Year: 2013

EWG , Germany, update

Hamilton

Predicting markets has become rather easy, all you need to do is count the number of days and multiply that by 50 points or whatever and you will know where the market will be at that time. Any problems along the way will be swept under the rug, legislated out of existence or simple ignored by the markets spin machine. But , here is Germany , then and now;

ewg june 17 2011ewg jan 25 2013

The then is from June of 2011, so about a year and a half ago. Now is now.  These charts show the very essence of Elliott wave. Sequences of 5 waves are always pointing in the then prevailing direction of the market. 3 waves, on the other hand, are always against the prevailing direction or counter-trend. Both the drops in 2008 and 2011 are 5 wave sequences and as such they define the prevailing direction as down. Both A-B-C’s in 2009/10 and 2011 , roughly, are counter-trend, in this case up. The logic behind this is that the human brain is wired in such a way that if we do something we like we take our time doing it. When we are doing something we don’t like we are guided by our “flight or fight” instinct, which is far more crude and abrupt (not necessarily in time but in the complexity of the structure!). So what we have is a main trend down, twice confirmed , followed by two big bounces.

Furthermore the EWG demonstrates the concept of “fractals” very well. This is when similar patterns recur in different sizes (degrees). Here you will notice that the big drop and rebound, from 36 to 12 back to 29, is repeated pretty well in an identical way in the next one from 29 to 17 back to 25. (See also blog on RIM for fractals). Right at this moment we are right on the downward sloping line connecting the three tops; next big move should be down. By the way, on shorter term charts both the RSI and MACD are also pointing down.

IMG, IamGold update

Hamilton

img jan 23 2013

See previous blog for the bigger picture. The stock needs a 4 and 5 to complete this leg down. If and when it reaches $8 or less it should be good for a rise back to about $12, a 50% gain. Look for the RSI to drop convincingly towards the 20 level.

DJIA update (also Nasdaq)

Hamilton

We have waited an extra day to make absolutely sure that we are wrong on our prognoses with regard to the DOW. Some might say dead wrong. Whatever the case might be this is the time to figure out what is wrong. Here is the big Dow picture;

djia jan 23 2013 b

What we show here is a count that some might offer to explain the events of the last few years. We have a large “flat” A-B-C for a wave 4, which is then followed by a wave 5 to new highs. Some might even suggest that  everything in this chart is a single pattern which , in my opinion does not exist in the EW vocabulary. The closest pattern that could fit is that of an expanding triangle from ‘99 onwards. The A-B-C would remain as is and we would now be in wave D that would go to 15/16000 and then wave E would take the index back down to 5500 or so. That would complete wave 4 which should then be followed by a 5th wave to a new high. The expanding triangle would take a total of, perhaps 16 years or so which is not disproportionate to previous corrections. This is shown in read.

We do not think this is the right interpretation. The wave up from the lows of March 2009 simple does not look like it can make it to the level required. Here is the Dow and the Nasdaq;

djia jan 23 2013 snasdaq jan 23 2013 s

Both display a very clear wedge that invariable is an exhaustion pattern. Neither has done much during the last year so clearly fatigue is already setting in. The Dow is within 250 points of the highs of 2007 and the Nasdaq remains more or less at the 60% retracement level from its 5000+ peak. The wedge may be a little longer than first anticipated but their is no question that it is there. So, for the time being we will stick to the original count, shown below;

djia jan 23 2013 2