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Tuesday, 16 December 2014

S&P 500, NASDAQ, Hang Seng, DAX, Nikkei, ASX 200 weekly charts all suggest further downside potential

S&P 500 has turned lower from the top of its trend channel.

NASDAQ 100 has turned lower from the top of its trend channel.

Hang Seng has broken trend line support, and the Elliott Wave count that I have been tracking for some months remains on track, suggesting 60%+ downside potential in the next year or two.

DAX looks to have completed a bearish false break above two lines of resistance. Also its behaviour is an echo of the big peak in 2007 (not shown), where it made a high mid year, then declined before making a marginal new high toward the end of the year, then cascaded lower til early 2009.

Nikkei has turned lower at trend line resistance

ASX 200 is trading below parallel trend line support. I've left this one til last as you might be getting tired of me banging on about it. But just in case you missed last night's post, I think this market may just be beginning its steepest and strongest decline since it peaked in August.

Gold showing bullish false break of up trend line drawn from 2005 and 2008 lows

Arithmetic scale monthly chart. I usually only look at log scale for Gold (eg. last week's post) but am playing around tonight. Interesting, I think. Both arithmetic and log scale long term charts suggest that last month's low is key, and that a meaningful rally may have begun there, perhaps even toward new record highs.

AUD/USD testing trend line support drawn from extremes in 2004, 2005, 2010

Monthly chart. As I've shown previously, the AUD/USD has broken lower from its recent down trend channel. The current test of trend line support looks important to me. Like any trend line test, could go either way.

EUR/USD nearby/testing key trend line support drawn from 2010 and 2012 lows

Monthly chart. Came close to a trend line touch earlier this month, but was pips away, for what it's worth. Failure to test may be a sign of strength, or perhaps an actual trend line test awaits?

Monday, 15 December 2014

ASX 200 Elliott Wave count suggests powerful decline beginning

The ASX 200 daily chart Elliott Wave count illustrated below indicates that a third of a third decline is beginning, ie. the third wave of a third wave. For non-Elliott Wavers, it is enough to understand that third waves are usually the most powerful portion of a trend, and a third of a third can be a sight to behold. It's also worth explaining that an Elliott Wave count is not a forecast, merely a reading of the best way to describe market action to date, which under the Elliott Wave model provides implications for the most probable outcome going forward. In markets, uncertainty reigns, but often one outcome is more likely than others.

Weekly chart zooms out to illustrate the path the market should follow in coming weeks if (IF) my count proves correct. If we do not see a swift decline, I will be looking at alternate scenarios. A move above the purple wave 2 peak would weaken the immediately bearish case. The chart also shows that the market is trading below parallel trend line support.

Monthly chart shows my long term EW count. So long as the weekly trend remains down, this is the scenario I expect to see unfold over the next two years or so ie. a move below the 2009 low, at least, and likely a move closer to 2000.

Thursday, 11 December 2014

ASX 200 down trend continues

Daily chart shows that the trend is down, no matter how you look at it, either through the lens of trend lines or moving averages. Will we see a Santa Claus rally? I have no idea, but betting against the trend is not a winning proposition in the long term.

Weekly chart moving averages indicate that the larger degree trend is also down.Trade this week has been unusual in that it has broken both the high and low of the previous week. Monday's upside break proved false. The trend suggests that today's false downside break will not remain false for long.

Monthly chart illustrates my view on the most likely Elliott Wave count and scenario. This will remain the top scenario unless the weekly trend turns up.

S&P 500 bursts below trend line support

Daily chart shows the S&P bursting below trend line support. Will we see a Santa Claus rally? Perhaps but upside potential appears limited, first by that nearby trend line line resistance, and also by the position of the market on longer term charts.

Weekly chart shows that the turn lower began at the top of the trend channel drawn from the 2011 low, meaning that the rally is stretched. Yes, the rally could remain stretched and even stretch further, but every rally has its limit. And like a rubber band, when the limit is reached, the subsequent action can be spectacular.