(to watch on youtube: http://www.youtube.com/watch?v=JT9MaJ3fn9c)
It's not "if" the Euro will default, it's "when"?
Over the coming weeks the world is getting closer to "The Big ONE"... as in, the next big stock market crash! When is the hardest question to answer of course, but we know it's coming... and probably this month. This week old article (http://www.dailymail.co.uk/news/article-2041201/George-Osbornes-eurozone-crisis-warning-6-weeks-save-euro.html#ixzz1Ysp8pT2F) gives us a time frame to work with, and now we only have 5 weeks left.
Five Banks Account For 96% Of The $250 Trillion In Outstanding US Derivative Exposure; Is Morgan Stanley Sitting On An FX Derivative Time Bomb? (http://www.zerohedge.com/news/five-banks-account-96-250-trillion-outstanding-derivative-exposure-morgan-stanley-sitting-fx-de)
However, nothing is ever as simple as it looks. We all know that the market reacts to news in advance and sells off first (or rallies first) before the actually news is released. Hence the old phrase "Sell the Rumor, Buy the News"... and if the news is expected to be good, then it's "Buy the Rumor, Sell the News". So, since everyone is expecting more countries to default, causing the Euro to collapse, I'd say we have a valid reason to "Sell the Rumor"!
But, are we going to "Buy the News"?
From a technical analysis point of view the charts still remain mixed on whether or not we have completed the 5th wave down, inside major wave 1 down? On the NYA chart you can see a 5th wave down that was clearly lower then the August 9th low. But the SPX didn't make a lower low yet, but instead just put in a slightly higher low (almost a double bottom). So, does that mean we still have a 5th wave down yet to come?
This question is impossible to answer, but very important in trying to figure out what's coming over the next few weeks. If we completed that 5th wave down on September 22nd at 1114 spx, then we are now in a major wave 2 up that should take us up for several months now. But, I really find that hard too believe as we don't appear to have bottomed in my view. So, that has us still waiting for that 5th wave down to complete this first major wave 1 down.
If we continue to sell off for the next 3-5 weeks (waiting on some good news preventing the Euro's death), then we should complete the 5th wave down inside this larger major wave one down from the May 2nd high. This would again imply that the market would rally for several months carving out that major wave 2 up... probably into January of next year. But again, I find that hard too believe as well.
How can we rally though the rest of the year with the Mayan Calendar ending on October 28th?
Plus, we have the once in a hundred years date of 11-11-11 coming up, and you know that the gangsters are going to stage something bad on that ritual date. You also have the good guys taking about a "financial shutdown and reboot" on 11-11-11... which is a "tentative" date according to Ben Fulford, but still of importance to mention. Any way you look at it... It just doesn't make sense to rally after the Legatus Pilgrimage ends on October 23rd, and continue up for several months into next year.
So, what if all the Elliottwave chartists have got it all wrong? What if the 5th wave down (inside the first major wave 1 down) ended on August 22nd with a double bottom on the SPX, and since then we have been carving out a major wave 2 up? It would meet the requirements for it lasting several months like major wave 1 down did, and allow for major wave 3 down to start this coming Legatus turn date. Remember, wave 5's can be "truncated" waves... ending short with a double bottom or double top. This theory would change the entire picture and support my thoughts of a "HUGE" crash starting on October 24th!
While most people will be looking for a 5th wave down to complete this first major wave 1 down, they could actually be seeing part of major wave 3 down starting...
If this theory is right, then we completed major wave 1 down on August 22nd with a truncated 5th wave ending at 1121 spx. Then we started the "A" wave up in major wave 2 that ended on August 30th at 1230, followed by "B" down to 1136 on September 12th, and finally "C" up to 1220 ending the entire "ABC" move up that completes major wave 2 up. That then implies that we have started major wave 3 down from that 1220 high and appear to be in the first sub wave of that major wave 3 down.
Counting this is of course subjective, as all elliottwave counts are. They are easy to figure out after the move is over, but predicting them in advance is really just a guessing game. I favor this count because of all the evidence I've presented about all the important dates coming up the next few months. With all those ritual dates, (and the monthly chart just now dropping below the zero line on the MACD's), I just can't wrap my head around this coming move down completing a final 5th wave down inside the first major wave 1 down, and then allowing a multi-month rally to start late this month and into early next year.
While all this negative news about more defaults in Euro land seems like it could be a "sell the rumor" event, I just don't see the market "buying the news" when the actual defaults are announced and the Euro really collapses! I can't forget how many times Lindsey Williams stated that we have less then 2 weeks to get out of all paper when the Euro collapses... which doesn't sound like a "Sell the Rumor, Buy the News" event too me!
I think we are looking at a "Sell the Rumor, Crash the News" type event!
If I'm right on my subjective elliottwave count, then we could end this first minor wave 1 down this week (inside major wave 3 down), rally back up for a couple of weeks, to put in a lower high for minor wave 2... which should end by option expiration on Friday, October 21st (and that weekend of course ends the Legatus Pilgrimage on Sunday the 23rd), and finally start...
"Minor Wave 3 Down, inside Major Wave 3 Down, inside Primary Wave 3 Down"!
Holy Smoke's Batman, I think you've got something there! This is all just my gut feelings, along with the ritual dates, crazy news of a financial reboot, timing of Elenin, end of the Mayan calendar, Legatus Pilgrimage date, and of course the monthly chart looking like it's ready to puke! I'm sure there are other reasons I've missed, but I think you get my point... "I can't see a rally starting in late October into early next year for major wave 2 up"!
If my theory is correct, then there will be a lot of bulls that get smoked on buying this next leg down that takes out the 1101 spx low. They will all think it's the final 5th wave down, ending the first major wave 1 down, and will be looking for that multi-month rally up for major wave 2.... only to discover later that it was likely just minor wave 2 up inside major wave 3 down! Uh oh... that means a lot of bulls are going to panic when minor wave 3 down, inside major wave 3 down, inside primary wave 3 down starts! (And if I'm right, that will be the week of the Legatus Pilgrimage).
The last several months I've been trying to figure out where the market will be when the Legatus meeting is over, and it's now looking like it could be at the starting point of at least a combination of 3 big "Wave 3's"! Now I don't know what the actually price level will be at on this coming opx, but it's doesn't look like that FP of 127.07 SPY is going to be hit anytime soon, and probably not even this year! (Of course if my theory of this alternate EW count is wrong, and we rally up for the next 3 weeks and hit that 127.07 print by opx, then I'll be an even happier Bear and short this pig with all my fingers and toes!).
Anyway it looks, I still see the next largest move down to start that week of October 23rd...
(to watch on youtube: http://www.youtube.com/watch?v=emFpu8OC6qo)
I have to say that I just seen that possible count in the charts today while writing this post, and I don't know if that meets EW guidelines and rules or not... but then again, when do the gangsters every play by the rules? I only know that they will do everything in there power to trick the most amount of bulls and bears before the next plunge starts.
When we look at astrology and moon cycles, we see that the next Full Moon is October 12th, followed by a New Moon on October 26th. Usually, the Full Moon produces bottoms on that date (+/- 2-3 days) and the New Moon produces tops it's date. Since the 12th is on a Wednesday, we could expect the bottom to be as early as that Monday the 10th, or as late as that Friday the 14th, (if you add 2 days before and after to expand the window to match the plus or minus 2-3 days criteria).
My best guess would be that it would end 2 days prior on Monday the 10th, which would allow for a 2 week rally into option expiration on Friday the 21st to squeeze out the bears and get plenty of new bulls onboard expecting this rally to be the first sub-wave inside major wave 2 up. They will expect this to last all of the rest of the year, with only minor pullbacks to create "B" waves down inside the expected "ABC" up (or possibly a 5 wave push up, with waves 2 and 4 down inside that major wave 2 up).
Thinking outside the "retail sheep's mind" here, and thinking like a wolf... I'd rally the market up hard into that Legatus Pilgrimage date, and option expiration Friday, leaving almost NO dips for the trapped bears to get out, or the retail bulls to get long at. Then starting on Monday the 24th, I'd turn it back down for what the retail bulls would think would be the first buying opportunity before another larger wave up into the holiday season of November and December. Most everyone will be expecting a Santa rally, and believe the worst is behind us.
After all, we should have put in a lower low then the 1101 spx low, completing that final 5th wave down that everyone was looking for... right? Oh, but there lies the trap that few will see... "it wasn't the final 5th wave down they saw, but the first minor wave 1 down inside major wave 3 down". While they will be expecting some type of "B" wave down (or wave 2 down) to be happening that week of October 23rd, instead they will be in minor wave 3 down, inside major wave 3 down, inside primary wave 3 down... taking everyone by surprise!
Talk about a Panic, just wait until those "Wave 3's" start!
Moving on to the short term, I see a new FP of 116.05 SPY afterhours Friday. This is probably the upside target for Monday or Tuesday of next week. While I do expect the market to gap down on Monday and put in a lower low then Friday, I also think it will turn back up shortly afterwards and rally up to work off the oversold conditions on the short term charts and make them get overbought. Possibly that new FP is the upside target before they get overbought and turn back down?
As for the 127.07 print, I don't see that happening if we are in the EW count I'm speculating about, as that would throw that count out the window if that print is hit by opx (not that I care, as I'd still short it). Back to Monday though, I do expect a positive close after an early morning push down. As for Tuesday through Friday, I'm unsure right now? We'll have to cross that road when we get there. I'll just say that I expect the selling to end possibly by the end of this week or early next week, being close to the Full Moon date of the 12th. We should put in a lower low then the 1101 spx low in order to fool the bears and bulls into thinking that we have put in that final 5th wave down and should now start major wave 2 up.
Ok, assuming we have started major wave 3 down from the 1220 high on August 20th, then first micro wave 1 down completed at 1114, and then micro wave 2 up to 1195, which puts us in the first smaller sub-wave of micro wave 3 down right now. If we go back up to hit the FP of 116.05 spy (about 1160 spx) by the close Monday or Tuesday, then we would have completed the 2nd smaller sub-wave up of micro wave 3 down (This is all inside minor wave 1 down)
This would leave Tuesday/Wednesday to start smaller sub-wave 3 down, inside micro wave 3 down, inside minor wave 1 down, inside major wave 3 down, inside primary wave 3 down. Getting confused yet? I know I am... LOL! Alright, if that actually plays out like that, then we should bounce back up Thursday/Friday for micro wave 4, and then roll back down Friday/Monday (the 12th) to finish micro wave 5 inside minor wave 1 down.
This would allow minor wave 2 up, inside major wave 3 down to rally into option expiration on Friday the 21st, and possibly Monday the 24th. When done, it should align up with the start of minor wave 3 down, inside major wave 3 down, inside primary wave 3 down. This count, if correct?, should fool all, the EW chartists out there, and the technical analysis people too! It would certainly fool me, and has been fooling me until today when I discovered this alternate EW count.
Predicting the low for this move down before the 2 week run up into opx is hard too do... but a possible low is one just below the 1077 ES afterhours print we got from several weeks back. Often times, the market will retest these afterhours and premarket prints at a later date. This would make the SPX put in a lower low then the 1101 low on August 9th, and fulfill everyone's expectations that the final 5th wave down inside major wave 1 down is now complete.
Ok, I think I've about covered everything I can think of for my predictions over the coming days and weeks, so I'll close for now and simply wish everyone good luck as usual.