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Thursday, November 17, 2011

SPX and BKX Update: Next Move Should Be Lower

While virtually every technical analyst on the planet is watching the bullish triangle "continuation pattern" that's been forming in the indices all month, I have stated on several occasions that I don't think it's real.  After studying the price action of the last couple days, the triangle has not displayed the proper form, and the volume has not performed according to the pattern.  Volume should be diminishing as the pattern forms, but has been rising instead.  Doesn't mean it can't be a statistical outlier, but I am cutting my odds on the triangle from 20% to 15%. 

This is of course, the "all clear" for the triangle to break-out tomorrow and humiliate me (cue music from Jaws... visual: triangle rising from the dark waters and ripping analyst to shreds).  On the flip side, if I'm right, I should get a cookie for digging into the charts and breaking from the "easy answer" analysis.  Keep in mind that if this move down is somehow Wave e of that triangle, there may be a strong whipsaw below the lower triangle boundary and back up into it.  While I think it's low probability, be aware of it and respond accordingly if necessary.  Below 1215 would completely eliminate it from consideration.  For the triangle chart, please refer to yesterday's article.

Yesterday, the market performed exactly as the charts predicted.  So did the news, as I also opined that the Fed's sudden talk of stimulus was an attempt to front run a bad news event.  There's an age-old debate between fundamental analysts and technical analysts over which is more valuable, news or charts.  As a technical analyst, while I do believe that fundamentals are important and a driving factor behind the charts; I also believe that the charts are forward-looking, so with rare exceptions, news is noise. If you look at the charts I posted in my prior article, every one of them predicted yesterday's sell-off perfectly -- and I drew those charts long before the news (which allegedly sparked the sell-off) was released.  Funny how the charts knew ahead of time what was coming.

This is one of the reasons I often laugh when I see the headlines on CNBC, trying to explain why the market did what it did each day.  You see things like:

Market Sells Off on Renewed Fears Over Europe; which is followed the next day by:
Market Rises on Renewed Hope for Europe; which is then followed by:
Market Crashes as Investors Are Overcome by the Nagging Sensation That They Left The Stove On

It's all nonsense.  The market does what it does because humans follow patterns in their psychology and decisions; so the exact same news can be perceived as negative one day and positive the next.

I continue to believe that October 27 was an important top.  I have one count I've been favoring for some time now, but this count does allow two possible resolutions over the short term.  Those possibilities haven't changed since last Thursday, but I have consolidated both possibilities to one chart.  The burden remains on the blue count to prove itself.  It needs to begin making some marked progress in the downward direction.

The blue count shows the market forming a subdividing series of first and second wave (or nested waves, as I prefer to call them), which would lead to new lows fairly directly. The black count shows wave (ii) still in process.  Trade above 1260 would be the first clue that the black count might be unfolding.


The Philadelphia Bank Index (BKX) is another that's performed perfectly in line with expectations, so far anyway.  I posted a chart two days ago showing my projected path for the BKX, and would now like to update that chart with the recent action.  None of the projections have changed yet:



The fly in the ointment for the bear count is the specter of Fed intervention.  The credit markets are beginning to show extreme stress, and the Fed has talked up stimulus recently.  Fed intervention could blow this count up.  While news is noise, the Fed is liquidity -- and liquidity drives the markets.

Another potential issue for this bearish count is that the sideways market has been burning off bullish sentiment.  This is not something bears want to see.  The latest AAII sentiment survey came in at 41.9% bullish and 31% bearish.  That's a 6.5% jump in bears from the prior week -- which actually represents a 26% increase to the total number (from 24.5% to 31%).

Long-term, I remain very bearish.  I believe that, one way or another, Minor Wave (3) will carry stocks to new lows.  The biggest challenge in deciphering the short-term turns of late is that the market has been forming multiple zigzag patterns within a trading range.  Double and triple zigzags are among the hardest patterns to predict and project, since they have very few rules; and trading ranges give you nothing in the way of meaningful price points.  I assume these patterns are a reflection of the extreme uncertainty present in market participants. 

We would be fools to ignore market signals and new price data when trying to determine the market's short term path.  Despite whatever I "think" should happen at a given moment, I try to respond as objectively as I can to the charts as new information becomes available.

I am severely handicapping the triangle as a true possibility, but that doesn't eliminate it. The triangle is still within the realm of possibility, and might be the "Fed intervention" pattern.

My strong belief that we're headed lower in the near future hasn't changed.  The key levels to watch are still SPX 1215 and 1190.  Barring some type of central bank intervention, or the significant threat of such, a break of those levels should lead the SPX down into the low 1000's.  Trade safe.

The original article, and many more, can be found at http://PretzelCharts.blogspot.com 

282 comments:

  1. Morning, all! 

    Man, I am beat. :p

    Doesn't help that my in-laws are flying in tomorrow, lol.

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  2. Today, I should say.

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  3. Your blue count suggests a modest bounce before further decline.  Some improving economic news this morning, and futures are pointing to a up start.

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  4. Yeah, that looked like a complete wave down yesterday into the close, so I'm expecting some upside here, although under the gray count, it would be a big bounce.  Futures have been manic all night, as usual.

    Charts are driving me nuts right now.  I hate trading ranges, because you get nearly nothing in the form of meaningful data each day.

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  5. I know you argued against the triangle in your article, but couldn't the bottom in the futures this morning count as a e wave with us currently in a whipsaw?

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  6. It could, but I would expect a faster rally if that were the case.  It spiked at first, but has been pretty anemic since.

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  7. Oooh, not a single typo in today's article when I cut and pasted it into Word.  That's a miracle, considering my current level of exhaustion.

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  8. Y'day/Today/Tomorrow - during volatile/screenwatching times like this, it all seems to merge into one!

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  9. Morning.  I was thinking more about PL's comments yesterday regarding Fed jawboning market.  I think they are also jawboning GS to jawbone market as well.  I saw one report that said GS was recommending to its clients to buy Eur/USD, while MS was recommending their clients to sell it.  I also noticed an article on BB with Blankfein saying he expected US economy to 'snap back'.

    So, I completely agree with PL's analysis that Fed is seeing something and is scared.  They will say everything they can think of to hold this puppy up through expiration.

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  10. OK, so a whipsaw should form a sharper angle.  Thanks.

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  11. Good morning Pretzel,  as usual great work!  Some bounce is not unexpected as my intraday stochastics are "oversold" (my TA 101 indicator) :-) 

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  12. I see that European markets are down today, that should help the bears.

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  13. Silver has now broken down out of the 2 week trading range, as I've expected for nearly 2 weeks.   It dove under $33 dollars this morning, and is now barely hanging slightly above $33.  (IMO, it's just waiting for gold and the spx to confirm by breaking down also from their trading ranges, before the weaker of the 3, silver, fully craters percentagewise).

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  14. Nice call there, Anon20!

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  15. Pretz,

    BEN seems to be a-crackin'

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  16. Yeah, so far the "Verbal QE3" stimulus program has worked for them, but eventually it'll start to be like the boy who cried wolf, and the threats won't be enough anymore. 

    I suspect the Fed is seeing what's happening in the credit markets, as well as anticipating something more major out of Europe.

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  17. Well, so much for a bounce of the lower boundary, lol.  THAT's encouraging, and more what I would hope to see if this is wave 3.  No such thing as support in a bear market.

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  18. SPX 1220 today  baby!

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  19. That really is an ugly chart.  Plus I love the name, 'cause it conjures up all sorts of great word plays with our esteemed Fed Chairman.

    Can Ben save BEN?

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  20. I was just pondering if I should use this early decline to close shorts and wait for a bounce to re-open them.  How do you read this P?

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  21. I'd really like to see it take out 1215 and get rid of that damn triangle from my "saved charts" files, lol.

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  22. Hard to answer that here... haven't seen wave iv yet, so it's hard to say where it jumps in.  I would just say go with your gut on this one.   

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  23. goud dat u dit kut habs miscakesz todahys

    god typing like that is hard work

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  24. i'd like to see 1070 :P

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  25. holy shhtt.  silver down to under $32.70, skydiving without an open parachute, at present.
    It's because gold and spx are starting to confirm a breakdown, IMO.   Gold down to below $1740.

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  26. I understand Bob Prechter has has now lowered his stop from 1360 to 1260.....

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  27. Philly Fed came in below expectations, that should drive us down.

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  28. Various articles speaking to ECB lending money to IMF to lend money back to ailing European economies... that is QE  - just in typical crazy European fashion. And of course - Germany has ALREADY denied it. 

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  29. Interesting.  Guess he doesn't like my black alternate count, lol.  From the article above:

    The black count shows wave (ii) still in process. Trade above 1260 would be the first clue that the black count might be unfolding.

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  30. I go away for a bit and Pretzel redecorates the place. 
    Looks like we bounced right off the 100 dma.  That has been support since the 9th.   Thats the first line to take out. 

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  31. Yaa, eye wuz a maised!  Youszhually they'res at LEEST won ore too airors.  Butt eye gess their wurr nun too day!

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  32. Hey, welcome back, Green.  Was wondering what happened to ya.

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  33. Lot of divergences just past 30 minute mark of trading.  RSI, MACD. Stoch and Williams on Daily and 60 minute charts remains trending downward.  30 minute chart looks to be just starting to trending up, but not too indicative yet of direction.  10, 5, and 1 minute charts pointing up.

    Loiks like we are going to get a reversal here if chart trends continue.

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  34. uh oh, here comes the bully

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  35. This *should* be a fourth wave under the preferred count.  This will be very telling as to what happens next.  I have a really hard time imaging we subdivide again here without forming a complete 5-wave.  So, we'd like to see this stay below 1243.55.

    In a perfect world, all this will be is a back-test of the underside of the triangle boundary.  Incidentally, that's somewhere that one could initiate shorts with a stop above. (not trading advice!)  If anything serious is going on here, the back test should hold.  If it fails, and 1244 above it goes, bears probably got trouble short term.

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  36. Pretzel, love the new article, but I have no clue about this message board. Where's the time? Any chance you'll go back to the old style?

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  37. If this is going to be the impulse wave we want to see here, expect us to make a lower low with positive divergences before we get a bigger bounce.

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  38. What does 'subdivide again here without forming a complete 5-wave' mean, Pretz.  

    Does that mean you expect a fourth wave retracement to eventually form complete a five wave structure?

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  39. Ty, appreciate noticing, and the welcome back. 

    "I love what you've done with the place Pretzel."
    Well mabye...in truth it's nice not having to scroll way down.  Might grow on me yet. 

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  40. Hi Trista, thanks.  The time is there, but for whatever reason currently only shows up in internet explorer.  Over the weekend I'm going to try to figure out how to fix it.  I'm probably going to stick with the new style because it allows image posting, editing, and shows newest posts first. 

    I just need to get on the forums and try to figure out why it only shows correctly in IE, which will probably take a few hours, so I won't have time 'til the weekend.  :)

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  41. In other words, I would really like to see us complete a true 5-wave structure here.

    If the move down on the 15th is wave 1, the move up yesterday is wave 2, the move down yesterday/today is wave 3, right now we *should be* in wave 4 -- so I want to see us take out today's low, BEFORE we break 1244, to complete 5 waves and confirm an impulsive structure. 

    Make sense?

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  42. Trista, in chrome,  if you click on the little square picture next to a person's name, then you get their last comment and the time it was made-- but you don't get that if it's a reply to someone else's post I think.

    Josh  

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  43. Okay, for some reason now my screen is doing relative time (i.e.- 7 minutes ago) instead of absolute time.  I just went to dashboard and checked, and it's set on absolute time, so it shouldn't be doing that.  Ugh, this thing is gonna drive me batty. 

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  44. pretz,I wonder what program they use in stocktwits,chart.ly etc. that makes the comments roll as they come up without having to refesh the site when you want to see the responses?

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  45. Makes perfect sense, Pretz.  My sincere thanks for the clarification.  I still struggle sometimes with terminology and phrasing.  

    The summary below very much helps for an E-wave neophyte like myself. 

    My 6o minute SPY chart is now in line and trending up along with the 30, 10, 5 and 1 minute.   Looks like retracement wave 4 up to me.  

    Your comment about 1,244 is duly noted.

    Thanks again.

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  46. No clue.  I'm somewhat limited to whatever can be integrated into the Blogger platform.

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  47. Hi Josh, I don't use Chrome and not sure everyone here does. But why would I want to spend my time clicking on everyone's profile just to find out the time. Wasting too much time as it is trying to figure out this new message format. Please bring back the simpler older board.

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  48. Okay, bears need to start getting serious about mounting a defense here.

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  49. Trista, I just need to get the bugs worked out.  I'm sure it'll be fine after I have the weekend to work on it.

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  50. I wish we could go back to the old way of sequential commenting because this is really hard to follow esp. from my phone.

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  51. Well, the groundrules there are:

    If the comment you're replying to is more than 4 posts down, just reply sequentially.  If it's not more than 4 down, you can use the reply, like this.  Supposed to make it easier to follow.

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  52. Just a quick note regarding the comments section: I AM GOING TO TRY TO FIX ALL THIS STUFF OVER THE WEEKEND.

    People seem to be equally split on who loves it vs. who hates it, lol.

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  53. Yes captain, fighting back at the lower triangle boundary wall  now :-)

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  54. Give PL a break on the new message format.  He has charts to look at and trades to make.  Can't be wastin' time with formats.  I wasn't crazy about the new format, but its growing on me.  Give him time to work on it this weekend (be a great distraction from "laws").  

    If we are going to use up wishes.......I wish we'd see 1150....today!!!

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  55. Thanks Pretzel, keep up the great work! Sure you'll figure this msg board out.

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  56. As long as today closes in the red whether we take out 1215 or not, it still does not bode well for bulls

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  57. This "looks" like a fourth wave here so far, kind of dull action, which is typical for a fourth wave of this degree.  Encouraging to the bear case, as long as 1244 contains any rallies prior to us making a new low.  After a new low, that will change, although if this is the blue count, I doubt we'll see 1244 again for some time.

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  58. Sure your wife would 'love' it if you nodded off while chatting with the in-laws :)

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  59. Assuming this is wave 4, the target for wave 5 is 1215-1220

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  60. taking a gamble with a short on CRM...earnings after the bell.
    also considering to put on a GMCR short after this little snap back.

    Pretzel - what do you think about GMCR, this move up look like a wave 4?

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  61. lol.  no doubt.  they're really pretty decent people, actually.  could be worse.

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  62. Could be the turn right there...  SPX unable to rally up through resistance, everything looks good so far.

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  63. Accelerating down..yeah

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  64. wow, if this thing just broke for wave 5...that was a super clean looking abc from the morning low.
    more inclined to think that move from the am low to just now was A and we're working on B now.

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  65. Another lower low for silver right now, $32.55.   I've never considered silver a tell, but the way it is leading all markets down, it is telling me that some rich folk are cashing out of weak silver, because they need the liquidity to pump into their spx positions, to hold them up, IMO.  Silver is dying to keel over totally, but the perennial bull-fools at the spx and gold, haven't let it yet.  Interesting day so far, in the chinese curse sense.

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  66. Rock, RE: green mtn 4th wave

    It does, but I don't have enough time to study the chart right now to tell you more than that. Check out BEN (kudos to Juan for pointing it out to me), that thing looks ready to cliff dive.

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  67. Pretzel - you see the wedge within the triangle on the R2K 30 min chart -- 733 seems like the resistance and the apex comes about noon today - maybe we will finally get some answers?

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  68. yeah, I'm in agreement...I've got an SLW short on since monday. Today has been nice for that position.
    SLW is at 33.56, during the 08 bottom it went to $3.00 !!! hoping to ride that popped bubble atleast below $20.

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  69. Looks like we are at a curious spot.  If the usual measures on the 60, 30, and 10 minute charts are to make full swing back up to the top of their normal cycles, then we still have a ways to travel upwards before heading lower again (to complete wave four??).

    If the rollover that's happening the 15, 5 and 1 minute charts holds, then sellers will be successful in stopping the advance.  

    Buyers may just be waiting for the one and five minute rollover to complete before continuing their advance.  Which looks like it'll be completed in the next twenty minutes or so.

    A second successful defense of 1,230 would probably augur well for buyers heading into the afternoon session.  The pros may see that LT we are likely headed lower, but for the rest of the day, there is more to be made on the upside.

    With the recent bad news now (seemingly) baked into the cake, I may initiate a *small* long position for the afternoon (which I would not hold overnight).  Still not sure yet, but it's where I am leaning at the moment.  Will know a lot more in the next half an hour.

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  70. Yep.   I love that people can post charts now, soooo much nicer.

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  71. still no tell on the triangle vs the preferred counts. On some of the other articles ive read they're expecting the triangle but I prefer pretzel's preferred count

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  72. Brian,

    1237 is a fib level from today's low to yesterday swing high at 1253, and it seems to have been well defended by bears.  An important fib confluence zone is located at 1243 (per Prez), which the market has respected before.  We'll see.  Today's volume is running higher than yesterday level at the same time, so IMO as long as we close in the red, whether or not we take out 1215, the bear case is still pretty good.  My downside target today is 1220.

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  73. That looked like 5 waves down in SPX, when this little rally turns, things should accellerate some.

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  74. Uh oh, Frank and I have the same targets.  I'd better cover my shorts!  :)

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  75. Kinda interesting how subdued everyone seems now.  Are there any other bears still short after all the up/down?

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  76. I'm getting more skeptical by the minute, particularly because of the R2k.  It was up 1.5% on Tues. when the S&P was up only 0.5%.  Then on a decent down day yesterday it was inline with the S&P, and today itis positive, outperforming the S&P by about 0.7% to the upside.  Definitely not confirming "risk-off" - more like "buy any and all dips".  Any thoughts on the R2k Pretz?

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  77. I'm still short. I wonder how many others are. I dont quite see the acceleration yet.

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  78. The funny thing was, when I first started writing the article, I had the triangle at 5% odds.  Then the futures spiked right before I published it, and rallied back up through the boundary... and I second-guessed myself.  Still convinced it's a fake.  We shall see soon enough, I suppose.

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  79. Still bearish for now... trying to figure out where to go pyramid my shorts.

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  80. Frank,

    Completely agree that the bear case over the IT and LT is looking great.  And I trust Pretz's counts to be pretty spot on.

    Was more speaking to the divergences in the charts showing up RIGHT NOW.  

    I just initiated a VERY SMALL call position in SPY at 1,231.  And will close out if we fall back to that level.  

    I can't make or lose much either way.  And it's mostly just to test my day trading strategies in a relatively risk free way.  I do better with that when there's at least something on the line, rather than paper trading.

    Divergences like this are not something that I'd ever put a lot on for an ST trade.

    Five minute chart just turned back up and is congruent with 15, 30 and 60 measures also indicating ST upward movement.  

    I don't expect any upward move to last very long. 

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  81. Im still heavily short....I see this thing just finishing the B wave of wave 4....C coming to bring us above today's high then wave 5 starts this afternoon. Really need today to be a down day though, we simply can't get follow through days and we need one to really damage the bulls.

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  82. Hi Brian,

    Sounds good to me.  I am all for testing your trade ideas with real money on the line vicerally. 

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  83. Counter-trend rally now caused by lunch hour short covering?  The big boys need to eat right?

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  84. Frank - I'm putting the last of my shorts on above 1240....as pretzel says, anything above 1244 and I'll probably take some back off.

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  85. Still short SPY, AAPL and BEN (just added this morning), Pretz.  Waiting for the next wave to flush us lower.

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  86. RUT's in a little bit different pattern than SPX.  Looks clean enough to me, though -- should take out today's lows soon enough.

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  87. With the five and one minute chart rolling over and the fifteen looking like it could too, I just closed out at 1,235. That lasted for oh five minutes or so. Ha, ha.

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  88. So, PL, if I understand correctly, according to your primary count, the spx is currently  s l o w l y  rolling down into a boring short 5th wave ending, to minimally take out today's low, so it can then shoot back up, and retrace another  s l o w  small stupid-bull a-b-c upward, thus taking up the rest of  this damn boring spx day.  I'd rather watch paint dry, so goodbye for a few hours. 
     
     I had thought they'd be some real bear spx fireworks today, but so far, it appears I was wrong.  Yet, I am still wanting you to be wrong, PL, and by today's end, so the spx has fully gone down the toilet by then, while you are in hawaii a'snoring.  You need some serious uppers, PL, to go 48 hours at a time straight, especially when grand supercycle turnarounds get hot.  Weekend is close, you can rest then.

    BTW, the amount of hard longterm bear second-guessing on this site, on a beat by beat minute basis, always amazes me.  It seems that you and I, PL, are the only hard-bound unshakeable longterm bears, while all others that post here, are as skitterish as scared bumblebees, to and fro in constant fear, with every spx unexpected tiny upward move.  Amazing.  Only convinces me further, that spx is just around the bend into a killer end, slaughtering all turkeys, bullish and skitterish bears all.

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  89. Made 4 points?  Cool.

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  90. Thanks.  It is still well within its pennant whereas the S&P looks like it just broke under and backtested (depending on ho you draw it).   Anyway it sucks because I'm in TZA and am in the red today while all the other indexes are down - very frustrating.

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  91. Hi Chris,

    Sounds good to me :-)

    I am currently short AAPL and have some TVIX.  Looking to add to TVIX.  AMZN also looks interesting as a short.

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  92. I'm one of those skittish bears becuase I was recently a bull.
    Recent converts rarely have as much conviction.

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  93. lol

    4th waves (like now) are *always* boring.  5th wave *could* get exciting.  Potential is there -- my 1215-1220 target is the "usual" target, not accounting for anything exciting.

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  94. I'm skittish too, but am still holding onto my TZA.  Might have to stop myself out if we rally though.

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  95. btw, boring 4th waves are a great time to show support for the blog, or so I've heard.  :D

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  96. I am the most skittish of all.. believing in a new bull market around the corner just a week ago :P  By the way, there is no bull or bear side to me, just the right side. 

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  97. ANON20; though I am a bull at heart (but went short for the first time ever yesterday and LIKING IT!), I have never disagreed with the big picture of an epic downturn that PL has been painting for months now, however and right now; short term, it's going undirectional, that's what sucks. BUT, S&P is trading well below the triangle and that's a good sign!!

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  98. Hey, Arnie!  You getting used to the new comments format?

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  99. ANON20,

    Stoic Bear, you should change your moniker!!!  I have been bearish on this market for the last six weeks, and continue to be short.  Based on prior posts, you think silver is tanking, but what is your take on copper and the apparently resilience of the industrials?  Each time we start down, certain indicators support a bearish position, and each time for the last month, we have snapped back.  What makes you think, PL's excellent work aside, that this time is different?

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  100. ANON20,

    Not holding anything for an extended length of time doesn't necessarily mean fear that the bear case will not play out eventually.  

    The market the last few weeks has been maddening and directionless, if nothing else.  My thesis has been (as repeatedly stated) that buyers simply have no confidence that they can hold above 1,260 which is why they kept stopping at 1,265 even if they could have easily taking things higher.  

    I also have been well aware of 1,240 downside that existed up until yesterday.  And which is now possibly upside resistance.

    So trading that range while not exposing any position I might hold to a strong run up past 1,265 that may occur on some headline (like the announcement of another round of QE which buyers would surely pounce on immediately and start a short covering panic) was in my opinion just sound capital preservation strategy.

    I'm not terribly concerned about missing out on some twenty point down move.  Especially if it means I'll expose myself to some news-driven twenty point up move, which if you are trading options (as I generally do) can mean an immediate 30% loss on the amount invested.

    Should the SPX successfully blows through 1,220 and there is true panic in the air, I will short and hold for the ride.  There are another 100 points below from there that seemingly will get taken out pretty quickly.

    It's not fear or lack of confidence that keeps me from holding short over the LT.  It's that there is rational trading range to observe.  And I can get for a huge down move when it's apparent that we are truly *there* and there is panic in the streets.  But we aren't *there* yet.

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  101. It's winding up to accellerate a soon as today's low goes...

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  102. Frank, you still short Bidu? that thing is looking weak again...I'm a little remorseful for covering back at 143

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  103. Still short.  Waiting for 1215, then 1190 to fall and will get even shorter :)

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  104. Lot's of gapping on the 1 min charts, much more so than any day recently.  Looking like we may break support at 1227 - 100 dma today.  I'm confidently bearish, not sweating at all myself. 
    But if any of you are nervous,  I can share something that *might* put you at ease. 

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  105. Chris, are you RockyTop?  I was out of BIDU a while ago.  I am short AAPL and am looking into AMZN as a short.  It's not too late to short BIDU.  It just sliced thru the 200 day MA today.

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  106. PL,

    Are you staying with your thesis it will bounce off 1227 or something close and ride up to test 1240 (or beyond)?

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  107. Don't think I ever said that?

    I'm looking for 1215-1220 next.  I thought I said something like "we probably won't see 1244 again for some time."

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  108. Well....maybe later

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  109. can't get any love from the RUT today...unusually strong.

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  110. You guys gotta not be so literal.  When I say that sort of thing, I don't usually mean "if the price is broken by 63 cents."  I mean once it's clear to the bulls that we're through it, then the move accellerates.   lol

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  111. Yeah, sure, please share - nervous short here!

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  112. Just curious Expat, are you uneasy now?

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  113. yeah, this is Rocky
    I shorted aapl for a bit, but covered with a small gain, not liking the beta on that...can't see a monster drop when people keep buying iphones.

    But amazon and bidu are so wildly overvalued, I've considered amazon recently as well.

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  114. I know.  Wishful thinking.

    What about now?

    Are we there yet?

    What about now?...

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  115. im feeling you there, financials aren't doing as badly as other sectors it would seem

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  116. I know.  Wishful thinking.
    What about now?
    Are we there yet?
    What about now?...

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  117. Pretzel, you're like our Jesus....what you preach is gospel! :)

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  118. No, just amazed!   :)

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  119. While the NAZ has been very resilient since August, I believe this leg down it's leading the other indexes now :-)

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  120. That's when I always give one of my favorite Classic Dad Answers:  "Soon."

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  121. Not to trying to offer my minute by minute moves, but I went short again.  

    The breakthrough at 1,230 looks for real.  And looks well played by sellers breaking the confidence of buyers in the last hour.  

    Still in small positions, given the way the ST charts look.  IT and LT I am very much believing the case for lower equity pricing.  

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  122. Don't worry guys.  If the bear case holds, when they raid the house, they get EVERYBODY.  Russell tends to have more "juice" up or down compared to Nasdaq eventually.

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  123. This does smell like some third wave action!  Although I am already lost in the infinitetesimal fractals already.. :-)

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  124. When you say "soon", do you mean NOW!

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  125. Donkey Kong anyone?

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  126. Not sayin' I told ya so, but...  :)

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  127. now we have to deal with 1215! Any predictions where we go from here pretz?

    ps, your wife will be getting more flowers once i close my positions ;)

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  128. Wow.  Now THAT is selling momentum on fine display.  Sellers did an f-ing fabulous  job of breaking the confidence of buyers in the last hour.

    And here we find ourselves at the crucial 1,220 mark.  Things now get really interesting.

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  129. i feel like this is like facebook. I just 'liked" this post. lol

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  130. So there's the 1220 target, but I'm going to lower it now, based on the structure.  I'd say bears have a more-than-fair chance of taking 1210 today.

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  131. And there goes the alternate count :) !

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  132. you might be surprised how much downside AAPL can have.  It's fate is intimately tied to the NDX :-)  The reason I like AAPL is it has less headline risk compared to a smaller name which can be bought out and zoomed 50% the next day.  AAPL is a household name I feel I can short and hold :-)

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  133. Bye bye 1215 support.  Hello 1215 resistance?

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  134. Nice work, PL covered@ 1211.5

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  135. I'm so glad.  I hated that triangle count, but I just couldn't ignore it 'cause it was there in the charts staring me in the face.  Never liked it one bit.  GOOD RIDDANCE      :D

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  136. BOOM GOES THE DYNAMITE!!!

    Are we really going to test 1200 today? I'm lovin this!

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  137. doesnt seem like it..

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  138. Awesome Pretz!  So the triangle is out now?  Whatr does this do for the alt w-x-y count?  Still in play until we break 1195?

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  139. Thanks Pretz.  It's about time we can stop talking about the mindf*** of a triangle.  

    I'm closing out at 1,215 here and will wait to see what happens next.  Would love to see 1,210 fall per your suggestion it might.Sellers can afford to regroup here. And the ST indicators I watch at the very least indicate a pause.

    Would love to see 1,220 turn into upside resistance.  May be wishful thinking at this point, but it would indicate where things are headed from here.  Looks like we may (finally) be getting to the wave three party started.  

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  140. This is probably moot now since we broke a new low for the month, but it has taken a while to get there.
    The article was from the beginning of the month, and I'll summarize it by saying that in EVERY November which has opened  with an S&P loss exceeding 2% as was the case back on Nov 1, the S&P has gone to close lower that month.   For this November  that means a close lower than 1218.43

    Until a few moments ago, we have been above our close on 11/1.  

    Incidentally, according to Bespoke that Nov 1 "forecast"  has not failed ever. 


    http://www.bespokeinvest.com/thinkbig/2011/11/1/worst-starts-to-november.html

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  141. Wow amazing SPX stopped right at 1211 which was 161.8% of range defined by this morning low at 1227 and yesterday swing high at 1254.  Let's see where the rebound will take... 1220? hehehe

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  142. Pretz, without asking for any form of trading advice, would your current preferred count indicate a possible retrace to any particular level.  Or just a brief pause?

    With every chart indicator now flatlined and with only one way left to trend (upward), it's hard for me to tell what to think.

    After big, dramatic down (or up) moves like this, I just don't have the tools and knowledge to pick a direction when the let up happens.  I know what the very ST indicators I watch are telling me though.

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  143. I don't want anyone to get complacent here, protect your profits and all that, but there's a chance this is actually only about the midpoint of this wave.  We could see 1200 break today.  Not sure, cause we have some positive divis on that low.  So it might have been an extended fifth.  But from the look of it, there may be a ways to go yet... 

    Of course NONE OF THAT IS TRADING ADVICE

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  144. Bit of good fortune for me there... covered with a stop limit order which very luckily nailed the bottom. NB this is in the cash market, but using a UK spread bet trade platform, which posted a  1211.3 offer at the low.

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  145. ty, nice cover

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  146. yep, this was the level I had committed to taking some off....done, still short though, just own less VXX now. Good calls Pretzel....i've got a feeling that once 1190 breaks, you'll have donations pouring in :)

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  147. Rest assured, we're only interested in EDUCATION, and that was one fine lesson.

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  148. IF that was the fifth wave, and after looking at it a bit more, I'd say there's a more than even chance it was, we could rally back up to the lower triangle boundary. 

    If it wasn't the whole fifth, we'll take 1200 today.  I just can't tell for sure right now, sorry.  Got us to 1210 +/- 1 point.  lol  ;)

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  149. Pretzel - so I am clear - you have this as 5th wave of wave 1 of minor 3?

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  150. Nope.  5th of the blue iii.   blue (3) still to come.  blue 3 still to come.  red (iii) still to come.  Hang on, I'll do a chart real quick. 

    But, what I'm not sure of is whether that's even ALL OF blue iii yet (!) 

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  151. Green, thanks for posting that article.  And good to know.  100% win streaks lasting for more than 100 trading years ARE rather reassuring. 

    Frank, your continual update of fib levels is rather helpful as well.  Your grasp of those is admirable, and since I am a relative newbie to E-wave and Fib analysis and measures, things like that only serve to improve my understanding of wave structures and trading levels.

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  152. 1190?  Sheesh, tough crowd.  :D

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  153. So much to learn, ain't there?  I am new to EW, and what I find most challenging is keeping track of the count and when you subdivide into the smaller fractals infinitesimally, it gets challenging.. :-)   And when you expand the count ... it gets challenging too when you deal with super cycle and grand super cycle because economic data of antiquity is hard to find :-)

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  154. Whoops, one too many in there.  Didn't look at the chart, was thinking of another.  FIXED

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  155. Yeah, looking a little more now, I think we've got a good shot at 1200 today.  Might go out on the LOD and hit it.

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  156. would love to see that chart too. this is exciting

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  157. P if this is not all of blue iii, then what do you call all this sideways stuff we are in now?  It has a 4 feel to it, I think, but 4 of what I get lost..

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  158. Okay, so this is just a quick sketch, not doing any hard math for this one,
    just eyeballin' it so to speak.




    Spiker, 4 of (5) of iii. 

     WHY WON'T MY IMAGE UPLOAD. I have a love-hate
    relationship with this new comment format...

    LOL, I had to switch to Google Chrome to upload the image.  IE displays "reply," Chrome uploads.  WTF is with this thing, lmao.

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  159. The updated chart helps A LOT, Pretz.  Thanks much.

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  160. This is the time of day that bully likes to rally but he's looking rather flat.  Barring some miraculous (and insane) 22 point rally in the next two hours I"m very much liking the prospect of  our third consecutive lower close tomorrow to add some momentum to this movement.   

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  161. did 1215 just fall???

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  162. Green, the inability of buyers to recapture even 1,220 (so far) certainly is encouraging for sellers.  

    I strongly considered getting back into SPY puts at 1,218 as the 5 and 1 minute charts were rolling over, but didn't have the confidence that this was 'it' for a retracement.  

    I still err toward capital preservation, especially right after a big down leg like the one we just had.

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  163. Fed gov making comments trying to fuel speculation of QE3; bulls yawn.

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  164. Purdy sure this is just a fourth wave.  Purdy sure we're gonna see 1200 or lower.

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  165. And NOW the chart comes up w/ IE.  lol.  Bizarre.

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  166. Rocky, re: target

    I'll work on it tonight. Too tired, plus just got yelled at by my wife, lol.

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  167. Same chart, just you testing the posting process?

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  168. Can I have a survey? (Not advice...I pay good money to a professional for that)


    So I have SPY puts expiring at the end of this week at 129.  Will most likely expire in the money. 

    Question:  a)Cover now, and buy again at retracement?  or b)  hold on to SPY short and take it to hell in a handbasket?

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  169. I think my earlier target was 1150 +/- if I recall correctly.

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  170. I had been staying OTM until we broke 1215.42 and getting out quickly.  I went in ITM after that threshold.  I'm daring the  bulls to charge lol.

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  171. There's a chance that was it for the fifth wave of iii.  Really hard to tell at this stage, especially since I should have gone to bed about 9 hours ago.  :p

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  172. Well, this is a potential pivot point.  If SPX can hold this area, it could well rally back up toward the triangle barrier.  If it can't hold here, I think we'll see 1200 pretty quick.

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  173. From here - we could retrace to 1237-1240 area -- can't go higher than that or we violate wave 1 -- correct Pretzel? So 2.2% upside and 15% downside from here ... LOVE THESE ODDS

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  174. 1215 is looking like resistance at the moment, wow SLV plunging

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  175. I honestly don't think bulls are buying right here...only thing supporting the market is shorts covering, but that will only last so long. Now, if we find 1200 today, I think we'll see a fairly swift retrace to the triangle for a backtest. I'll probably cover more after another 10 points down...RUT isn't down very much though which hurts because that is where a lot of my shorts are, maybe it plays catchup in the next 2 hours.

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  176. Okay, my brain is barely functioning, and I'm not as focussed as usual... but I'm looking at the charts, and I'm wondering if we haven't even seen the bottom of the red (3) yet...  If that's the case, we could slice right through 1200 and keep running.

    I really just need to look at everything after I've slept.  You guys seriously have no idea how exhausted I am.  I was literally passing out at the computer about 10 hours ago, and still going.  My brain feels like it's filled with caramel right now. 

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  177. Pretzel - so you know - I am hitting donate button when the pageview count hits 111,111 .... good karma there

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  178. My god man, go to sleep!!!  Thanks for all your work!

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  179. Thanks again for your insight!

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  180. Nope, it did that all on its own, which is why I was baffled by it.  When I tried to do it earlier, all it would say was "just a moment."  After 10 minutes of just-a-momenting, I gave up and switched to Chrome.  Then I deleted the IE post, and the chart came through anyway.  Go figure.

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  181. Thank You Pretzel for all the beautiful charts and crime scene investigations work in this "triangle".

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  182. RUT seems to be catching up now

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  183. 1215 putting up more of fight than I'd like!

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  184. Thank you, POTUS.  Very much appreciated.  :) 

    Hopefully, it won't skip ya and roll to 111,112, lol.

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  185. Go to sleep.  Thanks for your insight.

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  186. Alright, guys.   I'm gonna try to get at least a few hours before we go pick up the in-laws at the airport. 

    GL, trade safe!  :)

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  187. sleep! good job pretz and thanks for all your charts!

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  188. Get some rest, Pretz.  And nice work (again).  I suspect we may get another push down in the last hour and EOD day close.  Bulls aren't doing much to defend right now and sellers seem to be saving their firepower hovering above 1,210.

    Lots of chart divergences at the moment.  My 15, 5 and 1 minute all trending up at the moment.

    Should those turn over for another down in the last hour of trading, I'll go back in for to see what the EOD holds.

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  189. pretz, thanks for all the hard work, this is quite a memorable day and I can absolutely see why you wanna be awake for this since everything came exactly together as you predicted (and I went short for the first time in my life! wohooo!!!)

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  190. go to sleep and rest.thank you for all the hard work

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