Nov 27, 2013


Ok it is boring the market action and I was going through the charts and this one is interesting. High yield corporate bonds track SP500 very closely... do not ask me why. I am a chart guy I have no clue about fundamentals:)
Such "proxy" charts which follow closely the indexes can be used to adjust EW count,Cycle count etc. because they diverge a little bit and give you slightly different picture of the move.

I am not an EW expert, but it can not be easier:) almost perfect impulse with almost perfect proportions. The chart says we are nearing the end of wave 5 of a monster impulse lasting more than 2 years. The first target for wave 5 was reached 61,8% of wave 1... hmmmm it can extend to same size as wave 1, that is possible. Lets take close look of this wave 5 - next chart.

You have everything what you expect to see for a last wave - weak,chopy,divergence,falling volume, target for wave 5 reached.
It looks like ending diagonal (the one from yesterday is much smaller only for the last red line 5 of 5). It counts better as a diagonal because all moves a threes. The wave from the August low is a little bit ugly for a wave 3. With the correction in the middle it counts better as a-b-c with subsequent 4 and 5. If this is the right count a significant top is around the corner, if I am wrong there is wave 4 and 5 of 5 missing.

Conclusion: The proxy chart says significant top is around the corner, alternate scenario pullback(wave 4) and then the final top. You will see the difference - if the top is in, the indexes will start falling like a rock.

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