The Tide is Turning

Posted by Max Andronichuk / / / 0 comments

Hello to all who take an occational look at this sorry excuse of a blog, I must again apologise for not posting anything here is such a long time. University life has been quite overwhelming lately, the Libertarian Party is having a candidate stand in St Albans and I have been helping out with the campaign organisation/management...

anyway, I will try and make posts more frequently, but with only the ability to have daily/weekly/monthly charts, I think I will only post when there has been some significant development.


And so here are my 2 charts for FTSE and the Dow Jones. I chose not to do SPX because it is pretty identical to the Dow Jones in structure (as is obviously expected).





Looking at the FTSE chart above, I must first say that I have a small short of this market as of Monday this week. Last time I posted this FTSE chart I was very bearish and the market just shot up slightly higher taking me out, I have since re-entered a short position and am now pretty much on break even considering my previous loss.


Now there are quite a few reasons for my bearishness... I’ll start with the waves.
According to my count we are looking at a wave 4 of a big A down... now for this count to stick, this wave 4 cannot overlap the low of my wave 1 (5350). As you can see on the chart there is a bold red line marking this wave 1 low. This area has seemed to have worked as great resistance, with several doji candles and no real progression of the market. The FTSE has seemed to have rallied stronger than the Dow and SPX in the sense that the other 2 are not anywhere near their respective wave 1 lows. But so far the count still holds.

The second factor is that the market has stuck between the 162% Fibonacci projection (purple) and the 62% retracement into wave 3 (blue). If you look at my waves “a-b-c” structure since the march rally, you will see that “b” retraced perfectly into “a” by 38% before moving further on up. This is a very clean retracement and projection, and it seems to be working rather well as it clusters quite closely with the wave 3 retracement.

A third factor to consider is the “Counter trend channel” that seems to have formed. This supports the analysis that the overall trend is still down and that this rally is corrective.

And finally take a look at the MACD. There has been some real divergence of this indicator for AGES! (to my annoyance). This really suggests that this market has been overbought for quite a while, but if you look what it has done recently, you can see that it is breaking out of its “wedge” range, this is VERY bearish.


So as a conclusion, in short term, I think we may have a small bounce to make a small wave 2 before we fall further. Medium term the trend is down, Long term the trend is down.

NOTE: The above chart does not show FTSE activity today. It is currently down around 80 pips, at its low so far it was down nearly 100.





Looking at the Dow Jones, the first thing to mention is that it is in an upwards wedge formation. This works as a counter trend pattern and again supports the analysis that the rally we have seen since march is corrective and not impulsive.

Now you can see that the Dow has not rallied as far as the FTSE in relation to its wave structure. Looking at the “a-b-c” formation here, there is something that this chart does not show but it could be of significance. The running flat I have for wave “b” actually hits the 27% retracement into wave “a”. Now this IS a fib retracement level, but not one of the more well know ones (38%, 50%, 62%).

With this in mind, we can see that the market has rallied slightly past the projection and just above the 50% retracement of wave 3. This area has however caused some serious resistance to emerge and the market has dipped off the highs made and has not managed to hold the magic (psychological) 10,000 mark.

If you look at the MACD indicator for this market, you can also see that the Dow MACD has actually broken out already and has just retested the MACD channel. This is something the FTSE has not yet done, but none the less it is a bearish sign that this market may be ready to start breaking down soon.

Like the FTSE this market has also had a lot of MACD divergence for a while, but it has just gone up and up and up... it still suggests that this market is overbought.


Short term trend, again as with FTSE there might be a slight bounce coming. Medium and Long term the trend is down.


With both of these markets, I am calling a top. An accelerated breakdown will of course confirm this.

Weekend Review

Posted by Max Andronichuk / / / 5 comments

I thought it was about time I made another Weekend Review, mainly for the reason that I am finally looking to make my first trade on Monday and I will be going SHORT.

Take a look at these charts. First the FTSE. This too me looks like it has topped, with wave “c” being a perfect projection of wave “a” with fib extension levels. I think its pretty unquestionable that the fib. Levels have worked perfectly. Retrace to 61.8%, and then a perfect 161.8% projection!

You may also notice that in my last “weekend review” I was arguing for an expanding wedge formation in all major indexes, it seems that I was correct with this analysis.


I will be looking to short this market with a stop loss above the most recent highs. Even looking at the candlesticks, this market looks like it has hit some REAL resistance. If the bearish scenario does play out as planned, a key level for the FTSE to break will be 4500 (just above), which is the top of wave “a”, this will really serve as a confirmation that the pattern is complete, otherwise we could be looking at a 4 retracement, with a 5 making a higher high, suggesting to me that the bear market is over! (but I think this unlikely)

However, the headache I have is the internal wave count. If you look, you can obviously see that what I thought was a 3 is now the shortest of the impulsive waves, contradicting the purple count...
so where from here. Well, a possibility is that purple 3 and 4 are just 1 and 2 of wave 3.
Another idea is that it isn’t a 5 wave structure, but an abc-abc to make a double zig-zag “c”.


What are your views?

I think the top looks too convincing to me right now, we have a MACD sell signal with divergence, we have a perfect Fib extension hit, and we have it hit perfectly the top of my expanding wedge. Is this really all coincidence?



Looking at the Dow, we haven’t got the fib extension like the FTSE, but we have a perfect 50% retracement of the bigger picture wave 3! (what I argue is wave 3). We have a perfect touch of the top of the expanding wedge, and we finish with a MACD Sell Signal with Bearish Divergence!


I think next week, the markets are going to be painted blood red.


What do you think?

Weekend Review

Posted by Max Andronichuk / / / 9 comments

THE BIG PICTURE


This is the chart of the FTSE 100 UK Index






This is the Dow Jones.






This is the SP500





All three of the above charts show the "Bigger Picture" that I am arguing for. It seems remarkable that if you look at all three, the start of the crash shows all three making a "Descending Broadening Wedge" formation (perfectly). I am arguing that this formation, with 5 internal points be counted as a 1 down (red count). The rest as follows is 2 and 3, thus this rally we are seeing is a 4!

I am interested to hear what other Elliot Wave theorists make of this analysis, because I have yet to find someone who has been able to pick up on this pattern in all three markets. This pattern suggests to me that this move down is in fact a 5 wave (red count) big A.

So the expected decline will break the march lows, but perhaps not as far as expected by the permabears, and then we will have another big rally to make the big B, followed by one more fall to make a big C, completing the correction for this bear market. This possibility to me seems increasingly realistic, as it would allow for plenty of downside room for the big C.




RECENT ACTION



This is the recent FTSE activity.






This is the recent Dow Jones.






This is the recent SP500.





Now these three chars also have an interesting pattern, they all look like there is the possibility of an "Ascending Broadening Wedge", marked by a purple count on each chart. This also leave the possibility that the Dow and SP will push up once more towards the 50% retracement level of my argued wave 3 (red count). FTSE on the other hand looks more complete, so perhaps some sort of double top if the other two play out according to the purple count. FTSE has already hit and found trouble at the 50% retracement.

The other possibility that I consider is that the tops are in, and that the green counts will unwind in the early days of next week. There is a case that the red lines of resistance on Dow and SP will not be broken (with Dow there is also a cluster of resistance and the 50% retracement). However, looking at the Friday rallies for Dow and SP, they look particularly strong from a candlestick point of view compared to FTSE, this makes me think that the purple count is still a valid option.


I hope these charts have given you an alternative view that proves interesting. As Roy used to always say, "keep an open mind" so I am trying my best.


Please let me know what you think.

1929 rally in Dow Jones?

Posted by Max Andronichuk / / / 0 comments

Here it is, my first post concerning financial markets. Let me explain that with the charting software I am using (can afford) I am not able to provide any timeframe smaller than daily, but hopefully you will still find it helpful.


The Dow Jones looks to me like it has made an (a)-(b)-(c) decline to make a big (A) down (apologies for this big A not being labeled). The primary reason I am labeling this as an (a)-(b)-(c) decline rather than a 1-2-3 is because of the wave structure of wave (a)/1. I cannot see a clear 5 wave down without an overlap to make a 1. What I do see however is a clear zigzag, with divisible 5 waves in both the a and c waves to make a clean ( a ). The rally we are seeing also seems too prolonged to be a wave 4 when you compare it to the duration of wave (b)/2.


This bear market rally has surely been quite painful to watch for us devout bears out there, but it looks like we may be forced to sit on our hands for a little while longer. Looking at the rally so far I think we can say we have seen and a-b and are in the final C leg up, which we should keep an eye out to have a 5 wave structure (as this is a zig zag).

I have put in two Fibonacci retracements, assuming that the above analysis is so far correct. The first Fib retracement levels are of the big (A), the second Fib levels are of the (a) for this big (B) we are seeing.

Here is the interesting part...the Fib projection of wave (a) of (B) clusters with the 50% retracement of wave (A). This increases the likelihood that we could see this wave (B) take the Dow Jones towards 10370.

Interestingly if this does occur, the current market crash will look very reflective of the 1929 wall street crash, the key 50% retracement level is also the most important retracement level for Gann traders, keep this in mind (Gann correctly predicted the 1929 crash).

The last thing to keep an eye on is the MACD, I have drawn in a possible column that the MACD could be in, I will be watching to see how the indicator reacts to the support/resistance lines drawn in. If these lines are respected, a MACD sell signal at the upper end of the column near the price of 10370 could be seen as an important sell signal.



Short Trend: Down? (possible correction coming)
Medium Trend: Up (10370 target area)
Long Trend: Down