Those are typical Technical Analysis employed by majority of traders. As usual, they are the first to see opportunities to either go long or go short.
* For me I went long AAPL using the Sine Wave Indicator buying at $382 and sold 70% of positions on the way up. Kept the last 30% as possible long-term hold.
** Bought partial medium-term AAPL trade at $430 on the way down and still waiting for a possible Inverted Head and Shoulders to form on the Daily Chart before buying the other half. See my previous comments for AAPL Short-Term Buy Trade Setups.
First Friday Of May: Go Away Or Stay And Play? [View article]
"As you can see from the Big Chart, we've been up and down and over and out and each time we find ourselves flat on our face we pick ourselves up and get back in the race - that's the markets..."
Excellent!
Most of the time the markets are a matter of Flip Coin to many traders. But many times they can be punishingly complex as hell:
Those were my last EWA on "Buy In May?" Instablog Addendum before the rally yesterday. SnP500 was ever more confusing requiring a 'process of elimination'. Fortunately ES gave a clear signal of GO LONG.
Coasting up should prove relatively easy with the Jobs Report behind our backs (at least for the moment) rather than hindering our progress considerably.
* For AAPL. Apple is a highly volatile stock and is therefore a magnet for Aggressive Traders. Check out the weekly 200ema and the monthly 50ema supports. Those are among the major tools employed by aggressive traders. No wonder AAPL suddenly perked up as it hits those major supports. I am partial long AAPL on the way down at $430. Unfortunately, I kept using the conservative indicators 50ma and 200ma thus missed buying the exact bottom for the other half. Watch out for the aggressive traders; they prefer strong breakouts against minor resistances (the bulls) and strong breakdowns against minor supports (the bears).
If you analyze the Shanghai Index chart pattern for the last decade it is similar to what happened to Dow Jones during the roaring 20's Vertical Rally and the 1929 to 1932 Vertical Meltdown followed by the 1932 to 1938 rally and the 1938 to 1944 Pullback Down - the latter corresponds to the August 2009 to Nov 2012 Pullback.
- The difference was that China implemented the $600B Stimulus Program (equivalent to $1.8Trillion for US) in late 2008 thus they prevented suffering their very own Great Depression.
Right now, China is still executing the Industrial Revolution and the Mass Manufacturing Revolution implemented by the US and Europe during the late 19th century and the first half of the 20th century (also to some degree - not supported by the gov't - the Computer Revolution and/or Mobility Revolution) thus the run rate of economic activity in China is so much faster than what the US and Europe have achieved in the past = the Shanghai Index is performing as if it is a steroid version of Dow Jones of the 1920's to the 1940's.
Why expect them to perform toe-to-toe with the US when they are several decades behind in becoming a Developed Country and will probably take several more decades (or a few centuries) before they can become par value with the US on per capita income? Half of China's population are still living in poverty.
>> Good thing is that China, for sure, knows what happened to the US and Europe in the past thus they are not necessarily exploring uncharted territories but rather can (if they so desire) keep treading the beaten path. Thus, if and when they embark on another Secular Bull Market Rally - similar to what happened to the Dow Jones of 1944 to 1965 expect it to perhaps be stronger than the 900% DJ price appreciation (at that time) and more likely will take much less than 21 years before topping out.
* I am long Shanghai Index via CAF in expectation that history will repeat itself - with higher probability this time around.
To have a good idea why the rally from March 2009 is still Corrective rather than Impulsive: Flip the March 2000 to Oct 2002 abc-X-abc corrective pattern by 180 degrees. It looks similar to the March 2009 to April 2013 pattern except the upper-most portions.
> Once (or rather IF) SnP500 rallies vertically above 1640 then it will start to become more impulsive rather than corrective and can start generating momentum strong enough to make the 5'-th wave an Extended Rally.
When analyzing the markets it is important that all bases be covered in order to arrive at the highest probability scenario - and therefore be able to trade or invest based on strengths rather than on weaknesses.
Right now SnP500 (and Dow Jones) already have 80% probability of successfully executing another Super-Cycle Rally that may last 18 to 26 years measured from the March 2009 significant bottom. Last time a Super-Cycle Rally happened was 18 years for Dow Jones (1982 to 2000) and 26 years for SnP500 and Nasdaq (1974 to 2000).
But then: Unless and until an Impulsive i-ii-iii-iv-v Rally has been completed the current rally from March 2009 is still considered a Corrective W-X-Y Rally (see my Instablogs and/or Comments for the Weekly Chart Bullish vs. Bearish Views).
Sell In May And Go Away; Profit Anyway [View article]
One day rally or sell-off does not make a Trend.
SnP500 collapsed today because of lousy reports early in the morning but not necessarily already in a Trend Down.
There are several probabilities as the Daily and Intraday Charts have been indicating since SnP500 topped out in April 11. But instead of collapsing as the bears had been anticipating for months; SnP500 made another 8 days or rally with 1597 top yesterday.:
That's the study I made last April 17. The notes specified SnP500 can undergo 9 to 20 weeks of consolidation range with either a negative correction (lower high lower low) or a positive correction (higher high higher low) if a 4th wave correction is going to happen. A correction of less than 9% is the higher probability before SnP500 rallies again. If not; it may actually be able to execute the Extended 3rd wave Rally if it is able to make some consolidation range either negative or positive within 6 weeks or less. April 18 bottom of 1536 was the 4th week - therefore the last 8 days of rally becomes a good candidate to execute the Extended Rally toward the 1679 (or higher) target.
--------------------- For Short-Term Traders this is what SnP500 is now doing:
Four days already since SnP500 topped out at 1593 and it kept doing a higher high higher low pattern. A negative correction will start to materialize if SnP500 breaks below the iv-th wave bottom of 1577 - but not necessarily the end of the 8-days rally as we know it.
There are several potential scenarios as indicated on the Notes.
- For the conservative bulls; the less stressful trading strategy is to buy on a Breakout Rally above 1597 or above the Upper Channel Resistance;
- For the aggressive bulls, buying a re-entry into the Channel requires some nerves of steel but is the one that can result in the least amount of trade loss if SnP500 decides to keep going down tomorrow.
- For the bears, try to short an a-b-c corrective rally up or wait for a Head and Shoulders Pattern to form before shorting the markets - thus improving the probability of success and reducing the potential loss if SnP500 decides to rally for the Extended 3rd wave (on the Daily Chart).
Be sure to use hard stop loss since Trend Trading is a very risky business that requires considerable skills in order to succeed over the long run. Likewise, with SnP500 still capable of rallying into 1679 (or higher) on the Daily Chart; shorting a potential Extended Rally can be one of the most painful way of being a bear.
In a modern society Stock Market is far more important than Gold and is the barometer of a country's economy. Right now, the barometer is indicating e-QE is going to succeed.
Japan was the first to execute an e-QE in the early 1930's and was able to avoid joining the US's and Europe's Great Depression. But they suffered high-inflation as a result of the e-QE. Since after WW-II the Fed has acquired tremendous experience in taming high inflation.
If Japan successfully tame persistent deflationary pressures then it will be another breakthrough. A valuable experience that will benefit not only Japan but also the US, Europe, and other developed countries (who are now experiencing deflationary pressures) if and when they start to suffer the ravages of Deflation in the future.
- SnP500 suffered a Secular Bear Market from 1965 top to 1974 bottom lasting 9 years;
- The US defeat in Vietnam caused so much anguish to America's psychology that persisted in the 70's aggravated by the Severe Recession of 1974/75 and the High Inflation (and rising High Unemployment) of the late 70's to early 80's. In the 70's Gold rallied vertically as pandemic doom and gloom pervades while the SnP500 and Nasdaq were rallying from their October 1974 bottoms (Dow Jones was unable to rally because it was being trashed by Nikkei225 on exports competition while Nasdaq and SnP500 were rallying because of the emerging Tech Revolution on Personal Computers);
- When SnP500 Triple Topped in 1980 and kept making higher highs and higher lows Gold started to make Lower Highs and Lower Lows;
- There were several attempts by Gold to rally as SnP500 rallies upwards faster and faster but all those efforts (by the Gold Bugs) resulted in Lower Highs and Lower Lows;
- When SnP500 finally went into the Irrational Exuberance of 1996 to 2000; Gold got crushed as more money went to equities;
- Over-all; Gold suffered almost 20 years of Secular Bear Market losing 71% in the process. Comparatively, SnP500 enjoyed 26 years of Secular Bull Market rally with 2,425% price appreciation and then lost 57% max during the most recent 9 years of Secular Bear Market Correction.
----------------- In the most recent Past:
- SnP500 suffered another Secular Bear Market from 2000 top to 2009 bottom lasting 9 years;
- Gold kept rallying on the back of the Great Recession and the Doom and Gloom generated by prolonged numerous crisis events suffered over the so-called 'Lost Decade;
- As SnP500 started approaching it's Triple Top of 1576; Gold started undergoing a Lower High pattern and finally a Lower Low in April 2013 as SnP500 breaks above the Triple Top Resistance of 1576.
It seems those who know quite well how Gold performed against the SnP500 (in the Past) also are smart enough to act pro-actively this time around. They did not wait too long for SnP500 to make another Triple Top All-Time-High before selling Gold with gusto.
Simple as that.
The hard part is: Will history repeats itself (for the next 20+/- years) this time around?
The Race for Mobile Software Supremacy started last year with AAPL and MSFT expending massive $Billions to attract software houses to develop apps for their O/S'es - in addition to their ever expanding in-house programming teams. Before that it was Google's Android challenging the iO/S.
Who is going to win in this O/S War nobody knows yet. Perhaps in 3 to 5 years we will know who will become the undisputed dominant player(s). Meanwhile small-scale entrepreneurial programming teams (and houses) are sprouting all over the world - reminiscent of the late 80's to early 90's when millions of programmers around the world started developing software for the Windows. This time around programming is becoming much more tedious as it transition from text programming to 3D Graphics Programming - which consumes in-ordinate massively more time and manpower than text-based and/or 2D Graphics programming.
- During the Industrial Revolution of the late 19th Century Civil Engineers become relevant and the most sought after profession;
- During the Mass Manufacturing Revolution of the 1940's to the 60's Mechanical Engineers become relevant and the most sought after profession. Civil Engineers became less relevant;
- During the PC Revolution of the 80's and 90's Electronic Engineers became relevant and the most sought after profession. Civil Engineers and Mechanical Engineers became less relevant. As the process of designing and manufacturing electronic devices becomes relatively easy (as compared to the previous 3 to 4 decades), Electronic Engineers will start to become less relevant too.
>> In the near future Mobility Computing is becoming the de-facto emerging Next Tech Revolution to replace the PC Revolution (same as the Manufacturing Revolution replaced the Industrial Revolution of the past); thus it is now the turn of Software Engineers to become relevant as more and more complex apps will be needed to support the rapidly expanding Mobility Revolution. Unlike hardware design and manufacturing; software design and programming consume massive amount of time and manpower.
- Since Apple is also a Software Powerhouse; AAPL cannot become irrelevant as long as they keep their focus on software development.
For others like Samsung; it is in-evitable that they will confront major challenges in the future in hardware design since anybody and everybody can go to Foxconn and ask it's design engineers to give them design variants of the best and latest electronics technologies (mix and match technique) in order not to infringe on existing patents. When it comes to software; they either have to do the design and programming themselves or outsource them to the professional programmers - which usually would take massive amount of time to complete. Samsung is (still) woefully too dependent on Google.
Many analysts (specially those specializing in Fundamental Analysis) would recommend getting ahead of the curve when the stock and/or index have already shown tremendous success:
This was Apple while analysts were recommending it as a Definite Long-Term Buy and what happened next:
Apple was the darling of Trend Traders last year before it topped out in September.
Now that AAPL have already collapsed, analysts refrain from recommending it as a Long-term Investment and some of them started speculating that Apple is Microsoft Part II bound to suffer more than 10 years of underperformance.
------------------ These are among the Latest High Flyer Trends:
AAPL, Biotech, and DDD made their last significant higher low bottom in 2009 and their most recent significant vertical rally on the medium-term with AAPL the first to develop a Divergence Sell Signal on the Month Chart. Biotech have just started trending up using the ADX reading and DDD is already at 60.17 comparable to that of AAPL's reading last October. Thus it is still highly advisable to Trend Trade the Biotech Sector on minor pullbacks for the short-term basis while CAUTION is the better course of action when trying to trend trade DDD for the short-term to medium-term basis.
TAN had been melting down since it's inception in June 2008 and has made a credible short-term rally from Nov 2012 bottom to Feb 2012. Then it made a credible Pullback Down thus forming a credible Inverted Head and Shoulders pattern. As many traders and investors know; Inverted Head and Shoulders usually is the first indication of possible Trend Reversal. So for those who want to Buy Low and Sell High (instead of Buy High and Sell Higher) TAN has far more significant promise to the upside, on the medium-term, than either DDD or the Biotech Sector.
For the Medium-term Traders: If AAPL rallies next week it is the first opportunity to go long using a Triple Divergence Buy Signal.
For Short-Term Traders: There are several Trade Setups that may or may not happen. Actual price performance (if AAPL rallies) may differ significantly from what is illustrated but should be practically similar as what happened to majority of cases in the past to other stocks and/or stock indexes.
------------------ This was what happened to AAPL at the Top:
AAPL suffered a Divergence Sell Signal on the Daily Chart (and also on the Weekly and Monthly Charts) thus triggering the 6 months of Vertical Meltdown. As the chart shows; AAPL formed a Complex Head and Shoulders that became the feeding trout for the AAPL Bears. When the Daily 50ma Support collapsed; Day-Traders had a field day shorting AAPL. When the Daily 200ma Support collapsed; Medium-to Longer-term Traders were having a frenzied time panic selling/shorting AAPL.
Short-term Traders know those Trade Setups either to the downside or the upside. What's needed is for AAPL to start making some credible rally and those traders will start playing those Trade Setups again. This time, if successful, to the UPSIDE.
The Apple-Microsoft Comparison Is Valid [View article]
There are some differences:
Performance wise:
- MSFT rallied 100,000% from it's IPO price to Dec 1999 all-time high price of $59.97. MSFT made about 288 price splits;
- AAPL rallied 20,000% from it's 1997 bottom to $705 last year.
Market Penetration:
- Microsoft was able to conquer the whole world in the late 80's to the 90's and still hold a commanding lead when it comes to O/Ss;
- AAPL has just started conquering the world in December last year making a blitzkrieg marketing push to more than 100 countries. AAPL market share was basically limited to the developed/large countries and have catered to the upper bracket customers who can afford to spend $600 a pop almost every year.
When it comes to Technology:
- PCs and Windows ~ 30 years old. More likely their growth rate is already starting to become negative. MSFT is now trying to enter the Mobile marketplace with Surface and Win8;
- Cell Phones are more than 20 years old with SmartPhones 6 years old. Tablets are just 3 years old. It is expected Tablets sales will surpass that of the PCs in the not too distant future as it is now growing at approximately 2x run rate. Can Tablets achieve positive growth rates for the next 20 to 30 years nobody knows yet. Who will eventually win the Tablets War nobody knows yet. Tablets global markets are still the Wild Wild West of the early 21st century.
AAPL is now the largest Cloud Company in the world and the leader in Tablet sales with the iPads. As we know it Cloud Computing is also still a very young industry. It's growth rate has been phenomenal during the last 4 years.
Basically, there is still lots of room to grow for AAPL and it's Tablets + Cloud divisions. However, unlike in the 80's and 90's where WinTel monopolized the markets; today's Tablets and Cloud marketplace is still a Wild Wild West. Perhaps in 3 to 5 years we will find out who will become the undisputed dominant player(s).
* Smartphone sales growth started to taper down in the last few months. When will it start suffering YOY negative growth nobody knows yet.
SnP500 has a 1616 Upper Limit for the 5' wave so it is still capable of making it to that level (but low probability).
This study presents two possible run down scenarios: red i-ii-iii-iv-v Meltdown or an A-B-C Minute Correction that can last 5 to 8 trading days. Good for those who wanted to trade the markets short-term basis to the upside; short-term to medium-term to the downside.
* IF SnP500 rallies past 1593 tomorrow then immediately goes down; the same red i-ii-iii-iv-v Meltdown or an A-B-C Correction becomes effective again.
** IF SnP500 keeps making higher highs and higher lows for more than 3 trading days then the possibility of a Spiral Melt-up Rally should start to materialize.
Right now the same story of weakening economy (starting first quarter) is playing out every year since 2010. But they were not the ones that actually caused the panic selling of the past 3 years:
- The Greece Riots in 2010 started the 17.13% loss for SnP500 from April top to June low;
- The possible US Downgrade in 2011 followed by the actual downgrade in July and the PIIGS Dept Debacle resulted in 21.37% loss for SnP500 April 30 top to Oct 4th bottom; and
- The $600B Fiscal Cliff Crisis of last year caused 10.90% loss for SnP500 April to June.
We do not know if another crisis is going to happen in the next few weeks but there are some ways to gauge how stable (or how weak) the markets can be based on historical statistical analysis of rallies and corrections in the past century. Basically, the price performance of SnP500 (and/or Dow Jones) can become the major determining factor(s) whether they will succumb to another correction sooner or later.
================ The charts can show what have been achieved in the past and how they are being interpreted by the Bulls and the Bears:
Those were the charts I kept publishing for the past several weeks as SnP500 rallies toward it's critical price ranges that can determine whether a correction will happen SOONER or will it be DELAYED several weeks (to a few months) later.
Sooner rather than Later Scenario:
Right now SnP500 is rallying with a 1-2-3-4-5 pattern on the Intraday Charts with 1596 the Nominal Target for the 5th wave and 1616 the Upper Limit (see my previous Comment for short-term Elliott Wave and Technical Analyses of SnP500). There are three possible scenarios:
#1. SnP500 keeps rallying past 1616 and possibly transform the 1-2-3-4-5 simple rally into a Spiral Meltup Rally with Nominal Target Range of 1621 to 1637. OR SnP500 rallies with a Complex Spiral Melt-up further pushing the rally limits to 1664 to 1692 Target Range. After this rally a correction comparable to the 8.9% of Sept to Nov 2012 is supposed to happen;
#2. SnP500 starts making an A-B-C Pullback starting tomorrow that may last 5 to 8 days then starts another rally. The next rally will then have a Quick and Dirty Target Range of 1627 to 1649 if the Pullback proved to be shallow (1570 or higher using 1593 as the top - higher if SnP500 goes above 1593 tomorrow) and a Quick and Dirty Target Range of 1669 to 1704 if the Pullback proved to be deep enough (possibly toward 1557 as the lower range). After this rally a correction comparable to the 8.9% of Sept to Nov 2012 is supposed to happen;
#3. SnP500 goes into a 1-2-3-4-5 Meltdown on Intraday Chart as soon as the 1-2-3-4-5 Rally of April 18 to Today has completed. This scenario will complicate the Elliott Wave Analysis to the n-th degree but will favor the Bears more than the Bulls. Thus a black iv-th wave correction comparable to that of Sept to Nov 2012 8.9% loss becomes higher probability. OR the Armageddon Meltdown as illustrated on the Bearish View starts to materialize in the weeks and months ahead.
#1 is Very Low Probability; #2 is High Probability; #3 is very complex that may immediately result in further run downs or caused SnP500 to go into a trading range for a few weeks more. OR starts another rally.
On the Bullish View Chart the Nominal Target for the black iii-rd wave rally is 1607. As a conservative study; SnP500 is expected to make another Pullback comparable to what happened from Sept to Nov 2012 wherein SnP500 lost 8.90%. What is not stated in the Bullish Chart is that the black iii-rd wave is qualified (and is capable) of becoming the Extended Wave with Extended Target Range of 1679 to 1887. On the Bearish Chart it is expected that market participants will start to feel the pain of being left behind IF SnP500 rallies above 1630.
* Basically, based on statistical analysis of past rallies and corrections; the next few weeks can determine whether we will have a correction sooner or later. Hopefully the black iii-rd wave executes the Extended Rally in order for SnP500 to avoid (once and for all) the Potential Armageddon Meltdown - as envisioned by the Super-Bears.
** Also see my SnP500 Daily Chart Analysis for further familiarization of how 1-2-3-4-5 rallies happen from Comments and Instablogs. I tried to make the studies as simple as possible (eliminating numerous labels EW'ers usually present to their readers) but a few hours of study is still needed to get a gist of what I am talking about in this Comment.
Tech Revival? Watch Apple [View article]
>> AAPL Long-Term Analysis: http://bit.ly/135KuV5
>> AAPL Medium-Term Analysis: http://bit.ly/109SMXN
Those are typical Technical Analysis employed by majority of traders. As usual, they are the first to see opportunities to either go long or go short.
* For me I went long AAPL using the Sine Wave Indicator buying at $382 and sold 70% of positions on the way up. Kept the last 30% as possible long-term hold.
** Bought partial medium-term AAPL trade at $430 on the way down and still waiting for a possible Inverted Head and Shoulders to form on the Daily Chart before buying the other half. See my previous comments for AAPL Short-Term Buy Trade Setups.
First Friday Of May: Go Away Or Stay And Play? [View article]
Excellent!
Most of the time the markets are a matter of Flip Coin to many traders. But many times they can be punishingly complex as hell:
<< SnP500 Intraday Analysis: http://bit.ly/1007yDs
<< ES Intraday Analysis: http://bit.ly/11Ha8g7
Those were my last EWA on "Buy In May?" Instablog Addendum before the rally yesterday. SnP500 was ever more confusing requiring a 'process of elimination'. Fortunately ES gave a clear signal of GO LONG.
>> SnP500 Intraday Now: http://bit.ly/1007yDy
Coasting up should prove relatively easy with the Jobs Report behind our backs (at least for the moment) rather than hindering our progress considerably.
* For AAPL. Apple is a highly volatile stock and is therefore a magnet for Aggressive Traders. Check out the weekly 200ema and the monthly 50ema supports. Those are among the major tools employed by aggressive traders. No wonder AAPL suddenly perked up as it hits those major supports. I am partial long AAPL on the way down at $430. Unfortunately, I kept using the conservative indicators 50ma and 200ma thus missed buying the exact bottom for the other half. Watch out for the aggressive traders; they prefer strong breakouts against minor resistances (the bulls) and strong breakdowns against minor supports (the bears).
The China Syndrome Redux [View article]
If you analyze the Shanghai Index chart pattern for the last decade it is similar to what happened to Dow Jones during the roaring 20's Vertical Rally and the 1929 to 1932 Vertical Meltdown followed by the 1932 to 1938 rally and the 1938 to 1944 Pullback Down - the latter corresponds to the August 2009 to Nov 2012 Pullback.
- The difference was that China implemented the $600B Stimulus Program (equivalent to $1.8Trillion for US) in late 2008 thus they prevented suffering their very own Great Depression.
Right now, China is still executing the Industrial Revolution and the Mass Manufacturing Revolution implemented by the US and Europe during the late 19th century and the first half of the 20th century (also to some degree - not supported by the gov't - the Computer Revolution and/or Mobility Revolution) thus the run rate of economic activity in China is so much faster than what the US and Europe have achieved in the past = the Shanghai Index is performing as if it is a steroid version of Dow Jones of the 1920's to the 1940's.
Why expect them to perform toe-to-toe with the US when they are several decades behind in becoming a Developed Country and will probably take several more decades (or a few centuries) before they can become par value with the US on per capita income? Half of China's population are still living in poverty.
>> Good thing is that China, for sure, knows what happened to the US and Europe in the past thus they are not necessarily exploring uncharted territories but rather can (if they so desire) keep treading the beaten path. Thus, if and when they embark on another Secular Bull Market Rally - similar to what happened to the Dow Jones of 1944 to 1965 expect it to perhaps be stronger than the 900% DJ price appreciation (at that time) and more likely will take much less than 21 years before topping out.
* I am long Shanghai Index via CAF in expectation that history will repeat itself - with higher probability this time around.
Long-Term Bullish On U.S. Equities [View article]
> Once (or rather IF) SnP500 rallies vertically above 1640 then it will start to become more impulsive rather than corrective and can start generating momentum strong enough to make the 5'-th wave an Extended Rally.
Long-Term Bullish On U.S. Equities [View article]
>> SnP500 Long-Term Analysis: http://bit.ly/18fxEG8
Right now SnP500 (and Dow Jones) already have 80% probability of successfully executing another Super-Cycle Rally that may last 18 to 26 years measured from the March 2009 significant bottom. Last time a Super-Cycle Rally happened was 18 years for Dow Jones (1982 to 2000) and 26 years for SnP500 and Nasdaq (1974 to 2000).
But then: Unless and until an Impulsive i-ii-iii-iv-v Rally has been completed the current rally from March 2009 is still considered a Corrective W-X-Y Rally (see my Instablogs and/or Comments for the Weekly Chart Bullish vs. Bearish Views).
Sell In May And Go Away; Profit Anyway [View article]
SnP500 collapsed today because of lousy reports early in the morning but not necessarily already in a Trend Down.
There are several probabilities as the Daily and Intraday Charts have been indicating since SnP500 topped out in April 11. But instead of collapsing as the bears had been anticipating for months; SnP500 made another 8 days or rally with 1597 top yesterday.:
<< SnP500 Short-Term Analysis: http://bit.ly/Z0zkAS
That's the study I made last April 17. The notes specified SnP500 can undergo 9 to 20 weeks of consolidation range with either a negative correction (lower high lower low) or a positive correction (higher high higher low) if a 4th wave correction is going to happen. A correction of less than 9% is the higher probability before SnP500 rallies again. If not; it may actually be able to execute the Extended 3rd wave Rally if it is able to make some consolidation range either negative or positive within 6 weeks or less. April 18 bottom of 1536 was the 4th week - therefore the last 8 days of rally becomes a good candidate to execute the Extended Rally toward the 1679 (or higher) target.
---------------------
For Short-Term Traders this is what SnP500 is now doing:
>> SnP500 Intraday Analysis: http://bit.ly/103uq0R
Four days already since SnP500 topped out at 1593 and it kept doing a higher high higher low pattern. A negative correction will start to materialize if SnP500 breaks below the iv-th wave bottom of 1577 - but not necessarily the end of the 8-days rally as we know it.
There are several potential scenarios as indicated on the Notes.
- For the conservative bulls; the less stressful trading strategy is to buy on a Breakout Rally above 1597 or above the Upper Channel Resistance;
- For the aggressive bulls, buying a re-entry into the Channel requires some nerves of steel but is the one that can result in the least amount of trade loss if SnP500 decides to keep going down tomorrow.
- For the bears, try to short an a-b-c corrective rally up or wait for a Head and Shoulders Pattern to form before shorting the markets - thus improving the probability of success and reducing the potential loss if SnP500 decides to rally for the Extended 3rd wave (on the Daily Chart).
Be sure to use hard stop loss since Trend Trading is a very risky business that requires considerable skills in order to succeed over the long run. Likewise, with SnP500 still capable of rallying into 1679 (or higher) on the Daily Chart; shorting a potential Extended Rally can be one of the most painful way of being a bear.
Why Japan's 'Abe-Nomics' Won't Work [View article]
Japan's extra-ordinary QE is working as expected:
>> Nikkei225 Long-Term Analysis: http://bit.ly/10sApw3
In a modern society Stock Market is far more important than Gold and is the barometer of a country's economy. Right now, the barometer is indicating e-QE is going to succeed.
Japan was the first to execute an e-QE in the early 1930's and was able to avoid joining the US's and Europe's Great Depression. But they suffered high-inflation as a result of the e-QE. Since after WW-II the Fed has acquired tremendous experience in taming high inflation.
If Japan successfully tame persistent deflationary pressures then it will be another breakthrough. A valuable experience that will benefit not only Japan but also the US, Europe, and other developed countries (who are now experiencing deflationary pressures) if and when they start to suffer the ravages of Deflation in the future.
With Market At Record Highs, The Dow/Gold Ratio Is Still Low On An Historical Basis [View article]
<< SnP500 vs. Gold Long-Term: http://bit.ly/T46E3O
That's the study I made last August 2012.
If we analyze the sequence of events in the past:
- SnP500 suffered a Secular Bear Market from 1965 top to 1974 bottom lasting 9 years;
- The US defeat in Vietnam caused so much anguish to America's psychology that persisted in the 70's aggravated by the Severe Recession of 1974/75 and the High Inflation (and rising High Unemployment) of the late 70's to early 80's. In the 70's Gold rallied vertically as pandemic doom and gloom pervades while the SnP500 and Nasdaq were rallying from their October 1974 bottoms (Dow Jones was unable to rally because it was being trashed by Nikkei225 on exports competition while Nasdaq and SnP500 were rallying because of the emerging Tech Revolution on Personal Computers);
- When SnP500 Triple Topped in 1980 and kept making higher highs and higher lows Gold started to make Lower Highs and Lower Lows;
- There were several attempts by Gold to rally as SnP500 rallies upwards faster and faster but all those efforts (by the Gold Bugs) resulted in Lower Highs and Lower Lows;
- When SnP500 finally went into the Irrational Exuberance of 1996 to 2000; Gold got crushed as more money went to equities;
- Over-all; Gold suffered almost 20 years of Secular Bear Market losing 71% in the process. Comparatively, SnP500 enjoyed 26 years of Secular Bull Market rally with 2,425% price appreciation and then lost 57% max during the most recent 9 years of Secular Bear Market Correction.
-----------------
In the most recent Past:
- SnP500 suffered another Secular Bear Market from 2000 top to 2009 bottom lasting 9 years;
- Gold kept rallying on the back of the Great Recession and the Doom and Gloom generated by prolonged numerous crisis events suffered over the so-called 'Lost Decade;
- As SnP500 started approaching it's Triple Top of 1576; Gold started undergoing a Lower High pattern and finally a Lower Low in April 2013 as SnP500 breaks above the Triple Top Resistance of 1576.
It seems those who know quite well how Gold performed against the SnP500 (in the Past) also are smart enough to act pro-actively this time around. They did not wait too long for SnP500 to make another Triple Top All-Time-High before selling Gold with gusto.
Simple as that.
The hard part is: Will history repeats itself (for the next 20+/- years) this time around?
Why Apple Is Becoming Irrelevant [View article]
The Race for Mobile Software Supremacy started last year with AAPL and MSFT expending massive $Billions to attract software houses to develop apps for their O/S'es - in addition to their ever expanding in-house programming teams. Before that it was Google's Android challenging the iO/S.
Who is going to win in this O/S War nobody knows yet. Perhaps in 3 to 5 years we will know who will become the undisputed dominant player(s). Meanwhile small-scale entrepreneurial programming teams (and houses) are sprouting all over the world - reminiscent of the late 80's to early 90's when millions of programmers around the world started developing software for the Windows. This time around programming is becoming much more tedious as it transition from text programming to 3D Graphics Programming - which consumes in-ordinate massively more time and manpower than text-based and/or 2D Graphics programming.
Why Apple Is Becoming Irrelevant [View article]
- During the Industrial Revolution of the late 19th Century Civil Engineers become relevant and the most sought after profession;
- During the Mass Manufacturing Revolution of the 1940's to the 60's Mechanical Engineers become relevant and the most sought after profession. Civil Engineers became less relevant;
- During the PC Revolution of the 80's and 90's Electronic Engineers became relevant and the most sought after profession. Civil Engineers and Mechanical Engineers became less relevant. As the process of designing and manufacturing electronic devices becomes relatively easy (as compared to the previous 3 to 4 decades), Electronic Engineers will start to become less relevant too.
>> In the near future Mobility Computing is becoming the de-facto emerging Next Tech Revolution to replace the PC Revolution (same as the Manufacturing Revolution replaced the Industrial Revolution of the past); thus it is now the turn of Software Engineers to become relevant as more and more complex apps will be needed to support the rapidly expanding Mobility Revolution. Unlike hardware design and manufacturing; software design and programming consume massive amount of time and manpower.
- Since Apple is also a Software Powerhouse; AAPL cannot become irrelevant as long as they keep their focus on software development.
For others like Samsung; it is in-evitable that they will confront major challenges in the future in hardware design since anybody and everybody can go to Foxconn and ask it's design engineers to give them design variants of the best and latest electronics technologies (mix and match technique) in order not to infringe on existing patents. When it comes to software; they either have to do the design and programming themselves or outsource them to the professional programmers - which usually would take massive amount of time to complete. Samsung is (still) woefully too dependent on Google.
Three Market Trends To Watch [View article]
This was Apple while analysts were recommending it as a Definite Long-Term Buy and what happened next:
<< AAPL Before: http://bit.ly/SKlUUT
<< AAPL Now: http://bit.ly/17tEfv7
Apple was the darling of Trend Traders last year before it topped out in September.
Now that AAPL have already collapsed, analysts refrain from recommending it as a Long-term Investment and some of them started speculating that Apple is Microsoft Part II bound to suffer more than 10 years of underperformance.
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These are among the Latest High Flyer Trends:
- Biotech: http://bit.ly/Zw1iE2
- DDD: http://bit.ly/17tEer5
AAPL, Biotech, and DDD made their last significant higher low bottom in 2009 and their most recent significant vertical rally on the medium-term with AAPL the first to develop a Divergence Sell Signal on the Month Chart. Biotech have just started trending up using the ADX reading and DDD is already at 60.17 comparable to that of AAPL's reading last October. Thus it is still highly advisable to Trend Trade the Biotech Sector on minor pullbacks for the short-term basis while CAUTION is the better course of action when trying to trend trade DDD for the short-term to medium-term basis.
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This is TAN (U.S. ETF for Solar):
- TAN Weekly Chart: http://bit.ly/Zw1iUk
TAN had been melting down since it's inception in June 2008 and has made a credible short-term rally from Nov 2012 bottom to Feb 2012. Then it made a credible Pullback Down thus forming a credible Inverted Head and Shoulders pattern. As many traders and investors know; Inverted Head and Shoulders usually is the first indication of possible Trend Reversal. So for those who want to Buy Low and Sell High (instead of Buy High and Sell Higher) TAN has far more significant promise to the upside, on the medium-term, than either DDD or the Biotech Sector.
The Apple-Microsoft Comparison Is Valid [View article]
>> AAPL Medium-Term: http://bit.ly/Z0izkP
>> AAPL Short-Term: http://bit.ly/Ya2des
For the Medium-term Traders: If AAPL rallies next week it is the first opportunity to go long using a Triple Divergence Buy Signal.
For Short-Term Traders: There are several Trade Setups that may or may not happen. Actual price performance (if AAPL rallies) may differ significantly from what is illustrated but should be practically similar as what happened to majority of cases in the past to other stocks and/or stock indexes.
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This was what happened to AAPL at the Top:
<< AAPL = Short-Sellers' Paradise: http://bit.ly/Z0iBcx
AAPL suffered a Divergence Sell Signal on the Daily Chart (and also on the Weekly and Monthly Charts) thus triggering the 6 months of Vertical Meltdown. As the chart shows; AAPL formed a Complex Head and Shoulders that became the feeding trout for the AAPL Bears. When the Daily 50ma Support collapsed; Day-Traders had a field day shorting AAPL. When the Daily 200ma Support collapsed; Medium-to Longer-term Traders were having a frenzied time panic selling/shorting AAPL.
Short-term Traders know those Trade Setups either to the downside or the upside. What's needed is for AAPL to start making some credible rally and those traders will start playing those Trade Setups again. This time, if successful, to the UPSIDE.
The Apple-Microsoft Comparison Is Valid [View article]
Performance wise:
- MSFT rallied 100,000% from it's IPO price to Dec 1999 all-time high price of $59.97. MSFT made about 288 price splits;
- AAPL rallied 20,000% from it's 1997 bottom to $705 last year.
Market Penetration:
- Microsoft was able to conquer the whole world in the late 80's to the 90's and still hold a commanding lead when it comes to O/Ss;
- AAPL has just started conquering the world in December last year making a blitzkrieg marketing push to more than 100 countries. AAPL market share was basically limited to the developed/large countries and have catered to the upper bracket customers who can afford to spend $600 a pop almost every year.
When it comes to Technology:
- PCs and Windows ~ 30 years old. More likely their growth rate is already starting to become negative. MSFT is now trying to enter the Mobile marketplace with Surface and Win8;
- Cell Phones are more than 20 years old with SmartPhones 6 years old. Tablets are just 3 years old. It is expected Tablets sales will surpass that of the PCs in the not too distant future as it is now growing at approximately 2x run rate. Can Tablets achieve positive growth rates for the next 20 to 30 years nobody knows yet. Who will eventually win the Tablets War nobody knows yet. Tablets global markets are still the Wild Wild West of the early 21st century.
AAPL is now the largest Cloud Company in the world and the leader in Tablet sales with the iPads. As we know it Cloud Computing is also still a very young industry. It's growth rate has been phenomenal during the last 4 years.
Basically, there is still lots of room to grow for AAPL and it's Tablets + Cloud divisions. However, unlike in the 80's and 90's where WinTel monopolized the markets; today's Tablets and Cloud marketplace is still a Wild Wild West. Perhaps in 3 to 5 years we will find out who will become the undisputed dominant player(s).
* Smartphone sales growth started to taper down in the last few months. When will it start suffering YOY negative growth nobody knows yet.
Sell In May? Maybe Not [View article]
>> SnP500 Intraday EWA: http://bit.ly/YW6mxH
SnP500 has a 1616 Upper Limit for the 5' wave so it is still capable of making it to that level (but low probability).
This study presents two possible run down scenarios: red i-ii-iii-iv-v Meltdown or an A-B-C Minute Correction that can last 5 to 8 trading days. Good for those who wanted to trade the markets short-term basis to the upside; short-term to medium-term to the downside.
* IF SnP500 rallies past 1593 tomorrow then immediately goes down; the same red i-ii-iii-iv-v Meltdown or an A-B-C Correction becomes effective again.
** IF SnP500 keeps making higher highs and higher lows for more than 3 trading days then the possibility of a Spiral Melt-up Rally should start to materialize.
Sell In May? Maybe Not [View article]
- The Greece Riots in 2010 started the 17.13% loss for SnP500 from April top to June low;
- The possible US Downgrade in 2011 followed by the actual downgrade in July and the PIIGS Dept Debacle resulted in 21.37% loss for SnP500 April 30 top to Oct 4th bottom; and
- The $600B Fiscal Cliff Crisis of last year caused 10.90% loss for SnP500 April to June.
We do not know if another crisis is going to happen in the next few weeks but there are some ways to gauge how stable (or how weak) the markets can be based on historical statistical analysis of rallies and corrections in the past century. Basically, the price performance of SnP500 (and/or Dow Jones) can become the major determining factor(s) whether they will succumb to another correction sooner or later.
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The charts can show what have been achieved in the past and how they are being interpreted by the Bulls and the Bears:
>> SnP500 Medium-Term Bullish View: http://bit.ly/15iybTs
>> SnP500 Medium-Term Bearish View: http://bit.ly/17ozVeS
Those were the charts I kept publishing for the past several weeks as SnP500 rallies toward it's critical price ranges that can determine whether a correction will happen SOONER or will it be DELAYED several weeks (to a few months) later.
Sooner rather than Later Scenario:
Right now SnP500 is rallying with a 1-2-3-4-5 pattern on the Intraday Charts with 1596 the Nominal Target for the 5th wave and 1616 the Upper Limit (see my previous Comment for short-term Elliott Wave and Technical Analyses of SnP500). There are three possible scenarios:
#1. SnP500 keeps rallying past 1616 and possibly transform the 1-2-3-4-5 simple rally into a Spiral Meltup Rally with Nominal Target Range of 1621 to 1637. OR SnP500 rallies with a Complex Spiral Melt-up further pushing the rally limits to 1664 to 1692 Target Range. After this rally a correction comparable to the 8.9% of Sept to Nov 2012 is supposed to happen;
#2. SnP500 starts making an A-B-C Pullback starting tomorrow that may last 5 to 8 days then starts another rally. The next rally will then have a Quick and Dirty Target Range of 1627 to 1649 if the Pullback proved to be shallow (1570 or higher using 1593 as the top - higher if SnP500 goes above 1593 tomorrow) and a Quick and Dirty Target Range of 1669 to 1704 if the Pullback proved to be deep enough (possibly toward 1557 as the lower range). After this rally a correction comparable to the 8.9% of Sept to Nov 2012 is supposed to happen;
#3. SnP500 goes into a 1-2-3-4-5 Meltdown on Intraday Chart as soon as the 1-2-3-4-5 Rally of April 18 to Today has completed. This scenario will complicate the Elliott Wave Analysis to the n-th degree but will favor the Bears more than the Bulls. Thus a black iv-th wave correction comparable to that of Sept to Nov 2012 8.9% loss becomes higher probability. OR the Armageddon Meltdown as illustrated on the Bearish View starts to materialize in the weeks and months ahead.
#1 is Very Low Probability; #2 is High Probability; #3 is very complex that may immediately result in further run downs or caused SnP500 to go into a trading range for a few weeks more. OR starts another rally.
On the Bullish View Chart the Nominal Target for the black iii-rd wave rally is 1607. As a conservative study; SnP500 is expected to make another Pullback comparable to what happened from Sept to Nov 2012 wherein SnP500 lost 8.90%. What is not stated in the Bullish Chart is that the black iii-rd wave is qualified (and is capable) of becoming the Extended Wave with Extended Target Range of 1679 to 1887. On the Bearish Chart it is expected that market participants will start to feel the pain of being left behind IF SnP500 rallies above 1630.
* Basically, based on statistical analysis of past rallies and corrections; the next few weeks can determine whether we will have a correction sooner or later. Hopefully the black iii-rd wave executes the Extended Rally in order for SnP500 to avoid (once and for all) the Potential Armageddon Meltdown - as envisioned by the Super-Bears.
** Also see my SnP500 Daily Chart Analysis for further familiarization of how 1-2-3-4-5 rallies happen from Comments and Instablogs. I tried to make the studies as simple as possible (eliminating numerous labels EW'ers usually present to their readers) but a few hours of study is still needed to get a gist of what I am talking about in this Comment.