Will Rally Become Impulsive?

Friday's June23 market action was encouraging because strength in the former leaders($NDX) has resumed with additionally the NYSE A-D line posting a +1060 with high-low plurality increasing to +71. Similarly, NASDAQ A-D line improved to +870 with highs-lows rising to +74. The NASDAQ McClellan Oscillator was positive at 9.02 and the NYSE McClellan Oscillator will turn clearly  positive from Friday's -1.43 reading with another day of +1000 A-D action.

Further Explanation of C & H Pattern

3 people commented (on another site) yesterday about the Cup & Handle pattern being a basing pattern and that the current situation did not meet that criteria because it was occurring too near the ATH's. My response at that time  was not as thoughtful as it needed to be. An important deeper explanation is that the charts I posted were Stockcharts.com Gallery views which feature a daily chart at the top and a weekly chart beneath it.There is actually a C & H pattern from the daily chart which is embedded, or nested if you will, within the C & H pattern on the weekly chart.
On the weekly chart we can see that the bottom of the cup goes down to the 1810 area and was indeed the result of a steep decline. The upper edge, or lip of the cup, on both sides is not far below the ATH's.  I think most people were looking at the daily chart,on which the whole C & H pattern does take place within about 100 points of the closing ATH. But, in fact the whole C & H pattern on the daily chart forms the developing handle on the weekly chart. On the Gallery view, the weekly C & H looks V-shaped, which is not ideal since the ideal shape has a more rounded bottom forming a U, not a V. I originally called it an inverted  H & S pattern which was mutating into a C & H pattern with an inverted pyramid shaped cup. Below is a Gallery view of the $SPY. Note how the C & H on the daily forms the handle of the C & H on the weekly.

Cup & Handle Patterns Nearing Completion

Many indexes and ETF's look to be completing their cup and handle patterns. When that happens, which could be within a week, there will be upside fireworks. I have posted a Gallery View for each index or ETF.

http://stockcharts.com/freecharts/gallery.html?%24INDU
http://stockcharts.com/freecharts/gallery.html?s=%24SPX
http://stockcharts.com/freecharts/gallery.html?$MID
http://stockcharts.com/freecharts/gallery.html?IWP


As a bull, I feel acutely aware of the possibility of an irregular B corrective wave that surpasses the old all time highs. That is an accepted tenet of standard Elliott Wave Theory,at least as I know it. That may or may not be the case for OEW. Tony is the final authority on that. Possibly it is an OEW principle in the process of mutating. I am not a aware of an RN Elliott or Prechter-Frost defined limit to the height of the B-wave above the previous ATH’s. The farther above the
closing SPX high of 2130 and the intra-day high of 2135 it goes, the less likely it is that the price movement is just a B- Wave. Above a closing high of SPX 2200 is where I would say that the irregular flat corrective wave theory loses 99% of
it’s credibility.

Another Wall Street Crossroads

The stock market at this time is providing enough evidence for either the bulls or bears to make their cases. Two important indicators which displayed strength at the recent rally peaks are the late Richard Russell's Primary Trend Indicator (PTI) and the NYSE advance-decline line (NYSE A-D line). Both of these made new all-time highs at the April 21, 2016 rally closing peak of 2100 and neither of which has sold off too sharply during the subsequent decline from that apex. A link to the $NYAD  is given below but I can not give a link to the PTI because it is proprietary to Dowtheoryletters.com.

http://stockcharts.com/freecharts/gallery.html?%24NYAD

On the weekly charts of indexes, ETF's, and mutual funds a potential inverted head and shoulders pattern can be seen, one which has evolved into a sort of cup and handle pattern with steep sides (like a type of wine glass). Here are a few charts of mutual funds and ETF's which illustrate it. The list is ordered with the largest cap funds at the top and the smallest-cap funds at the bottom. The aforementioned chart patterns are stronger the larger-capitalized their groups are:

http://stockcharts.com/freecharts/gallery.html?s=DIA
http://stockcharts.com/freecharts/gallery.html?SPY
http://stockcharts.com/freecharts/gallery.html?s=PEMGX
http://stockcharts.com/freecharts/gallery.html?s=IWP
http://stockcharts.com/freecharts/gallery.html?PRDMX
http://stockcharts.com/freecharts/gallery.html?s=GGOIX
http://stockcharts.com/freecharts/gallery.html?s=IWM
http://stockcharts.com/freecharts/gallery.html?s=IWO
http://stockcharts.com/freecharts/gallery.html?s=IWC

April 6 2014 Rally Day Within Consolidation Pattern

With an SPX close of 2066.66, we had a devil of a good up day today! Market participation was broad and inclusive. The NYAD line posted a +1550, NASADAQ line  a +1212. The Transport and Utilities sectors were the notable exception. My guess is that they are being negatively impacted by higher oil prices at this time. However, they did perform well earlier this year during the upward phase of the oil price action. So far, the overall market still appears to need a rising oil price in order to continue it’s uptrend. I remain moderately convinced that that dynamic may change soon, but, even if it doesn’t, I believe the bull market will still resume intact. However, I think we could yet see another little downleg to complete a micro ABC pattern on the $NYAD.
http://stockcharts.com/freecharts/gallery.html?$NYAD

April 3 Technicals & Fundamentals

The McClellan Oscillator needs to have some sharp up days to snap out of it's correction. When that happens, this market will surge towards ATH's. The breadth of the market is harder to pull up than the large caps in and of themselves. Therefore the strong A-D days that it will take to get the McOs rising sharply again will energize all the price indexes to the upside. 1977 and 2008 are the only times that I know of  that the A-D line was in a strong uptrend while the Dow declined.  And I am not even sure 2008 was a strong A-D uptrend or not. I wish someone with access to better charts than I have would post the A-D line and the DJIA for the 2008 time period and even the 1977 example.
The positive correlation that the oil price has had with the stock market may not continue. For the last year and a quarter the market has been discounting the negative effects of lower oil and gas prices on energy-related companies. The market may again start discounting the benefit of lower oil and gas on companies and individuals who consume them. In fact, it probably already started in Dec 2015 with the beginning of the Utility sector rally, although low interest rates have helped. But low interest rates are also an effect of low energy prices. This dynamic may cause different industry sectors to be leaders in the next segment of the bull market.
http://stockcharts.com/freecharts/gallery.html?s=%24NYAD
http://stockcharts.com/freecharts/gallery.html?$NYMO
The Transports rose steeply a couple of weeks ago but since then have declined much more sharply than the Industrials. They are a sector, like the Utilities, which obviously benefits from lower energy prices.  I am expecting the Transports to be co-leaders with the Industrials and NASDAQ in the next rally phase, if not to surpass the Industrials. The mid-cap growth sector, which is not an industry group, but a size and style group, have started to gain in relative strength. I am particularly interested in that market segment because I own a couple of mutual funds of that type,
There is much incredulity about the logic of a bull market continuing amid so many economic, financial, and geopolitical stresses. Being a bull does feel a little like going "over the top" of the trenchline into no-man's land with shells bursting all around and then climbing the wall of the enemy's fortifications in the face of machine-gun fire."Climbing a wall", yes, that is what we bulls must do: Climb a Wall of Worry. And "Climbing a Wall of Worry"  is what sustainable bull markets do as well.

Pivotal Market Interpretation on Feb. 15, 2016

The decline to Feb, 11 low at an intraday SPX price of 1810 and a closing SPX price of 1829 from the all time high of 2135 from the May 18-July 20 double top at 2135 and 2128 respectively was more appropriate in time and extent for a Primary degree down wave than the decline to the 1867 low or even the 1872 low were. A broad A-B-C pattern was etched out by the Primary 4 down wave. The A leg divided into an a-b-c starting from the July 20, 2015 top at 2128 and ending at the Aug 25 low of 1867. The b wave starting from 1867 divided into a 1-2-3 topping at 2021 on Sept 16, 2015 with the c-wave ending at the Oct 29 low of 1872 in a single wave decline,creating a double bottom.
From there a strong B-wave rally took the SPX to an eventual peak at 2081 on Dec 29, 2015. The double top pattern created by the Nov 3, 2015 and Dec 1,2015 highs of 2116 and 2104 respectively were the absolute highs of the rally. That could have been called a 5-wave rally with the 4th wave dividing into an a-b-c and the 5th wave peak at 2081 failing on Dec 29, 2015 to even match the Dec 1 high. From the Dec 29, 2015 peak of 2081 the C wave fell to 1810 (intraday) on Feb 11, 2016. The a wave hit it's low at 1812 on Jan 20; the b-wave peaked at 1947 on Jan 29; and the c-wave probably ended on Feb 11 at 1810. The large A-B-C pattern consists of the Major waves of Primary 4. The anomaly in this wave pattern is the 5-leg B wave which ended in the "failed fifth" wave on Dec 29, 2015. According to Elliott Wave theory, a corrective upwave is supposed to take a 3-wave form. But at the time it was happening, it was believed by many of us to be Major 5 of Primary 5. For the market to maintain that deception it had to deviate from the orthodox pattern, only appearing as a corrective B wave (to me) in retrospect.

The up days in the bottom forming action in the week of Jan. 18-22 featured a couple of days with the A-D line above +2000, one of which was a +2400+ day. This was a harbinger of further strength in the Fri, Jan.29 rally to come. The Friday, Feb 11 rally was not as strong as the Friday, Jan. 29 surge which at the time I thought was the beginning of Primary 5, but if there is follow through, it will prove more sustainable. Then Feb 11, 2016 would mark the low of Primary 4.

It is true that the DJIA closed 6 points below it's August lows while the DJ Transports have long since fallen below their Aug lows. So there is plenty of justification for calling today's action a Dow Theory sell signal. However, recently the Transports have strengthened and today they closed 200 points above their Jan 20 lows. Picking the appropriate points to compare is a kind of art whether it is the Dow Theory or any other set of indicators that are used in conjunction. I think I am on firm ground in saying that there was a short-term DT non-confirmation to the downside by the DJ Transports. The downside penetration by the Industrials was very marginal as well. However, strict Dow Theory rules state that any closing price above or below a previous level, no matter how small, counts as a penetration. In my opinion, the Dow Theory Transport (Rails) and Industrial confirmations or non-confirmations are the original ancestor of all the myriad index and indicator divergences and confirmations that are used today.
The Dow Theory is based on closing prices, The DJIA fell below it’s Oct, 2014 lows in Aug, 2015. The DJTA did not fall below it’s Oct 2014 lows on a closing basis in Aug, 2015. That is the reason why there was no Dow Theory bear market signal, not because of the flash crash. Subsequent to the Aug 2015 decline, the DJIA rose to new highs. The DJTA failed by a wide margin to do so. On Dec 18, 2015 the DJTA fell below it’s Aug, 2015 low but the DJIA did not do so by a wide margin.
There were declines prior to Aug, 2015 that some Dow Theory practitioners may have used as reference points and thus generated a bear market signal. But I consider the Oct, 2014 lows to be the correct ones to look at for comparison. From what I have read, I would say that most Dow Theorists interpret the price action from Oct 14, 2014 to mean that the Dow Theory has signaled a bear market. But obviously I have an interpretation contrary to that.

The NYSE daily A-D line fell below it's previous low but the NYSE McClellan Oscillator held well above it's previous low of -89 by rising to 58.6 and then halting it's last decline at about -43.5, thereby creating an uptrend. If the NYSE McClellan Oscillator can climb above 60 and then hold above 0 on any pullbacks, that would amplify the nascent uptrend in the NYSE Summation Index, which fought it's way up to -575 from a low of -800, and now appears to be making a higher low at -668.


http://stockcharts.com/freecharts/gallery.html?$NYAD

http://stockcharts.com/h-sc/ui?s=$NYMO

http://stockcharts.com/h-sc/ui?s=%24NYSI

The severe decline in the NASDAQ and in secondary stocks served to revalue growth stocks and generate some sector rotation, possibly in preparation for finding new leadership in the next, and perhaps last phase of this bull market. The NASDAQ daily A-D line fell even further below it's previous low than the NYSE A-D line. Subsequently the NASDAQ McClellan Oscillator rose from a low of -86 to +58.6, and then fell to a higher low at -33, and has currently risen to the 0 level.The NASDAQ Summation index looks to be making a double bottom in the 4292-4313 area. Of course, to kick the NASDAQ Summation Index into an uptrend, the NASDAQ McClellan Oscillator needs to move above 50 and then stay above 0 on any declines.

http://stockcharts.com/freecharts/gallery.html?$NAAD
http://stockcharts.com/freecharts/gallery.html?$NAMO
http://stockcharts.com/freecharts/gallery.html?$NASIT

If both of these Summation indexes can generate durable uptrends, that would be strong evidence that the bull market has resumed rather than just a counter-trend rally developing in a bear market .

From a psychological point of view, I would say that the market has been trying to convince it's players that any forthcoming rally is only corrective in nature, not a resumption of the primary bull. Most of the so-called bullish forecasts I read are only anticipating a counter-trend rally to the upside within a primary bear market. The bull needed to throw off some of the people who were riding it, especially on credit, with too much of a sense of equanimity. Although there some who agree with my position that Primary Wave 4 ended on Feb 11 at 1810 (intraday) or will end soon in this same price area, I think there is a great deal of fear that this is a bear market and it will resume it's destructive path downward after the upward reaction burns itself out. I feel quite a bit of fear myself and am not overconfident about this position that I've taken.

Oct 11, 2015 Weekend Market Comments

I have noticed all the publicity and controversy about the Zweig Breadth Thrust. But don't confuse that with the McClellan Summation Index. The SI only exhibits a strong uptrend when the McClellan Oscillator stays positive, and preferably at or above 30, for a sustained period of time. And that is hard to do because, by it's construction, the McOs loses points easily when it is at a high level. The McClellan Oscillator, having risen to a high of 95.5 on Thurs, Oct 8, declined to 88.73 on Friday even though the A-D line posted a +419. The Summation Index has risen to it’s highest point since early June, 2015. The ZBT can just burn out like a shooting star and fail to sustain it's upward momentum. That is why I have said to watch the SI to see if it enters a real medium-term uptrend.
Also significant was the strength of the DJ Transports Friday and for the past week as a whole, The weekly gain of The DJT was 4.82%. The SPX has cleared it's 50-day MA convincingly, but the small and mid-cap indexes, especially the growth indexes, have not done so.

http://stockcharts.com/freecharts/gallery.html?$TRAN
http://stockcharts.com/h-sc/ui?s=$NYA&p=D&yr=3&mn=0&dy=0&id=p83733137120

Wed Oct. 7, 2015 Dow Up 122: Technical Battle at 50-Day MA

Today market action continued the struggle between buyers and sellers at the 50-day MA of the Dow and S&P 500. Chart wise this is occurring on the upper right side of a W shaped bottom. The NYSE A-D line has put in a strong performance on Tuesday, Oct 6 with a +336 posting in the face of a sharp sell-off in the mid and small-caps, especially the growth stocks. The 16 point rally in the SPX and 122 point increase in the DJIA on Wed, Oct 7 was accompanied by a remarkable +1715 plurality on the NYAD.
The McClellan Oscillator recorded a 77.7 reading, creating breakaway gaps to the upside in the NYSE Summation Index. If the A-D line can continue it's current strength, it will generate a clear and unequivocal uptrend in the NYSI. A strong Summation Index rally is as close as it comes to a silver-plated guarantee of a powerful and long lasting intermediate term rally in the price indexes. That goes for the NASDAQ Summation Index as well.

http://stockcharts.com/freecharts/gallery.html?$NYAD
http://stockcharts.com/h-sc/ui?s=$NYA&p=D&yr=3&mn=0&dy=0&id=p83733137120

But the bulls must overcome tenacious overhead resistance at the 50-day MA of the major indexes as they approach it from below. The Chart of the NYSE Composite very clearly shows the overhead resistance exerted by the 50-day MA:
http://stockcharts.com/freecharts/gallery.html?$NYA

Monday, Oct 6 2015 Market Action

Double bottoms have been put in, not surprisingly, by both the NASDAQ and DJIA as well as the SPX, as mentioned in Tony’s update. All three of these indexes may consolidate on the upper right side of this W shaped double bottom. That hesitation could draw in unbelievers looking for an opportunity to sell, thereby creating some fear and skepticism. But this market might become powerful enough to move straight up out of the W-shaped low before consolidating it’s gains.

http://stockcharts.com/freecharts/gallery.html?$INDU
http://stockcharts.com/freecharts/gallery.html?$COMPQ

The daily NYAD produced a powerful mega-plurality with a + 2372, after having put in +1590 days on Wed and Fri. The weekly NYAD stopped it’s descent nicely above it’s Dec 2014 lows of 387K on Tue, Sept 29 and has been moving up sharply (for a weekly chart) since then.

http://stockcharts.com/freecharts/gallery.html?$NYAD
http://stockcharts.com/freecharts/gallery.html?$NAAD

The Russell 2K put in a strong showing with with a +2.47% performance. If the R2K continues increasing in strength in tandem with the A-D ratios of the NASDAQ and NYSE, they would be manifesting behavior more typical of an Elliott Wave Primary 3 Wave than a Primary 5 Wave.

http://stockcharts.com/freecharts/gallery.html?$RUT

With today’s strong A-D action, the NYSE McClellan Oscillator shot up to a +58.07 and the NASDAQ McClellan Oscillator, responding to the +1564 of the NASDAQ A-D line, moved up to a +33.66.

http://stockcharts.com/h-sc/ui?s=$NYA&p=D&yr=3&mn=0&dy=0&id=p83733137120
http://stockcharts.com/h-sc/ui?s=$COMPQ&p=D&yr=3&mn=0&dy=0&id=p44465978337

Aug-Sept 2015 Correction Over

The daily NYSE A-D line has made a probable double bottom at about 89,000 and has been moving up smartly from that area. http://stockcharts.com/freecharts/gallery.html?s=%24 NYAD

The NYSE McClellan Oscillator, a derivative of the A-D line has created a sharp uptrend line from -105 through a rising bottom at -45.
http://stockcharts.com/h-sc/ui?s=$NYA&p=D&yr=3&mn=0&dy=0&id=p83733137120

I would like to see high plurality days in which the A-D line exceeds +1500 and even +2000. We have seen two such  breadth power days since the 1872 SPX intraday lows on Tue, Sept 29. On Wed, Sept 30 the NYSE A-D line posted a +1585 and on Fri, Oct 2 a  +1590. I would like to see some 2000+ days, but if we are in Elliott Primary Wave 5, they might be rare because in the final stage of a bull market the majority of stocks typically lag the large caps in performance.
That raises the question of how far we are from the end of the bull market. If we are in Elliott Primary Wave 5, then we might not be entitled to expect +2000 plurality days in the NYSE A-D line. If we are in a degree lower, such as Major 5 of Elliott Primary Wave 3, then we should expect some mega up days for the A-D line of from +2000 to +2500.
On the same subject, the S&P 500 suffered a maximum decline so far of 12.55%, which is low for a Primary degree decline. The Principal Mid-Cap Growth Fund has only lost 12.24% to date during this decline. If this correction were destined to go longer and lower, then undoubtedly greater percentage declines would occur for most indexes and funds. But it appears to me that that is not going to occur; I believe for the reasons explained above that we are in an impulse rally mode of a wave of some unresolved degree. We should be on the alert for a Zweig Breadth Thrust, especially if this rally is at an earlier stage than Primary 5.

Critical Technical Day Approaching

Both the price indexes and the NYSE A-D line did what they needed to do on Thurs. Nov. 20, 2014. The A-D ratio registered a +977 today, which was a good reading in relation to the magnitude of the price rises in the Dow and SPX. The daily and weekly charts of the A-D line did not resolve their technical problems, but they did take another step in that direction. A strong A-D line performance on Fri. Nov. 21, 2014 will nullify the weekly A-D  H & S pattern and eclipse the previous uptrend high of the daily A-D line.
The NYSE  McClellan Oscillator has made a nascent move up from the 0 area (-3), which a strong A-D day would turn into a full blown uptrend with rising bottoms starting at -65 and passing through -3. Incidentally this potential trend line would not be so steep as to be easily broken. Tomorrow could turn out to be a big technical day for the continuation and power of this uptrend.

Update of A-D Line & Historical Implications

The weekly NYSE A-D line still shows a head and shoulders pattern and the daily NYSE A-D line is tracing out a minor downward a-b-c pattern. The decline could easily terminate soon and the A-D uptrend could quickly resume, but the beginning stages of amplified declines look like the pattern currently manifesting. Or, of course, a moderate correction could occur over a period of a couple of weeks.

In Jan. 1999 the A-D ratio made a top but the SPX, Dow, and Nasdaq (price dominated by large-cap members) continued up until March 2000. So the large cap sector can continue much higher without support from the A-D line, but that does not usually occur until the later stages of a bull market. The risk is that any steep correction in the later phases of  the bull cycle can turn out to be the beginning of a primary bear market.

Since this bull market lost it's A-D and R2K leadership early in 2014, it has experienced much more volatile behavior than the steady rise of 2013, with net annual price gains appearing and disappearing repeatedly.

Dollar, Market Indexes & Indicators for Mon. Nov. 17, 2014

The weekly NYSE A-D line ($NYAD) looks as though it may be forming a head & shoulders top and may be starting to decline from that top. Link to the $NYAD chart:

http://stockcharts.com/freecharts/gallery.html?$NYAD

The US Dollar ($USD) on it's daily chart looks to be making a flat-top consolidation prior to embarking on a substantial new up leg. This chart pattern on the USD seems more reliable to me than a similar one being manifested on the S&P 500 ($SPX) because it is coming at a much earlier stage in it's bull market than the similar pattern does in US equities. Link to $USD chart:

http://stockcharts.com/freecharts/gallery.html?$USD

This bull market has given many deceptive bearish signals in an attempt to keep as few people as possible from riding it, but it must fairly soon act to nullify the bearish weekly $NYAD chart or that pattern may well drag us down into an Elliott Wave Primary IV correction. A wise investor will always want to avoid a Primary wave correction but it is all the more important to do so when it occurs late in a bull market (Primary IV vs. Primary II) because the decline could turn out to be the next primary bear market, and it will be difficult to persuade oneself to sell after the SPX has already declined 20% +.

I believe that the benefits of a strong national currency outweigh it's negatives, so I consider the $USD strength a long-term bullish force for the US stock market.

Value of QE Nov 9, 2014

I have not been able to find the exact figures but US banks have a very large amount of excess reserves in the Fed vaults. The point of QE is for the Fed to increase the amount of reserves it's member banks have so that, using fractional reserve banking ratios, they can provide abundant, low-cost credit to businesses and individuals, thereby increasing the money supply and stimulating economic activity, and thus growth. There is no point in increasing bank reserves further because they have not really used the reserves they already have for making business and consumer loans that much, so they still have more far more reserves than they need.
The reasons for this are deep but the net result has been that the velocity of money in the economy has remained very low. Therefore more QE would just be superfluous for any economic purpose. I guess the banks could just use additional reserves to buy more T-bonds and speculate in equities, as they have been doing. That's the reason QE has fueled the bull market in stocks, as well as bonds. Bonds, of course, have also benefited from low inflation.

Nov. 6 - Nov. 7, 2014 Markets & Contrary Opinion, Movie "Fury"

With both the DJIA and DJTA making new highs Nov. 5, the market gave us a Dow Theory bull confirmation signal. However, the NYSE A-D plurality at +548 was weak for a +101 point day on the DJIA. The R2K was up only .14%. On Nov. 6 the NYAD A-D  posted a weak +415 with the DJIA up +70 and the DJTA up 113. With the Dow Industrials and Transports again making joint new highs on Nov. 6, we have a second consecutive day of Dow Theory bull market confirmations. The NASDAQ looked stronger on Nov. 6, up 17.75 and threatening to make new highs. The R2K did better on Nov. 6 than on Nov. 5, with the R2K up .41%. The RS of R2K vs SPX, after rising above its 50-day MA, has made a short-term double top in the .5850 area.
So the large and mid-cap indexes have put in 2 solid up days without strong participation by the A-D line or R2K. I still don't think that type of market segmentation can continue indefinitely in this bull market, even though it has done so in past bull markets. We need to see much increased strength in the A-D line and the R2K for this uptrend to continue as an impulse wave rather than fizzling out and giving way to a corrective wave. The first link is to $RUT:$SPX (relative strength of Russell 2000 vs S&P 500) and the second one is to the NASDAQ:

http://stockcharts.com/freecharts/gallery.html?%24RUT%3A%24SPX

http://stockcharts.com/freecharts/gallery.html?$COMPQ

Link to Fat Pitch article discussed below:

http://fat-pitch.blogspot.ca/2014/11/what-fund-flows-tell-us-about-current.html

The correct procedure is usually to take a position opposite to the majority, the famous contrary opinion approach. Is there a reason not to do that today? If there is one, it would be because the number of market participants is already much thinned out from what it was before the 2002 and 2008 bear markets reduced the percentage of public participation in the market. While the amount of money being invested is higher than ever, the number of people investing it is lower. So if we count all the middle class (and former middle class) people who are staying out of the equity markets, we could make an argument that such a phenomenon is itself an indication of widespread skepticism. The players who are left in the market are mostly the wealthy, the institutions, and the professional traders. So the bullishness that Fat Pitch is reporting might just be a measurement of what different segments of informed investors are thinking and doing. Of course, my argument could just be a rationalization for remaining bullish when I should just take the Fat Pitch documentation at face value.
If anyone has seen any recent data to contradict the above hypothesis, it would be enlightening to see such information.

By the way, I liked the movie Fury with the demurrer that the final scene of a single crippled tank and it's crew destroying half or more of a Waffen SS batallion assumed a great deal of combat ignorance on the part of the Germans. Audie Murphy's exploits in driving off a German company with a 50 caliber machine gun mounted on a half-track in NE France was a real life event that gives the Fury finale a hint of credibility. I also read that the German Army awarded a Romanian soldier the Iron Cross for an incredible exploit in fighting off a large Soviet force in the Ukraine, but I don't remember the exact details .


                                                                                                         

Possible Dow Theory Bull Market Confirmation on Wednesday, Nov. 5, 2014

If the Dow Transports close higher tomorrow, Wed. Nov. 5, 2014 and the Dow Industrials close 8 or more points higher, we will have simultaneous new highs in both Averages, the strongest kind of Dow Theory bull market confirmation.

Blog Posts on Elliott Wave Lives On: Oct 28-Oct. 31, 2014

George Schaeffer says:
October 28, 2014 at 6:47 pm:

The R2K ($RUT) was up 2.86% today compared to a rise of 1.19% in the $SPX. $RUT:$SPX (relative Strength of $RUT vs. $SPX) is showing signs of a nascent uptrend:

http://stockcharts.com/freecharts/gallery.html?s=%24RUT%3A%24SPX

The A-D line recorded a plurality of +2098 with the DJIA up 188 and the SPX up 23 1/2. The McClellan Oscillator rose to +80 and it’s derivative, the Summation Index, has climbed from a low of -635 to today’s -220. Today’s breadth performance was strong enough in relation to the rise in the large-cap price indexes to be considered part of what PN Haurlan and Dave Holt of the former Trade Levels service called a “kickoff impulse”. And I think “impulse” (as in “impulsive”), rather than corrective is the right way to describe the market action since the 1821 SPX low.

IAWT says:
October 30, 2014 at 4:05 pm:

"This not acting like a corrective wave at all in my opinion. It hasn’t from the start. It looks like a sub dividing kick off rally wave. Once again….oct 2011 deja vu. Down into Turkey day then rockets back on into February."

George Schaeffer says:
October 30, 2014 at 6:05 pm:

I agree with IWAT and have posted that the rally since Oct. 15 has looked like a motive wave more than a corrective wave because of the strong "kickoff impulse" characteristics it has displayed. This description is founded on the broad and deep market participation that has characterized it. With the McClellan Summation Index having risen to -90 from -635, we see objective evidence of a persistently strong A-D line. The chart pattern of the relative strength of  R2K vs. SPX still looks like the early stages of an uptrend. It needs to surpass it's preceding high of .5858 to confirm that it's recent rally is more than just a corrective uptick.Again here is the chart of $RUT:$SPX:

http://stockcharts.com/freecharts/gallery.html?%24RUT%3A%24SPX

The evidence in support of this rally being a corrective wave is Tony's OEW work and the V-shaped pattern the rally has traced out. Impulse upwaves tend to have a broader bottoming pattern and corrective upwaves are more likely to be V-shaped. The market was strong but somewhat mixed today with the DJ Transports down 84 while the DJ Industrials were up 221.
If the rally were to continue showing this kind of incomplete participation by market segments, I would consider that to be support for the corrective B wave thesis.
However the DJTA had posted a new high on Tuesday while the DJIA had lagged considerably. The strength of the Industrials this week, and especially today, combined with the weakness of the Transports over the last 2 days will create a better opportunity for a joint closing by both the DJIA and DJTA at new highs. This would represent a Dow Theory bull market confirmation and would also be bullish for the intermediate term trend, coming as it might only 2 -3  weeks after the low point of a sharp correction.

I should add that my agreement with IWAT does not include this part of his post:

"Once again….oct 2011 deja vu. Down into Turkey day then rockets back on into February."

I don't expect a decline into Thanksgiving from today's close. After making new highs, we might expect a kind of consolidation before the rally resumes. The day before Turkey Day is often a good up-day.

George Schaeffer says:
October 31, 2014 at 3:14 am

The correction down to the 1821 low did not look nearly deep or long enough to me to be a P4, but it did look to be about the right magnitude for an M4. I believe that the surpassing of the SPX 2019 high will occur by Fri., Nov 7.  If that occurs with good A-D line strength and wide price index participation, that will be strong enough proof for me that we have completed M4 of P3 and are now in M5 of P3. Tony's OEW group will probably figure out a wave pattern that describes recent price action in those terms.

Technical Points for the $SPX on Oct. 20, 2014

The $SPX is coming up from below against 2 vital resistance points: it's 200-day SMA and the 1905 low of Aug 7. For those few on this site who may not know this:  Once a low point which has been downside support is broken, it becomes resistance when the price of the item moves back up towards it from below. So if the $SPX can rise above these former low points, it will have made an excellent technical accomplishment. The 200 day SMA was not a previous low point per se, but it did provide technical support for the $SPX for a long time period. So the principle described above works the same way for it as for the 1905 former low.
Additionally,  Richard Russell's PTI stopped going down right at it's 89 day MA on the day when Major Wave A  of Primary Wave 4 probably made it's low. Russell's Dow Theory Letters has used the 89 day MA as the dividing line between bull and bear markets for decades, and it seldom if ever has given a wrong signal. It seems to be an exception to the principle of indicators losing their validity after too much exposure.

Link to $SPX chart on Stockcharts.com:  http://stockcharts.com/freecharts/gallery.html?s=%24SPX

                                                                                                   

Mystery Indicator & Monday Oct 13 2014 A-D Action

The Mystery indicator is starting to move down for all the Price Indexes, but not yet in proportion to the degree of the price declines. I am at the point of concluding that it is of no use in predicting intermediate-term corrections (do not mean intermediate Elliott waves). Maybe it is accurate in predicting or tracking the primary (long term) direction of the various price indexes, or maybe it's numerous detractors are correct in believing it is a just plain useless indicator. I am therefore discontinuing my commentary on it until the bull market is over; then I will try to see how well it matched market price action over the course of the entire bull market.
The small-cap R2K was down only .38% today and the A-D line posted a -1116 on a day when the $SPX recorded a -31.39 and the DJIA a -223.  On a day like today, the R2K could easily have put in a  -2.5%  day and the A-D line could easily have displayed -2000+ declines over advances. Inasmuch as the latter two indexes had previously been the market leaders, maybe this is a sign of Major Wave A decelerating, and hopefully  approaching conclusion.
The RS of the R2K vs SPX made another potential bottom and incipient turnaround today, but we shall have to see if it becomes an uptrend. Here is the link to the chart:

http://stockcharts.com/freecharts/gallery.html?%24RUT%3A%24SPX