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Wednesday, November 30, 2011

SPX Update: A Bit More Rally Still to Come?

There's been no material change in the counts since yesterday.  The expectation remains that new lows will follow this rally.  The primary question in my mind right now is whether that was it for the snap-back rally, or if there's one more new high coming.  The rally has not yet hit my preferred target range of 1209-1225, so I have a sneaking suspicion there's probably more to it.

On Monday, I talked about money flow, and how it was negative on that 3% up day, which indicates that the big money players were selling into strength, as opposed to accumulating positions.  This is not at all consistent with a meaningful bottom in the market.  The market cannot generate a sustainable rally unless the big money is buying, because obviously John and Mary Lunchbucket are not going to "move the market" this week by contributing eighty-seven dollars to their 401K.

For this reason, I would like to present a couple more follow-up charts on money flow.  The first one is from yesterday, and on this chart you can again see that "da Boyz" were in distribution mode:



The second chart is presented for contrast.  This chart is from October 5, and illustrates how the big players were accumulating stock after the last major bottom in the market:



I'm not going to show fifty-seven different examples of this, but it's a pretty consistent pattern.  Even near important short term bottoms, the heavy hitters are accumulating shares, not distributing them.  This would appear to be further evidence to support the preferred view that the rally is nothing more than a dead-cat bounce, and the primary trend is now down.

Again, the main question in my mind is whether the rally's over, or if there's more to it. 

The rally consisted of three waves up, and as such, could be complete. However, there is an interesting Elliott Wave phenomenon at work in this particular case, because the decline counts best as an extended fifth wave. Extended fifth waves have specific retracement targets, and they often perform complex "double" retracements. There are never any guarantees, but there are reasonable odds that we have only seen the first leg up of this type of double retracement.  A new high would also serve to turn sentiment around, and get more investors "bulled up" and believing that we just made an important low. 

Unfortunately, there is simply no way to say for certain exactly how the correction will play out.  By nature, corrections are much less predictable than impulse wave patterns.  The market already made it into the blue retracement target box, so until I see more clues from the market, all I can talk about at the moment is further probabilities  The chart below roughly depicts the two most likely possibilities.  Either the top of the rally was made on Tuesday, and we head down directly from here -- or we have one more leg up in store.

My preferred target for this bounce remains the same as it was yesterday: 1209-1225.  Specifically, 1222, but we'll see how close that comes.


In both cases, I am anticipating lower prices on the horizon.  My first short-term target after the rally ends is 1130-1140.  Medium term, I expect the SPX will head down toward 1000-1050.

Sustained trade above 1225-1230 would call this count into question, and if that happened, serious consideration would have to be given to the bullish alternate count, despite all present signs to the contrary.  Currently, I remain in favor of the view that this rally is short-term.  Trade safe.

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

213 comments:

  1. Just for fun, let's compare my "too lazy to use Photoshop" first impression of the dollar chart with what's actually happened since.  Striking:

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  2. Hmnnnn - futures were in the tank up until that China announcement (which really was an admission how bad things were getting there) - but that's viewed as bullish !  

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  3. PL, yesterday you wrote 1220 and the market is just following your recommendation

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  4. Oil consumption revised down?  Bullish!  China going to pot?  Bullish!  EU can't find their butt with both hands?  Bullish!

    Just how it goes in a 2nd wave.  Right up until it doesn't.  :D

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  5. The market had better just listen to me from now on.  I'm tired of having to do all this chart work.  It'd be much easier if I could just call the shots, and have the market listen.  Then I could just make up whatever I want!  Like this: 600 point down day tomorrow!  :D

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  6. PL and friends, S&P has cut the rating  of 37 banks in the US and the market goes up driven by the 37 banks? Like Bugs Bunny yesterday today I have something else to do, I will joing you later

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  7. Holy cow, I should do all my charts with that snipping tool pen.  That dollar chart at the bottom of the comments continues to track almost perfectly.  So far it's nailed 3 turns in advance, lol.

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  8. Pretzel, it is such a revelation to have confidence in where the market is headed.  I'm sure there are others out there with your talent, but how many of them offer their expert analysis on a donation basis?

    Great stuff, loving it.  Hope you can find a routine that includes proper sleep.

    James

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  9. Thanks, James. :) Speaking of sleep, I have an appointment to take one of my boys to the Dr. first thing in the a.m., so I think I'm going to try and get a little bit of sleep right now.

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  10. Even bigger news than China just hit. Fed announcement of coordination with the worlds central banks to boost liquidity. Big bounce is happening today. Glad I held off on going short yesterday.

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  11. PL: While I tend to find that Walter Murphy's public commentary tends to be of the "cover all bases" type (to my ears, at least), his comments from a couple of days ago regarding stockmarkets (at least) seem to have become much less equivocal, and what he's describing wouldn't be too far out of line with your own comments:-

    http://www.wminsights.com/Commentary/PublicBlog/tabid/81/EntryId/500/STR-Bullets.aspx

    What do you think?

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  12. An, the interventionist welfare state knew it was on the ropes. They had to have known that we were at the edge of the cliff in the credit markets.

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  13. Ugggggggghhhhhhhhhhhhhh !!!!!!!!!!!!!!!

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  14. Did I say how happy I am that I did not short  at the close of the market yesterday.  All because PL provides such good analysis.

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  15. Can someone explain to me how what the Central Banks did solves the problems in Europe?? Will this liquidity keep the bear market rally that began in 03/2009 going indefinitely?

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  16. S&P futures just hot 1228 way past PL's target of 1209-1225. PL also says that sustained trade above 1125-1230 would move us to the "bullish" count. Yikes!

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  17. My target remains that this rally is likely to exceed the October highs. After breaking the resistance in the 1220 area the next target is probably 1270 in my eyes. I will start shorting at SPX1290 at the earliest, at SPX 1330 at the latest.

    This would be consistent with the view that minor 2 waves tend to throw conventional elliott wave analysts off track..

    Of course I could be very wrong...

    Happy trading!

    @ vulture 711: next time  some more modesty from your part would be welcome as none of us has a crystal ball in his hands...

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  18. Matteo - I'll have to eat crow on that one !  My account will be suffering for it.  I don't view what the banks did was really anything more than admitting how bad things are (are getting) - but its tough to fight the headlines and people are dying to see action.  My debate is whether just to cover or see if it peters out

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  19. Ben Bernanke hates the US Dollar. And loves over-priced assets and any and all forms of state issued debt that can be sold to TBTF institutions.

    Bully getting his 'Santa Rally' gift-wrapped and hand-delivered today. We'll get the credit card statement soon enough. We were about to have a major bank failure. Those systemic problems aren't just going to go away.

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  20. We will just have to wait and see! As long as it does not stay above 1125-1230 I think it should be fine.

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  21. Yeah - sustained action.  Have to see if it gaps up and pulls back down or goes up and trends up

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  22. With you. Trying to figure out if I should cover my shorts now.  This is hurting.

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  23. Feeling the pain as well this morning.  Just wondering how long this euphoria trading will last.  And also trying to figure out whether to cover as well.

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  24. More than Greece, Italy etc etc is they are trying to stave off a Global financial meltdown like we saw in 2008 and taking some of the steps we did.  I had read recently that there is fear money market accounts may be losing their "safeness" and that is where most of the global dollars are sitting - they are trying to stave off a catastrophe and global run on banks - this is a bit of a separate issue 

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  25. this is not what I wanted to see...I'm totally confused now.

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  26. This is why I never do futures---you are all being squeezed right not by Da Boyz.   Da Boyz fully own the futures market, SHORTTERM. 

    However, as to myself, I am going to add to my puts as soon as markets open, going up to fully 100% invested AGAINST all my favorite markets (silver, new usa homebuilders, gold).

    This is a PANIC move by the central bankers of world, right before some UNAVOIDABLE MAJOR DEFAULT (S) is about to occur. 

    The world stockmarket will CRASH soon.  You wll see. 

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  27. PL goes to sleep and the *s&%t* hits the fan :)  Now we will have to take turns to keep him awake at night until the markets open going forward and get him back on his old routine :)  Lets collect a large enough donation and move him to the mainland.

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  28. Anon20, I believe you. 
    Have you read Aftershock? 

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  29. I could not agree more, Anon.  There HAD to have been major bank defaults (probably in Europe) and a total credit market freeze up in the offing for THIS to happen.  Which would have been followed by a global run on banks.

    As the CNCB talking heads are calling it:  This was 'Calling in the Cavalry'.  And the equivalent of 'Financial D-Day'.    So this doesn't happen unless something very, very BAD was about to hit the wires.

    It buys time for the system, which isn't the same as saving it.  We still have a fundamental solvency and massively overpriced assets problem.  And that one hasn't even begun to be addressed.  And the latest 'solution' only makes it worse.

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  30. It is interesting - the entire move off of 1158 has come pre-market.  The 1st big gap up traded sideways during the day as institutions sold into it, yesterday actually traded down and the up open and today will also be a big gap up.  A pre-market bull !

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  31. It isn't a loss until you sell/cover.  I won't at the open and see if it gains strength.  My view is the real trend is still down and we'll eventually pass my entry point on the way back south

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  32. italy 10-year is at 7.19% and spain 10-year is still trading at 6.38% while portugal's is spiking higher to 13.41%. today's events apparently are not having an effect on solving the true problem of insolvency. the higher move in the SPX may not be sustainable is my guess

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  33. what does PL mean with "sustained trades above 1225-1230"? is that like the whole day (today), incl tomorrow, or?

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  34. I have a problem with the end of Oct high being a significant high.  Although I have not yet done an exhaustive search but a significant high is usually associated with the $vix:$tnx closing below its lower Bollinger (20,2) band just prior or on the high day.

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  35. Both non farm payrolls and Chicago PMI well above forecasts.  This rally won't be rolling over yet.

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  36. looks like the bears stepped in!

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  37. bold but risky move ANON20..

    I agree that the market will crash, but sometimes it can take a lot longer than one might think (i.e the market can remain irrational longer than you can stay solvent')

    hope your puts are long dated ;)

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  38. I would doubt that worldwide and coordinated central bank intervention is factored into Pretz's counts.

    This is a rather extraordinary change of circumstances that no one could foresee and which I doubt even Ben himself knew was coming less than two weeks ago.  

    One can easily presume that the central banks must have seen that we were headed over a cliff, in which case the October top would most definitely have been a significant top. 

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  39. repeat of monday?

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  40. Apparently The Street sees this as a bogus rally as well:

    http://www.thestreet.com/_yahoo/story/11327042/1/dont-trust-todays-bogus-stock-market-rally.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

    It's painful to watch in the short term, but we are possibly setting up for some potentially nasty drops in the not too distant future.  I think the sensible traders will eventually be rewarded for their patience.  It will also be interesting to see how today plays out.  So far it's more of a gap opening as the gains of the futures have been extended by almost an additional 1.5%.  But I can't see this move up going much longer, and I believe we will close well off the highs by the end of the day.

    Don't know if this qualifies as PL's "over 1230 for an extended period of time" bullish alternative, but let's wait and see where we close out the day first.

    Pete

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  41. Hope you're right Pete else I'll be joining Greece and Italy asking for a bailout !!!!

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  42. Is 1235 the 61.8 fib retracement between 10/27 high and 11/25 low?  Does that have any significance here?

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  43. Nice summation from Pimco:-

    http://ftalphaville.ft.com/blog/2011/11/30/773511/guest-post-el-erian-on-central-bank-action/

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  44. well hey, at least we filled all the gaps, lol!

    I'm 100% short now. This might be the end of me.

    Pretzel...tell me there is a count that says this thing reverses soon.

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  45. the rally did pause around that number and moved down to now levels.

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  46. The market is acting very similar to '07/'08 as I remember it from a newsflow standpoint. My initial gut feeling to the news and market underlying information told me that we were about to crash hard, and amazingly enough, it held in quite well...till it didn't.
     
     Talking heads on CNBC were saying that there was some problems, but go ahead and buy stocks, blue chip dividend stock to be safe, but buy. The sad thing was that many of my friends and family's brokers were saying the same things. I, and a few friends that do this to avoid getting a real job and having to wear anything but PJ's till 1PM (CA here), knew that judgement day was inevitable. Alot of those people got crushed, pulled out at the bottom and put what was left of their savings in CD's.
     
    Unfortunately,  it's happening again. In the last few weeks I've been talking to many of my neighbors and family about the markets, and they were all lured back out of CD's and are back in the market again. I know that this is just my little world I'm taking a sample from, but it would appear this is happening everywhere. Their brokers  seem to have more of a cautious tone, but still sticking to the company line - buy... or at least, hold.
     
    Pretzels bullish count, which may be in play now, creates the perfect scenerio to crush the most people possible, including shorts  - it's favorite game (thank god I close my position in the ES yesterday!!). That would be perfect fuel for his Big Picture count which will have people bailing at the lows again, but this time probably crushing any trust in, and desire to invest in stocks again... assuming they have anything to invest left. The sad thing is many of those friends I mentioned before are retired seniors and a few had to get jobs as Walmart greaters and security guards... litterally.
     
    I'm not quite ready to by into Anon20's end of the human race scenerio, but it does sadden me to see what this is going to do to the average Joe. Of course that's offset by the thankful feeling that I'm back making profits - mostly thanks to Pretzels Therapy Group giving me the confidence to follow my gut feelings.
     
    None of these actions, as brianhut pointed out, will "fix" anything. It buys time till the PTB can figure out how to build the next bandaid. And the American consumer will do what they always do, spend every last penny in the account and max out their credit cards on "stuff" skewing US data to the positive... till everything crashes.
     
    Of course after todays market action, everyone I know will think I have a tinfoil hat and talk to trees, but this is just going to present a windfall shorting opportunity soon. Hopefully Pretzel's amazing charting skills will give us all some insight as to when that will be... my gut says soon, but that could be indigestion caused by the ailien radio waves boucing the tinfoil under my hat... 

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  47. I cant imagine this is good for the drop theory soon.  With the VIX crossing to the downside on the MACD this morning?  I hope I am wrong as I held shorts overnite.  The buy the dips Santa Rally could be in effect on any weakness.  With the break of 1225 on spx is the other chart in play here Jason?

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  48. LOL - I'm with you Rock.  I took all of last weeks gains on shorts and doubled them in losses by shorting at the close last Friday.  Dumbest thing I could ever do I guess

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  49. Rocky, me too. I am 100% short as well.

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  50. No. 1241.5 is the 61.8 fib retracement, so SPX has some more upside to go.

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  51. CTP is showing his ST cycle top today with the next low 12/3.  The negative is because its late in the top window and we didn't undercut 1190 on the low, we'll just get a pullback and then a bigger move up maybe pullback to 1200 or the 50 day which is 1195 or so.  

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  52. I would think that how high this thing will climb is a pretty tough call at this point.  The Street is certainly going to milk this for all it's worth in the ST.  Fund managers must be salivating at the gift of being able to distribute that these prices.

    One thing that will be very telling:  What happens in all of the upcoming bond auctions in Europe?  I doubt that those yields will fall much.  Nor will there be a credible solution to the real problems that necessitated this extraordinary coordinated move by the world's central banks. 

    How long it takes the rest of the world to figure that out becomes the question.

    Trade above 1,250 (near term) seems almost a foregone conclusion now. 

    I'm looking for the obvious stopping point at which the Street doesn't feel comfortable to take the indexes any higher.  I would *guess* that to be somewhere north of 1,250. 

    It will probably take sustained trade above 1,250 to lull the masses into happy, bullish, Christmas cheer sentiment again.  I'm pretty sure that now becomes the Street's primary objective.

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  53. You are right.  I was looking at ES not SPX (I trade the futures).  Thanks for clarifying.

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  54. Dave, i love your post. tinfoil hat!? LMAO! I agree with you; talking with my colleagues and telling them to guard their 401K they all look at me sheepishly and wonder where i get my ideas from. I must say this rally hurts me -financially of course- as it (today) came for me -and many others I assume unexpectedly. I will take my losses on the next low and buy the dip to recoup. It's just hard to trade when the futures are calling the shots everyday.

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  55. I subscribed to your friend 
    "Lee Adler" service with money paid 2 days ago, still unable to log in, still unable to reach him live.

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  56. Nice comment, Dave. Re late 07 and in to 08, once it became clear that subprime issues were immense, we then had the "decoupling" themes in play, first of EM markets, and as they began to succumb, full bore into commodities as the last man standing, culminating in crude's parabolic rise to ~$150. All this as the credit problems became ever greater and more apparent.

    This market certainly has echoes of that period, although expecting it to rhyme *too* closely with such a recent experience is perhaps asking too much.

    On an other note, lets say I, err, identify with this line particularly well: "I, and a few friends that do this to avoid getting a real job and having to wear anything but PJ's till 1PM (CA here)".  :)

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  57. Hi- new to the forum.  with the bullish count riding at 15% probability, clearly that would have been the best bet, since it went again the 85% probability.  I think the banks may have been save by qe3, so until someone defaults it looks like smooth sailing to the uspide.

    which is why im... short?  there does seem to be an awful lot of jubilation today, but the futures indicate the big boyz are covering, but we're not really moving anywhere intra day. very confusing and very very scary!

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  58. on a 5min scale, monday saw the MACD crossover at 10:50am. hmmm, guess what!? today at 10:55am the MACD crossed over too... could we maybe do "copy/past and insert here"?

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  59. so let me get this straight....the FED is going to print money and give it to the European banks because the ECB isn't willing to print the money themselves? this is stupid...QE3, next is the QE4 to buy mortgage assets...Bernanke is going to crush the dollar here, too much liquidity...it's just propping up the bubble.

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  60. The thing that frustrates me the most is I missed the bottom on 10/4, so I kept waiting for a pull back to get long. Never got one. Now I'm short and we're getting pull backs like crazy on the way down...market is doing a hell of a job shaking me out. This thing just needs to waterfall already so that I can makes some freakin money back.

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  61. Nice upward wedge on ES.

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  62. Just thinking aloud here. It strikes me that the reserve banks just their platinum bullet. Sure we got a rise, pardon the expression, but Viagra only last for a few hours. I think that they are out of ammo for a while and it is up to the politicians to make the necessary changes. I have some serious doubts as to that working. This may continue to rally and if it does counts and expectations will have to change, but if this goes stagnant from here, I don't see anything good for a long long time. imo

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  63. The Feds actions only work longer term (6 mos to 1 yr) when they move with the overall market trend ie Elliot Wave.  However, the short-term reaction can really "juice"  the markets as we are seeing today.  You do not want to be 100% short here unless you are able to stomach the S&P rising to 1275 by 12/10.  Be patient.

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  64. First, boy do I wish I took my own advice.  I had posted about the impact (SHORT-TERM) of the Fed/ECB intervention.  Guess i should have stuck with my gut.  Oh well, all on me, no trading advice given here!  Second, watch the dollar and oil.  Oil been creeping down all day, doallr been creeping up.  I think it is a tell as to the strength of the rally and if we will turn strongly down soon.  Just my 2 cents.  I still agree 100% with teh medium and longer-term thesis PL has presented; I was only concerned about going short before this pop which I had a feeling could not be avoided.

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  65. Wedge broke down. Covered 1/3. Breakeven stop in on remainder.

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  66. I've found that there have only been a few days that I've held positions overnight and it has worked fantastic for me. My trading stratagy has included a full misstrust of any direction in this market.

    With the apparent magnitude of the underlying problems in world credit markets being probably worse than even we on this blog imagine, politicians and central bank officials can and are prone to do very "creative" things with unknown timing.

    Have I missed some big moves... yes. Am I still positive... yes (whew!). Not even dipping my toe short here, as I'm still worried that there may be some more upside.

    If I was to guess, these central bank moves worldwide will fix nothing, and the markets will ignore it. Bond rates in the PIGS will rise, probably including France and Germany to a lesser degree, but markets will ignore it. QE4 by the Fed will happen with MBS purchases, and the markets will rejoice.

    Then China 's economy will crash (or some equivalent there of) and it will be the top of the waterfall. I'm really hoping it's not something stupid that happens in the middle east that is the catalyst.

     So "day trading" this market has worked for me. And I hope it continues, or my wife will make me get a real job!

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  67. Rocky,

    I would expect a retrace and fakeout move lower that possibly extends into the gap to scoop out what lurks down there; to shake to out weak longs who just bought in; and to make the retail bear crowd chase and sell the bounce.

    And then we head higher.

    Not advice, but the trading today is going according to a pretty normal script.

    Since the gap up, we are in a (predictably) very narrow range with the BB's pressed tight together to pick off everyone who will sell and cover at these levels.  We are now seeing the slow drop off from the HOD at 1,240.  One, three and five minute stoch, RSI and Williams are bottomed and flatlined as I write this. 

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  68. This being 'Viagra' is exactly right.  And this particular bullet can only be fired once. 

    Which means that something was pretty damn dire and on the verge of panic-causing collapse.  I would think it was inter-bank lending (or lack thereof) that led to this. 

    Which does nothing to solve the problem of fundamental insolvency, though it does buy more time. 

    After this the options are rather few:  more printing and QE, bailout fantasies and schemes, and political pow wows and pronouncments.

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  69. just a note, here is the money flow
    DAILYTOTAL MONEY FLOWBLOCK TRADES LastChg% ChgMoney FlowTick UpTick DownUp/Down RatioMoney FlowTick UpTick DownUp/Down RatioDow Jones Industrial Average11981.13425.503.68$-75.97$1,576.66$1,652.630.95$-95.48$195.33$290.810.67DJ U.S. TSM (float)12834.84451.683.6527.2918,658.2118,630.921.00-173.832,352.432,526.260.93Dow Jones U.S. Total Stock Market SectorsBasic Materials2904.70158.755.78-48.721,182.751,231.470.96-59.8490.46150.290.60Consumer Goods3292.7083.042.59-50.151,035.571,085.720.95-68.21115.51183.710.63Consumer Services3455.5697.342.90-0.981,961.741,962.721.00-10.37237.96248.320.96Financials2643.1999.213.90289.947,118.236,828.291.04171.961,081.12909.161.19Health Care3251.8498.313.122.07995.49993.421.00-1.26158.93160.190.99Industrials2998.81132.344.62-69.011,447.411,516.420.95-96.63135.10231.730.58Oil & Gas5714.30259.314.75-73.521,785.521,859.040.96-57.60167.27224.870.74Technology6254.64222.433.69-11.342,654.322,665.671.00-41.33297.39338.720.88Telecommunications1048.8626.232.56-2.73219.94222.670.99-12.2528.4240.680.70Utilities1827.2435.601.99-8.25257.24265.490.971.6940.2838.591.04

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  70. that was ugly, let me find another way to do it

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  71. It now appears the 1300 on the S&P is at least 50% prob. before "the decline."

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  72. So, do we have an orderly march right up to 1300 or we go back and fill in this morning's gap at some point?  That is the question I'm cipherin' on right now.

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  73. ok just go here
    http://online.wsj.com/mdc/public/page/2_3022-mfsctrscan-moneyflow.html#daily?mod=mdc_pastcalendar

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  74. looks like somebody is selling into this atrocity

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  75. QE infinity and beyond bitchez
    /sarc

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  76. @ Blah--Shouldn't march straight up from here.  Need to see end of extension to determine pull-back.  Pull-back should provide entry for longs to 1310 - 1330 by end of Dec.  IMHO.

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  77. Thanks for posting that.  Look at the SPY topping the chart on the 'Selling on Strength' link.  Tells you what the pros think of this:  Let's take profits on Ben's gift.

    http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html#daily?mod=mdc_pastcalendar

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  78. So is that weakness or short covering?

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  79. 3rd day of selling into strength, with decreasing volume and decreasing $$$s tells me the big boys soon start buying  (into weakness). I could be wrong, as I never so this day coming, but maybe there is still a grain of logic left in this market???

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  80. 1,310 to 1,330?  

    Hmmm, apparently you think that the European bond auctions are going to go well for the next four weeks and the entirety of the Streets pros who move markets are going to stick their head in the sand with respect to fundamenatl insolvency. 

    Or that perhaps we'll hear about a new grand master superplan that wipes away all the trillions of dollars and euros in debts that will never be repaid. 

    Which may all happen, but it's not a bet that I'm willing to make.  The current market euphoria will pass soon enough.  

    Lending the world's banks cheaper money to trade back and forth to keep their chimerical game going isn't going to solve the problems that got them to this point.  And in the end only makes things worse. 

    And worse:  the massive distortions this causes in the financial markets destroys way more wealth than it preserves and creates. 

    It preserves all of us paying higher prices for everything with money that is steadily losing it's purchasing power and value.  All so that the existing financial and political structures can be preserved for the PTB that runs the nonsense and is the true beneficiary of it all.

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  81. huh? ETF Fund Flows: SPY Nets $642 Million 

    http://www.indexuniverse.com/hot-topics/10279-etf-fund-flows-spy-nets-641-million.html
    can anybody explain how that rimes with the money flows?

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  82. You have a point.  Could very well be short covering. 

    Though I wouldn't expect that McDonald's and Pepsi are short covering. 

    For Caterpillar, Apple, Cisco and the SPY though:  short covering is a rather plausible explanation.

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  83. I'm back, all my risk nickels are in, 100%, into SHORTterm puts, and I added a few of the BUM usa banks also, since the puts were going at half price sale, from yesterday.  Bought more puts against silver and gold miners, too, all at half price 1-day bargains.   Today was my "black friday".
     
    And I am amazed once again, to scan over all of your knee-rattling comments below,
    and see just how easily you are all so  shaken, away from your longterm bear stances, 
    from one sharp blahblah unexpected 1-day upmove, by Wizard of Oz's "awe and thunder."
     
    This baloney blah blah upmove, "We are the tough C.B.'s, and We MOVE markets",  
    will be WHOLLY FORGOTTEN, in just a matter of days---you will see, doubting bears. 
    I SAY IT ENDS TODAY.  I SAY THIS IS THE SHORTING OPORTUNITY OF THE CENTURY.
     
    (And btw, who is that idiotic bull below matteo nopants, did he stray into the wrong website?  Yes, turkey matteo, buy buy buy, with both hands, SUCKER!!   For your Fiat-Magician GreenPaper-Daddy  Bennie BullBarkey, will take REEAL GOOOD care of you, you'll see, ever-believing SUCKER.) 
     
    (Because let's just see, matteito, how BabyFace BahWacky makes nearly a QUATRILLION dollars of REAL WORLD DEBT dissappear, even if he were allowed to run the usa printing presses 24/7---because, as of right now, there are LESS than THREE trillion ACTUAL PHYSICAL DOLLARS IN EXISTENCE.   But hey, I bet you believe in Santa too, don't you, SUCKER?)
     
    -----------------------------
     
    Here's a 3 things for you doubting bears to closely look at, read, and carefully listen to.
     
    http://www.etfguide.com/research/708/8/Ignore-Everything-and-Focus-on-the-Only-Thing-that-Counts/
     
    http://www.elliottwave.com/freeupdates/archives/2011/11/28/Interview-with-Steve-Hochberg-We-re-Not-Out-of-the-Woods-Yet.aspx
     
    http://stocksthatpay.com/?p=18268
     
    --------------------------
     
    What happened today is EXACTLY what I have been warning you about, that the VIOLENCE of bear market rallies, CRUSHES even the staunches bears, so one must NEVER bet, what you cannot afford, to FULLY lose.
     
    For you all continually trying (laughingly, as though this was a some kind of joke) to MATADOR a very old (but still very strong), 30 yr old BULL---YET this old bull still has sharp HORNS, that if you get COMPLACENT, it will GORE you.  But this does not change the FACT, that this bull is very tired and old and dying.  And there are a MILLION evidentiary facts to prove this, despite what any 5th-wave dumb-money SUCKER, has to say about it.
     
    What happened today with BennieBlarney BullBarkey, is EXACTLY the same hiphip-hooray CRAP, that he pulled SEVERAL times in 2008, or don't you all remember that far back?   Recall those one or two day uberwonder supermega "the world is again saved" rallies?  Yet, they would totally fizzle out days later, only for the crashing waves to resume.
     
    As an added example, I enclose this FACT: the 10 greatest stockmarket rally months in history, were ALL in the midst of MAJOR bear markets.  And fyi, this last October was #2 in that ignonimious hitparade, if I recall correctly.

    I once again enclose the 1930-1932 86% stockmarket collapse, with 7 powerful uberbeartrap rallies in between.  But do not be guided by their time factors, now everthing moves at lightspeed, in comparison to the early 30's.  The chart provided by the weblink above, demonstrating the CLOSE similarity of 2008 and 2011, is the one to be guided by, timewise---even though we are now moving even faster, in events, than in even 2008.  As 2008 was grand super cycle wave1, and we are now in gsw wave3.  And gsw wave3 is the biggest killer of all, in nearly 3 centuries, since the start of the usa.  So it makes proportionate sense, that gsc w3 should also have, the sharpest nastiest beartrap rallies of all.

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  84. I am RIGHT there with you, Dave, about holding positions overnight.  The only reason I think you'd do that in THIS environment is an unfortunate pschological phenomenon I call:  Fear of Missing Out.  Which is nearly always a primary cause of losing trades. 

    This is not a back-handed slap at anyone here, btw.  This board is full of knowledgeable and excellent investors.  And I don't pretend to know more or be superior in my approach. 

    What I AM though is very careful about capital preservation.  Because I've lost plenty in previous eras when I haven't been.  And I was caught 'holding and hoping', often on overnight moves.  And more often when I was gullible enought to believe what the news and headlines were telling me.

    I therefore have NO PROBLEM missing out on an overnight move, when the headline risk is simply so extreme at any given moment that it could just as easily move against me. 

    There are more than enough opportunities when the cash market is open to make profitable trades.  And which gives me the ability to abort mission in an instant when my wager on what's going to happen next is not looking good.

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  85. Looks like we are about to get the retrace. 

    Three and five minute stochastics and RSI were turned back down on last cycle.  Selling pressure is necessary to cause that kind of reversal.  First time it's happened today.

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  86. Anon20, you have nerve of steels :-)

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  87. Anon20, I notice in your chart the min. bear rally is 11% high, max is 39%.  Min. time is 14 days, max is over 2 months.  Plenty of opportunity to make money via long positions even in plunges.  After all, even PL had the market much higher as a 15% prob.  Personally, I'll go heavy short at 1300 - 1330 with Matteo.

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  88.  
    Just got up, getting ready to take my kid to the Dr., but I've got a little time.

    Apparently, Emperor Ben is printing money for the the whole world now? Wow.

    We are bailing out other countries on the backs of the American middle class. Amazing.

    http://www.bloomberg.com/news/2011-11-30/fed-five-central-banks-lower-interest-rate-on-dollar-swaps.html

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  89. Word on the street is that a massive European bank was close to failing last night, hence the intervention.

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  90. Anon20, I whole heartily agree with you on this one. I'd put it all a little more "political correct" ;-) but nothing has changed structurally with our economies, in fact the banks' move has made it even worse: more money printing, more loans, more debt. NOTHING has changed. The futures are just killing me at the moment. I don't trade them (yet)... the last 4hrs brought us back to levels after the first 30min after open; what a bull run...  

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  91. Eur still unable to retake 1.35.

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  92. Glad I only dipped a toe in short at 1192ish.  Added a little at 1233.  Let's see if they can get anything going in the cash market.  So far, the entire rally has been all leveraged futures moves.  They've gotten, what?  10 pts out of the cash market?

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  93. Yes - really amazing.  All 3 days - all the damage has been done while the market was closed.  Which from todays announcement - really isn't that fair to those not long - but they hate shorties anyhoo

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  94. That bank in the US will be Bank of America which will need a bailout - I'd bet on that.

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  95. if that's what you truly believe, you are 5th-wave dumb-money.
    as such, I recommend you should be solely in cash, short-term t-bills only,
    and out of this grandsupercycle market from hell.   this is 'no market  for old men'.
    because what I am saying, yet you don't hear, is much more complicated than that chart.

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  96. PL, glad to c u here (even if it is for a while); if we move into the 1225-1230 area today will that still keep your preferred count/forecast valid? 

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  97. Similar here.  Put on a small position around 1195, and then added to it mid day today.  Any thoughts on where this rally might take us?  We backtested the pennant on the R2k perfectly today, and came close on the S&P and Dow as well so maybe 1240 was it for wave ii here.  Some channel lines coming in around 1270 as well.  If this is still c of larger wave 2 (alt bullish count) you're looking for 1290-1307 right?  Not sure whether to bail or ride it out.

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  98. My only regret, is I have no more money to put in. 
    Because I want to put much, much more---I am that sure.
    I am certain this is the top---Bennie BoobieWarkie has assured it.




    I will now make 2 predictions, to have a good time.

    1. spx market today wil close beneath PL's cited top 1227.

    2. spx will fall to MINIMUM low 1100's, within a 2 week time span.

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  99. The problem I see with the rally, in the tiny little bit of time I've had to look at charts, is that it's not being reflected in the NDX. NDX has approached major resistance @ 2290-2300, but so far has stayed below it.  NDX is the leader, but less watched by the general public --so it's less subject to less end of month, happy print tape painting.

    I'm ready to change footing here if I need to.  These types of BS intervention moves are enough to drive any sane man crazy, and there's a point where fighting the tape/Fed becomes financial suicide.

    Just not ready to throw in the towel quite yet.  ;)

    Wish I had more time for charts right now.  I'll have to dig in after the close. 

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  100. It feels weird to me: the market wasn't tanking yet, and yet the world central banks are taking these "preemptive" strikes to front run what could be ominous down the pike.. very fishy.  I am keeping my shorts, though I am not 100% in yet.

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  101. Alt. bullish count could go as high as 1330ish.  I personally will probably bail if it looks likely and await better entries.  Not trading advice, I just hate drawdown.

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  102. No, good try, but I disagree on BAC, 'barf of america', since Buffett has their back, don't forget that, and that decrepit shark from omaha, will keep their rotten zombie-bank carcass alive, long enough to get his 6 billion paid back in preferred stock, PLUS his 7.25% interest.

    No, my own 2 favorite 3-legged nags on the usa bigbank default horserace, are: either C, 'chittycorp', or my own personal favorite (that should have died in 2008), MS, 'morgana trampy'.

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  103. Feels more reassuring to have you with us, Pretz. 

    Buyers just stepped in after the push down to 1,234 that made all of the indicators roll over.  Apparently the bots were paying attention. 

    One, Three and Five minute indicators are ALL peaked and maxed out right now on the move to 1,237.  They *should* roll back over pretty soon here. 

    The market seems to be doing its best to convince everyone that this is a strong market again.

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  104. Usually these types of moves have some residual momentum, so I doubt we'll see an immediate reversal, barring a black swan news announcement. 

    Of course, "usually" the move like we had *down* has some residual momentum.  If that bottom holds, it would be an incredibly odd one.  No divergences on Mclellan, no big instititutional participation, etc.. 

    But that's why there's never guarantees.  Nothing out there works 100% of the time. 

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  105. It's not amazing att all, PL, it is totally logical.  ALL the bigbanks of the world are now MARRIED, notwithstanding their country of origin.  ANY international bigbank falls, it takes out another, then another, etc.  EVERY centralbanker in the entire world  has now to SUPPORT the entire fiat system. 




    And, I have been foretelling (and you also), there will be one bigbang, that silences them all, together.  
    Gap down overnight, in the thousands of dji points.

    Then, as always, as the flapper song goes:  "the rich get richer, and the poor get children"---
    for the sucker "it's like money in the bank" depositors, will be left holding the empty bag. 
    After that, world pan-demonium.  Multi-generational.  "Brother, can you spare a dime."

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  106. The other thing is, on the NDX, this looks like an ABC with 2 near-equal length waves up.

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  107. Wow. Hope you are correct. You also have guts of steel.  I am in but not 100%.  Looking to add.

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  108. Don't throw that towel.  For same goes for silver and even gold, not even breaking their resistances.  Silver is still under $33, and it has yet to go over $33.80, to even enter it's old prior trading range, much less go against heavy resistance, at $36.  And even "mighty" gold has been slapped back repeatedly today, from even entering $1750, with the hard resistance there at $1758.  However, if $1758 goes, then it's back to the low $1800's, were there is even more powerful resistance.

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  109. Royluifamily --
     
    Try e-mailing him at the "admin" support link.  I know he's been super-busy with a family trip, but you should be able to reach him there.

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  110. Looks like crude might be heading toward Unch

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  111. Ah, another reason everyone here 'loves you', Pretz.  That chart certainly tells a story.  Though I'm sure there are few here who would have known to look at it. 

    SPX travelling in a 6 pt range snce the early morning isn't giving much info like that NDX chart.

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  112. Euro now trading into the overlap range, which usually indicates a corrective move. 

    Today reminds me a bit of Oct. 27.  Huge overnight blowoff.  Trade sideways a couple sessions, then *whoosh* down the toilet.  We'll see.

    Gotta run now guys, I'll bbl.  Where's Jaco when you need him?  :)

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  113. PL, you should listen tonight to this 10-minute audio interview, from just 2 days ago.  You will find it interesting.

    http://www.elliottwave.com/freeupdates/archives/2011/11/28/Interview-with-Steve-Hochberg-We-re-Not-Out-of-the-Woods-Yet.aspx

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  114. Hi PL, one question before my nonsense ranting below:

    As I glance at your long term chart, I dont se ANY gap down who hasen´t (more or less) been filled later within 1-3 months (with the exeption of the big gap okt08 which took over a year to get filled). With the "more or less" i meen I see one exception, the gap red 5 to blue (1) I seem to recognice a small small gap exactly jan 08 which doesnt seemed to get filled on the bounce.
    Maybe you have more data of the history regarding gap-filling than my glance your big picture chart.

    So the question(s) if I may: the bullish alternative I guess is MT/LT still bearish, with the ST bullish view that we have to bounce and fill the gap april11 somewhere between 1300-1325.

    And, (i mean no disrespect, just trying to expand my knowledge), wasnt it "obvious" that, when looking at history - every gap have more or less to get filled? My understanding of EW is far far less than yours, so the question is more like - is it a EW rule that state that every gap has to get 99% filled?
    (if not - i hereby declare that a EW rule).

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  115. I opened a Dec put for LULU, earnings out tomorrow.  Shall see :-)

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  116. And replying to myself with some ranting nonsense;

    PL hope your still hanging in there and dont get tired of constantly updating your blog for us your humble followers. I love your work, and knowledge is worth more than money.

    However, Im stuck down in the region SPX 1180-1190 100% short in SPX, Silver and Dollar - but will go down (or, up I guess?) with the Titanic shouting about a crash a´-la ANON20 (ANON20 which I must give all my respect, always somehow funny thou somewhat hostile from time to time).

    And finally I must thank you and Mr Bernake for saving us Europeans, didnt now it was that easy - can you maybe start printing dollar for all countries? For example Ive heard that Mongolia seem to be in some of a predicament regaring their financial system and growth...

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  117. This helped enourmously today.  Thank you for taking the time to chime in before the close.
    I'm holding on reupping my shorts a day.  A little sorry I missed on some of my selling the bounce yesterday, but hopefully I'll get it all back with new lows :).   I wonder if the Fed was reading your blogg PL and they ran similar analysis....

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  118. wow... did the bears fell into hybernation...???

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  119. Well today's ramp up and blow off close convinced me to take very large short position at 1,247.  

    I decided to buy into leveraged ETF's that cannot expire the way a put position can. So I can hold them for as long as it takes find below today's close. 

    I find it incredibly difficult to believe that we won't soon return to lower pricing and at least some kind of retracement within a reasonable time frame.  This is a sell the news event if there ever was one.

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  120. Wow, a 50 point SPX up day?  Sure sorry I missed out on that, but no way would I have gone long yesterday.  I am forced to conclude that I can't trade this market.  Looking like if enough people believe in something (rally through the end of the year) it may just happen.  though I agree 100% with all of the reasons why it shouldn't.  That was one hell of a can-kick!
    As for "bull fuel" (multiple interpretations intended), isn' the Fed action backstopping Europe essentially QE3?

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  121. I think the bulls kept the price high to make the most out of the hopefully short lived short squeeze.  I saw my SPY drop about $.40 2 seconds after the close and now it has gurgled back above 125.  Hoping for some sideways to down action from here until expiration...  Today does feel and look a bit like Oct 27th... EOM window dressing?

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  122. Brian,

    Applaud your guts. good luck. Deciding whether to follow you.

    Daniel B

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  123. THIS is the type of bear-FEAR I LOVE.
    Even your uber-leader PL has his panties confused, all tied in a knot.
    Plus obviously, THIS is the type of IDIOTIC-bull OVER-ebullience, that I ADORE.

    Of course all my puts are getting creamed 80% DOWN, but ask ME, do I give a flying  fukknngg  SHHTT?
    HAHA. NO.   NO WAY, TURKEYS.
    Because THIS is the price of LEARNING the big game, and the TICKET IN, to the BIG GAME. 
    And make no mistake, this IS the ULTIMATE, BIGGEST game, OF ALL.

    I AM ANON20.
    And as of tomorrow, I will get more money, out of nowhere, and I WILL ADD MORE PUTS. 
    Since they are just pure slicing gravy, right now.  They give them to you, as holiday cards.
    HAHAHA.

    ForI have lived through all this elite LIAR crap before, and repeatedly. 
    THIS IS THE TIME TO KILL.  And not the time to run, like a bunch of scared bear fairies.

    HAHA,
    THIS is fun.  FINALLY.
    Some REAL ACTION going on.

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  124. ANON20 as you are a big game hunter, maybe you can tell us, how many months out you prefer your long puts and if you go for in or out of the money, I at least would appreciate  this info.

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  125. Hi Everyone, if you decide to pile in on shorts at this point, a good way to do this is instead of going long an inverse leveraged ETF like TZA (a popular one), you can short the long leveraged ETF TNA (a popular one).  The advantage is you can short the decay factor of TNA to your advantage.  Let's say if the market plunge massively from here TZA can profit more, but if the market chop and slop its way down from here, shorting TNA may be better because you can get the decay factor to work for you.  I don't know if it makes sense or not, just an idea to get some bucks off the decay factor.

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  126. I salute you ANON20, you do have nerve of steel :-)  a 80% drawdown is not something most people can withstand. 

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  127. Makes total sense. I never thought of that.  I went big into TZA at the close today.  And FAZ for good measure.

    I don't anticipate having to hold this one too long though.  TZA's low for the year (which I understand is not truly a comparable measure to prior periods), is less than fifty cents away from where it closed the session.

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  128. hi Brian, there is no right or wrong way of doing this.  A massive plunge that takes the Russell down 33%, for example, would more than double your investment on TZA (decay works to your advantage in fast moving trends), whereas shorting TNA may only yields 90% of your investments (things can only decay so much according to logarithmic scale).

    if the market slops and chops (which I suspect it might do even in a down trend), shorting TNA might be a more viable strategy for short and hold because TNA will decay after a few months even if Russell were to stay at the same price level.

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  129. After a big run up in the VIX, the same can be done by either shorting VXX or selling calls. Plot the VXX against the VIX and you can see the rebalancing contango. Rocky may know more since he trades VIX a lot.

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  130. Life is scary.  You americans are so spoiled, you are pathetic.  you are like pampered poodles.

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  131. Frank another reason to be short an etf if one has the choice, if for whatever reason the etf goes down the drain one should be better of short than long.

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  132. Yes very true :-)  Shorting VXX does require nerve of steel though... I have been trading TVIX (2x cousins) the last couple of months and boy that was a tough bronco to ride.

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  133. It's not exactly a gutsy call so much as a calculated one. 

    If I were being 'gutsy' I would have bought a much riskier (but potentially far more profitable) put position. 

    The calculation here is pretty simple:  this is actually a VERY bad sign for the state of the world's financial markets. 

    The Street's pros KNOW that that's what this really means.  Especially the 'bond vigilantes' who will now be only more emboldened to drive up those yields.  

    This is a tacit admission and concession by the world's central bankers. Not a show of actual strength. The world's central banks could not have signaled more clearly:  things are bad out there. 

    This doesn't make the Street form a song circle and hold hands to save the world from itself.  They will attack the weakness and seek to profit from it.

    I don't pretend to know when and where this rally corrects and reality sets in.  But a blow off top like we saw at today's close and printing a 490 point Dow day is as much the market trying to convince (and deceive) the masses as anything else. 

    That they didn't leave a more on the table to drive the indexes higher for tomorrow and future sesssions also indicates the Street's expected time frame.  It tells me that it's sooner, rather than later.

    My fundamental calculation is:  It's only a matter of time. Whether that's next week or next month. There is simply NO WAY that a return to reality with a hard landing

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  134. I have taken 100 percent loss many times.  I have also taken 500 percent profits often.
    It is your life.  You live it as you choose.  Some take it easy, try to within the quasi norm. 
    I am not one of them.  I live on edge since birth, and will do it until I leave this trash planet.

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  135. You trade like Jesse Livermore my friend - boy plunger :-)

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  136. Nah it's funny.  Moreso with the HAHAHA, but even without.  I know some people believe everything they read on the internets - not me. 

    HAHAHAHA

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  137. I believe you are right Brian.  I think someone was about to go under and rang the bell for a life line.  They do not want a run on the banks across the pond.  It's a dual crises, but related - the Sovereign issue and the banks issue - just a continuation of 2008

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  138. Well, I am thinking that this might be it. I am certainly not like Anon20 ready to put my last penny on it as there will be plenty of time to do that on the next move. Nevertheless what I am considering is that 1) the news is out of the way (further fed action would probably bring more fear than confidence), 2) there are no structural changes to the fundamental issues (sovereign debt), 3) except for the pre-opening futures news rally and the close on the equities the day was marginally uneventful, 4) other markets didn't perform as well (Euro, CL, etc.), 5) End of month is done with a blow off rally, 6) institutional money flow doesn't appear promising for a sustainable rally. 6) PL's KO line is still intact for the time being, etc.

    I am not saying that we have definitely put in the high but there are some things that definitely look like it. Anon20 is kind of the spoiler for me because the market usually moves to destroy those with that kind of resolve (nothing personal Anon20, you will either be a hero or a moron only the future will tell). Anyway for me I would think that if we hold here in this area we may see a very nice turn around with good momentum building as we fall. 

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  139. Anon20, since you speak of an impending apocalypse, the likes that none of us have seen in our lifetime, I am thinking you must have a fallout shelter of some kind.  Is there a way you can squeeze several of us in there with you?  I'm thinking it must be one hell of a bunker.

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  140. Never heard of this guy before, but one thing about his wiki bio made me laugh hard outloud--
    "On March 28, 1933, Livermore married 38 year old Harriet Metz Noble in Geneva, Illinois; there was no honeymoon. It was Harriet's fifth marriage; all four of her previous husbands had committed suicide."

    And I am still laughing at the moron.

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  141. Wow, you are a genius... IMBECILE.

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  142. Brian,
    Just be careful with the 3x leveraged ETF's because they all decay over time with respect to the  index that they track as Frank alluded to. As a quick example over a short period of time, the R2000 was 765  and TZA was 27.90 on 10/27/11 - flash forward to today where the R2000 was 737 and TZA was 28.20. In a one day decline from 765 to 737 that a 3.6% drop in the R2000 which should yield +/-11% gain in TZA which would put it at about 30.96. But because of the time decay over this period you are stuck holding TZA @ 28.20.
    Anyway, you guys may know that already, but I've learned from experience not to hold these things to long - few days max, unless of course you have a streak of positive days, then it works for you - but the bull and bear 3x's perform the same over time and eventually they head to zero. That's why they usually reverse split these things when they drop below $10.

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  143. And do note where exactly datewise he married this lizzie borden first rate beatch---right at the depth of the bottom of the 30's depression. 

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  144. More than can be said for you. 
    HAHAHA

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  145. This didn't do much more than postpone the inevitable. 

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  146. LilJudge,

    Very aware of time decay, but this is an IT position at best. We haven't had a wave down / correction yet. And today's close created a low cost and harmless 'space' between 1,247 and 1,238 for at least a 10 point pullback to occur.

    I tend to interpret HOD closes to be ST bearish. And especially with a 400+ Dow close. I do expect trade above 1,250 to happen though. Why would the Street not capitalize on another opportunity to sell to the masses? We got here. They'll surely want to make something of it.

    Buy IT and LT, I have time on my side. And I believe it'll be in my favor a lot faster than the decay factor. We'll see.

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  147. Listen to the hochberg audio from elliott wave international, he is Prechter's #1 short-timer for years, first rate, free audio that I have posted twice today, believe me, he knows much more than PL does, about EW counts---since PL always craps in his panties, everytime a wave smacks up  a bit further, than his ideal count.  EWI has had the grand super cycle correct for 30 years minimum, ever since I started reading them on occassion, back when Prechter was the only megabull analyst, believe it or not, in early 80's. 

    PL is a first rate ew analyst, if not I wouldn't be here, but, like every other 21st century "uber-happy entitled" american turkey, he is way too bullish on humanity, and especially americans. 
    300 yr. Grand super cycle for usa ended completely in late 2007.  end. kaput. gone.

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  148. Colorade; I agree. Looking at the 1-day BB the SPX has now almost reached it upper band (now at  1258). In addition, SPX is approaching the DMA (200)

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  149. Hahah.. as the saying goes... be careful who you go to bed with!   Livermore may be a great trader unfortunately he made big money but lost it all at the end.  WD Gann was able to keep his fortune (some 50+M in those days a lot of money).

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  150. Ah, Anon. Just when you get a 'get out of jail free' card handed to you, you take offense and hand it back. And with a backhand.

    Has it not occurred to you yet that for all of your freedom and liberation from all of the false and superficial enticements and chimeras the 'American' universe proffers, your choice and response is to retreat to within your own safe cell? You aren't truly a risk-taker Anon. Nor even a seer, though you do not lack for insight.

    It's a curious way to choose to confine oneself. But it is confinement and false invulnerability no matter how you choose to package and present it.

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  151.  
    A20- Where on earth do you get this stuff? Did I sound even slightly panicked today?  :D

    And yes, the difference between me and Prechter's team is that I consider the possibility that I'm wrong.  I'm not an uber-bear 24/7.  It's not that I don't think this grand experiment in Keynesian economics isn't a complete disaster: I do.  But the market doesn't treat uber/perma-bears well.  Even the worst bear markets have bull rallies.  And as Jesse Livermore said in Reminiscences of a Stock Operator (paraphrasing, because I don't have the book in front of me):

    A20, where do you get this stuff?  Did I sound even slightly panicked today?  :D

    The difference between me and Prechter's team can be summed up with a quote from "Reminiscenses of a Stock Operator" by Jesse Livermore (I would recommend this book to everyone, btw):

    "It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side. It took me longer to get that general principle fixed firmly in my mind than it did most of the more technical phases of the game of stock speculation."
      

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  152. Colorade; I agree. Looking at the 1-day BB (10, 1d) the SPX has now almost reached it upper band (now at  1258), but this is not the case when the BB are plotted on a 20, 1d scale.... In addition, SPX is approaching the 200-DMA (now at almost at 1266).  RSI is very rapidly climbing (58 now). The MACD is not crossing over yet, neither is TRIX (no IT buy signals yet). Somehow this looks like the early May 2010 pattern IMHO, though 200-DMA and 50-DMA are reversed now.  Then, the SPX broke below the 200-DMA, quickly reversed from ~1060 to ~1170 in a matter of 3-4 days depending how you look at May 8, touching the 50-DMA (which would now be the 200-DMA), but only to drop to lower lows in less than 2 weeks of trading. The SPX broke below the 50-DMA last week. 
    I might be wrong, as I have been now -like most of us ;-) - the last few days, but it just seems like the whole March-May 2010 pattern is repeating itself now, just faster.ps: this must have been one of the biggest 1-day rallies of of the past 2-3 years... surely being top 3 (for what ever that means)

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  153. This Disqus is weird.  That published all screwy, because I cut and pasted.  Fixed it.  :\

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  154. I agree w/ Frank.  I've always liked shorting the opposite inverse funds.  Problem seems to be finding shares available to short, some days.

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  155. Bot calls on SSO today and SLV. If we get a drop to 1229es and/or 1220 es I will add to SSO position. However, would not be surprised at a more shallow retracement.

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  156. I actually agree to an extent.  I think our countries leadership has lost its way, both morally and fiscally (and the two go hand in hand). 

    But more than likely, I also have quite a bit more experience dealing with personal pain, suffering, and loss than the average person of just about any *civilized* culture (there would be drastic cultural exceptions of course).

    I also believe I probably have more experience dealing with actual real-life Americans.  Not the Americans you see on TV from afar, or the stereotypes that are bandied about, but living breathing people. 

    And Americans as a whole are tougher than you think.

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  157. Funny, I didn't see the earlier discussion of Livermore and realize I was being topical.  Regardless of what you think of the guy personally, his book is absolutely brilliant.

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  158. Major issues here.  I am short and looking to bail as are many.  Few things we have a MACD cross down on VIX=Bullish, still not crossed yet on the other idexes yet but will be crossing to the upside soon unless a MAJOR negative comes out, and everyone is looking to buy the dip including me.  This dip should be shallow.

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  159. Regarding gaps, the only time I give them much weight in my analysis is when they're fairly fresh.  I don't think many MM's are anxiously awaiting their chance to fill a gap from 3 months ago.  I could be wrong, but I think the old saying "gaps always get filled" simply holds true because the market trades across the same price territory repeatedly.  Old gaps getting filled is an effect of price movement, not a cause, IMO. 

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  160. PL, I liked your post about the money flow.  After today's close I went to WSJ to check it out for myself. I was surprised to see +3,829.68 for the DJI avg and 11,599.49 for the float. What do you make of that? da Boyz gettin' back in the game, or just short covering?

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  161. Not sure where A20 is coming from. I don't find you in a panic. What I do enjoy is when you a give percent chance for an alternative count. Furthermore, your alternative count doesn't change you overall opinion but rather the timing, which considering the intricacies of trading may be more significant than the overall direction.
    I call it mountain vision. we can see the peak and it looks like a few hours hike, but what we don't see are all the peaks and valleys in between. My view is still 1000-1050 in the near term but will it head there tomorrow, Friday, Monday, or maybe next Friday? That is what we are trying to answer (You in particular).

    I went back to the overall picture in AD and I think that your assessment was correct. I believe this rally is a correction phase so a "double zigzag" (I think you called it) makes sense. However I was working off of the assumption that yesterday the high was in. It actually looks better now than yesterday when no top count seemed to fit well. I would have liked better action for today (post rally) so I am reluctant to say the high is definitely in, though I do think it may very well be. But as always I am interested in your view. I also wanted to comment on black swans. In my experience they usually show up just as the market is picking up downside momentum. We are a at least a few days too soon for that. IMO

    Finally assuming the downward move begins tonight or tomorrow, is it your take that momentum should build rather quickly or do you see this as a wind out of the sail snap back?

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  162. If the ST bear count is to play out, and I must admit it's hanging by a thread across markets, it might start off as a sideways "consolidation" looking move.  But if it's to be the blue 3rd wave, the momentum should build quickly once it starts rolling.

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  163. More of the same brand of attempted diminishment your critics will continually employ: go after you emotionally. And then say other ES practitioners are 'better'. Or they know more.

    Stop taking the fucking bait, Pretz. It only supports (without actually confirming) the emotional argument.

    The answer I'd have given Anon: Go follow Prechter's acolytes then, kiddo. Then get back to me about how that works out for you. If you want to argue with my counts, then stick to why you think they aren't what you'd consider credible.

    Which isn't what he's really arguing with.

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  164. It's tough to say at this point.  What it does tell me is that few were expecting this huge rally.  QE2 showed signs of accumulation, and was front-run before it was officially announced, so the big players knew about it ahead of time.  Clearly few knew this was coming, and it might make for a difficult market ST.

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  165. My problem is I'm a sucker for debate.  I haven't yet gotten my head around the idea of debates that have nothing to do with debating.   

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  166. PL,

    Like I have said before I do not post much.  However, just hang in there. Your posts are outstanding. 

    Daniel B

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  167. Interesting, because every market seems to look that way accept for the equities and the metals. (Dollar, Euro, Swiss Aussie, CL, Bonds, even HG)

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  168. Gotta run for a bit, bbl.

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  169. Brian,

    Well said. I bought TZA also and some FAZ. Good luck to both of us.

    Daniel B

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  170. Agreed... Major issues here. Also looking to bail ASAP. However to play devil's advocate.... keep in mind that the VIX  often marks a tradable top by a significant drop/relaxation. The market just gets real "quiet" before a big move. For example, look at the VIX on Oct 27/28.  The fact that the VIX dropped 9.3% today is....hell, I just don't know. But I do know that actual SPX price volatility certainly did NOT drop today.

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  171. Your not a 'sucker', Pretz. And yeah, that wasn't a 'debate'. Anon's saying that because he wants reassurance and a lifeline.

    And in his world, he abuses and demeans . . . and then you follow up with defenses and explanations which lets him know that your on the hook with wanting to help in the form of proving yourself. This is emotional manipulation 101.

    It only 'works' to the extent you are a party to it though. Which doesn't make you a 'sucker'. You're just operating from a different assumptive framework.

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  172. ANON20

    Listened to the interview. Hochberg was very definitive about what is coming in December.  Hope he is right.  Thanks.



    Daniel B

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  173. It is definitely one of the best trading books ever written.

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  174. OK, PL. Need you back to make sense of all of this... including what to do with all my shorts at the 1195 region. OK, ok, I know you said now was not the time to short. But it seemed right and I shorted yesterday and was looking for a nice low to 1150. Did not expect a high to 1248 :) We were going to ask your wife to wake you up earlier today, but then felt you could not have done much other than burn the money the beard was going to print. Look forward to the next update.

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  175. Unfortunately nummus, each option position (short-dated vs long-dated) (ITM vs. OTM) is has advantages and disadvantages depending on traders market view. I highly recommend familarizing yourself with option "greeks" and their interactions/interdependencies before trading options. If you are comfortable with a bit a math, a review of the Black-Scholes equation is a fast-track to understanding how various options will respond to changes in spot price, volatility, time, interst-rates, dividends, etc. Sorry, I know this isn't the answer you were looking for.

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  176. PL this is for the dollar bulls out there, let's get ready for a breakout.

    http://blog.kimblechartingsolutions.com/2011/11/cup-of-hope-for-dollar-bulls/

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  177. It's a little worrisome how many people here sound desperate for a pullback, makes me
    Think the upside will sustain and climb the wall of worry. I thought today was capitulation to the upside, but am surprised how many people held short through a 50 point day...

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  178. Truly, you would think. I am new to trading. About a month in and not many $$ invested. But it is the emotional investment. In reality I did not lose a lot because I did not invest much. But the hope was that I was learning and adapting. I am. What many of you have gone through many times, I experienced for the first time. Everyone was predicting a down turn to 1050. Maybe a small bounce before the big crash down. Check other blogs besides PL. Seriously, when we went sleep last night, did anyone predict a 50pt rally 2hrs into the morning or the last rocket ride up at the close. Does printing more money or making the $ available to failing EU banks makes sense to drive our (US) stock market up in this kind of rally? This is crazy. The EU is still going to tank. No wonder Anon20 writes the stuff he does. China bubble will burst soon, EU is going to he'll in a hand basket, the FED is printing money and the stock market had a 50pt rally. How nuts is that? Anyway, now looking back the first mistake was shorting "before" the down turn. Second mistake was not getting out early at 1230. Should have used those stops that were planned on my excel spreadsheet. So OK will learn and adapt. Give up some now and make it back on the return down. Learn and adjust!

    Besides, it's just a flesh wound.

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  179. "Head and Shoulders"? Looks like a set of butt cheeks to me :)

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  180. I would venture to guess that there were some big players who knew what was coming -- at least by  Friday, the 25th.   Something that perplexed me Friday (well okay, most everything perplexes me most everyday)  was seeing TLT drift lower all session along with the stock markets.     In hindsight, I'm speculating that there were enough players in the know who were liquidating enough treasurys to send prices lower in spite of the falling stock market, a plethora of bad news, the absence of an expected  Thanksgiving week bounce, and another approaching weekend of  "the financial world can disintegrate before Monday comes in the U.S." fear.   Of course, there could be other explanations.  

    Anyway, I'm still kicking myself for seeing something that seemed totally suspicious and not analyzing/thinking enough about it, especially when considering your Friday update that included "The market has been forming a fifth wave extension, and could see a strong
    counter-trend bounce soon" and some other factors.   And, then in a tired stupor moment of not wanting to play anymore selling a substantial long position (at a slight loss) at the close on Friday.    

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  181. Hmm. The Euro is rallying. I think that Italy is ready to announce that New Zealand is going to bail them out!

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  182. Click here: Traders Should be Shorting This Rally - Seeking Alpha

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  183. interesting times. just wanted to see a 'real' panic and crash asap. not like the 2008 one but more like an '87 one
     (-10%+). Seems its not on the cards for a long time to come. One  more weekend coming up and its time for "The great euro weekend soap" starring aunt merkel and sarkozy as main leads, also starring juncker, draghi, lagarde, etc. It wouldn't be a surprise if exactly before the markets open on monday, euroville announces 'significant' steps forward made over bong pipes at some weekend brussels den. There we go, add 5% across the board next week and the shorts  will be squeeezed to a big red candle.

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  184. Wow, this place has gone quiet. I think that there are a lot of discouraged people out there. Really friends, take heart. The next big move is around the corner and this will all be swept away into euphoria. You will triumph if you don't become feint of heart. One thing I pulled away from Livingston ( I read it many, many years ago) was that no matter what happened he always got up and tried again. So put on your rally caps or crash helmets because one way or another we are in for a great ride. Happy trading!

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  185. I think the shorts are out getting drunk to kill the pain.

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  186. WOW what an impressive rally/dead cat/whatever. Luckily I closed most of my shorts at profits Monday and Wednesday. And I even decided to go long in a security (NPN - Naspers) before the fireworks started and NPN was still more than -1.5% down. It closed the day over 3% up. Unfortunately my gold and oil shorts took me down more than that gain, but it did lesson the blow somewhat!

    I'm still up over 100% over the last 3 months, however, so still enjoying this roller coaster....

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  187. I'm around... just working.  I think most everyone else went to bed. :)

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  188. Moreso than most days, a lot of people today felt that these weren't their crayons.  I find this completely understandable.  :)

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  189. Amidst the equity market falls last week,  we commented on here of the likelihood of imminent central bank policy response to the credit situation emanating from the Euro Zone (EZ).

    The difficulty has been the degree of disconnect there's been between equity and credit. While credit markets were flashing DEFCON1, equity, despite the falls, was much more sanguine relatively. After equity rallied from the 1150 area, this disconnect became greater: EZ credit market strains showed no signs of easing.

    Hence,  looking solely at equity markets, it would have appeared that the strong likelihood of a central bank response had diminished (since they like to act at extremes of negative  sentiment in order to garner the greatest bang for their buck).

    It seems that, despite the equity rally from the 1150 lows, EZ credit markets were close to a dislocation point, with the systemic risk that would have entailed. Seen in that light, it's easier to view the timing of the central bank policy response.

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  190. Good post.  That makes sense.

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  191. The disconnect could have been resolved the other way - by equities tanking to bring them in line - if it hadn't been for those pesky central bankers...

    Another day!

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  192. Head up friend, your doing great. All will be great, I hear that Zimbabwe is going to bail out Italy. I hear they're flush with cash. ;)
    Seriously, I know your sick of hearing me say it but the key lies with Ad because it measures the fear of risk and also with crude because it shows the true state of global activity plus global instability. Global instability is at elevated levels and still cl has rallied very weakly over the past few days and is as I write this loosing ground. These two may not be the glory markets but they hold a lot more information than most realize. Copper too, more so than the precious metals or the Dollar or the Bonds. Just saying that as long as the Ad has strength the markets will find it hard to have a significant break down.
    Beaides that i hear we are supposed to get bitter cold and snow here, so take in some fresh tropcal breese and chuckle about how crazy some of us really are. ;P

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  193. Alright, alright.  I'll go look at aussie dollar right now.  :)

    I do watch copper fairly closely, as well as oil.

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  194. That does make sense.

    I think in the this particular case, what was going on in the equities markets had pretty much nothing to do with the central banks' intervention.  
    The credit market 'dislocation' and impending freeze up in inter-bank lending was enough by itself to make the CB's make their dramatic announcement.

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