US Indices

The US, yes that crashing market that does not want to seem to stop even as sentiment in in the lower single digits for the number of bullish advisors. So let me go over some observations as we decide that the Great US bear market has indeed started.

I discussed the Transports early this week. And it is not much lower, but the size of the fall in percentage terms [log scale is now the same as the fall last see in 2011.

Clearly wave B was a triangle so wave C has to complete in 5 waves. The daily chart below does show that we are in wave v of C down which could be the last push lower for now. Whether this is wave C ending or wave 1 of C, and will the next move up be only an X wave is a separate discussion and we do not know the answer. But after a 5 wave fall we should see some retracement of that fall to start with.

In Oct I posted all the channel charts of the US. So let us look at them again. The Nasdaq 100 again. Note these are on arithmetic scale. After taking support on the channel it was the only index that managed a new all time high. And it has now fallen back to the channel line.

I am using weekly charts. I am using reverse channels. On the S&P I made a reverse channel from the 2011 highs that gave support in Sept. Now I am taking the 2010 high to include all price activity. And we are now near the lower end of the channel at 1850.

All about crude

Crude - needs to be reworked as following. The point till I marked wave 4 at 60 is the same. At that point I forecast wave 5 down to 38 and we got there. Then it bounced a bit but broke the low. I tried to fit an ending structure into it but that is wrong. So the fall is now impulse. The right thing to do is consider wave 5 to be subdividing into 5 waves as shown on the chart below. Based on this we are in wave 3 of 5 down. Once complete we will see wave 4 up and wave 5 of 5 down as the last leg. What are the Fibonacci targets? Ratios of wave 1 to 3 down projected for wave 5 from 60$ down are as follows

38.2% = 38 [achieved], 61.8% = 30.5 [achieved], 100% = 24.30 Open

Wave 3 of 5 is at the lower channel line, if complete it stops here or else extends down to 26.50. Wave 4 up cannot go above 37.75 the low made by 1 of 5. 

Crude daily chart shows that the Vth wave of 3 is near the lower channel. So below 29.15 it may keep stretching till 26.50. Second I have plotted the S&P with crude. Note when crude fell from 100$ to 45$, US went up. But in wave 1 of 5 the two appear correlated only between 52$-38$. Then again US bounced back and even as oil fell to 38$ from 50$ no impact and then, from 38$-29$ the two fell together. So this whole oil relationship has been extremely limited, but it is all over the news as if it is the only thing.