Barron's April 22nd, 2013 Magazine Edition Tells Us The High Is Near!

(to watch on youtube: http://www.youtube.com/watch?v=ZLzB7i1MyRE)

Red

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(to watch on youtube: http://www.youtube.com/watch?v=qxa8k7pGpAA)

Hitting the old 2007 high seems certain now, and after it's hit a several week pullback should follow...

The spoken (but of course not guaranteed) rule is that the longer the period between one prior top and it's double top in the making the stronger the resistance.  Therefore the odds are much higher for a pullback before making a third attempt to pierce through that double top and make a new all time.  As for how far and how long the pullback will be is usually based on how overbought the market is on the various time frames.  Looking at the daily, weekly, and monthly charts one could argue for a several week pullback versus just a few days... and I personally concur with that logic as well.

I'm going to present two different scenarios here but both have the market pulling back next week.  Each scenario is just the longer term wave count but in reality the only difference in the price level of the market and not the expected periods of the highs and lows.  Since I'm not an Elliottwave expert I'm going to study the charts of someone that is, and input possible future wave counts with likely date periods for the highs and lows.  One of the counts puts a new all time high next year and the other puts it this year.  But both counts still give us the important turning periods.

Scenario One...

First, lets go over what I said in the last post.  I proposed that we would top in the first week of April and then sell off for several weeks toward the end of the month.  I was thinking that wave down was going to be a wave 1 down with the move back up starting in late April and likely ending in late May (with the 22nd being my target date) being called wave 2 up.  Then a wave 3 would follow which would be one very nasty panic wave of selling.  This was also based on the high being hit in the first week of April to be nicely above the prior all time high of 1576.09 SPX in 2007.  My thoughts were that we'd do some type of ritual number like 1666, just like they bottomed at 666 in March of 2009... and had an intraday low of 333.33 on the day that the high was put in for the year of 1987 before the crash that followed later that year (that date was 08/25/1987).

While hitting 1666 would probably be very obvious to any "red pill taker" today (and even some "blue pill takers" would figure it out too) the odds of that happening on Monday, (the ritual "eleven" date) seem very slim with the SPX closing at 1569.19 on Friday.  This leaves the next ritual "eleven" date of April the 10th for that possible high happening.  But I just don't think that's the way it's going to play out now.  I've been doing more studying of what happened in the past and I now am going to give that scenario low odds and go with the second scenario that I'm going to go over now.

Scenario Two...

I was reading Tony Caldaro's blog last week (which I haven't done in a very long time) as I wanted to get his Elliottwave count on all the various waves and see if I'm missing something.  Sure enough I did indeed overlook something (assuming history repeats itself?), which I didn't go looking for until I seen Tony's wave count was different then mine.  Since I'm not an expert at EW theory and Tony is I decided to go back in the past to see if it was possible that his wave count could play out (and to see if it had happened in the past as well).

So what is his wave count and how is it different from mine?  Of course I'll go over that in the video but let me see if I can explain it here for you as well.  Tony proposes that we are in an "intermediate wave 3" up right now inside a larger "major wave 3" up... inside an even larger "primary wave 3" up.  His count would suggest that we still could drop for an "intermediate wave 4" down anytime now, which I suspect will be on Monday when (and "if"?) we hit the double top zone of 1576.09 spx (hopefully pierce it by a few points), which could last 2-4 weeks toward the end of April.  This then leaves the wave up into the late May Legatus meeting to be a final "intermediate wave 5" up and not a wave 2 as I previously thought.

This also means that the current coming double top zone must be broken for that to be a valid "intermediate wave 5" up.  I'm thinking we'll hit 1610-1630 spx around that May 22nd ritual date now, which obviously won't be the wave 2 up like I previously thought but the final 5th wave up (intermediate) inside a larger "major wave 3" up.  This would setup the first wave down from that May peak to be an "intermediate wave 1" (or wave A I guess?) inside a larger "major wave 4" down.  The start of major wave 3 up was 1266.74 spx on 06/04/2012, which leaves a lot of room for big 5 wave (intermediate) panic sell off to happen.

But, here's where I disagree with Tony...

Tony states on his weekend post that he see's the top for the bull market in February or April of 2014... which of course there just happens to be a Legatus meeting then too!  Coincidental?  He also see's a high of 1650-1700 spx, which I see a ritual number like 1666 spx, so we agree on those two points. But I don't understand his wave count that he has laid out because it would project the market way higher then this 1650-1700 top area.  Let me explain... if we follow the plan with his wave count into May and put in a high of 1610-1630 that will complete the intermediate wave 5 up and the major wave 3 up then the first of a suspected 5 wave (or 3 wave) intermediate wave series down should start.  This also starts major wave 4 down, which again needs to stay above 1266.74 to be valid... but that leave major wave 5 up that needs to take out the late May high of major wave 3 (thinking 1610-1630).

So if that happens to be his 1650-1700 target just how do that end the bull market?  That only would complete major wave 5 up inside primary wave 3 up.  Where does primary wave 4 down and primary wave 5 up come into play?  My speculation is that primary waves one, two, and three are really A, B, and C and there won't be a 4th wave down and 5th wave up, as if there were the high would be closer to 2000 spx... and I just can't see that happening.  The other alternate is that the major wave count is wrong and the move down in May starts primary wave 4 down and that top completed all the major waves up.  Then we could go down as deep as 1074.77 to make a primary wave 4 down and back up to 1666 for primary wave 5 up.

This lines up with Tony's call for a final high in early 2014 but ironically doesn't match is wave count?  I'm not sure if I'm missing something here but I've went over this many times now and I can't make the waves match up with his target for the end of the bull market... not unless you change the label's of the current waves.  But I guess the wave patterns aren't really that important as the most important thing here is to catch the turning points correctly so we can all make money from the moves.

Therefore, I still calling for an important top this week with April 1st being the most likely date...

Then a 18-20 calendar day sell off seems likely... if history repeats itself.  Followed by a rally into the next Legatus meeting May 23rd-25th, 2013 with the most likely topping date being on May 22d (which is a double "eleven" date).  Whether that date is accurate or not remains to be seen... and some how I wouldn't doubt that it won't be accurate just because I've been talking about it so much lately.  If the gangsters read this blog (and I"m sure they do) then they will most likely change the date just so I'm wrong.  So just take that date as potential date and not something written in stone.  Many, but not all, important tops are on "eleven" days... which I'd guess at 30-40% of them are.  That's actually pretty high considering that they could land on a one, two, three, four, five, six, seven, eight, nine, or ten day just as easily... which when adding in the 11th day you have odd's of only around 9% for each number.  Therefore hitting "11" 30-40% of the time isn't normal... unless of course it's planned.  😉

Backing up a little, I mentioned that I looked back in the past to see if Tony's wave count every happened or something similar... and something sparked my eye.  When the high was put in on 03/24/2000 of 1552.87 spx it was truly and "all time new high" that there wasn't anything even close to it in the past to compare it with.  That was the intraday high and the closing high was 1527.57 which was revisited on 09/01/2000 when an intraday high of 1530.09 was reached but failed to hold and closed at 1520.77 spx.  That was the last time the market would see that level until 2007 came along.

(to watch on youtube: http://www.youtube.com/watch?v=ACvZH2YSTiM

Seven years after that 2000 top the market hit 1555.90 spx on 07/16/2007 with it's intraday high.  It couldn't hold that high, (which was just 3.23 points over the intraday prior high), and closed at 1549.52 that day.  The market then dropped Tuesday and continued into Wednesday the 18th for the first wave 1 down.  It put in a nice bottoming tail on Wednesday and rallied hard on Thursday the 19th to hit 1555.20 as an intraday high.  That move completed the wave 2 up which was followed by the start of the wave 3 down on Friday the 20th.  That move lasted for 18 calendar days until wave 3 down bottomed on Monday 08/06/2007 with and intraday low of 1427.39, or 133.51 points in total from the top.

Then you had a wave 4 up that lasted 3 days topping that Wednesday the 8th, and then a wave 5 down that lasted until an intraday low of 1370.60 was hit on Thursday August 16th, 2007.  The total 5 wave move down was 185.30 points in total and 28 calendar days.  What's important to see here is that a double top that happens after 7 long years did indeed produce a very nice sell off.  That's why I'm also expecting a similar type of sell to start this week when we hit (and slightly breakthrough the 1576.09 double top from 10/11/2007.

This all leads me up to May 22nd for another all time high and sell off to follow...

I'm not going to go count all the waves made prior to 07/16/2007 high (from 2000) as you can study Tony's charts for that... or a dozen other EW chartists.  The thing that caught my eye the most about this period was the fact that after the 2000 high was broken the market did sell off, but more importantly it recovered to make again another new "all time" high on October 11th, 2007, which was 1576.09... a 20.19 point move higher then just a few months back.  This supports Tony's theory that we are in intermediate wave 3, which if tops on April the 1st and drops for 2-4 weeks to make intermediate wave 4, then intermediate wave 5 up should be around 20 points (or so) higher then this early April high.  And if that high is say 1580 then 1600 or more seem reasonable for late May.  My thoughts are for a little higher move (1610-1630) as rarely do patterns repeat exactly.

Besides that, if you are going to have a 1929 style crash this time around (and I believe we are) then you should certainly go a little higher then everyone expects.  If you get up to 1610, 1620, or even 1630 spx in late May then I'm pretty sure every bear will go back into his cave and give up for the year... only to miss the really nasty bear feast that should follow.  Remember that this major wave 4 down can be as low as 1266.74 (the start of 3 up and the end of 2 down), which is over 400 points from where we are now.  That could very well end up being primary wave 4 down (which is my thoughts) if Tony's count on the market being in a major wave 3 up is wrong.

I personally thing we will complete not only the intermediate wave 5 up in late May but also the major wave 5 up.  I can't figure out how the wave count really could line up but it makes more sense to be starting Primary wave 4 down in May (to end in Sept/Oct 2013) followed by Primary wave 5 up into spring of 2014.  I say that because I believe the sell off to start in late May will likely be faster then many will expect, much like the 2011 summer sell off was.  I really see it as being a primary wave 4 down with primary 5 up into spring of 2014 ending the whole rally from the 2009 low.  Tony's the expert here on EW counts and then only thing I can't figure out is those major wave's.  For this to work out as I expect both the 3rd primary wave up and the 5th major wave up must end in late May.

Brief update from Ali...

Ali hasn't any new updates per-say as nothing has changed.  But he did email a few days ago with more supporting evidence that this move down in May will be a very, very nasty wave... which is why I think it will be a primary wave 4 down (which can go as low as 1074.77 to still be valid), and now just a major wave 4 down inside a primary wave 3 up.

Uranus 17-Year Cycle... you may examine the cycle in detail back to 1897. We are currently in a 17-year sideways-to-down cycle that began in the year 2000. Each sideways-to-down cycle contains a mid-cycle panic as Uranus crosses the 36° harmonic, as it did in October, 2007.

October 2007 Uranus 36° Harmonic... This resulted in the corresponding top in the markets, leading to the 2008 crash. As a matter of fact, this cycle is interwoven with Venus-Earth 13-year cycle which is going to peak in late May. I assume that the bearish market could continue into early 2017, of course with some bumps on the road, for example we are going to have a major turning point in October of 2015 which could be a bottom.

Ali Firoozi Yasar

Let's also not forget that 2013 is the year of the snake and May is the month of the snake, which 2001 was (911 happened), 1941 was (pearl harbor), and of course 1929.  Good things don't happen too much during snake years I guess?  Throw in the all the stuff we have covered in this post and prior posts, and I think we have some really good odds here for a bear feast to occur.  So I'll be looking to short the market Monday, April the 1st (will it be April fools day for the bulls?) if they hit the prior all time high of 1576.09 (and hopefully pierce it a little).

Obviously I'm not going to pass up a chance to profit from another 133.51 point drop like what happened from 07/16/2007 to 08/06/2007... not to imply that it's going to be that exact amount again, as that's highly unlikely.  But never the less, a very nice move down should be coming over the next several weeks and I think it's worth shorting.  History shows it to be accurate and the gangsters were manipulating the stock market back then too, just like they are today.  The part that most bears won't see will be the rally back up from the late April low.  I think they will all be expecting a wave 2 up (like I was in the last post) so they can catch the wave 3 down.

Unfortunately I think they will all be sadly taken for their money once again as the market will very likely repeat something similar to 2007 where the rally back up didn't put in a lower high but instead rallied up 20 more points higher and put in a new all time high.  This will squeeze every last bear out of the market for sure as very few people will be expecting such a powerful rally to start in late April, early May.  In fact everyone will be chanting "sell in May and go away"... only to see a rip roaring rally the first 3 weeks of May that will blow the tires off the bear bus!  Those bears will be stranded once again just when they thought they were ready to go over the mountain and down into the bull abyss!

On top of that I also expect the bulls to miss a lot of that rally too as they will have some really big scars from the early April bear attacks.  Most will be hesitant to go long and will miss the rally.  Can't blame them really as after a new high is reached on April 1st who would believe that there would be another higher "new high" to come in late May?  I'd go so far as to say that the bull will also think the rally up is just a wave 2 and become bears at some point trying to short it at some Fibonacci level all the way up... only to get squeeze themselves and propel the rally that much more.  After that 1610-1630 level is hit I think there won't be any bears let on the planet... except for me (and those of you reading this post).  🙂

Red

Author: Red