The thesis on the Transports is the ATH is a “BIG TOP.” Thus far, we haven’t really broken down that hard so only TIME will tell.
We like when .382 / .618 retracements are on top of each other and we have that a little lower in the high 10K’s and low 11k’s. This a HUGE target zone for the Transports. IF they slice thru that level then they “should” go down to the ABCD level and then attack the 50 year old trend line .. we break those levels and the corrective drop target (likes to target the previous wave 4 of a lesser degree – guideline NOT a rule) into 2K is certainly a reality. I’m blogging about this now because I have no earthly idea what would cause such a thump .. let’ face it, that’s pretty much a breakdown of the transportation sector, probably globally.
I’m going to stick w/ this count, more than likely getting proven wrong – certainly hope so …
from a technical perspective pay attention to:
obviously, the count …
the orange trend line (log) from the monthly, weekly – it appears that is what is holding it up
the “nested” head and shoulders .. breaking the neckline AND the orange log trend line should start this lower
.382 from the 90 year low 0f 13.43 is 11,277
the BUY pattern is down around 8986-9396 –
net, net we have two very important zones of support and then the looming trendline from 50 years ago.
hope, being a strategy, this analysis is COMPLETELY WRONG
we last blogged about the “1.618 level” and the fact that we are in the continuation phase of completing a LOT of 5’s or we completed it at the AB=CD.
that is one heck of a bearish “wick” on that candle folks … but it’s also a LOT of thrust into the AB=CD so WAIT but if your long Transports might want to start paying attention to them …
and then I think ..
“now that I see a MAJOR pattern completing (yes folks they do fail – please remember that) I think of what could be the “news cause” of actually really thumping the transports that, after a little sell off, have weathered the pandemic actually pretty swell ….”
it’s time to really start paying attention to the market across the board.
in this case, there is a high probability that this count is correct. I was able to use some of the data from the peeps at http://www.elliottwave.com. I enjoy their newsletter and while sometimes too early, in the end, they have proven to be correct.
I’ve found that when my count matches their count AND we have a turning point in the Martin Armstrong cycles things do happen …
bottom line … I would fasten your chin straps and get ready for Mr. Toad’s Wild Ride … folks, I love SUP Surfing.
and, believe it or not, I see the waves and look for patterns and fractals of the waves that are coming in my Pacific Ocean playground. all I can think about is a tsunami to describe the wave that is approaching our shores. I’m not even sure if this wave is one that anybody could ride, it’s that powerful.
call me crazy, many continue to do so, but we are entering into territory that NOBODY alive has ever experienced.
CLIFF NOTES: we are up almost 3% above the PATTERN that completed from the all time low on the transports some 46,000 ish days ago. Is that statistically significant? Well, I honestly don’t know. We do have the 1.618, 1.68179 (musical note F#) and the 1.732 extension targets that are being played with …so, my “line in the sand” so to speak will be the 8050 level. IF WE GET A DAILY CLOSE ABOVE 8050 THEN THIS PATTERN HAS FAILED. Again, this pattern is 46,000 days “old” and SHOULD be massive resistance. Not calling for a crash or anything like that but it certainly should pause it. And, let’s take a look – no swing low has been broken and it just keeps on “trucking” so to speak. (pardon the pun)
here is the post w/ the chart: http://bartscharts.com/2014/04/01/the-most-important-chart-in-my-lifetime/
I do see a 5 wave sequence coming into play so we’ll just have to wait and see …
CLIFF NOTES: the most important pattern in the history of the US stock market was hit today. Period.
all time low on Dow Jones Transportation Index was 49.59 on 10/29/1896
that low when used as the key node for retracements was responsible for the LOW in 1987 (.382 retracement ), the LOW in 2003 (EXACT 50 percent retracement) and the LOW in 2009 (EXACT .618 retracement).
it was also the beginning of the projection for the high in 2007.
now, currently, the 1896-2007 leg is projection to an area EXACTLY to where we close today …additionally a 1.618 extension from the 2007 top is at the exact same area.
folks, I incorrectly assumed that a top had been made in the transports when we went down 4% in one day. figured some slippage or something like that. well, it kept going up and, guess what — it went up and smacked (today) the ONLY PATTERN that can be complete using the all time low.
the market is so beyond thunderdome that I expect it to get crushed and the band will simply play on and on and on …but the prudent investor, trader, institution would BAIL AT THE FIRST HINT OF A WEEKLY SELL SIGNAL …
one last – these numbers we are dealing w/ have their genesis from the all time low in the Dow Jones Transports some 42887 days ago. what does that mean? well, it’s a big flipping pattern that completed today is what it means…you can argue if it takes into account inflation or stock splits or any of that other stuff … none of that matters. Look at the chart and there right in front of you is the retracements and projections.
that 49.59 has been responsible for EVERY major high and low in the history of the Transports …
apologize for falling off the blog bandwagon early this week…got smacked like a brick in the face w/ a stomach bug. just resurfaced … actually got some emails from you asking where the posts are…thanks! since my record appears to be broken, thought I would add some thoughts from 50+ years of trading…each of these men are friends and mentors of mine …
Larry Pesavento (www.tradingtutor.com) put out a chart on the Shiller P/E ratio but actually added some “other” criteria to the chart in the following manner:
Shiller P/E anything > 18 (current is 25+)
S&P 500 at a 5 year high
S&P 500 at least &% above 40 weeks smoothing
Bulls > 50%, Bears < 20% (Investors Intelligence)
Prior Instances of this happening: 1972/1987/2007
note – in 2000 bears never fell below 2000
note – this happened in 1929 on imputed sentiment
the most recent clusters have been in May 2013 / Aug 2013/Nov 2013 …. why hasn’t the market gone down, just a bit? Well here’s why …
mentor/friend Mike Jenkins (www.stockcyclesforecast.com) recently explained the amazing run in these terms:
“The FED buying of treasury bonds actually spills into the area of the FED buying stocks because indirectly they are. The ‘banks’ like Goldman Sachs now can borrow billions from the FED at a fraction of a percent and buy an ETF basket of stocks with 2% dividends and sell futures short as the hedge and also sell puts and calls to make up the spread difference arbitraging a good profit on the FED loan. This has had the effect of ratcheting up the market with each new buy program. The proof that this is at work is the fact that the biggest correction seen so far took place in late June when the S&P futures were expiring and in a downtrend and the September contract was at too steep a discount to roll out profitably so they had to liquidate some long baskets. This will happen again either in December or March and then there could be hundreds of billions of baskets unwinding just like the portfolio insurance of 1987. The big institutions learned in 2008 that no matter what the ‘valuation’ of a stock was, it could go to almost zero if a large enough seller was out there. They won’t wait around this time and they’ll create a ‘flash crash’ getting out…”
I’ll just leave you w/ two charts …one is the IWM (Russell 2000 ETF) and the continued march of the DJ Transports …
it’s coming folks … keep riding this wave but when you get smashed into the coral at the end of the break, hope you brought a breathing apparatus. What a great run it’s been…