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Friday, November 11, 2011

SPX Update: Crash Wave Ready; Confirmation Still Pending

There's been no material change in the counts since yesterday's update, however, I have narrowed down some possibilities for the current retracement rally.

(If you're new to the discussion, or to Elliott Wave Theory, it would be quite helpful to familiarize yourself with The Big Picture long-term market projections, which have played out quite well so far.)

The retracement rally off the 1226 print low has fulfilled the minimum requirements for a second wave.  While there are several options for the structure to take from here, two possibilities jump out at me as the most likely:

1) We have seen most, or all, of the Wave 2 rally.

2) Thursday was part of an a-wave leading diagonal (see chart, below).


I am slightly favoring the leading diagonal interpretation, simply because it counts a little better given what the market has revealed so far.  However the rally could also be counted as a series of zigzags, which makes for an unpredictable short-term outcome.  It reminds me a lot of the beginning of the rally off the November 1 lows; it's simply an ugly structure.  So the third option is that it will evolve into a similar type of rally as the previous one -- although, this being a smaller degree wave, it won't retrace as many points.

The critical knockout level for my preferred count remains the October 27 high of 1292. 

I continue to feel that the important support levels are 1215 and 1190 SPX.  If the bulls can't hold those levels, we will almost certainly see a rapid drop to the next meaningful support zone near the SPX 1000-1050 area.  This first leg down would then set up a much larger crash wave, which could ultimately take the SPX as low as the 400's.  The chart below reveals the intermediate picture, if these critical support levels don't hold:


The bullish alternate counts are still floating around out there at 20% odds.  However, given all the bullish sentiment; the fundamental mess the world is in; the double-failure at the 200 day moving average and head and shoulders neckline; and the cross-market comparisons I've been publishing for a couple weeks (the Dollar, copper, Apple, etc. -- Apple and the Dollar, incidentally, are so far performing exactly as projected.), I continue to have a difficult time viewing this as anything other than an important top.

As a result of all these studies, I believe it's highly likely this crash wave will occur, and am favoring it at 80% odds.  But it's not like I've never been wrong before (just ask my wife, she'll gladly verify this).

In any case, it's a bit of watch and wait right now.  The market is perched on the edge of a cliff, and what happens next could determine this market's future for a long time to come.  Trade safe.

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

178 comments:

  1. Morning everyone!

    (Except for those of you who, like me, live in Hawaii, where it's actually really late at night.)

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  2. What I want to see is a series of lower highs and lower lows before it gives way. I don't think we'll get a full crash because the volume has stunk, there is a lot of money in cash funds and the FED will enact another round of easing. Following that we can maybe get a better volume rally and a more pronounced drop - IMHO

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  3. Morning Vulture. You're always on early, where you located?

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  4. There was a ton of money in cash funds in '08 too. I remember hearing that the whole way down, all the "money on the sidelines" that was going to come pouring into the market. Never showed up, though. :o

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  5. I'm in Florida but I get up at 5:30 to workout etc

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  6. LOL, I love when I get these random bad prints from optionsXpress... I think it's something in the Java streamer. I just looked at the dollar, and there was this huge one-minute green candle up to 78.3 and I was like, wft, did Italy just default? Then I reloaded the streamer, and it was gone.

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  7. I think the bond market and FED are closed and it's generally a holiday so I suspect we'll see low volume drifting like yesterday. Italy vote is about all that's out there for noise

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  8. Yeah, not really expecting any fireworks today either. I might knock off early so I can actually get some sleep. Been killing myself lately w/ 3-5 hrs each night for weeks. Can't keep it up.

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  9. Pretzel,
    Yesterday I was a bit confused by your comments to stay nimble vs short and hold. Can you clarify this? I presume it is dependent on when 3 of (iii) of Minor 3 hits.

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  10. Looks like we'll test 1260 today. Those wanting confirmation will have to wait. Get some sleep, you've earned it.

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  11. Difference between now and 2008 is that the Fed was draining liquidity from the system in 2008. Trying to crash the system in order to help their banker friends get bailouts from the taxpayers, some say.

    Right now we are momentarily between QE's, but they are going to keep trying to print their way out of problems, no doubt about that. So we may have a market that will look like the S&P is going to 400 soon, but then suddenly they rescue the system with QE3 and everything starts coming up roses again.

    Josh

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  12. Looks like we may get more bull trap trading today, judging by the futures. Mr. Market seems to be saying: Don't go anywhere people, let's get another rally started.

    Pretz: it sounds like you are very ST bullish (for maybe a day or two). And then about as bearish as one could be from there.

    For me, I simply expect in the next week to retest the 50 dma just below 1,200 once this little rally is over and the next bad headline hits.

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  13. Spiker, yes, once the nested third hits (assuming!), it's pretty much a short and hold situation.

    I'm posting a super quick update on Crude Oil, I think it's about to top... brb

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  14. Oh, crude oil update, great. I think it looks toppy here too.

    Josh

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  15. I for one appreciate your excellent work... my gut has long told me that we are at the edge of an abyss at so many levels beyond the fiscal... stumbling upon your work now gives me the "ah ha" that the markets are the ultimate reflection of the human condition with all the faults and attributes of greed,hope,dismay and faith (to name a few)...thanks for the insight and God Bless

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  16. good morning guys. 6 am here on the west coast weather is 61 and cloudy with highs of 71 on the day

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  17. Still watchign the credit markets as the leading indicator or confirming indicator -- although Italian bond spreads have come in - that is mainly due to ECB intervention focused around the new issues that have and will be coming from Italy in the next few days. Keep an eye on the French yield curve. That will tell you A LOT. Couple things to note - France is in a recession -- S&P or Moddys - I can't remember commented a month or 2 ago that if/when France enters a recession - a downgrade would be highly likely - a downgrade to France would put the ponzi EFSF scheme into submission.

    Also - the MF Global situation and Jefferies situation are canaries ... every bank is currently tryign to reduce gross exposure to the PIIGS and France right now - and there are no buyers (except the ECB) - the "hedges" are BS - as shown by the Greek CDS - how is it a hedge if it doesn't protect you on a restructuring?? So - all those banks that claim to be "hedged" think again - gross exposures MUST come down whcih means PIIGS and France yields MUST go up which means Euro MUST go down which means DOllar MUST go up which means equities MUST go down... still bearish

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  18. So looks like we are going to break that 1251.82 level right at the open. Doesn't that imply we go to your alternate count from yesterday and we'll likely go higher next day or two? Maybe turnaround Tuesday begins the next leg down?

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  19. POTUS, lol... love the last sentence.

    Josh, crude oil update posted. The other difference between now and 2008 is if sovereign nations default, it will make Lehman Bros. feel like a Swedish massage by comparison. Fed won't be able to backstop the liquidity black-hole that will be left in the wake of the collapse. Not to mention, the US isn't in much better shape. I think the Fed is between a rock and a hard place now... as is the world. Everybody's already shot all their bullets, and the monster is still growing.

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  20. PL, my gut feeling (of current smaller, contracting, bull sentiment movements) is that what's coming straight ahead (next 2-3 days), is a similar structure to the prior abc you labeled, that took 5 days. But now, I feel the bullish movement are contracting, as it takes them less time each time, to come to that moment of panicking realization.

    Therefore, I feel there will be a repeat abc smaller structure, and timewise shorter (3 days instead of 5), and from a higher, happier spx "all is well in bull-land" place, than the one there is right now, at 1248, which does not feel "really happy bullish" enough to me, to incite the next major 3-wave drop.

    So I opine today will be an spx rising day (and maybe even part of monday also), with the spx finally hitting right under your upward diagonal resistance line, and at the upper end of your green rectangle (say slightly above 1270).

    I say this because this theorical spx1270+ print, would get the bulls' panties all drippy happy wet again, and it's what's needed, in terms of extreme sentiment, to get them just ripe for a record deep skrewin.

    So, based on your charts, my best guess right now is bear-rally up to spx1270+, to end by late Monday, or early Tuesday.

    And I feel strongly all commodities will fall right along with equities in w(iii), including silver and gold, and for a higher percentage drop. This will shock even more the hardcore goldbug diehard camp, whom, believe it or not, are even more wildly, extremely bullish on the (supposed) "safe haven" precious metals, than even the equity bull crowds, are on "cheap" equities.

    So I opine that when the dust finally settles, on this next equity major crash leg (at approx. 1000spx, I feel), gold price will also be in the $1400-$1500 area (a +/- $300 dollar drop), and silver to $25-$26 area (an $8 drop). And since I continue to see silver as the highest (and most unexpected) percentage drop, I continue to stick with silver, as the best short-play in town.

    ANON20

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  21. I would add to potus' comments that if Euroland does QE to try to save the EMU, that is also bullish for the dollar.

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  22. Anon, I actually nixed the nested 1-2 count last night when I was examining some other markets. My bad for failing to mention it in the article. I get so wrapped up in everything, it's hard to remember to mention everything sometimes.

    Yesterday's alternate count is now the preferred count. There, it's official. :)

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  23. Anon20,

    I agree, if gold can't get back up over $1800 quick, it's on it's way to 1400-1500. Definitely on the same page there.

    Yeah, I suspect we might see something like the last rally, and a nice fib 3-day-turn rally was exactly what I was thinking, one way or the other. Early structure even looks similar to the last one, as I mentioned in the article.

    Everything is lining up amazingly here, from currencies to metals to oil. If this setup isn't the real deal, I don't know what is.

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  24. Literally the only possible bullish condition I can imagine here would be investors fleeing the Euro into dollar-denominated stock assets (in potentially huge numbers). But I think even that occurance will be offset by the coming liquidity suction/debt implosion.

    However, I do have that scenario in the back of my mind -- if the charts all suddenly turn bullish in the near future. Right now, there's not much in the charts to give that scenario traction.

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  25. Should be some resistance here in the 1258-1260 area.

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  26. That was crazy. Futures were pointing to like a 120 Dow open, but we basically went straight up to 210. Likewise, 14 on the S&P became 21. Added to shorts here - hope we don't go too much higher.

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  27. Remember I posted in last night's comments that the dollar looked like it was in a b-wave triangle and wanted to head down toward 77? 77.42 right now.

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  28. Sounds like today's big gap up doesn't have you too concerned. I'm not myself. But it is curious to watch. Didn't think we'd be striking back up toward 1,270 just like that again. But here we are.

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  29. Headline on BB - "Gold Traders most bullish since '04 on debt crisis"

    It's getting more difficult for me to remain unemotional about the prospects for the short-side bet.

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  30. So depending on where the trend line is drawn exactly, it looks like we backtested it perfectly there. Hope that holds. Should have known we'd have a huge bounce with the bond markets closed - am always surprised by that - you'd think I'd have learned.

    Pretzel, could this gap up be the c that tops out wave 2 or does the structure not fit? Thanks.

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  31. AAPL in the dumps again. AMZN will soon follow

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  32. William, lol.

    Anon, yes, that's a distinct possibility. Might get one more fresh high to fully top wave 2, but shouldn't be *too* much higher if we do, maybe 1263-1266.

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  33. Although... I can see one scenario where wave 2 would top at 1275.

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  34. Jobless claims drop, consumer sentiment improves - its a new bull market !! Not sure if those are pluses or minuses to a bull case - the better they are, the less likely the Fed intervenes. Hmnnnnnnn

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  35. I've got nothing to add other than...UGH!

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  36. Pretzel, Great calls. OT Question: what are you seeing on AAPL, is the short term bottom in or is it going lower. It seems to be putting in some nice Support in the low to mid 380s. Thanks again for all your great work. Skideep

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  37. rare earth miner MCP falling off a cliff today

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  38. Rocky groaned - is that the all clear to add to short positions ? That generally signals a ST Top !

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  39. so either way, there will be a drop from now before we go higher?

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  40. Re: Apple. 372 ideally for ST bottom... although, that makes a c=a scenario on Apple, which means we make new highs afterwards... damn. The next few sessions across the board could make or break the IT bear case here.

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  41. TJ, yes we should. Elliott triangles have 5 waves a-b-c-d-e... but like I said, e is unpredictable. Usually overshoots to the downside and whipsaws... but sometimes falls short.

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  42. Spiker, YW.

    If we hit that upper trendline or come real close, I'll have to give that serious consideration, mind boggling as it is, and include it in the next article. The thing that's bugging me now is the three wave potential that's been bugging me since the first big drop. And I mentioned yesterday that I saw that potential again in the second big drop.

    Regardless of what I think of the state of the world, the charts rule, and I have to respect that.

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  43. Pretzel, thanks. any views on RUT?

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  44. The good news is, at least we'll know to potentially expect it and protect ourselves accordingly during the next drop.

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  45. Pretzel,

    Are you saying that alternate bullish count may be in play here?

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  46. If we don't break the upper boundary, looks just like 'diamond top' formation some other TA was mentioning. Looks like we'll battle it out at 1238-1240 again.

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  47. do you think the drop is happening today or next Monday

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  48. FYI, I timely recant on my earlier posted, 2-3 day final bear-rally scenario.

    Since these folks are so bullish right now, they are tripping over themselves buying and buying, with no worry at all. Therefore, IMO, they are already ripe for the kill, at any moment.

    It's the Santa Claus rally that makes them all so confident, I feel, a fat bull-rally they have all been promised, that makes them all so sure of big Christmas gift profits. And like kiddies, they are expecting great big fat profit presents; and obviously with no concern, for their current investment expenditures.

    Total euphoria buying, incredible. Because I expected some sort of concern today, some trepidation--yet I see none.

    Thus, this will probably end today. Probably today. I feel the big, shockingly unexpected turnaround is very near--and for all markets, except cash.

    Today feels like climax buying. An unjustified feeding frenzy, as though all the massive world debt had just gone poof, and disappeared, sending everyone into extreme joy. It's magically happy thoughts, just like with Santa.

    But equities Santa did not show up at all, in 2007, and apparently no 2011 bull remembers that. Since nightmarish Christmas 2007 is still a scary dark haze for all 5th-wave-type bullish folk, that they rather not recall it at all. Yet--they will remember Christmas 2011, forever. As Santa is once again not coming to town, nor in 2012, either.

    Therefore, I feel a turnaround is coming, within hours, from total buying exhaustion. Probably before day's end. Who knows, maybe a full island reversal, by closing today, which would be very bearish. Thus setting up potential for a nasty Monday.

    ANON20

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  49. This day LOOKS identical to the last time the stock market was open and the bond market was closed. I remember at the end of the day one of the smarter traders saying - that was enough playtime for the kiddies, the grownups will be back Monday and we'll head back down

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  50. Pretzel - does trade above 1263.21 mean anything here? An earlier chart mentioned break above 'good for the bulls'.

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  51. Why is Apple not rallying when the rest of the market is enjoying euphoria?

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  52. Vulture,

    And what exactly happened to the equity indexes in the days following the last time there was a run up on a day the bond markets were closed?

    Lots more fears and doubts about the bear case showing up again. Even from Pretz, who does have to consider every alternative.

    Today feels like a big buying holiday today. The fight will be back next week. If we cross 1,275 again, I'll add heavily to my put position, which I wish I had last time.

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  53. This market is a complete joke. Take it down for a couple days to get everyone to sell/short, then take it up overnight in the ES to trap them.

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  54. Yeah Brian - it generally seems when everyone screams - "I'm covering - see ya" - we get a gap down the next trading day. I guess that's par for the course. With the bond market closed, no-one can rotate money that direction so you're left to trade the equity market - it's the only open game

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  55. TRIN dropped to .56 shows overbought on NYSE.

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  56. yes, overnight is why this market is untradeable if you ask me.

    I don't understand what is sending the market higher today...maybe just shorts covering into the weekend.

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  57. Pretzel,

    Do you think it's possible that: since there are many trend following system out there that still bears that long term bearish sell signal. The market needs to squeeze those systems into a "buy" signal before reversing?

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  58. The good news about the triangle is, bears should get a decent exit if it plays out. We definitely should have another leg down even in that "bullish" scenario.

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  59. Pretzel,

    When you say new bullish count, you don't mean a bull market do you? Or just a different count but still leading to Wave 3 Down eventually? Thanks.

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  60. Anon, I have no opinion there. It's possible.

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  61. market is creeping high but so is vix since the open...seems to like 29 as support. that trend can't continue, one of the two must break.

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  62. Today has all the earmarks of a trend up day. Good day to stand aside and let the bulls punch themselves out.

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  63. Interesting observation Rocky,

    VIX is flat after the gap down open with a slightly upward inclination while SPX still advancing after gap up open. One must give.

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  64. lol, 11/11/11 at 11:11:11
    rally to the mooooooooooon!

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  65. Frank, NO, not a new bull market. It would just add another leg higher to the current correction; a C wave. If that happened, it would probably peak around SPX 1330-1350 give or take. Have to do the math.

    So, in the end, it would all be good news for bears, I think. We would know to watch for a reversal, we'd get a decent exit and not get burned with the rest of the shorts, and we'd get a chance to get short again at higher levels... not to mention we could even play the rally on the long side.

    I'm going to have to really dig into the charts this weekend. I'm not saying this is a given now, I'm just saying we need to respect the possibility and play accordingly.

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  66. Would be nice to get a freakin pullback at some point today so I could see some green on my screen instead of all this damn red !

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  67. Reading all your posts now, I am even further convinced, that the rally ends today. When even the most diehard bears are crapping in their pants, and considering going bull, it's when it all ends. Today, the end. PL, you did not read my prior post above, apparently, since you did not answer it. I recanted, and at length, over my original 2-3 scenario. Bull dies today, with a possible dramatic island reversal in the last couple of hours, just like on Oct.4, and with a scary overthrow, just like Oct.4. But the fear is on the bears side, this time, you should all re-read your posts, you are all quaking in your bear boots, even diehard PL. That says: reversal time, today.

    BTW, this is the reason I have never traded futures--I hate being stopped out, by slight (or large, as in today's case) overthrows.

    ANON20

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  68. The KO for that count would be the bottom of the a wave on the chart below:

    http://www.screencast.com/t/8hKSaKc81Sed

    I, personally, will probably consider exiting on the e wave and getting short again if we break below the a wave bottom. Plenty of decline left if this is the crash count. Not trading advice, of course.

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  69. I guess there is a thing called the rule of three.. maybe the SPX just needs to kiss the 200 day moving average one more time goodbye :-)

    ANON 21

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  70. Anon20, I did read your post.

    I just can't get away from my intial impressions now of 3-wave declines each time. I, personally, have to at least respect that as a possibility.

    But as far as today's rally goes, it should end soon enough one way or the other. Not worried about that, actually.

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  71. The other thing: feel free to fade me here.

    It's almost always the case that the moment I start giving serious consideration to a more bullish count, the bearish count gets proven right within a day or two. :D

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  72. Hmmmm. I'm not troubled by this advance at all. Given the way the ES played out and the bond market is closed today, and good headline news, this is a freebie for bulls. Why would the bear crowd put up much of a fight today. There's no point.

    I suspect the limitation to the upside today wont be any pushback from bears holding the line, but fears from the bull crowd about what happens next week, when the fight resumes. And next week is op ex week too.

    If I were a street pro, I'd be more than happy to spend the rest of the day selling to the gullible. And congratulating all the other pros who created the opportunity.

    Either way, I won't start worrying much until I see what happens by Tuesday or Wednesday.

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  73. Just an observation... since the 10/28 top the declines have been sharp and fast with no overlapping waves, while the rallies have been choppy with lots of overlapping waves.

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  74. CTP, yeah, I know. I'm probably just way too tired right now. I should probably just go delete all my posts and go the hell to bed.

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  75. LOL!... It is sometimes good to get away from all the minutia of every little squiggle for a while, Being away for a couple days allowed me to look at the charts with a fresh perspective again.

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  76. There. All better! I deleted a couple of 'em. Left a couple too. Forget I said anything. I'm going to bed, I'll look at this stuff again when I can think clearly.

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  77. Couldn't the recent back and forth action of the last two weeks be seen as a flag pattern? If so, there's a chance the market could gap up again on Monday and extend the run?

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  78. Also, Anon20, I'm not "quaking in my bear boots" lmao. I'm just respecting the possibility of an extended rally. I would see it as a blessing for bears who played it right, not something to fear.

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  79. I am still looking for something close to an all-markets island-reversal today.

    I consider today's buying to be manic, and a perfect turnaround day, for the shocking big bear leg down.

    ANON20

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  80. Here's the other thing... we are getting this feel good everything is fixed in Europe rally because of what? Because some technocrats are leading provisional governments is Italy and Greece and they will pass more Austerity measures. So, more Austerity measures = Good News? Really???... In reality the Austerity is what is crushing the PIIGS economies and sending them into deflationary debt sprial, so more Austerity is going to fix it? OK sure...

    The only real solution to the problem would be unsterilized and open ended QE by the ECB backstopping all the PIIGS debt WITHOUT preconditions of more Austerity. Anyone think the Germans and the ECB are gonna go for that? If you do then by all means load up on longs for the coming melt-up. Otherwise all these phony band-aids are good for temporary short squeezing.

    Sorry to go all fundamental, but really the charts are backing up this as well.

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  81. Alright, g'night all. I should have gone to bed about 4 hours ago. :(

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  82. Hey PL... FYI... Personally I find your site an excellent resource because you DO look at the alternative views. I tend to stay away from the columnists that are so sure of themselves and their views that they don't offer any alternatives, because in their minds their aren't any. As you pointed out earlier, the markets have a tendency to have a mind of their own... and often needs to see a shrink! I'm sure I'm not alone in this view. Keep up the good work!
    Dave in NorCal

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  83. Pretz, well done explaining what you see (potentially) and how to play it.

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  84. good article...

    http://krugman.blogs.nytimes.com/2011/11/11/crat-me-no-techno-continued/

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  85. Pretzel,

    Whether you are right or not eventually... I believe EW analysis is as good as it gets on your site. Keep up the good work. It's OKAY to be wrong. No worries.

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  86. They'll all approve austerity to get the $$ then not follow through on any of it which has happened before - the populous will push back - this is just on paper

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  87. Disregard the "shaking in boots" metaphor, PL.

    What I meant was the violence of this out-of-nowhere bear-rally, has every one here doubting the bear case today, and even had you looking for potential more bullish chart scenarios.

    Personally, I continue to opine an Oct.3-type reversal-overthrow today. Today´s manic assuredness feels like the opposite hand of Oct.3.

    So I still expect a large turnaround at the end of today, and even an island, just like on Oct.3.

    ANON20

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  88. Oh brother.. this is just all a circus. Austerity passed so they can get ECB to open the flood gate to buy up all their PIIGS junk bonds... then what?

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  89. Hi Anon20,

    Before the reversal there should be one more push to new high today methinks. Let's see...

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  90. If anon20 is right, this could feel a lot like Thursday the 27th. Maybe we tail off a little at the close then either gap down Monday or print a doji like the 28th then gap down on Tuesday.

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  91. Seems counter intuitive.. but why the politicians never think creation? Instead of contracton. Austerity is contraction... economy will keep shrinking further and further and deficit will never get controlled. Look at Japan is a good example. Their 10 yr bond yield under 1% and they have had two lost decades already. Austerity apparently doesn't help them. Don't they learn from history?

    How come no politicians propose things like let's encourage more startups and entrepreneurs to expand their businesses? Instead they tend to focus on businesses that are too big to fail?

    On a personal level, if I am already broke.. my way out of poverty is not about saving $2 a day on my lunches. One needs to think about HOW to make money, not save money!

    Sounds simple to me... but no politicians will do it. Maybe I am just too naive.

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  92. Get some rest, Pretz. The worst case scenario for anyone here is probably the S&P back at 1,245 to see a position back to even. Im on my iphone and away from my computer at the moment, but I'm pretty sure there hasn't been a single week since the Oct 4 lows that we haven't been below 1,240.

    My perspective is more along the line of Anon20's. Not sure if we'll get an island top reversal, but bears are going to sit this one out for sure today. And playing this one long from here seems suicidal.

    We'll know a lot more by Tuesday of next week.

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  93. So if we get a push past 1,265 today, I suspect it's only in the last two hours and with little volume just to get a nice big, green candlestick print and high close.

    I don't think this is bears holding things down so much as its pro bulls knowing they can still trap everyone who bought in last week above 1,265 (and which will include the hopefuls who bought above 1,250 looking for more) coupled with understanding that this is the time to unload shares, not add them.

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  94. Austerity is a word invented by statists and leftists to justify diverting money to government directed spending and away from the private sector, where resources would be FAR more profitably and productively directed.

    What a statist will never tell you is that government spending and borrowing is a tax on the private sector just like any other. It is a diversion of resources AWAY from where they would otherwise go. And in an entitlement and welfare society it is usually a diversion towards those who will produce nothing of actual durable value other than consumer spending for life's necessities. Which is NOT actual wealth creation. And even worse: consumption of resources rather than creation of them becomes incentivized.

    The actual healthy way out for these countries IS default that leads to the destruction of the welfare state and will also include a meltdown in the equity markets. Default ends the cycle of irresponsible vote buying that is backed up by irresponsible bankers who

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  95. The last hour yesterday and so far today seems to count well as a 5 wave c. If so, could turn lower at any point. Probably just wishful thinking on my part though.

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  96. So I'm lying in bed and thinking, if we have a THIRD failure today at the 200 dma and h/s, coupled with what all my other work has suggested, how on earth could we get a bounce off 1220 back to new highs. Charts might suggest it's possible, but it simply wouldn't make any sense.

    On that thought, I'm going to bed, especially since my wife is now really PO'ed at the hours I'm keeping. :|

    GL

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  97. I am thinking it SPX doesn't reverse here at 1265, it might euphorically inch its way higher to kiss the 200 day to tease the bears.

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  98. make the whole scheme possible. The reason the 'too big to fail' institutions are getting bailed out is because the welfare state NEEDS them to buy their bonds, which in turn enables the financing required for vote and constituency buying.

    Which exposes the utter fraud that any of these guys are actually looking out for the common man and 'little guy'. All they're looking out for is how to make sure that enough of those little guys are deoendant and scared and impoverished enough to buy 50.1% of the vote total.

    Austerity means contraction of government largess and spending. Statists HATE it. And yes, it DOES mean near term economic contraction. Because in a society where private risk taking is taxed to death and thwarted at virtually every turn, it's not going to just step in and fill the void of lessened government spending of money that was never created to begin with. Because it was simply printed or issued or borrowed.

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  99. This extreme two-way volatility is also characteristic of a topping market. TRIN now at .45 and market no higher than earlier, last buyers being fleeced.

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  100. brian,

    Aside from political biases, the stock market does NOT love Austerity, the stock market loves bailouts and monetary largess. Therefore is Eurozone pursues never ending Austerity they will see a deflationary collapse. If on the other hand the ECB went all in with QE monetization of the debt you would get an inflationary effect on asset prices and stock market would explode higher. The stock market does not care about 'statism' the stock market cares about liquidity and money. The more of it that is sloshing around the better for stock prices and vice versa when liquidity and money is scarce the stock market will implode.

    So, in that context Austerity is very bearish, while money prinitng is very bullish.

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  101. CTP,

    I think their only way out of it (at least kicking the can down the road) is monetization. This might delay the eventual collapse for now. But excessive QE will definitely stir up inflation, as can be seen in the unrelenting move up of crude and gold. What happens when you have excessive government debt and rampant inflation? That will be the eventual collapse right?

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  102. Yes. However, they can kick the can down the road for several years before things blow up. I am not expecting S&P 400 any time soon.

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  103. Austerity means contraction, while monetization means inflation. The two together creats stagflation and an eventual collapse. If not now, it will be later. Maybe the Fed and the ECB is thinking they can "delicately" keeping all the asset classes here in fine balance like a eco system. With no big movement in any asset class. That seems like that's what the market is doing. This buys them time so they can collect their golden parachute before everything implodes.

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  104. The frustrating thing for traders is to combat the status-quo intention of politicians and central bankers. We need to find the point of least resistance to trade to make a few bucks. Otherwise, if things trade in a range we need to have CTP teach us more how to do cycle analysis :-)

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  105. Frank,

    I hear ya ;-)... Much of what I do with cycles is the result of years of observation and backtesting, so unfortunately is is not something that can quickly be taught. But I will do my best to provide some nuggets over time if you keep reading my blog :-)

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  106. Thanks CTP,

    So many things to learn :-)

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  107. My position is fully set, so I have time.
    Like I've stated several times before over last 3 weeks (since I found PL´s solid work), I am going mostly against silver and gold, through their senior mining stocks. And that's because the total bullish euphoria there, is even more extreme (believe it or not), than the current equities "can't-miss" Santa-Claus rally-mania.

    I've traded stocks and options for 30 years, off and on, mostly as a hard contrarian. If anyone has questions about my trading choices, I will answer, and I will do it as my payment back to PL, and his rocksolid ew work (while he sleeps). I do this because his work has assisted me in my trading decisions over the last 3 weeks.

    FYI, I still expect an island reversal (or near one) today. A strong selloff into the close, IMO, similar to Oct.4, yet opposite hand.

    I set a target of 1270+ this morning, as one of the first posts above shows; yet, even I never expected, that it would be nearly be achieved, by mid-day today. Ergo, I strongly opine the market has fully "shot it's wad" today, and spx is ready to rollover and die very soon.

    Because if you know ew analysis, "big news" are wholly interpretational (by newscasters and so-called stockmarket "experts"), that solely regurgitate the obvious linear analysis---daily reported interpretations which, have nothing whatsoever to do, with true ew counts.

    In other words, the SAME one day's "big news" event, can be taken as positive one day, yet negative the next, because massmedia daily interpretation of events are only based on where you are, in the count of an experientially solid ew analyst--like PL has proven himself to be to me. And he did this by recently nailing both the short-term bottom on Oct.4, and then again, the long-term top on Oct.28.

    So we shall soon see if I am correct, and today proves to be a major reversal day, in lower prices for everything, except for cash.

    ANON20

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  108. Thanks as well CTP. Hope your blog becomes as big as pretzel's.

    Side note, pretty quite day today. very light volume

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  109. seems like it's all setting up like the Oct 24 - Nov 1 time frame. All technical indicators (MACD, RSI, SSTO) are moving in a similar fashion now as back then.

    Then the market went from 1292 to 1224 (almost 70 points drop; 5.3%). If we can expect the same monday-tuesday we'll be looking at ~1197...

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  110. http://news.investors.com/Article/591360/201111111158/Apple-iPhone-4S-Sells-Out-In-Hong-Kong-In-Hours.htm?src=HPLNews

    This article confirms my theory that Iphone even though they are selling like hot cakes.. but they are being "traded" like a speculative commodity nowadays. How perfect it conincides with the topping patterns on AAPL.

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  111. ps: AAPL keeps on dropping, even when markets are up... If AAPL is a leading indicator as mentioned before on this blog (and I agree) we know what to expect in the near future... (It has lost over 10% of its value since its October high... ouch)

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  112. lol, Frank and I are on the same wave length it appears... scary!?

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  113. Arnie: While AAPL stock never went parabolic, I believe Iphones and Ipads are going parabolic now in the Chinese gray market if there is such a chart :-)

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  114. This is my first post here, but I have been following PL's blog for about a month or so. As a novice I find the EW theory fascinating, and hope to use it as a stepping stone into stocks sometime in the future.

    ANON20, I've been reading your posts today, and I'm thinking we may be seeing the beginning of the final hour selloff as the Dow is now about 40 points off its high. Perhaps it's just a minor blip and the real selloff starts Monday or Tuesday. But equities have been trending down the last ten minutes, so we'll see what happens. It should be an interesting final 45 minutes!

    Pete

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  115. ANON20,

    Markets rally on news Eurozone takes steps to curb crisis. Markets plunge on news that Eurozone "still" are taking steps to curb crisis.

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  116. 5 min chart on the RUT looks like it's trying to rollover. We may get a little relief on the close and be under 1260 at the bell. I doubt anything dramatic happens in the last 30 though.
    Vix still holding its ground. Going to have to wait til monday to see anything interesting happen.

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  117. Yes the S&P hanging out around 1,265 and just below all day on LOW volume is rather telling. Pro bulls could push this up to 1,280 right now if they wanted to. Bears wouldn't spring into action to stop them.

    The reason they won't is because it'd cost too much and give all of us an ideal place to go short.

    But 1,265 is perfect. All who bought above recently remain trapped. And all retailers who bought above

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  118. 1,250 or so stay in hoping for more to come. And in the meantime they can sell off excess inventory. We may see an EOD surge to print a nice looking high, but don't expect the Street to spend a lot to do it.

    Most pros probably know they have a bond market spanking coming in Monday.

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  119. half hour left. I am surprised sellers are not stepping in yet. Though I am getting the rounded top formation I expected for the entire day.

    ANON20

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  120. this is actually a weak rally...vix really hasn't "collapsed", freeport and copper are pathetic, apple is crap. Holding short into the weekend against my better judgement.

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  121. I think your better judgement is probably sound here Rocky. The indicators all point to a 'logical' conclusion. There's no seriousness to holding these levels. It's not sellers / bears holding bulls off here. It's bull rationality knowing when and where to stop. JMO.

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  122. last 10 spx minutes, still a slow rounded top for the day. let's see if there is any breakout here, up or down.

    ANON20

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  123. prices jumped back up. they just won't let it roll over here!

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  124. Anon. I don't think the pro sellers are even
    around for this nonsense. Their firepower is better saved for the coming Sellers party next week. Expect a lot of today's bulls to be next week's bears. This seems an easy call and read.

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  125. I sure hope so. Painful being short today though.

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  126. Anon, buyers at tops are not usually so much 'exhausted' as they know when to stop. And you just don't stand in the way of an elevator that's about to fall. Lots of times they deliberately and consciously bring the elevator up there so that the 'fall' is just one hell of a lot more profitable on the way down. Meaning they are neither bulls / buyers or bears / sellers per se. They're pro traders who know wtf they're doing.

    Today is a raising the elevator back up to the top day . . . so that it can be run back down. Which is why they'll print an HOD close . . . but only for ten minutes worth of firepower. Watch the futures get propped up over the weekend too. It all creates the impression that all is fine and well. And more highs are coming.

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  127. BTW, how did no European bank blow up Wednesday when Italian yields blew out? Do they have to mark-to-market on a daily basis? I'm no financial expert, but seemed like someone would have blown up over there.

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  128. Lastly, many here mistake WS fund managers for wanting a 'Santa Rally' when I don't think they really do. As long as we close the year at a high then in the meantime large and predictable price swings are FAR more profitable than the sheer amount of money and liquidity required to sustain a run up.

    Think through the math here: what's worth more: every week up and down movements spanning fifty S&P points whee you make money on both the up and down stroke? Or one surge up to 1,330 where you get a one time 45 point up move and it costs enormous resources to get there. And it won't be maintained anyway.

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  129. I should clarify: I think WS wants a Santa Rally in the last three weeks of December. In the meantime I think the Street simply wants big but understandable swings. And between predictable ranges that allow for both sides to be played. That is exactly what happened all if August and September. Only it got a little TOO predictable. And nothing in the market stays the same anyway.

    But if I had to bet right now if the people who really run Street would rather spend the sheer fucking $$$ it takes to capture 1,300 . . . or run down to the 50 dma and below for a spell

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  130. Just a plain old rounded top finish, as though the world was normal. Incredible. The complacency is extraordinary.

    But, to call for a crash, as PL did today in his title, is also extraordinary. So, I still concur with PL. A crash is imminent. All the sentiment indicators, longterm and shortterm, are there to attest to it, plus a record overbought screaming high MACD on the 1-year spx chart, further confirms.

    And they have just become worse today.

    Probably, because that sort of extreme optimistic complacency, is exactly what is needed, to kick the teeth in, of as many bull and bears, as possible. That is the market, it always seeks to murder everybody. And especially at extreme counts.

    Next week, we shall see how far this rotted bull rubber band further stretches. Because with every market hour, it get's tighter and tighter. So I wholly continue to concur with PL's ew chart analysis, on sentiment extremes, and on overall market fundamentals. We are staring at the commencement of a major multi-century created bear.

    IMO, we are now down only to market hours, and not days, before all pricings break down, bigtime. And the probability of it being next week, has just risen exponentially, due to today's extreme manic buying action---when nothing has been done right, other than to create another spin story, in order to one more day further disguise, the existing stratospheric world debt; a debt that easily dwarfs, all historical prior measures.

    signing out.
    ANON20

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  131. PretzelLogic,

    I know this sounds crazy. However, if Italy and the rest of the Eurozone defaults not only will world financial markets tank but there also will be violent civil unrest throughout Europe, which could easily spread to the USA. The powers that be clearly know this. My question: Is it possible that the US Government gets involved along with the ECB and just bails everybody out?? I know this is crazy and this bailout will make the 2008 US bailout look like a garden party. However, how can the powers that be let Europe fail?? The US Federal Reserve could print dollars, buy Euros and inject the Euros into the economies of every European country. The banks would agree to a haircut and be recapitalized by the ECB. Is this crazy?? Enjoy your posts and look forward to your answer.

    Regards,

    Optimal

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  132. From Optimal. Anyone else please feel free to comment on my above post.

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  133. Eur/Usd driving this market in the short-term. Today Eur was up. Stocks were up more. We'll see what Monday brings, but stocks overbought. That doesn't mean they can't stay overbought short-term.

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  134. Optimal. There will be no US 'bailout' of the world. The political class already shot their wad there. And it made things WORSE not better. Asset prices have been artificially too high for a very long time. And we've been paying too much for pretty much everything. Like it or not, deflation is an inevitability. Because a fucking loaf of bread shouldn't cost you four bucks nor should a gallon of gas. Or should some crappy suburban house that is built to last twenty years cost $400K. Nor should you pay some guy who doesn't want to use his f-ing brain $55 an hour to put a car or widget together. Plus his pension and benefits to go with it.

    Prices of assets will fall first. And a LOT more than a fall in prices for labor and commodities and materials.

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  135. And prices of assets already have fallen a lot. But not enough. Assets are the underpinnings of the system and strucures that got us here. A decline in the value of those will bring down a nation's financial system, evaporate an entire nation's wealth and savings, and reduce an economy to: what's necessary, essential and important here. While the frivolous and overpriced gets inexorably weeded out. Because not enough people will buy your overpriced crap and nonsense under such conditions. It's called 'creative destruction' in Econ circles.

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  136. Brian,

    I am sure the politicians won't cut their own salary. Oh well, I guess the salary is only for them to buy snacks. They rely on campaign donations and other forms of compensation under the table.

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  137. Brianhut,

    Your point well taken. However, what about civil violent unrest?? If it comes, it will be ugly. There are 1 million gang members in the USA, all heavily armed. In addition, many respectful peolple will become desperate. Desperate people do desperate things. The world bailout is a desperate thing. However, the powers that be may see this bailout as a necessary evil to avoid a catastrophe.

    Optimal

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  138. What you suggest are fantasies and histrionics. The people you mention are headline news material with NO possession of either assets or wealth creation or the ability to produce or manifest value. Your assumptions fall simply on the fact that 99.9999% of Americans will NOT fall in with gang members, civil anarchy, nor simply turn on one another in the way you envision. Because that's not how we're really wired up. At all.

    What WILL happen is hoarding and protection of what asset value remains under one's control. That's what the bailouts were about, btw. It was hoarding in plain sight.

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  139. And hoarding done in the name of 'saving the economy' and protecting us all. What you suggest with US led and paid for bailouts is that we will finance and underwrite a financial system hoarding and protection racket on a global scale. All assets will be 'protected' and propped up by the existing resources and powers tgat be. Rather than be allowed to collapse and disperse and fall to their true value.

    True value will inexorably and mercilessly be found though. Just because there existed a ten to twenty year period where me were willing to assign a greater value to something than it was really worth

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  140. Brian I agree with your views. Govts and statists are at the root of the problems and all money they steal via taxes and misappropriate cost us all in the end.

    Saw this great quote today by Tomas Sowell:

    The poor are a gold-mine. By the time they are studied, advised, experimented with and administered, the poor have helped many a middleclass liberal to achieve affluence with government money.

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  141. Well, *IF* the preferred count is to play out here, I suspect we see a gap down open on Monday. Today may have been Bully selling the last of his garbage inventory to panicked shorts.

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  142. Boy I hope you're right Pretzel - held onto my shorts throughout today and over the weekend.

    Is it also possible we go higher, as long as we stay below yesterday's high of 1277.55 for the preferred count? Today kind of looks like a bull flag which scares me, though it also looks like it wants to just roll over here.

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  143. Actually, after looking at the charts a bit, I think it' more likely that we're in the potential count I suggested everyone watch out for in Thursday's article:

    http://4.bp.blogspot.com/-mRpWN_u3Qqo/Tru33ok8S-I/AAAAAAAAAhU/pRUPamjAUI4/s1600/spx+alt+5+min.png

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  144. Not sure I understand the chart you just posted and wanted us to take a look at from 9-Nov. Are you implying that we are going to move up instead of down.

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  145. I actually really like the potential there -- in the count suggested and shown Thursday (and linked above).

    Unless this is a bull market (?)(!)... show of hands if you're ready to jump on that bandwagon...

    But if that count plays out, it will pretty much fool everybody. Bears will cover, bulls will think it's a triangle breakout... then down we go.

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  146. Anon, it would stretch out this second wave up, but stay below the Oct. 27 high.

    Note that we the C-wave shown in that chart would be nearly complete, keep in mind that was drawn after Wednesday's action.

    If that's what's playing out, we could break out over Tuesday's high, yes, and then reverse... but if the preferred count is correct at all (and we're still in a bear market) we should definitely not break the Oct. 27 high.

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  147. We could easily be in, or soon begin, a bull market. This could be like 1998 where everyone panics and then the problem gets fixed-- at least for a year or 2-- this time by papering it over with Fed or European QE.

    Josh

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  148. There's just no way to know for sure, unfortunately.

    Tops are confusing processes... if you doubt that, look at how many people were calling "bull" on Oct. 27, then calling "bear" on Wednesday, and now calling "bull" again today.

    There's only so much you can do with analysis. It's not a crystal ball -- it's a Magic 8 Ball most of the time.

    "Signs point to yes"; "Answer not clear"; "Ask again later"; "Outlook good"; "Reply hazy" -- that sort of thing. And things can go from looking crystal clear to dark and murky in the blink of an eye.

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  149. Historically, sentiment is consistent with a top... doesn't mean history always repeats though. But, probability still indicates bear market, and that's really all we have to go on.

    If I start off with pocket aces, probability dictates I will beat 7-2 off-suit -- and you can be sure I'm going to go all-in on my opponent with that hand; and I'm playing correctly to do so. But that doesn't guarantee I'll win everytime. Flop could come 7-7-2, with a 7 on the turn, and all the sudden my "sure win" is a sure loss. Nothing's guaranteed.

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  150. PL

    You have done some excruciating work! I, for one, am grateful for your efforts. As you suggest, the market can mirror a Magic 8 ball with answers equally opaque. I hope you are able to get some rest this weekend and I look forward to your insight after you have had some time to digest this week's activity.

    Cheers

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  151. Interestingly, the dollar got the tag of the 77 level I suggested the other night:

    PretzelLogic said...

    Hmm. Not liking the action in the dollar right now. Looks like it's forming a triangle; possibly a B-wave, which could lead prices down toward the 77 level over the ST.

    November 10, 2011 7:47 PM



    It now looks like it might want to make a *slighly* lower low, so we might get a continued stock bounce on Monday morning. The dollar should hold 76.675 if the bull case there and bear case in equities is correct.

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  152. Anon, thanks. It is excruciating, so hopefully it hasn't all been in vain this time around.


    Here are the clues:

    It would be odd for this to be the smaller second wave at this point; it's unusual to get two retracements this deep in a row. I would be more inclined (at this moment) to think it is actually the c-wave of the a-b-c shown in the chart I posted Thursday. In other words, this is still part of red wave (ii).

    So if that's correct, Monday could see some continued rally before a reversal.

    I wish I had some more concrete answers for everyone at the moment. It was just one of those days that raises more questions than it answers. :(

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  153. ECRI (Economical Cycle Research Institute) have a US recession call since September, so combining this business cycle forcast and PL Elliott wave analysis, I believe the bear will
    prevail.

    Ray

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  154. Ray,

    Good point about ECRI, also notice how hostile the CNBC anchors were towards the ECRI guy when they had him on Monday. It was practically a lynch mob, they just didn't want to hear anything negative and were desperate to discredit his analysis...

    http://video.cnbc.com/gallery/?video=3000055854

    Reminds me alot of the Mark Haines interview of Peter Schiff at the the 3:08 mark of the video linked below...

    http://www.youtube.com/watch?v=Z0YTY5TWtmU

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  155. Pretz, I think Monday will see a temporary extend of Friday's rally (aka memory effect) and then it will start to go down to end ~LOD. Why? Looking at the 30min chart
    1) BB's have become extremely narrow: will be followed by rapid widening (see for example Oct 24-25, or Oct 28-31)
    2) MACD is at a top and flattened out (though not crossing)
    3) RSI is at 85 (over bought is >70, and not much more room to grow to 95+)
    4)SSTO is at 88,89 and been topping all friday (not much room to grow to 95+)
    5) CCI topped early Friday morning and has been steadily decreasing all day. Check 0ct 24, 27. Nov 4 etc for similar pattern and what happened the day after...

    IMHO there might be a little room to grow right into the upper end of your wave ii target zone and from there on it's going down!

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  156. CTPtrader,

    Thanks for the link. It is very refreshing.

    Ray

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  157. Over at my blog a new post with some contingency planning just in case we don't see a reversal lower early next week...

    http://ctptrader.blogspot.com/2011/11/just-in-case.html

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  158. smells like a bear market rally... :

    http://www.firstpost.com/investing/smells-like-a-bear-market-rally-its-time-to-wait-watch-129430.html

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  159. wow you can sense the animosity towards the ERCI guy. he definitely stood his ground though

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  160. Arnie,

    Just based on the waveforms in the charts, a little rally extension appears somewhat likely... but not guaranteed.


    CTP,

    I should pay more attention to myself sometimes. Remember back on Nov. 2 we were discussing whether the decline was an extended fifth, and what we could expect... and I said:

    "PretzelLogic said...
    CTP:

    Yes. Also the retracement after an extended fifth is often a complex, double retracement. So that could generate the confusion I'm expecting.

    November 2, 2011 2:15 AM"

    How prescient does that sound now? :o I think at some point I allowed myself to become convinced it wasn't an extended fifth and stopped giving weight to the double retracement.

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  161. Anon LS,

    I appreciate *everything* you mentioned very much! :)

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  162. The most important chart for next week...

    http://ctptrader.blogspot.com/2011/11/most-important-chart-for-next-week.html

    maybe Pretzel can do a wave count on $SSEC

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  163. CTP I have a count for ssec, I'll try to get it posted later.

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  164. Pretz,

    Cool, I look forward to seeing your count

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  165. Hoookey dokey, posted some charts of the Shanghai Composite.

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  166. After studying the charts this weekend, while it's always possible we roll over right at the open on Monday, I think it's far more likely we'll get some more upside Monday and roll either later in the day or Tuesday/Wednesday.

    I've just about got the weekend update ready and will post it Sunday sometime.

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  167. PL, you might find these 2008/2011 chart comparisons interesting. This guy from ETF Guide does not use ew, but he nevertheless comes to similar longterm conclusions as yourself.

    However, he is not a daily timer, so his work is of no assistance regarding next week, except to note that the bottom of the large 2011 h&s neckline should contain whatever feeble seasonal rally there may still be left to continue attempting to struggle upward; yet it's only simply delaying the large longterm downtrend similar to 2008, and not changing it.

    As for my own view, it's only a matter of trading hours, and not days, before the spx drops hard; and the longer it takes, the worse the drop will be. Have you made any fibonacci projections, as to what the first stop, of a 1-day drop, could be? Down to 1190, or 1215? Probably in-between appears technically correct. Psychologically, just above 1200 spx. That would be about a 70 point drop from these levels, or 6%, doubling the 3% 1-day drop from last week. I think that would be the top potential for a 1-day drop from where spx is now. Do you agree, or do you see as possible a 1-day break of the strong support at 1190?

    ANON20

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  168. here's are the charts and analysis--

    http://www.etfguide.com/research/705/8/The-Chart-That

    ANON20

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  169. Anon20-

    TY for the link.

    I would be shocked if the market took out the 1190 support in one day.

    Also, if you look at 2008, the biggest one day drop during any portion of 1 of (3) was "only" roughly about 40 points.

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  170. So you believe then, that even my spx 70 point, 6% drop in 1-day "crash" scenario above, is even too much a drop, as a potential fall for next week?

    So then, when you decided your title for your last 2 posts, that a "Crash Wave" was soon forthcoming, you did not literally mean a 1-day major event, but a series of days of mini-crashes, is that correct?

    You see, I lived through oct. 19, 1987 crash (and that was a 22.5% drop in only 1 day). Thus, to me, that day is what I measure the word "crash" by. (Additionally, the entire week prior to the Oct.19 crash Monday, the market was falling several percentage points nearly each day; thus, by the weekend, there was extreme panic in the newspapers, TV, etc., setting up the huge percentage fall on Monday).

    I remember now that I placed several stock buy orders in the premarket that day, at literally HALF the price of each stock I selected (just to see what would happen), and believe it or not, I got almost every order filled at HALF the friday-price of the stock; and the few that were not filled, happened solely because of broker error, since the volume was stratospheric that day, it was sheer mass pandemonium, and seller had to place just market orders, since if they didnt, it would not be filled.

    Probably the most extraordinary worldwide mass panic day I have witnessed. (BTW, I sold all I had bought the very next day, and for a handsome profit of a few thou, becaue even I didn't trust in that market to hold on to the shares even at half price, yrt I knew there'd be at least be a 1 day bounce, I could sell into. Besides, I had bought them mostly on margin).

    Therefore, whenever I read the word "crash" in an article title, I am looking for something really big (percentagewise) and longterm meaningful; and not just some small 3% fall, like the spx had last week. So I'd say at least a double of that, say 6%, ergo my call above for a dro next week to less than 1215, above 1190. Tell me if that makes sense to you.

    I am looking for what you ew techs call "the point of recognition". Or is that point still much further down the road, do you think.

    ANON20

    btw, took a look at the gold chart now, looks like it's zigzagging up abc style like the spx, have you looked at gold lately.

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  171. Pretzel, I have been following your blog for a while and am very impressed by your analysis. As a (fundamental) sell-side analyst myself I don't know much about T. But I do know how important it is to stick to your view if its backed by good analysis even if its not consensual. Well done!

    I had 2 questions/requests, if possible.

    1) You talk about mid-term target for the S&P of as low as 400. What is your rough timeframe here - 3 months, 6m or 12m? Also any other bearish (but not quite so) targets for next year (ie testing the 2009 trough)?

    2) I know you have a lot on your plate - but given your spot-on analysis of Apple. In Europe there is another stock where the chart looks pretty similar. ARM Holdings. Have a look at the chart of the UK listing in GBP. Its breathtaking. Was wondering what EW says about where its headed?

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  172. ANON20,thanks for sharing your experiences of the 87 crash. Quite interesting, and timely to the current discussion. I was in college and not watching the market back then.

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  173. Anon20,

    I am referring to more of a waterfall crash at this stage. The big crash you are referring to would be a bit down the line, in 3 of (3). This would be a prelude... more of a mini-crash to set up the big crash.

    As I said in the articles, I would look for the first trip to take us down toward 1000 over the next few weeks (assuming we can ever take out support here!), then a small bounce, THEN the big crash. Sorry for any confusion, but the body of the articles have described this.

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  174. Other Anon,

    ty :)

    Regarding LT targets, I would guess late 2012ish; maybe early 2013. Some of that is going to depend on what happens right here.

    I'll try to take a look at the chart you mentioned when I have some time.



    btw, everyone, Monday's update is posted, let's continue the discussion on that thread.

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