Midas (5EN.SI) – The Spring Theory

Midas – The Spring Theory

In the last post for Midas, I had projected a multi-week bull run for the Midas. But that did not materialise and instead, Midas came down by 5.5%. There was blowoff selling on 10 Nov 11 and with that it looked like a zig-zag correction had been completed for Midas. The next expected move was the next five waves up and that is what prompted me to call for a multi-week bull run. Let’s take a look at the move for the past week and see how Midas progressed. After the buy call was made, Midas moved side ways for three sessions and then turned down in the last two days. But it turned down very slowly with extremely low volume.

Midas Primary Elliott Wave Chart

To me it looks like a spring that is being compressed and as we know, more force is needed to compress it further and further. But that force (volume) is waning so I don’t see Midas heading any lower. Coming back to the spring analogy, the compression stores potential energy and when released, it results in a swift burst of energy that eventually brings the spring back to its original state. I think the same is going to happen to Midas.

Midas is raring to run but is being pressed down with what’s happening in Europe and US. S&P 500 has headed lower and sold down for the past few session. A relief rally is in store. I expect Midas to hold at 0.345 on Monday as S&P 500 was flat on last Friday. If the relief rally comes on Monday or Tuesday in S&P 500, then we can expect Midas to snap up the following day ie Tuesday or Wednesday. The immediate target is 0.41.

Alternate View

The Alternate View is that the recent move up is a correction and Midas is head down again to continue with the medium term down trend. The move down is a  five wave impulsive move down and we can label it as Minute wave [i]. This is to be followed by Minute [ii] and after that by Minute [iii] which will bring Midas to new lows.

Either way, the next expected move is an upwave and we need to monitor the character of that move to determine whether we are dealing with a bull or a bear.

Midas Alternate Elliott Wave Chart

 

Capitaland Flag Formation

The Capitaland (C31.SI) is in a flag formation and is consolidating with very low volume. The next expected move is upwards but limited to a target of 2.90. The bias is still bullish because the volume on the way down is way lower than the volume that was seen on the way up. Also, Capitaland did not sell off heavily with the selling seen in the S&P 500. I’m expecting one more leg up on the Capitaland to complete the Minute wave [v].

Capitaland Primary Elliott Wave Chart

The Alternate View

The Alternate View is the bearish view but it is not being supported by the volume. As can be seen, the volume is declining with each down wave (indicated in red line) which indicates the selling is losing steam. But still, as the situation in Europe and US is lingering on and on, this could drag the STI and Capitaland lower together with it. For the downward case, it is likely that we are in the early phase of Minuette (iii). If selling volume picks up in the next few sessions, we could see lower levels for the Capitaland.

Capitaland Alternate Elliott Wave Chart

 

S&P 500 EOD Review – The Triangle Pooped

Yup. You read that right. No typo error. The Triangle Pooped. It was going smoothly for a few weeks and a lot of people have been patiently tracking the Triangle and then, it moves against the rules of a Triangle. But hey, it could be one of those overshots and the market might just turn up from here. Yup. That’s adding more uncertainty to this volatile market. But the overshot theory is waaaaay overshot as it has gone below the starting of the first leg which is 1215.

It looks like the bulls have thrown in the towel and the bears are cheering and getting ready for a stampede. Well, the market is definitely looking very bad. There are a few reasons for this.

S&P 500 Volume

Firstly is the volume. Volume has increased in the last few days and these days were sell down days. But, the volume is not like a final blow off volume which happens at the extreme selloff or buying points ie, bottoms or tops. The volume is increasing gradually from a low volume level. This is exactly the same volume pattern that we saw at the end of July 2011 before the sell down of about 220 points.

S&P500 Daily Volume Chart

S&P 500 Fibonacci Confluence Regions

Secondly, is the break out below the Fibonacci Confluence Region. I had published a few days back a post titled S&P 500 Fibonacci Study that speaks about these Fibonacci Confluence Regions and I had also said then that a sell down below this current Fibonacci band, could possibly result in a significant move.

Here’s the updated Fibonacci Confluence Chart. The next band is at 1180 – 1190 region. Note that this move down has stopped at exactly 31.8% retracement of the move up since 4 Oct 2011.

S&P500 Fibonacci Confluence Chart

S&P 500 Elliott Wave Chart

And finally we have the Elliott Waves which are also pointing downwards. All the down moves are impulsive in nature and the up waves are corrective. This knowledge itself lends a huge weight to the overall trend which is downwards. It appears that the down waves were unfolding in a 1-2-i-ii pattern and with this, we are probably looking at a subdivided wave 3 unfolding.

Here’s the updated Elliott Wave Chart for the S&P 500. Based on my Primary count, I believe that we are at Micro wave [3] of Subminuette wave iii. The sell down in the last session is most likely Micron wave (3). From here, a corrective wave for Micron wave (4) is expected to be followed by Micron (5) to complete Micro wave [3] at 1183. Note that in the Fibonacci Confluence section, I had mentioned the next band is 1180 -1190 region and 1183 is therefore right smack in that band. The target for Subminuette iii is 1148.

S&P500 EOD Elliott Wave Chart

Alternate View

The Alternate view is that another Triangle is forming and so far the completed legs are legs a-b-c. The leg c ended in the last session. This Triangle is depicted with a red line to the bottom and the blue line to the top. But this is looking very unlikely.