong signal of a sharp drop in the near future. In addition, we have 7 and consecutive days respectively when 5-day and 10-day Trin gave bearish readings.
ReplyDeleteIf the market stays flat through Friday (per the analysis in Jon's link - to kill as many OI puts and calls) then my guess is that the drop could start next early next week.
I meant to say that 5-day Trin has given bearish warning for 7 consecutive days, including yesterday.
ReplyDelete10-day Trin similarly gave bearish warnings for 8 days consecutively.
The Federal Reserve's policy statement is due at 2:15 p.m. ET.
ReplyDeleteargh!
ReplyDeleteMass confluence of Gann turn dates in the area of the cycle top of 12/29 with fixed dates at 12/31 and 1/3!~ Good trading!
ReplyDeleteParker,
ReplyDeleteHave you noticed 10 years Treasuries are approaching 3.4%, 30 years 4.5%. This is happening even with POMO in place and before the deal to add $850B to the budget for the next 2 years. To me the real story is that the buyers of our government debt are demanding better returns. This will have an effect on the stock market. The question is when.
I watch the SOX to get an early warning. Today the SOX is acting weaker. I'm guessing because BBY missed and that is an early warning that all those electronic goodies with semiconductors in them aren't leaping off the shelves.
Enjoy your posts.
Edwin
ReplyDeleteTreasuries are reacting just as any sane person would expect with the money printing. That Bernanke said QE2 would bring rates down means he is either insane, or secretly wanted rates up for whatever reason.
Good call on SOX. SOX and NDX seem to lead SPX recently.