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Monday, November 28, 2011

SPX Update: Sell the Bounce

The markets finally got some relief from the selling on Monday, bouncing from within the target zone of the extended fifth wave count.  I am now favoring that wave interpretation going forward. 

Most of the rally work was done by the futures market, after a short-covering panic was sparked by the (apparently unfounded) rumor that the IMF was going to attempt to bail out Italy by holding a huge raffle and a bake sale.  The rumor came under suspicion when it was discovered that the first place raffle prize allegedly being offered (described by the IMF as "a beautiful summer home") was, in fact, the Vatican.  The rumor was finally completely quashed when Christine Lagarde held a press conference and vehemently denied allegations that she had arranged the purchase of "massive quantities of pie shells and marshmallows."  The IMF indicated that its annual Winter Carnival and Face Painting Event would still be held on schedule.

Despite my disappointment upon learning that my hopes of winning a beautiful new home had been crushed, I continue to expect that this bounce will be short-lived.  There are a number of reasons for this expectation, described in detail as follows.  The first is that the bounce fits well very within the expectations of the extended fifth wave count.  In fact, not only did the bounce come from the target zone, but the area indicated on yesterday's chart is exactly where the rally ran into resistance. 

This count anticipates there is still a little bit more upside left, with the preferred target range falling between 1209 and 1225 SPX.  This target range assumes that the move down yesterday competed the b-wave of blue wave 2 (see chart below).  It's difficult to say if the b-wave completed though, so a little more downside is certainly possible before we move above yesterday's high.

I should also note that, given the market's position, it would not surprise me if these counter-trend rally targets were missed.  If my big picture count is correct, the larger waves pressing down on this market could compress the smaller waves and create upside failures, as they seemed to do earlier in the month. 



Another reason to be skeptical of the rally is that the money flow yesterday was negative, particularly in large block trades.  This indicates that the big money players were selling into yesterday's strength, while the retail investors were buying.  Negative money flow on a 3% up day is a sign of underlying weakness in the market.  Below are the numbers showing yesterday's money flow:



The next chart depicts my preferred count's expectations of what could happen when the rally ends.  I believe we have only completed the first wave (blue 1) of red wave (iii) down.  The current rally is blue wave 2 of red (iii).  Blue wave 3 should follow the rally, and carry the market rapidly to new lows.  My medium term view has been, and continues to be, that the market will ultimately knock out the October lows.  If my preferred count is correct, blue wave 3 now has the potential to test the October lows all by itself, which means we could approach new lows quite rapidly after this rally ends.  And there would still be more downside to follow after another correction in blue wave 4 (not shown).


Sustained trade above 1225 would call this count into question, and would lend credence to the bullish alternate count shown yesterday.

Of some note, the psychology of sudden hope among investors and traders on Monday is consistent with a second wave.  Second waves at all levels are times of hope, either a little hope (such as in a small second wave, like now) or a lot of hope (for a larger second wave, like in October).  The next wave is a third wave down, and -- as I've talked about many times in the past -- that suggests a "point of recognition" is coming for the masses.  If my preferred count is correct, bad news will soon be received very negatively.

In conclusion, my expectation is that there might be a little more upside tomorrow to wrap up the snap-back rally.  But whether the market reverses immediately tomorrow, or bounces around for a couple days, I expect new lows below 1150 on deck very soon.  Trade safe.

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

174 comments:

  1. Do you consider big news events such as various Eurozone bond sales when making predictions, or is it solely technical analysis? Perhaps it weighs in on the likelihood of the given potential moves? I'd like to hear your thoughts and whether you employ methods outside of charting in your estimations.

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  2. I always look at charts first.  I actually arrived at my targets without knowing about the Italian auction you mentioned on the other thread, but when I read it, I thought, "yeah, that makes sense." 

    When the charts are ambiguous, sometimes then I will look at other things (money flow, Fed funds, etc.) -- but never news.  I strongly maintain that news is noise, and I think today was a great example of that.  The market rallied on news that wasn't even real -- but the charts showed it ahead of time.

    I think charts are a leading indicator, news is a trailing indicator.

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  3. PL,

    Oooooh, you in trouble.  Trying to sell the vatican!!!   Great work....and LMAO!

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  4. ty  :)

    But it wasn't ME trying to sell it, it was those nasty IMF scammers!  I don't make the news, I just report it.  :D

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  5. Good Post Pretz! I'm pretty stoked to see it all unfold.

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  6. Awesome post, your charts are so clear thanks.

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  7. Thanks mav and CO.  :)

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  8. Morning/evening PL.   On your 2nd chart, re the "textbook double top target 1150" comment, what were the double top levels/dates to which that comment refers? Thanks.

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  9. Oct. 27 - 1292; and the second week of Nov. - 1277. 
     
    One could also call the formation a head and shoulders, I suppose. 

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  10. There, I made it more generic to allow viewers their own personal charting preferences on what to call the top formation.  :D

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  11. Morning PL,
    Trying to get a better understanding of your wave count; which ot the indicators is primary the one for you that suggest that we just finished wave blue-1-V down and are now in wave blue-2 up, and that wave 1-V down is´nt wave (iii) down?
    Or is it a cointoss between that blue-1-V instead is (iii) - which i guess would be the continuation of the where your wave (x) has alt (ii).
    Is it some specific wave/ EW rule, between 1-29 nov that suggests to you that we just finished wave 1-V instead of wave (iii)? Or is it some other indicator?

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  12. Thanks PL! I got my bearings back on the big picture. The goal is to hold on to the shorts tight unless the bull knocks me off him over 1220s.

    P.S. Love the vatican reference. LMAO!

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  13. Hi Daniel,

    Some of it is the fact that red wave (i) was a brutal, screaming drop... it doesn't make sense to me that (iii) should be slower and more orderly than (i) -- usually it's the other way around.  Also, VIX didn't react the way it usually does to a third wave down.   But some of it's just my gut -- it doesn't "look" right to me as all of (iii).  Technically, there's no reason it couldn't be (iii).  It's more a case of gut feel and circumstantials.

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  14. On Italian banks and punters being urged to buy more BTPs:-
    http://ftalphaville.ft.com/blog/2011/11/29/769731/come-back-sovereign-feedback-loop/

    the best of luck with that....   :0

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  15. Very interesting.

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  16. I'm going to try something really different today.  Since I got the update done early, I'm going to try sleeping *before* the market opens.  Crazy you say?  So crazy, it just might work!

    I'll be back on near the open.

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  17. The liberties folks take around here...  

    :)

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  18. Gap and crap day - short the open

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  19. Hi PL, in September 1220 has been a recurrent resistence both in the intraday high and low, I agree with you

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  20. PL - First thanks for all you do here, really terrific insight.  Second, sort of a follow-up to my post last week regarding actions the ECB might take.  I understand and totally agree that ultimately the charts are telling us where we are heading.  My only real 'fear' here about being short is that don't you agree that we could see a massive rally (however short lived) that takes us to new highs if and when the market finally gets the news that the ECB is stepping in as lender of last resort?  Also, your thoughst on why the Euro is holding up so well?

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  21. PL - First thanks for all you do here, really terrific insight.  Second, sort of a follow-up to my post last week regarding actions the ECB might take.  I understand and totally agree that ultimately the charts are telling us where we are heading.  My only real 'fear' here about being short is that don't you agree that we could see a massive rally (however short lived) that takes us to new highs if and when the market finally gets the news that the ECB is stepping in as lender of last resort?  Also, your thoughst on why the Euro is holding up so well?

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  22. Actually, ECB devaluing the Euro would cause the dollar to go up and US stocks and commodities would get clocked

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  23. Thanks, vulture.  Again though, that should be the ultimate reaction, but it seems the U.S. market wants to rally on the initial news.  That rally could be devastating to shorts initially and that is what I am thinking about.  I am looking to short oil via SCO, but it just seems to me that the initial news could cause us to rally, SPX over 1300 before the news sinking in of "oh God, what have we done now?".  So it's really a matter of wanting to go short now in anticipation of the move down that appears imminent, but thinking it is better to hold off and short much higher?

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  24. Looking increasingly less likely that hopeful bulls will get the bounce past 1,200 that I thought they'd push for.  That assumed no major new headlines for the next few days. 

    Italian debt auction pushed yields up close to 8%, which should be no surprise.  And certainly signals that those screaming headlines will be back soon enough.

    There's little question in my mind that fund managers would love to unload more inventory to the naive and gullible up around 1,220 if they can get just pull it off.  And play keepaway from 1,150 into the end of the year, since its a long ways down further from there.

    Headlines this morning are trying to put a more rosy spin on things, but who's really going to buy it? 

    This was always going to be a sucker's rally anyway.  One that would depend on enough people to sticking their heads  in the sand and ignoring the unraveling financial structures across the pond.

    I'm not going short again just yet, since today doesn't look like it's going to be any kind of major move that I'll miss out on. And who knows, maybe the buyers can salvage something here.  But it sure does seem like time will run out soon.

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  25. Vulture, from reading your replies yesterday:  Seems we are actually in agreement about pretty much everything other than timing and price level that longs want to take things to.

    I viewed yesterday's trading as mostly just positioning and longs wanting to have a mini-rally to sell off more inventory from higher than here and reposition to go short over the next stretch of days (not weeks).  I very much agree that the next leg down is not far off though. 

    Not sure that the European news is going to oblige that agenda.  But I do think an additional leg up was well positioned by the close of trading yesterday.

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  26. The eur is driving all other asset classes, except possibly oil which has structural factors impacting the Brent/WTI spread.  It's up to 1.3348 from around 1.3310 at yesterday's close.  When that turns, stocks will follow.  As long as Eur has a bid, stocks will too.  I am adding to shorts here in anticipation of a turnaround later today or tomorrow/Thursday as per PL's charts.  Eur should face some resistance at 1.3350.

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  27. I decided to look up today the German DAX 5 year chart, and it looks terrible, even worse than the spx.
     
    Then I read the Reuters news below, re the S&P soon forthcoming lowering of AAA French bonds to negative, probably sometime next week. 
     
    And if you read to the bottom of Reuters press release below, you'll see that Moody is also now considering a "...downgrade the subordinated debt of a SWATHE of euro zone banks." (CAPS mine).   These eurozone banks all probably sport now razorclose greek haircuts.
     
    Then I looked at the French CAC 5 year chart.  ---  No comment. --- 
    CAC is very close to taking out it's April 2009 crash low. 
    And who knows what will happen after that occurs.

    I enclose the link to the CAC 5 year chart (yahoo).
    http://finance.yahoo.com/echarts?s=%5EFCHI#chart8:symbol=^fchi;range=5y;indicator=sma(50,200)+volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=off
     
    France is in a lot of trouble.
    (Probably not far behind Italy and Spain, even though they keep vehemently denying it.)
    (note that in list I provide below the Reuters article, France has a larger external debt, than Italy and Spain PUT TOGETHER).
     

    And when France totally collapses financially, Germany will soon follow suit, even though it seems impossible right now.
    (note that in list I provide below, Germany has a larger external debt than any other euro nation, other than UK)

    And when Germany falls, all of Europe FALLS.  Then, rest of world.  And all in a matter of just---days.
     
    I continue to strongly believe that the entire human race is very close to a major financial crash, that will be reflected in very large percentage drops of all indices, occurring in synchronicity, over only a matter of a few days.  And there will be no recoveries of any kind, once the bank runs and bank closures and major riots start.
     
    ------------------------------------------
     
    PARIS (Reuters) (6 hours ago) - Credit rating agency Standard & Poor's could change its outlook on France's triple-A credit rating to negative within the next 10 days, a French newspaper reported on Monday, citing sources, the latest signal that France's top-tier status is at risk.
    "It could happen within a week, perhaps 10 days," La Tribune quoted a diplomatic source as saying of a change to the outlook.
    The economic and financial daily said S&P -- which cut Belgium's credit rating to double-A from double-A-plus on Friday -- had planned to make its announcement on France the same day but postponed it for unknown reasons.
    The euro briefly dipped on the report, which coincided with news that credit rating agency Moody's could downgrade the subordinated debt of a swathe of euro zone banks.
     
    -----------------------------------------------------------------------

    for your further information, this is a list of the world's 10 most indebted nations,
     to OTHERS than to their own citizenry.  (from an 'investopedia' oct. 2011 article).

    Measuring External DebtExternal debt is a measure of the public and private debt, that is owed to non-residents.
    This list, also compiled by the CIA, gives a different top 10.

    1. United States $13,980 billion
    2. European Union $13,720 billion
    3. United Kingdom $8,981 billion
    4. Germany $4,713 billion
    5. France $4,698 billion
    6. Japan $2,441 billion
    7. Ireland $2,253 billion
    8. Norway $2,232 billion
    9. Italy $2,223 billion
    10. Spain $2,166 billion

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  28. This website scares the heck out of me but I'm glad I found it

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  29. Considering that over half of Germany's exports are to other Euro countries, the option of them leaving the EU is like suicide to their economy.

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  30. Looks like buyers have now decisively broken the neckline of the inverse head and shoulders formed on the SPX between Monday of last week and yesterday. 

    Add to that:  I'm sure that the Street's short pros necessarily WANT to stop this little bull party (at this juncture).  Not when laying off means an opportunity to go short again lies ten to fifteen points higher.  And all you have to do is hold off for another day or two.

    There's been lot's of kicking a bully in the balls lately.  Bears will have their chance for more of that sort of fun soon enough. 

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  31. Ok I just added a little more merchandize to my shorts list: BIDU and tiny bit of TVIX.  I hope I don't get crushed ANON20 :-)

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  32. Well that was a rather weak showing by sellers at a crucial juncture.  I suspect that for today it's all over for bears but the shouting. 

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  33. lol pretzel knocked out. i dont think hes coming back

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  34. In MY opinion, most bears will also get crushed, along with bulls, in a major world crash.
    Why?  Because you rely on a broker, in order to make your "huge" bear profits, in a crash.
    And, this broker, may also crash, go broke, scam their customers, default--not pay at all.
    MY opinion.  In the current world, you can rely on NOTHING, that has to do with others.

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  35. I did not write above that Germany would ever leave the EU--of course they will not, and for many more financially pertinent reasons, than just their exports.

    No, Germany will handhold the EU until the end of the EU, in a mutual westernworld suicide pact, most probably occurring in 2012. 

    After that, after the total world fnancial collapse, then all EU nations will revert back to their own borders, and their own old currencies.

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  36. That is when you had better have stored up your "B's" :-P
    Bibles
    Bullion
    Bourbon
    Bullets and
    Beans

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  37.  The upside here is I should be able to stay awake through the open now. :)
     

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  38. Welcome back captain.

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  39. I've thought about this point a bit myself lately.  Not sure if there's really anythng you can do to protect yourelf, or if any brokers provide any better protection than others? Other than buying physical gold and burying it somewhere.  Are you taking steps to protect your "paper" profits?

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  40. Not much interesting going on.  You could have had another hour of sleep.

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  41. Where did you get that money flow table?  

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  42. Gold bullions might be good ideas.  Trust me my family has been there before through wars, revolutions, and turmoils.

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  43. Hey, welcome back, Pretz.  Looks like the Street is determined to sell above 1,200 to the masses and reposition for the next rundown. 

    How high can they take it before folding again?

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  44. Added some spec AZO puts.  Put writers there are pretty confident of AZO's strength -- didn't even need Shatner to negotiate better prices for me, lol.

    Not trading advice.  ;)

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  45. I will wait till the bullions get cheaper before buying :-)

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  46. do you mean close there bud? :P

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  47. lol, yes.  More coffee is in order, apparently.

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  48. 1225 should be serious resistance.  If they can take it over 1225 for any length of time, I'll have to reassess my outlook.

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  49. This looks like a 4th wave now -- ideally 4 of c of blue 2.   Maybe one last push higher, then kaput?

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  50. Welcome back PL.  Your AZO news moves markets apparently, LOL.

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  51. Pretzel, you are like a famous hedge fund manager.  When you announced a short position the equity tanked :-)

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  52. Lotta big boyz in the red:  AAPL, GOOG, MS, BAC, CIT, AMZN, CSCO, GS, MSFT, IBM, JPM...

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  53. PL, what is your take on oil. SCO?

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  54. The Nasdaq is negative, bad sign for bulls

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  55. I expect Earl to test 90 next, after the correction is over.

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  56. Don't be scared, be prepared.
    And trust only, your own self.

    For what's coming, it's unavoidable.
    And it will make 1930's, look like a picnic.

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  57. lmao @ william & Frank  :D

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  58. Also--- Bombs.  Barriers.   Blockades.   Bazookas.

    And---most importantly:  Brewery.   And---Babes.

    ------------------

    As to Myself, I prefer J's.
    For My true name is--- Jeremiah Johnson.

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  59. It's weird being up at this hour w/ you guys and having some measure of brain function.   :o 

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  60. just got back on-line and wanted to ask why the NASDAQ is all red and why AAPL took a nose-dive? Sign's of things to come? Seems like the bulls lost the 1200 fight and maybe even the 1198. (already!?)

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  61. NASCRACK is the leader, so red Nas always bad fer bulls.

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  62. PL; Chrome doesn't allow me to thread-response (or show time stamps), but NASCRACK... lmfao, anyway glad I placed some minor-small-tiny puts at 1200.

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  63. 1.33 still looks key for the Euro. 

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  64. Conversely, bears don't want to see it up over 1.345.

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  65. on the same note, its also awesome you being here with some brain function.

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  66. I was about to make a wise crack about brain function (in response), then I was about to say that I found what soulsurfer was saying about Chrome and replying.   

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  67. Looks like EUR ran into some solid res at 1.345 this morning, DX continues to form a bottom here, and needs to hold if bears are going to get excited...EUR/DX will lead the way.

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  68. Chrome works for replying, you just have to find the button.  Highlighting the area around the post works.  I am now SORELY tempted to make a wisecrack about brain function here, as well.  :D

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  69. A great day after yesterday's slaughter. I closed one position at a health profit and one flat. The rest (all short) are now all back in the Green, except my Gold short that is flat....

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  70. Strange, considering Blogger and Chrome are from the same Googlesphere.  Oh and go ahead on the brain function cracks.  

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  71. lol -- But it's something to do w/ how Chrome reads Disquss.  Gets the colors wrong so the blue "reply" shows up black on black and you can't see it.

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  72. Looks like sellers are doing an impressive job holding things in the 1,198 to 1,200 area. Which is probably all they need to do to demoralize longs.  Seems the Street will have to console itself with selling at this level and positioning for the next leg down.

    Getting back to 1,200 has in actuality been a gift to bears and bulls alike. 

    I'm very likely going to put shorts back on at the close of today's trading.

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  73. I'd really like to see daaa bears get something going on crude.

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  74. One question Pretz:  Are we looking at another one of those 'fake triangles' with the way that today has traded?

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  75. Btw, nice to have you here for the close - I brought some beers, have one!

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  76. Looks like it.  It's WAY harder for me to tell on a short time frame like this.  The amount of analysis that went into calling that big triangle at the top a "fake" was probably 20-30 hours.  Hard to do that many cross market comparisons on an intraday triangle. :)

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  77. And lots of Biltong (South African beef jerky)

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  78. Crude a crashing soon :-)

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  79. brian, an hr or two ago I was thinking the same thing (looking then on my Iphone's finance app), as it surely looked like a triangle merging into exactly 1,200 at around 1:30pm ET. surely it did get there 1:26pm, but didn't break out... as we witness now.

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  80. So far Wall Street needs help from banks that with futures recover, I see bears around

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  81. Was just a 'for my education' question.  Overall though, buyers not being able to capitalize on the push above 1,200 looks awfully bad for even the ST scenario. 

    They did an impressive job in the late morning of shrugging off the first sellers' test of 1.200.  But it's been all bears since then.  Simply holding the range just below 1,200 has to be pretty demoralizing for hopeful longs at this point. 

    I'm just waiting to see what the last hour of trading holds before getting back in short in again. 

    60 minute stochastics have been rolling over since late morning, and the last time that happened from the level the 60 min Stoch is at now, the SPX fell from 1,260 to 1,215. 

    15 and 30 minute indicators just bottomed though.  I'd like to see them make one more cycle upward and to maybe take out today's open while we're at it. 

     Which would then make all of the charts rather congruent with one another and the atmospherics are right for bulls to give up any resistance. 

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  82. some see it coming: http://business.financialpost.com/2011/11/29/sp-500-sell-off-could-spill-into-2012-bank-of-america/

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  83. Yeah, this an extremely weak showing by longs so far.  The fact that sellers were able to create the 'fake triangle' at all sure doesn't look good for their cause. 

    Going into trading today, I thought that a break of 1,200 would be a foregone conclusion, with the larger question being:  what can longs do with it from there? 

    Looks like the answer is turning out to be:  Not much.  And that's all bulls are going to get. 

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  84. lol, ty jaco.  Still 9:30 am here, though!  :)

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  85. more "short" news (this is more ST than the LT BoA article -
    S&P 500 sell-off could spill into 2012-
    I posted earlier): "Merrill: Hedgies Sell Crude, Gold & Tech In Week; Keep Buying Dollar"

    http://blogs.barrons.com/focusonfunds/2011/11/29/merrill-hedgies-reverse-to-sell-crude-gold-tech-in-week-keep-buying-dollar/?mod=google_news_blog

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  86. This is my wision, thank's soulsurferusa

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  87. I have written in my blog that S&P500 will bottom to 1015 in 2012 just on Saturday the 26th

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  88. So far this morning, as Bugs Bunny would say, "I shoulda stood in bed."

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  89. This still could be a small 4th wave here, btw.  We'll see if da bulls can push it up to new highs.

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  90. Yeah definitely still a little early - even for an island paradise lol. We are as far apart as we could be; here it is just after 9:30 pm! Well only physically "apart" that is. As far as our views of this market are concerned, we are clearly not poles apart ;-)

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  91. You got that right.  I'm just checking in on the charts throughout the day, while mostly working on other things.  The market is doing its best-est to keep everyone guessing (again). 

    I still want to see how the day closes out.  And namely:  Are longs playing rope a dope with sellers and saving their bullets for the close?  Or are they just holding here long enough to sell more expensive stocks and position for the next decline? 

    The case for falling indexes sure does remain compelling over the IT and LT though.

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  92. If this is wave 4 - and the gap open was wave 1 -- then wave 5 should finish off around 1208 so as wave 3 isn't the shortest? You agree Pretzel.

    A20 - was going to buy ZSL to have a play on silver - but then I clicked the ad at the bottom of page and it told mne I was supposed to be buying silver 

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  93. You're brain function is definitely in question now, with the Bugs Bunny reference, as it is somewhere near my own.   I was actually going to post Marvin after you said "kaput" earlier.  

    I'm still waiting for the earth shattering KABOOM!!http://carton-clasic.blogspot.com/2011/04/carton-clasic-marvin-martian.html

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  94. Wave 1 could have been yesterday, from 1184-1188

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  95. You are supposed to be living your life, and making your own decisions, and paying for them, like all earthly breathing predatory existentials.  You want my opinion?  I just added to my gold puts, against senior goldminers, 'cause they were cheap.  More gravy there right now, than in silver miners, I took that position long ago, and holding.  At this moment, I consider silver a leading weaker indicator, and gold, a trailing (but following)  indicator.

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  96. You apparently need death.  When the kaboom comes, you will die.

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  97. The only problem is the Q-36 Explosive Space Modulator never seems to work right...

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  98. LOL, POTUS, I just caught that last part of your post.  :D

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  99. It's borrowed time, everybody has to go sooner or later.
    Some are waiting for 2012, others for the mother ship

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  100. Haver, have you ever looked at CAC40 5yr chart, as I wrote earlier at length, while you slept, I now consider France the leading tell.   France.

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  101. France?  A20, I might have to ban you again for even suggesting that!  :D

    Yes, I've been watching CAC.  CAC is the one that might present a problem for the ST bear case, actually.

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  102. ouch, this doens't look like a bullish close to me, unless "they" bully real hard the last 5min.

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  103. Can you explain you thoughts on that.

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  104. I have been repeatedly banned, for years, from much better places than yours, online and real, so ban away again, maui ew crazed dude.

    Interestingly, I always get banished, because I make people face themselves, which they do not like, at all.  So, what's your problem with France?  Old french girlfriend, that got away?

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  105. Well that was pretty weak by longs.  All they were able to print today was 3 points above the open doji, even with the headlines working in their favor.  Hmmmm.   I wouldn't expect a whole lot more upside from here. 

    I wonder if we just saw the 'Santa Rally' come and go?

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  106. Re: France CAC 40. 

    CAC sports 5 waves down from 2011 high, which means we should ultimately see lower prices there IT/LT.  However, France potentially shows 5 waves up off the Sept. low, and currently, it shows 3 waves down from the October high. 

    When I say "potentially" 5-waves off the Sept. low, it's because that move could count as a triple zigzag -- it's unclear.

    I've been watching it carefully to see what happens next.

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  107. That late afternoon rally may have been a truncated/failed fifth wave.  Need to see the today's LOD taken out to confirm, so we have to wait 'til tomorrow.

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  108. I think I see what your saying but I don't have a very good chart. Thanks

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  109. Euro and Dollar both got real sleepy for the last few hours.  The potential is definitely there for a strong move (up for Dollar, down for Euro) once this consolidation is over.

    Might see something break there tonight.

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  110. Please do - My oil short is hurtin the OL Bottom line

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  111. Ok, valid ew points you make, keep watching it, its probably zigzagging away, due to disseminated bs, about France being in good shape, when it is as bad as Italy or Spain.  And no caucasian wants France to go down, it's a psychological motherearth thing, the core of western civilization, probably it's heart---Paris, France.

    And what IF it's a grand super cycle w5 top in late 2007 for all markets,
     (instead of w3, as you uber optimistically currently chart?)

    Does that make any difference, in your current shorter term charting, of the cac40?

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  112. Euro finally looks like it is breaking down and maybe taking AD with it.

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  113. Mr Pretzel;

    I'm looking for your long-term SPX chart/wave count to put the current count into perspective. Can you direct me to the chart? Thanks.

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  114. WTF, dollar jumped 1200 pips as soon as I posted that about it being ready for a big move up.  lmao, I guess I need to watch what I say.  :o

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  115. No, the GSC wouldn't make a difference in that case. 

    And actually, few Americans would care too much if France's market/economy cracked.  :)

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  116. http://pretzelcharts.blogspot.com/2011/10/big-picture-spx-long-term-count-and.html

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  117. HAHA - S & P just cut its ratings on a handful of banks.  Lets get a downgrade of France and another shitty bond auction and it'll be tank city 

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  118. lol, that would be a typo.  :D

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  119. ES heading down AH.  May end up w/ a nice bull trap if that keeps up.

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  120. What happend to that impulse move down at 4:30 for EurUSD?  Is the bounce finished?

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  121. Looks like it could be. Should get an answer to that question tonight.

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  122. It's the Europe bitchez nothing else... Didn't you hear the world is saved, EZ crisis is over and we will have a bull market coming shortly.
    /sarc

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  123. Who is "bailing out" Italy this time?  New Zealand?

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  124. Why is that PL and Annon20. Appologies but this newbie is not sure how the CAC is effecting the ST bear case. Can your explain? Thanks.

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  125. Annon20, I think PL is kidding you about banning you.

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  126. HAHA - whenever there is some crap announcement from Europe on CNBC on my phone, it always takes them 2 hours to come up with any details and when they do its always - sort of a plan, not sure how much, maybe we'll see if the IMF can help.  It's more like they just enjoy issuing statements so it seems like they're actually trying to do something

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  127. The S&P bounce is done?

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  128. LONDON (AP) -- European finance ministers agreed late Tuesday to terms for two options to expand the capacity of the region's bailout fund to include bailouts for "anyone who needs them, including other planets in the solar system," according to a statement released by officials following a night of heavy drinking in Brussels.

    Under the first option, bond holders would get partial risk protection by being issued a complete set of Collectible European Leadership Cards backed by the European Financial Stability Facility with Ability and Agility.  Leadership cards would have "stats" for each leader on the back, including "Debt Incurred While in Office" and "Percentage of GDP Lost During Term."  A second set of "Hall of Fame Retired Leader" cards may also be made available, depending on how the program is received.

    Under the second option, one or more so-called co-investment funds would be created, which consist of bonds backed by hard, tangible assets.  A preliminary list of hard assets included: 

    1)  The Leaning Tower of Pisa.
    2)  Any coins found in the couches at the Eurogroup finance offices over the next few weeks.
    3)  France's collection of old Jerry Lewis movies. 

    Both options are expected to be ready for use sometime before the earth crashes into the sun. Also, president of the Eurogroup finance ministers Jean-Claude Juncker said ministers had agreed to several more rounds of drinks, funds for which will be available by mid-December.

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  129. PL,

    LOL!!!!!!!!!!!!!!!!!!!!!!!!!!!! All I can say. However, I do not say much anyway.  You are the greatest. Glad to be here.  Regards, Daniel B

    Regards,

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  130. Eur gapped up through 1.3350, es still down.  I guess the es traders don't believe the eur move is real, or there is stock for sale here no matter what.  Tomorrow should be very interesting to see what stocks do if eur remains bid up overnight.  If stocks can't rally on that, it's ovaaah.

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  131. Dollar starting to look like it might try for a test of the bottom of the potential trend channel in white.

    Equities rally was 3 waves, so it could *count* as complete, or they could turn it into something else, like a double zigzag (another 3 waves up after a correction).  That 1220-1230 area is so critical, I'd almost be surprised if it isn't retested.  I mentioned it many articles ago, but that zone has been a bull/bear battleground for a decade.  

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  132. On another note, the dollar decline off the high doesn't look impulsive.  It looks like an overlapping corrective mess.

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  133. Ty, Daniel, glad to have ya here.  :)

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  134. I'm too lazy to open Photoshop and do a proper chart, but you'll get the idea here.

    The dollar chart is a bit of a mess, but the rally earlier may have been part of a larger, more complex correction.  Dollar looks like it's forming a B-wave triangle, so it may break out to the upside later, but if it's a triangle B, it will eventually be retraced.

    This is one reason I'm thinking maybe we see a more complex correction in equities.  Hard to predict with a chart this messy ST (and I don't mean messy 'cause I was too lazy to open Photoshop).

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  135. HAHAHAHAHA. funniest thing ive read all day

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  136. i wish all of your charts were like this

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  137. lol i wish all of your chart were like this pretz

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  138. Don't tempt me, mav! :D

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  139. Have you looked at $ in light of the aussie. It strikes me that in order to have a real turn down in the equities you need an underlying fear of risk that is quickly reflected in a contraction of the Aussie. imo

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  140. That makes some sense.  I'll take a look at it later tonight.

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  141. If my count is right (and I am not saying it is), we have at least one more wave up in the Aussie. That is not to say that the equities will follow suit (they didn't last night) but Crude Oil probably will and the equities will probably hold until it is complete.
    Not sure why the Aussie rallied fundamentally speaking, but I am quite sure that the reason given (Italy's IMF pretend bail out) is crap.
    The economic numbers are all out for tonight and they were okay but not "I'm going to go to the outback and get bit by a boon snake" kind of awesome.

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  142. So now that we've seen today's buying weakness . . . it just seems so very, VERY difficult to imagine a significant leg up from here.  

    1,220 in particular *seems* pretty damn near impossible now.  As of yesterday, I thought the Streets bots and algos *might* be able to engineer a sucker's move to 1,220-ish to sell to the gullible.  But even the gullible don't seem to be buying it. The upside of any market is not just the push back from sellers, but the point at which buyers know that they can tread no further and hope to hold their gains.  Seems awfully likely that 1,200-ish is now that place.  Even if the Street was hoping it could be more.And since the market needs to move somewhere for anyone to make any money, and upward sure as hell doesn't look like it's going to be it, well that leaves only one direction.  And the path of least resistance . . . 

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  143. Seeing that I have this awesome innate ability to reverse the market with the power of my mere predictions to the opposite, I am going to go on record right here, saying I believe that we are on the cusp of the largest bull rally in equities ever. (sarc)

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  144. I really hope you are right, that come tomorrow morning the elevator doors open but carriage isn't there.

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  145. Apparently they spent their last hard assets on another round of Jaeger shots as the eur is dropping hard and es going lower.  But it's many hours until us markets open, tomorrow should be telling.

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  146. What gives! These stupid little support lines that I drew under AUD and EURO seem to be made out of concrete. Die you stupid markets, die already.

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  147. So far, the dollar has almost perfectly followed my scratch-paper path drawing.

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  148. Here is my AD count. I am a beginner so have mercy ;).  I know that my nomenclature is probably totally wrong, but heck you can't learn if you don't try, right.

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  149. I am also noticing some divergence in market action between AD and Euro over the last few hours. For the last 3 days AD would advance even when the Euro stalled but now AD is at the bottom of its range, while the Euro is rising a bit. May be nothing, but just an observation.

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  150. It's a good rookie effort.  :)

    The last wave of the structure doesn't reconcile, though.  Waves 1 and 4 cannot cross the same price territory except in an ending diagonal.  Depending on the larger count would depend on how I labeled that final wave.  Just looking at it without a larger frame of reference, I would be tempted to label it as either:

    an expanded flat: abc (as you have) for A, then a (where you have (1)), b where you have (2), and c where you have (5) for B, then the current wave would be C down.  The red 1 would be 3 of C, the 2 would be 4 of C.

    If you were to try and label it impulsively, it's a little more challenging.  This is why I'd need to look at the larger count.  I'd be more inclined to label the entire rally as a double zigzag correction at first glance. 

    It's almost impossible to do accurate counts without big-picture context, though.  Looking at the chart is a bit like turning to page 200 of the latest bestselling novel, and trying to figure out the whole story from that one page.  :) 

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  151. Cool. At the top I change it up about 30 times as it was developing. I also originally had it as a double zig zag but didn't know whether you could have a 5 wave count for each of the legs and it seemed cleaner with the 5 count legs. Thanks for the critique.

    I also did some big picture work but got a little tied up on some counts. When you do it one day I will be definitely be interested.

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  152. Zigzag is two 5's separated by a 3.  Double zigzag is two of those on top of each other, separated by a larger 3 (the x wave)

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  153. I have it all fixed up, and man do I feel pumped! Thanks PL

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  154. You gonna post it?  :)

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  155. lol- there goes the neighborhood.  Dollar staging strong breakout, as suggested.  ES down 13.  Euro 1.327.

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  156. eur/usd being hammered . 1.33200 to 1.32675 in 15 minutes flat.

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  157. Ooooh...  I think I see what the dollar was doing.  Dollar looks headed right back to 80.  If they can tack on a fifth wave, then that triangle will be part of a nested 1-2.  Looks like it's targeting 80 either way.  Then we shall see.

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  158. Nice! My shorts shall be happy! Still think we are going to retest 1220-1230? Given the intense selling upon strength today as well, and the minimum ABC (C=0.382A) correction requirement fulfilled for 2 of 3 down of 1 of 3 down, I feel like we are headed south again. Just my two cents. Can't wait for your opinion in your next post.

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  159. Just looked at the futes.  Not surprising

    Dollar breaking out and Euro dropping too, huh?Back down we go in the cash market tomorrow.  Where it stops . . . only Pretz knows.  Ha, ha. ;)

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  160. The dollar moving down never made any sense to me.  What you just posted sounds a lot more fitting with what one should expect.

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  161. Dollar chart's real messy.  What bothered me was the 3-wave rally earlier (well, yesterday for you guys) in the dollar.  I think that was probably a B-wave, though.  Like I said earlier, the equity rally *could* count complete.  

    One way or another, I'm sure we'll break the recent lows -- but it's a little tricky over the very ST... some things are simply beyond anyone's power to predict, such as *exactly* how a correction will play out.  Still have a lot of work to do, chart-wise. 

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  162.   The top formation on the Euro targets roughly 1.315 -- if they can hold 1.332 on backtest, next stop should be 1.315.

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  163. Euro now backtesting the breakdown, as is ES.

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  164. Euro backtest held, ES still screwing around at the breakdown.

    Interesting article here, TY to Lugnut for calling my attention to it:

    "China's Exports to Europe 'Falling Off a Cliff'"

    http://www.bloomberg.com/news/2011-11-29/china-s-exports-to-europe-falling-off-cliff-chart-of-the-day.html

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  165. China just cut rates (reserve requirement ratio).  Shanghai Composite had tanked today, and was testing lows of the year, so a response of some kind is not  entirely unexpected.

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  166. Looks like my first impression of the charts was the correct one.  Dollar looks like an a-b-c up now, and ES just went ballistic.

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  167. Wow add an instant 100 pts to the Ad and 50 to the Euro and stir briskly! What the heck happened?

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  168. I think it was Rolf's news -- although, it's really what I was seeing in the charts all night, just had a hard time believing it, especially with all the "peer pressure," lol. 

    But early on, I was talking about an ABC for the dollar, and a complex correction that tests the bottom line of the trend channel, etc..  Then I talked myself out of it.  :)

    Who knows, still 3 hours til the open, things could change again... but I doubt it.  Usually my first impression is the correct one.

    New update's posted, let's continue discussion on that thread.  :)

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  169. That's about the biggest rout to the upside that I can remember.  

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