The Grand Supercycle Big Picture

Transcription

1 January 5, 2013 In a Bear Market of colossal magnitude like the present, you are either a Bear or a fool. Exceptional Bear The Grand Supercycle Big Picture This piece deals with the Big Picture, at Grand Supercycle Degree, a log step higher magnitude, than we have discussed to date. As in any discussion of this type, it s best to start with the fundamentals. The Elliott Wave Principle takes its shape from the ebb and flow of the collective unconsciousness of the primitive brain, which reacts with the same fear and greed as our cave man ancestors, regardless of how much we believe we employ the intellect. The Elliott Wave is Nature s Law and so has operated from the beginning of man s time on earth, long before markets existed. What s more it is ever climbing higher to reflect humanity s progress, despite these Bear markets at appear never-ending; they serve a vital purpose, by purging the excesses of the previous boom, so we can start to build a new phase of prosperity. What s more, the Market is a fractal, defined as a structure which maintains its integrity no matter how much it is blown-up or shrunk down. Repeated, over and over, in its parts and similarly echoed in its sub-structures, like to a diamond, with many faults, which are the corrections. As RN Elliott first described, the basic fractal is a 5-wave bullish pattern repeated over and over, from the 1-minute increment to the 1-year increment, represented by a single candle. Below you see this 5-wave structure applied to the highest currently relevant magnitude, Grand Supercycle Wave [III] in progress. As you see wave 2, or (II) corrects wave 1 or (I), and wave 4 or (IV), corrects wave 3 or (III). Waves 1, 3, & 5 all share this basic structure, which is repeated within them, regardless of how small the time increments.

2 Below is that Big Picture, where the final Bear Market trough must plummet to the area of the previous 4 th of one lesser degree, Cycle Wave IV, and usually its extreme, Dow 555, which approximates S&P 60, using simple ratios of Friday Jan 4 th s closing prices. As you see below Wave C is bearish fractal of the basic 5-wave bullish structure, turned up-side-down. However, viewed in its entirely, the corrective structure is always an A-B- C or some variation of it. Where wave B acts as a diversionary counter-trend rally, while waves A & C either drop or plunge, depending on the relative magnitude known as degree of trend. Although the corresponding wave 2 of the same Supercycle degree persisted for twentyfive years, with the B wave encompassing the entire Roaring 20 s, we might expect its corresponding simple structure, resulting from the natural alternation described by Elliott, could conceivably complete the final trough by 2020, or in 20% less time than the comparable Bear Market, ended in the Great Depression.

3 Wave C is shown in progression from its origin at the 2007 top, is labeled in detail on the Weekly S&P chart below, which can be seen more clearly in the Public Stockcharts via the link at the bottom of the page.

4 In the multi-century chart employing data provided by the Foundation for the Study of Cycles, with Exceptional Bear s unique annotations, ends before the completion of Supercycle (III), nevertheless provides great insight, to which we can always refer for historical reference. Without the application of the A-B transitions, to which Prechter and his group refuse to acknowledge, it is impossible to arrive at this the correct count. On the bottom far left, we see transition down from Grand Supercycle Wave [II]. Within Supercycle Waves (II) and (III), there were two Bear Markets of Cycle Degree labeled II & IV below. These are echoed in the Grand Supercycle structure in the diagram of the top two charts. It is the low of wave a, of Cycle Wave IV, which culminated a Diagonal Triangle type II, (Diag II) the point which marks the most likely trough of the current Supercycle Wave (IV) Bear Market. If we look closely within Cycle Waves II & IV, we see two further degree of trend downgrades on this yearly chart shown as Primary waves 1-4 and Intermediate waves i- iv. It is precisely these downgrades in degree of trend, which propel a long Bull Market, concurrent with relatively low volatility, since volatility is proportional to the degree of magnitude.

5 Below the S&P is in process of topping, near 1475.

6 UPRO above and below represent the inverse S&P, UPRO shows a 2-hour close-up, of the inverted Daily chart above. The UPRO indicates a slightly lower low, consistent with a higher high perhaps reached on Monday or Tuesday of next week in stocks.

7 Timer Digest S&P SPXU Inverse S&P 500; UPRO long S&P 500 Cash Sold full pos UPRO limit 95; cost 85.3 Timer Digest Bonds TMF 20-yr. long Bond; TMV 20-yr inverse bond Full pos TMF average cost 70.38; w/out taking into account the sale of ½ at 75.5 Pension 2/3 pos TMF average cost 70.38; w/out taking into account the sale of ½ at 75.5 Traders Full pos TMF average cost 70.38; w/out taking into account the sale of ½ at 75.5 Bonds, shown below in the Big Picture perspective, and also the 2-hour chart, too will likely bottom to coincide with the top in stocks.

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9 Equity Allocator 35% DRV Inverse Real Estate; DRN Real Estate One Fund Strategy Pension 2/3 pos DRV average cost 22.5 Traders Full pos DRV average cost 22.5 DRV and the other inverse indices, are about to reverse like a spring after being tightly wound up and constrained. 35% EDZ Inverse Emerging Markets; EDC Emerging Markets Pension 2/3 pos EDZ average cost Sell 1/3 EDZ limit 14;

10 Traders full pos EDZ average cost Sell 1/2 EDZ limit 14 30% FAZ Inverse Financials; FAS Long Financials Pension 2/3 pos FAZ average cost Sell 1/3 FAZ limit Traders Full pos FAZ average cost Sell ½ FAZ limit 19.25

11 Alternate Position full pos TVIX average cost 5.135; Sold 1/2 TVIX at 11 Bot ½ pos TVIX at 7.41 at the opening off a 7.5 limit The VIX, here represented by TVIX, made an about face last week and allowed us to sell a partial position near the high, and it buy back at a significant discount

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13 Timer Digest $GOLD Full position $Gold cost $1716 (as of Nov 2) Sell full pos $Gold limit $1885 (as of Nov 24); CXL sell ½ Gold has a minimum upside of 1885 before the next major pull-back To view the long-term public charts, where you can view the full long-term charts shown magnified above, click: if you are a subscriber to stockcharts, I would appreciate your vote.

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