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Saturday, July 13, 2013

Saturday, 7/13/13 update

This is beginning to look like a blow-off top in equities.  The steepness of the ascent since the Jun 24 low is notable, and it's a fair guess that if the ES/SPX continues to steam upwards at this rate through the all time high at ES 1685.75 (only 16 points away as of Friday close) then it will possibly hit some major stop losses on short positions and actually accelerate.  Current long term bull and bear alternates look like this:

Bull alternate

Bear alternate

In depth discussion of these alternates can be found in the chart section of this site here.

From a short term perspective, the rally from the Jun 24 low into the Jul 1 top looks like the 1st wave of the move. Wave 2 bottomed (after an odd looking correction) at 1594.00 on Jul 3rd and wave 3 is currently in progress.  Best guess on the internal count for wave 3 is shown, which will require two wave 4 & 5 sequences yet to complete.  However, it should be mentioned that there is a way to count wave 3 as much closer to completion (not shown).  So the status of wave 3 is an open question.  Either way, it appears that the bull move off the Jun 24 low has a distance yet to travel before a significant top can be expected. 

One other note: the Al's travel indicator is about to go off.  I'm scheduled for a 5 day business trip starting Sunday, Jul 21 through Thur, Jul 25.  Because I'll be on the road in airplanes and driving etc I won't be able to monitor the market very closely at all.  When I travel it seems that the ES inevitably hits a critical juncture and I miss a major turn (last trip I was on was Apr 16 - 19).  So put your astrology charts aside, more than likely the current bull move will top somewhere in the Jul 21 to Jul 25 time frame based on my travel plans.  And if that happens, I'm going to once again ask WHO'S IN CHARGE OF THIS S....!!


  1. Al, looks like the market has clarified its trajectory since our last chat. There is hence a convergence of views among everyone, including the orthodox wavers at Gainsville, which leads me to think the market might surprise...Anyhow, you present here the whole spectrum. I am not sure we are counting in the same way, but the count of wave 3 as being close to ending yields 1687.18 for me (3=1*1.382) then 5 up at 1691.68. One attraction of this count is that after such an extended wave 3 (from dec 12 to 1686!!), wave 5 might get truncated. Another attraction is that all the way from the Oct 2011 lows, every dip has played out as a bear trap, and I would expect the top to be a massive bull trap. This count could see bulls trapped on the break of 1686, then again after wave 5 gives the illusion that the market "wants higher". Of course your expectation could also play on the same theme: a break of 1686, has bears running for cover and bulls throwing bad money after good, then top and reversal. The timing that you give as a joke happens to be the time-frame that fits the Nasdaq count as well. One last observation: $BKX seem to have completed wave 3. So to sum-up, there is currently a spectrum of upside ranging from 11 to 65 points, after which a decline of 166 (1691 to 1525) up to 275 (1745 to 1470) points. Risk/Reward starting to get seriously in favour of shorts here. The bearish count has wave one down ending well below 1470, so the 275 is a very conservative up limit on downside (if that makes any sense). Hope you have safe travels. Alex

  2. You mean Prechter's gang is now bullish? That's a serious bear omen. When the last bear capitulates, the top can't be far away.............. Where exactly that top will be is TBD, haven't seen signs of it yet.

  3. They are recognizing that this is wave 5, and that minor 3 is in the works, so yes advocating higher. And as I said in my previous post, there is no ambiguity left in this wave count, and given the consensus, I place high odds on it being truncated.