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Long wave audio-slides-11-05-11-sub-rounded_top
- 1. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 2. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 3. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 4. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 5. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 6. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 7. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 8. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 9. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 10. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 11. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 12. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 13. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 14. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 15. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 16. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 17. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 18. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
- 19. This chart is from the November 2011 Market Analytics & Technical Analysis Report November 5 th, 2011 THE ROUNDING TOP DISCLOSURE STATEMENT AND TERMS OF USE THE CONTENT OF THIS SLIDE PRESENTATION AND ITS ACCOMPANYING RECORDED AUDIO DISCUSSION ARE INTENDED FOR EDUCATIONAL PURPOSES ONLY. This slide presentation and its accompanying recorded audio discussion are not a solicitation to trade or invest, and any analysis is the opinion of the author and is not to be used or relied upon as investment advice. Trading and investing can involve substantial risk of loss. Past performance is no guarantee of future returns/results. Commentary is only the opinions of the authors and should not to be used for investment decisions. You must carefully examine the risks associated with investing of any sort and whether investment programs are suitable for you. You should never invest or consider investments without a complete set of disclosure documents, and should consider the risks prior to investing. This slide presentation and its accompanying recorded audio discussion are not in any way a substitution for disclosure. Suitability of investing decisions rests solely with the investor. Your acknowledgement of this Disclosure and Term of Use Statement is a condition of access to it. Furthermore, any investments you may make are your sole responsibility. THERE IS RISK OF LOSS IN TRADING AND INVESTING OF ANY KIND. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. Listen to the original podcast for this slide at www.GordonTLong.com/LONGWave The content of this slide should not be considered investment advice of any sort, nor should it be used to make investment decisions. Use of this slide is considered to be your explicit acceptance of the Disclosure Statement and the Terms of Use found on the last page of this document.
Editor's Notes
- IT IS ONE THING FOR THE MARKETS TO START EXHIBTING AN INITIAL NEW PATTERN OF LOWER LOWS AND LOWER HIGHS THAT SUGGESTS A DOWNWARD TREND CHANNELIT IS ANOTHER FOR THE 50 DAY MOVING AVERAGE TO CROSS THROUGH AND BELOW THE 200 DAY MOING AVERAGE.WHEN THIS OCCURS IT IS REFERRED TO AS A “DEATH CROSS” AND IS A FAIRLY RELIABLE CONFIRMATION THAT AN INTERMEDIATE DOWNWARD TRENDD IS IN PLACE.MARKETS AND TRADERS REACT BADLY TO SUCH A TECHNICAL SIGNAL.LET’S EXAMINE THE MARKET TO SEE WHAT WE FIND.
- We have been reporting the following S&P 500 (SPY) chart of the 100 DMA banded by two standard deviations of the 50 DMA for months now (RISK ANALYSIS: 50 Day Boundary Condition) . We have used the S&P 500 ETF because of the volume traded, its options participation and its sensitivity to trading adjustments. It has accurately kept us 'long' throughout the duration of the upward trend, It identified the topping formation and Now is helping us with the initial set-up of the emerging down trend. Throughout this period the 100 DMA has consistently remained within the 50 DMA boundary condition. Additionally, the 50 DMA Boundary Condition has assisted in identifying the recent price rise from October 4th lows would minimally achieve 61.8% retracements along with the strong possibility of a full and rapid retracement to the 200 DMA. The price action since October 4th has resulted in the 100 DMA (shown in turquoise) being held within the boundary conditions despite a reversal in trend. The Death Crosses of the 50 and 100 DMA with the 200 DMA were important attribute signals that correlated well with a 50 DMA Boundary Condition trend reversal. We can now expect the 50, 100 and 200 day moving averages to "band" or close their separation as we 'bend' the 200 DMA downward. This brief sideways consolidation is required to launch the next leg down. In Elliott Wave parlance this is where 1-2 wave counts of smaller degrees are put in.
- In the following chart we have overlaid Fibonacci Extensions and Retracements to better understand the Price / Time / FORM relationship of the initial downward wave structure. FIBONACCI PRICE EXTENSION Examining the price action from the intraday market high of April 29th, 2011 to the low of June 22nd, 2011 we projected a Fibonacci 1.618 Extension to give us initial market lows of the SPY of 108.24. We in fact achieved an open of 108.35 and an intraday 107.43 on October 4th, 2011.FIBONACCI PRICE RETRACEMENT The present counter rally we believe to be a 4th wave within a larger 3rd wave. As such we measure the retracement of the downward move from the high of July 22nd, 2001 to the low of August 9th, 2011. We show the downward smaller degree wave 3 on the chart above with a solid gray line. The Fibonacci Price Retracement is shown in light grey with Fibonacci retracement percentages. We recent price rise has been precisely a standard Fibonacci 76.4%. These results strongly suggest:Our Elliott Wave Count (not shown on the above chart) has a high probability of being correct,The Symmetry of Wave structures is in play The recent price rise to just above the 200 DMA and precisely a 76.4% retracement suggests the high for the smaller degree 4th wave counter rally is in.
- In the following chart we have drawn in a rounded top closely approximating a 2 year cycle. We have labeled the months in black for easy reference. You will notice we have used the April 27th, 2010 high and the May 2nd, 2011 high as anchor points. They are identified by the vertical black lines.
- Next we have drawn in a tighter rounded top in an off blue using: PRICE: The market low of July 2nd, 2011TIME: The market highs we identified in the previous chart of April 27th, 2010 and the May 2nd, 2011You will immediately notice that the recent rounded top is clearly evident and precisely 'enveloped' in what appears to be a classic "Head & Shoulder" pattern.
- We next add some labeling that are structure gives us confident to be both correct and important: SUPPORT We have drawn in two support lines at the bottom of the chart. One higher one approximates 1040 -1050 on the S&P 500 and the lower one approximates 1010. ELLIOTT WAVE PRINCIPLE We have labeled an Intermediate Wave at (1) and (2). We have labeled a Primary Wave as 1,2 3 and just completed Wave 4. We have also labeled the 4th wave counter rally as an Extended Flat with a Wave A, B & C labeling. We are showing an initial Minor i (circled) and ii (circled) wave. What is very important to note in the labeling is that the Primary Wave 4 did not violate the Elliott Wave Principle Rule regarding Wave 1. The recent Price rise stopped at precisely this point. We have labeled it with a Gold line. As you recall from the previous charts this point was also a Fibonacci 76.4% Retracement.
- POSSIBILITY Though we feel it is a lower probability, there is the possibility that the following final ending diagonal wedge wave pattern may unfold into year end.This possibility has merits and needs to be pointed out because: Price has broached the inner Rounded Top,An emerging Wedge is clearly evident,The count rally price momentum since the October 4th, 2011 low has been so strong and most importantly,A touch of the Black Rounded Top would approximate a 0.618 Fibonacci on Time based on our monthly bars on the 2 year cycle
- Our preferred thinking is the following: We will consolidate Price at this level on the Inner Rounded Top which is currently in control,The 50, 100 and 200 DMA's will band (tighten by closing their separation) together which is normal in such a pattern,Smaller degree One and Two waves at the Minor and below will be put in,A year-end, Santa Claus rally along with further announcements from the G-20 count be announced and accommodate the mentioned 1-2 smaller degree wave count and yet still allow for a 'double top' formation,
- 5- The following long term boundary condition has been particularly telling.
- 6- We have a very clear Parallel Chanel on the SPX (versus the SPY we have been using), which allows for the consolidation, MA banding, seasonal year-end rally and Wave 1-2 'coiling'.
- 7- Global Markets are sending clear signals:FTSE
- DAX
- EMERGING MARKETS
- 8- The Wave Count allows for the 2 Year Cycle and integration of the two rounded Tops as shown in the following chart:ELLIOTT WAVE PRINCIPLE The Primary Wave 5 would count nicely with Wave 5 equal to Wave 3 at our initial support line shown in grey. The previous low of Wave 3 would be extend with the new low being approximately Wave 1 in price lower.Intermediate Wave (3) would end at the lower support line and retrace to black rounded top boundary condition at the 2nd anniversary mark and in the area of previous key support and resistance levels. This is very typical.A major Wave 5 down leg would take place in 2012.
- What gives credence to this Price, Time and Form is the symmetry the pattern exhibits. Notice the two grey mirrored, sloping lines we have now added and how well they correlate with key price pivots circled in grey. Notice also how well they line align with the circled red support, resistance points.
- Next, notice how the rates of change (slopes) are all parallel and additionally a Fibonacci ratio in separation.This adds to our confidence in our present outlook.
- 9 - Finally, it allows for another Rounded Top, though not as precise, to tell the same story: