Bigger Picture

This page contains discussion of the markets on daily and higher time frames.



Market Indices

Updated 8-5-2011

Below are charts of the SPY on the monthly time frame down to daily. 


Back in 2000, it is my belief, and that of many other Elliott Wave practitioners, that we completed a major multi-decade top.  The actual degree of the top is a subject of some debate, but for now I'm calling it a Grand Supercycle degree three, which has huge implications.
The first implication is that we are in a Grand Supercycle degree fourth wave.   A wave of that size will extend for decades, and do huge damage along the way.
To really get a feeling for where we are, you have to walk down the degrees.  The first corrective structure down will be of Supercycle degree, which instead of decades, you are now talking years.  We are in that now, and have been since 2000.   The good news is we are more than half-way through the correction.  The bad news is that the worst of the selling happens in the c-wave.  We are in a c wave of cycle degree that began in 2007-2008.
What happens once the c wave is over?  To some extend, we simply don't know.  The problem with corrective waves, is they can be very complex.  It can be over after a completed a-b-c, or it can continue into another structure.  Even if it does end there, that will only be a super-cycle degree move.  ie.  perhaps an A wave of an even larger structure.

Below the monthly chart is a 5Y weekly chart, which shows the entire rally off the March 2009 lows.  This is shown as an (A)-(B)-(C) of intermediate degree, likely completing primary wave ((2)).

Finally on the daily chart, as of the time of this writing, we appear to be in a third wave down of minute or perhaps minor degree.  When five waves complete we will have (1) down of perhaps intermediate degree on the weekly time frame.

US Dollar 

Updated 8-17-2011

Below are monthly and weekly charts which show the possibility that the 2008 lows will not be taken out for years.  The intermediate term picture is more bearish, as we still need wave ((v)), which means we will likely take out this years lows from May.  
If this count plays out, we should get a really strong dollar rally when this intermediate term wave concludes.

Oil and Natural Gas

Updated 1/14/2012
 
Below are Monthly and Weekly charts of USO.

Bear markets in commodities typically begin with a crash off the highs, particularly after a bubble-like rally.   The collapse in 2007/2008 which I've marked primary wave ((A)) certainly fit that description.  Back in May, the wave structure indicated that we had enough to call primary wave ((B)) complete, or in other words, a simple (A)-(B)-(C) correction off the lows.  Since May, however, we only have a three-wave corrective move lower.   Additionally, we have retraced most of that three wave move, and are at this point nearly flirting with the old May highs.  A look at the weekly chart shows the three wave move in both directions in more detail.   Momentum is also misleading here, which is common in larger degree corrective moves.   There are a couple possibilities for the longer term wave count that I can see.

1. Primary wave ((B)) is not actually over yet, and will take the form of a (W)-(X)-(Y) corrective combination.  The three wave move down starting in May and ending in October would form the (X).  We therefore need an A-B-C move higher to complete (Y).  The structure on the weekly chart shows that we are still completing the five waves for minor degree wave A in this scenario.
2. Primary wave ((C)) is underway, and is taking the form of an ending diagonal pattern, where each of the five waves will subdivide into three wave A-B-C moves.

One of these scenarios should be validated very soon.  Here are three things I'm looking for.

1. A five wave impulse move higher would throw favor into the first scenario above, and be bullish for crude intermediate term.  We only have three waves up so far.
2. A move above the proposed ((B)) wave high in May at 45.60 would effectively invalidate the ending diagonal pattern, and thus make the first scenario the preferred count.
3. Assuming the above does not come to pass, a move below the October lows of 29.10 would make the case for the ending diagonal scenario.  This scenario is actually intermediate term bearish for crude if it comes to pass.  

So we have one intermediate term bullish scenario, and one intermediate term bearish scenario encased in a very bearish longer term view.

Natural Gas

Due to the disconnect between the UNG ETF and the spot price of natural gas (and the lack of longer term price history for UNG on my platform), I've decided to base the longer term wave count on the latter.
Below is a weekly chart going back to 2004.  You can see that the downtrend in natural gas actually started as early as 2005.  

It's possible, therefore, that we could actually be in the fifth wave of primary degree wave ((C)) if my analysis and labels are correct.  Minor wave 5, which started in June of 2011 gets pretty choppy, so I've decided to leave that labeling for more short term timing.  Suffice it to say, we should make new all time lows before it completes.