Wednesday, April 1, 2020

Elliott Wave Stock Market Update - March 31






















The market has traded within a range in the last few days and unless it is able to break out and rally towards 2855 soon then we might see substantial selling pressure. I am labeling this bounce a B or a W4 so I am expecting lower lows at some point. With the US having the most virus cases by far and now Trump saying keeping deaths at 100,000 thousand would be a "very good job", the really ugly numbers are coming out soon and I don't see how the current situation could hold prices at 2017 levels when everything was fine economically. I had been looking for a bear market for a long time but what is happening now is just terrible and I don't see this going away anytime soon.

Also, I am super short-staffed in my business so I don't have as much time to post. But I'll do my best.

Stay healthy and safe!

Short Term Trend = Bearish trend being challenged
Medium Term Trend = Bearish
Long Term Trend = Bearish


* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking

Thursday, March 26, 2020

Elliott Wave Stock Market Update - March 25






















The market fell to a lower low on Monday at 2191 and has rallied substantially since then. This doesn't mean that we are seeing "the bottom" but rather a relief rally from an extreme oversold condition and the ending of a bearish 5 wave count. Hard to see how far the counter-rally could go but the next level of resistance is at 2855 so there is plenty of room to go. Ideally, we would see an ABC test 2855 or the 50 DMA in the next week or so and then see another strong sell-off towards sub-2000 levels. Given how the numbers from how the number from coronavirus is rising, we might see the next intense sell-off wave when cases are in the hundreds of thousands or even over a million. I said last week that we were going to surpass China in coronavirus cases this week and unfortunately it might happen by the end of the week. But that's not even what would cause a complete market collapse, it is the ongoing realization that our government is not capable of handling this crisis. We now have Trump declaring that he wants the country to go back to normal by April and that the media is making this a big deal to "hurt his re-election chances". All these contradicting messages and the absence of a coherent strategy will ensure we will have the most cases in the world by far and an economy that could go into not just a recession but a depression. The strategy of doing business as normal and ignore the hundreds of thousands if not millions of people dying can only work in Trump's brain.




Stay healthy and safe!

Short Term Trend = Bearish
Medium Term Trend = Bearish
Long Term Trend = Bearish


* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking

Saturday, March 21, 2020

Elliott Wave Stock Market Update - March 21






















Two weeks ago I mentioned that it was just a matter of time when all the states would be infected with the virus and unfortunately the entire mainland is now infected. The drop in prices already reflects the virus itself, what the market is not able to predict is the government response which is nothing short of a complete disaster. Today, we are just behind China and Italy in infections and looking at the numbers we will have more cases than China by the end of next week and until the government declares a nationwide lockdown, the problem is not going to go away. I am in California and we have a governor that takes this very seriously so if we get lucky, we might be able to keep to flatten the curve of infections. But what stops people coming from other less strict states from infecting us back? the whole thing is so stupid and I can't believe we are stuck with an imbecile making national decisions at this time of crisis. Which brings me to the market and why it seems likely that the sell-off will continue to extreme levels. Right now, things are so bad that it is impossible to predict when this will end so prices are probably headed towards an extreme drop like we had during the financial crisis if not worse. No monetary policy is going to stop the fall as the country will not be able to function normally until a national lockdown is in place which under the current government looks unlikely. So while we might see some counter-rallies here and there, I see prices headed towards sub-2000 fairly soon and possibly headed towards 1500 depending if the number of infected are going to be in the hundreds of thousands or in the millions. Right now, I think we will be well over 100K by the end of the month.

Stay healthy and safe!

Short Term Trend = Bearish
Medium Term Trend = Bearish
Long Term Trend = Bearish


* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking


Monday, March 16, 2020

Elliott Wave Stock Market Update - March 16






















The market has plunged again. Despite having one of the strongest rallies ever on Friday, prices had an almost -12% decline. One of the biggest in history. So, looking at the count it seems like the top made on Friday was a W4 and there is still more downside to come on a W5. Support as I said last week is 2346 which is not looking like it will hold.  Below that is 2134 and if that doesn't stop the selling then there isn't much to hold the market until 1867. The Feds are now basically almost out of bullets as it dropped rates to near zero and are implementing QE like efforts but the problem we now have is not monetary. It's an admission that we are going into a recession and we have no idea when it will stop or how bad it will get as the worst numbers have not even come out yet. Trump has gone from saying the virus under "tremendous control" to "maybe the virus will last until August". Had Trump actually listened to experts in early February and taken the whole thing seriously as any normal person would, we wouldn't see the crisis we are seeing right now. So while the virus is a black swan event, it could have been handled completely different. The sad thing now is that blue states are moving ahead on their own with the most strict measures and the Federal government seem to be following the blue states lead with the red states being left behind. What this means is that red states are now the most unprepared for this because they have been trusting Trump all along with his "expert" assessment of pandemics and viruses. Trump is basically done despite giving himself a "10 out of 10" on his handling of the virus.

Stay safe and healthy!

Short Term Trend = Bearish
Medium Term Trend = Bullish trend being challenged
Long Term Trend = Bullish trend being challenged


* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking

Friday, March 13, 2020

Elliott Wave Stock Market Update - March 13






















The market staged a strong counter-rally today after the market bottomed in the 2300+ area (taking into account pre-market prices), posting one of the strongest rallies since 2008. However, the week closed -8.43% and in a bear market territory. Assuming the sell-off this week is a completed C wave, we should see a continued bounce towards a test of the Trend Average before another bearish leg to lowers lows. However, if the market makes continues to sell-off early next week then we are looking possibly at a W3 which much lower prices to come in the near future. Considering the really bad news will probably come later next week or in a couple of weeks, a continued rally would make sense before another plunge. The nation is finally officially on alert now that Trump announced a national emergency (about 2 weeks too late) and the panic is just barely getting started. So the fundamental picture favors substantially lower lows. Whether they will come in the next few weeks or a few months down the line remains to be seen. At this point it's obviously impossible to predict the ultimate bottom but I think if the number of infections end up being in the hundreds of thousands we could be looking at a similar drop percentage-wise as the one we had during the financial crisis from all-time highs. The equivalent to 666 in today's numbers is 1450 more or less. So perhaps, this is a chance to multiply your capital after patiently waiting for years as I am sure once everything clears up we will see prices go back to all-time highs.

Stay safe and healthy!

Short Term Trend = Bearish
Medium Term Trend = Bullish trend being challenged
Long Term Trend = Bullish trend being challenged


* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking

Thursday, March 12, 2020

Elliott Wave Stock Market Update - March 12






















The market plunged today almost 10% in what was basically panic selling. Trump's attempt at calming people and the markets didn't go too well, specially when he banned travel to and from Europe but not UK or other parts of the world?! His ineptitude is shining bright and only the blind can not see. I mentioned yesterday that 2600 was key monthly support and now that the level has been breached we are looking at 2346 as the next stop. If that support doesn't hold then prices might go down to as low as 1850. Assuming what we are seeing now is a W3, a 5 wave down structure would target 2000. I assume there will be a strong bounce from the bottom but it's not a given. We might just see a sideways move before another bearish leg since the REALLY bad news are barely just now making headlines. The lack of testing I mentioned yesterday will be exposed in a matter of weeks and only then will we know what we are truly dealing with. I started transferring funds to my trading account but won't make purchases yet unless I see something ridiculous like 1500. This sell-off has gotten ahead of itself but a true bottom will probably take some time.

Short Term Trend = Bearish
Medium Term Trend = Bullish trend being challenged
Long Term Trend = Bullish trend being challenged


* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking

Wednesday, March 11, 2020

Elliott Wave Stock Market Update - March 11






















Prices fell to a lower low as expected after a rally yesterday and today's low went below the 2728 multi-month support I mentioned on Monday so there is a good chance 2603 will be tested. We might see strong counter-rallies like the one on Tuesday but they will probably be sold into. Putting waves aside, the problem we now have is just barely getting started. The problem is that we are more like Italy than China or South Korea. The reason the corona virus spread so fast in Italy is because they had some cases that were undetected for over a month, this means the virus had more than a month to spread all over the place and now the entire country is in quarantine and a recession there is virtually assured. In the US, we have a similar situation. There are people who have not been tested who carry the virus and are spreading it without knowing. Is not only until we have plenty of test kits available that we will know the true number and then figure out what to do but by then we probably will have cases in the 10's of thousands. The Trump administration needs to take this very seriously before it becomes a national disaster. Trump and his followers have been going around comparing this virus to the flu which has killed 20 thousand in the last year. Sounds like a few dozen dead is negligible at this point? yes if you are a simpleton. What this type of thinking doesn't take into account is A) We have a flu shot, which saves approximately 60 thousand lives per year and there is nothing against this corona virus at this point. B) The fatality rate is 2 to 3 times as deadly as the flu so a simple calculation yields 160-240K additional deaths in a year if the corona virus is left to propagate like the flu. So the government MUST start restricting travel not just from foreign countries and across state lines right now, set up zones and declare a national emergency. The more Trump goes around trying to minimize the problem, the bigger he will make it as his loyal followers seem to believe everything he says and will go around like nothing is happening. This time, Trump can't divert attention, blame Obama or BS his out of this one. We need someone who listens to experts and follows their advice not someone who is just worried about the economy and his own election prospects.

Anyway, now that I've said what has been on my mind, I predict a recession this year. The market might find a bottom at 2600 but there is a high probability we will see lower prices given the backdrop. Major long term support is 2346 if 2600 breaks and then 1860 which would reverse all gains made since Trump took office. In the event of massive panic, we could see severe selling to as low as 1450 which would be a gift!! I am sitting on a pile of cash and maybe I'll get to spend it all during one of these panic attacks.

Short Term Trend = Bearish
Medium Term Trend = Bullish trend being challenged
Long Term Trend = Bullish trend being challenged


* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking