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Oyster report from October 15 Rate Topic:

#1

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Posted 15 October 2003 - 06:42 AM

Hello folks,

This morning Oyster's commentary was quite extensive - so much, in fact, that he ran out of time and was cut short at the most interesting (for me) part - when talking about the outlook for gold.

Let's see what I can remember...

First, he talked about the SPX - quite a lot, too. Said that the index remains above its 40-week EMA but below its 200-week EMA. According to him, this means that the intermediate-term trend is up but the long-term trend is still down.

Mentioned that the index is only marginally higher than its June 17 highs - I'm not sure what this is supposed to mean, besides the real highs were in July (slightly higher than those in June; see the next chart).

Said that he does not expect the index to exceed the 1050-1068 area defined by the 200-week EMA and the 61.8% Fibonacci retracement between the all-time high and the October 2002 low (sorry, got the Fibbo retracements reversed on the chart below). I personally would widen this range a bit to 1052-1083, in order to cover the real value of the 200-week EMA and the important March 2001 low.

Also said that momentum is decreasing - that the index is making higher highs on lower and lower momentum. Did not show any indicator on the chart demonstrating this, so I have improvised a bit, trying to demonstrate it with a ROC (which is a momentum indicator) - although I don't know the exact settings that he uses. Still, it's visible well enough. Remember, similar negative divergencies in momentum recently preceded the sharp sell-off in gold (that's from me, not from him).

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#2

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Posted 15 October 2003 - 07:06 AM

On the daily SPX chart, he showed the following Elliott Wave count. Said that he still believes that this is an ABC correction. Noted that the overlapping waves at the end indicate that this is not an impulsive wave and that, most likely, we're having an ending triangle. The negative divergence of the momentum (again, the indicator is added by me; it wasn't on his chart) is typical for this e-wave picture.

The anchor reminded him that the last week he said that if we go above 1040, he would be proven wrong. Oyster didn't answer this directly, just noted that 1040 remains an important pivot and that a fall below that could indicate a trend change to the downside. Said that the index could remain range-bound for a long time - with 965 being the lower end of the range - but that in the short term such a drop would feel like a sell-off.

Said that the cycle seems to have inverted, suggesting that we're entering a consolidation phase. I couldn't make any sense of that, sorry. Perhaps some cycle guru could comment on it?

Said that he expects the sell-off to be triggered by a spike of the interest rate of the 10-year bond. Noted that many think that a sell-off in bonds will be bullish for the stock market (because the money will move there, V.B.) - but that he disagrees that this time this will be the case. Has the feeling that this spike could be caused the the falling dollar. (I personally think that the dollar is overdue for at least a small Dover Sole bounce.)

In any case, he expects at least some kind of correction (yeah, this rally doesn't make sense to me, either) - e.g., to the 200-day EMA or a 38.2% retracement from the top, whereever it happens to be. Didn't show it clearly on the chart, but I understood it to be to somewhere in the 960-965 area.

Again, I have added a (daily this time) ROC to the chart, to show that the higher highs of the price are made with less and less momentum - a point, which he stressed several times (although without illustrating it with a chart).

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#3

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Posted 15 October 2003 - 07:20 AM

Next, came a monthly commodity chart. He said that it was from '97, but when I looked at the pattern of it, I think that he meant from '87 - because the pattern of the chart from this period matches closely what he displayed.

He trotted something about the price of soybeans, which I didn't remember, because I'm not interested in them.

The chart shows his Elliott Wave count on this index. He believes that it is entereing what every Elliottician dreams of - wave 3 of 3. :lol:

(Well, he didn't say it in these words, of course - just that it is starting a third wave of an impulse up.)

Said that the area around 250 is important resistance and that the index is on the verge of a breakout and has possibly broken out already (depending on whether you consider the horizontal or the downslopping channel, I presume - he didn't comment on these channels).

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#4

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Posted 15 October 2003 - 07:36 AM

Finally, he started talking about gold. Unfortunately, at this point he was running out of time, so he sped it up, and the anchor cut him short anyway, so I couldn't grasp and remember much. Basically, there was just an Elliott Wave chart of gold. I have tried to reproduce it below, but there is no guarantee that I have remembered it correctly.

The essence of his comment was that he thinks that gold is going higher. I disagree. The above e-wave count tells me that we're entering wave 4 down. It won't be until the next year that wave 5 (up, to new highs) will start. And that's only if the alternate count in blue is not the real one; if it is, then the bull run is over. Perhaps a more experienced Elliottician than me could comment on this.

That's all that I remember from his presentation, I'm afraid...

Regards,
Vesselin

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#5 GregFokker

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Posted 15 October 2003 - 07:56 AM

Excellent work, Dr. B.!

...A declining spenglerian carnival of Colossaalism united with Inflation where the numbers one through 10 are forever banished as worthless arithmetical detritus from a bygone age... - Beardrech

Naturally we believe the govt numbers... and Boobus Americanus sleepwalks off the edge of the energy-crisis cliff clutching his shares of "Crisco", Yoohoo and GooGah munching on his Yum Yums and Ho Hos. Future historians will have a hell of a time figuring out what the hell Americanus neanderthalus was thinking and exactly what brought on his sudden demise... - Henny Penny

Well, good night everyone. I gotta go lube up for tomorrow's regular end-of-week Gold Slapdown and Stock Index Bear Punishment Rally Weekend Greenprint. ...Probably another Shock-and-Awe Gap-Up-Open and Wire-to-Wire Meltup Runaway Bull Charge Mo-Mo Spike to Fresh New All-Time Lifetime Highs, culminating in a 4:15 yelping scalded dog runoff with panic short-covering and legal not-held bad double fills due to fast market conditions, plus quote system freeze-ups and trading platform lock-outs along the way. *yawn* typical gov't Friday. - Shorty

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#6 Captain's Log

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Posted 15 October 2003 - 07:56 AM

Bontchev : Excellent summary. I feel like I watched it myself through your eyes.

You should have your own film : Being John Bontchevich

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#7 Hiding Bear

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Posted 15 October 2003 - 08:14 AM

Tanks much. Great job.

Would you say then that Oyster thinks the a move above 1040 but contained below 1058 is not significant?

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#8 BeerMarket

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Posted 15 October 2003 - 09:50 AM

Vesselin,

Many, many tanks - for passing on and illustrating Oy's points so well, and for your own thoughts. All the work is very much appreciated!

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#9 Bearman

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Posted 15 October 2003 - 09:56 AM

Bontchev Tanks :lol:

I need all the help I can get :lol:

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#10 Jimi

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Posted 15 October 2003 - 10:11 AM

Much appreciated, Mr. Dr. Bontchev.

Profoundly clueless,

Jimi

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#11 OldMan

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Posted 15 October 2003 - 10:56 AM

Vesselin,

Thanks a lot for the excellent summary.
Very much appreciated here.

OldMan

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#12 loose

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Posted 15 October 2003 - 10:56 AM

tanks Dr B

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#13 phatbubble

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Posted 15 October 2003 - 01:53 PM

thanks once again VB - excellent detail. very much appreciated.

Quod Severis Metes

Your life is the sum of a remainder of an unbalanced equation inherent to the programming of the Matrix. You are the eventuality of an internal anomaly, which despite my sincerest efforts, I have been unable to eliminate from what is otherwise a harmony of mathematical precision. While it remains a burden assiduously avoided, it is not unexpected, and thus not beyond a measure of control. Which has led you, inexorably, here.
You haven't answered my question.
Quite right. Interesting. That was quicker than the others.