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Wednesday, December 14, 2011

SPX and NDX Update: More Selling Still to Come?

While the market has been hitting all  my projections perfectly, every night I look at the charts lately seems harder than the night before.  There are a lot of possibilities on the table right now, and because it's been range-bound recently, the market hasn't given much relevant info for us technical analysts to work with.  So I'm going to present some "best guesses" today, along with some indicators which support them.

I'm just going to roll right into the charts here, because outside of patting myself on the back for my flawless record of "no QE3 today" predictions, there isn't much else to talk about.  The first chart I'd like to share is one which has nothing to do with Elliott Wave Theory, but is one of the confirming indicators I like to use to help point the way.

The chart below shows the Volatility Index (VIX), also known as the "fear index."  When the market goes down, the VIX usually goes up, and vice-versa.  This week, however, the VIX has been falling in concert with the market; and I mentioned yesterday that the majority of the time, this means the market will make lower lows.  There are two things I'd like to call attention to on this chart: one is that the VIX bumped into its lower Bollinger band yesterday, and the other is the fact that VIX formed a possible reversal bar on Tuesday.  The chart highlights the last six months of occurences of this bar, and shows that 70% of the time, it leads to a meaningful move up in the VIX.

 
If you compare the top panel to the S&P 500 (SPX) chart in the lower panel, you can see that 70% of the time, this signal is quite bearish for stocks.

So, now we have some probabilities to work with on the Elliott wave counts.  The first count I'd like to share is the one I'm favoring, and it's the most bearish possible count.  I'm using the Nasdaq 100 (NDX) to illustrate this count, because it shows an interesting fractal relationship between the current move and the beginning of the November decline (highlighted in yellow).


This count believes the "Santa rally" is over.  The bullish alternate count I've mentioned for over a month still cannot be ruled out, though.  I'm trying to take it day-by-day here, because the structure of the waves lately is somewhat infuriating -- and even though I've been nailing the short term moves of late, the market's larger intentions are still somewhat veiled.

On the NDX chart shown above, an upside break of the falling trendline would be first warning to be on alert for bullish potential, and trade above any of the second waves (the first level to watch is 2316.90) would be a huge red flag to that count. 

The next chart I'd like to share is at the request of several readers.  Apparently, a fair number of Elliotticians are now calling the decline an ending diagonal.  I have a problem with that interpretation, and the chart below shows why.  As the name implies, an "ending diagonal" comes at the end of a trend; and when we chart a market other than the SPX, we can see that this interpretation makes little sense.  The diagonal on this chart is the entirety of the new trend; which means it could be the start of a new trend -- i.e.- a leading diagonal -- but not the end of one.

The chart also illustrates what could happen if this is a leading diagonal.  Leading (and ending) diagonals are known in classic technical analysis as "wedges" and a breakouts often results in the market returning to the price level at the start of the pattern.  Significant new lows beneath Tuesday's should knock this count out of consideration; or conversely, an upside breakout above the red trendline would be fair warning that this was unfolding.


The final chart is my "best guess" on the short-term intentions of this market.  The tiniest waveforms are a bit sketchy, so use this however you see fit, or ignore it completely if you want.  My best guess is that yesterday's low was the bottom of the smaller internal third wave of the current wave, and the market still needs to form the fourth and fifth wave. 

The chart also shows how one could count the decline as a complete correction to fit the bullish alternate count.  The market has now traded markedly into the target zone for that count, and has fulfilled the requirements for a B-wave correction under the terms of that bullish count.

However, even if that bullish count is playing out, based on my VIX studies, the market still has a 70% probability of making new lows before forming a meaningful bottom. 


Please note that in the above chart, the 1230 target was already hit in the overnight futures session, and as such may be complete.  With this market, it's tough to say.

In conclusion, there has been nothing to change my long and medium term bearish stance, and the probabilities argue in favor of a short-term bearish stance as well.  Trade safe.

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

218 comments:

  1. Morning everyone.  :)

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  2. Thanks PL, I and my customers we are long on dollar and short on Euro: That's less volatility and of course gains than with market shorts

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  3. PL  Great analysis as always and the charts are early today as well.  Could shoot myself for not shorting SP500 at 1249 yesterday.  Not asking for investment advise but are you waiting for the market to clarify itself this morning before deciding which direction it will be heading or do you already have a plan for today?

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  4. PL,

    When you mention ES futures, are you still referring to Dec, or have you switched to March?

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  5. I'm planning on trading according to my "best guess" final chart, with tight stops, unless the market does something to scare me off it -- or conversely, convinces me to hold beyond the target zone on the downside.

    Already opened a small short position yesterday at ES 1225.25 (March contract).

    Obviously not trading advice.  ;)

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  6. I've switched to March now, but in the article regarding cash equivalents, it's really 6 of one, half a dozen of the other.

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  7. Futures looking pretty anemic now.

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  8. PL,

    Thanks for the update.  I have one more question from my last post.  Do you see a 3-3-3-3-3 sub-wave structure of the ending diagonal (C of (w) in the first SPX chart of your last post) in the intraday data?

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  9. It's pretty iffy, but it could be.

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  10. Had a sell limit open overnight for ESH2 for 1225 that filled.  Covered at 1217 when I woke up this morning (didn't have time to keep watching it).  Looking for another entry.

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  11. PM's in meltdown mode.

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  12. In your last chart (SPX) of today post, could the wave blue iii be subdivided as wave (i), then we may see wave (iii) of iii of 3 of (3) of big 3 today?

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  13. so if futures hit 1230 and we're bumping 1215 maybe the short trade is already over.... waiting for a bouncy

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  14. morning Pretzel and others...couple things I'm looking at -- USD (DXY index) has broken out through significant resistance at 80 - conversely, Euro broke thru key 130 this am-- gold has gone thru 150 day moving avg and getting ready for the assualt on the 200dma. Silver is in worse shape than gold. NDX through key support and vix at recent lows as Pretzel mentions this am. somethign rotten in Europe and hedge funds can't wait much longer for Santa rally.

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  15. Covered at the potential double bottom @ 1213.

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  16. Yep, could be.  I went with the conservative count.

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  17. Oil made a big break too.

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  18. Since Thursday last week, news couldn't have been worse for PMs: no ECB full-QE (yet), and no Fed QE3 (yet). 

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  19. I think vix is dying because of seasonality. The holiday season and low volume is killing it.

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  20. Okay, that looks like it might have been an abc correction up.

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  21. Yep, that was it.

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  22. HT,

    I don't buy the VXX going down on seasonality.....something else is cooking.....low volume....maybe, but didn't the VXX drop around that Thanksgiving Day rally...on really low volume????

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  23. Someone had posted the other day about speculation of HF Manager selling a bunch of calls to raise cash, and possibly anticipating decline in the market.  This could have the VIX calc (mostly options based) out of the norm right now.

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  24. If that WAS 4 and 5 in the last chart, the target zone was hit.

    Not completely sold on that yet, though.  That drop had some punch.  Glad I bought some March SPY puts on the morning gap fill. 

    VIX reversal looking good so far today -- that has big potential to run.

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  25. HF managers selling calls?????    they think the market is going down!!!!.......but that is not what they said on TV!!!!      :)     

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  26. PL,

    How do you play the VIX?

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  27. any chance we hit spx 1190

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  28. Back short at ESH2 1212.50, hopefully we're in wave 3 down on the 1 minute chart.

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  29. If NQ can't hold 2240 (today's low) it could crack *big*.

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  30. If bulls can't get something going here off 1215, 1190's a definite possibility. 

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  31. Pretzel, is 1210 on the cash market your bounce area?  worth going long there?

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  32. Crash potential in the charts right now.  I'd be real careful about trying to counter-trend trade this today.

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  33. Since SPX seems to have moved quickly through your short term projections, what sort of moves are on the table from here?

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  34. No guarantees of course, but the potential is there for sure right now.

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  35. Hopefully my reply below answers your question.  ;)

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  36. Commode-ities are swirling the bowl - gold's last stand @ $1600.

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  37. Yeah, you can trade it w/ the cubes.

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  38. It's the NDX futures contract symbol, NQ

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  39. my guess is the euro needs some short covering in the 129's, that was a major target...

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  40. Maybe.  If it doesn't get some, it's done.  Toast.  See ya.  It's walking the edge now.

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  41. Everybody take a look at the VIX chart again, and then look over to the far left at the circled reversal bar at 17.14.  Then look at the SPX chart beneath it.  That's the potential in the charts right now -- or worse.  Doesn't guarantee we get that, but the possibility is not unrealistic.

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  42. so if that's the case, from here where is a good point to go short?

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  43. There's no really clearly defined spot.  Charts are still a mess.  I'll try to keep an eye out and see what develops here.

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  44. im with you- just trading a bounce to reshort higher...

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  45. avoid the vix and VXX right now...I got my chance to get out this morning and I took it. VXX is up 1% and look at the market. It's hard enough to call direction with the SPX let alone with the vix which has a mind of its own. I doubt I touch that one again anytime soon.

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  46. financials are stable though...what gives there?

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  47. Great let me know when you see a good spot.  Thanks!

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  48. Right around here, one could take a crack at it, with tight stops.  This market's backtesting the trendline break at 1217/1218.  Watch it if it leaps back over, though.

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  49. Pretzel you are a good day trader.  Ever thought about opening a day trading firm? :P

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  50. The VXX play would be when the VIX spikes to 60+ then short VXX (or sell calls).  Even if the VIX stays high for an extended period, the contango sets up a nice time decay.  Not advice, but I've made nice profits this way.

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  51. agree completely, you simply can't hold vxx for any extended period of time on the long side

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  52. yeah, gs is green?? feels like rumor time...

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  53. Thanks, Frank.  I kinda already have one.  ;)

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  54. The flip side here is that now we have to watch out for that leading diagonal scenario.  What happens at this trend line backtest could be critical going forward...

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  55. Shorted at ES 1211 (March).  Gotta take a crack at it -- ready to cover if we get some momentum back above the trendline.

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  56. You are a good business man :-)

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  57. NDX looking like the weaker sister right now.

    Apple on the verge of a breakdown.

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  58. Got in at 1210.50.  Where does the trend line stop you out?  I was thinking 1212.50.  Looks like a potential H&S forming on the 1 minute ES as well.  If so, that would retest morning lows.

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  59. what odds do you put on an apple retest of 300?

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  60. Right in that ballpark.  This is one of those trades I'd be happy to get stopped and reverse, and then re-reverse if we breakdown again.  It's got big potential in either direction, so I'd be willing to take a few little whipsaws in the process.

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  61. Good Morning guysss.
    Financials are really holding up this morning, but its good to see a little red.

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  62. Seems to be trading nicely in an intraday triangle formation with low bias.  Could be a nice run down if it will break.

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  63. Eventually -- I'd say 100%.  Not promising it doesn't go up first, though.  ;)

    Everything is at big pivots right here.  Today/tomorrow will probably determine the direction for a few weeks.

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  64. There it goes.  If it follows the typical rules, could see 1196 from here.

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  65. gold thru 200ma -- below 1600 -- central banks selling to raise cash for bailout - NOT GOOD

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  66. Morning Fred and Mav.  :)

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  67. pretzel - any thoughts on where silver is at right now and potential targets?

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  68. morning all, potential support at 1185 down to 1175 depending on time

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  69. Ultimately, my next target is in the 26 area.  Haven't taken a good look at a silver chart today, though.  Too much other stuff to keep up w/ right now.

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  70. Got quiet in here...With all the action I guess people are glued to their monitors.  Fun day!  Moved ESH2 stops down to 1208.50.  Will get at least 2 points on this one, but setting new lows as I type.

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  71. PL, it seems captain Kirk is back from vacation at the holodeck.  Any idea what ST support I should be looking at?  I'm thinking here till 425?

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  72. could get larger support around 27

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  73. Pretzel, thought I confirm this with you: when you draw your resistance and support, are you referring to futures or cash market?  I only trade cash, and looking at your chart, 1210 will be the first support, and on cash we are not there yet but for futures, we have already hit 1207. 

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  74. I would consider holding that one for a few.  PCLN could be looking at low 400's to 380's.  Just took out prior swing low, and it's one butt-ugly looking chart.

    Not trading advice, of course.

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  75. Articles are always in reference to the cash market.  Usually when I post trades, it's futures.  I can start quoting the equivalent cash price instead, though, since most trade cash.

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  76. Funny too, I was just looking at that chart and thinking about ya.  What are your expirations?

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  77. Hussman's "Hard Negative" note this weekend was timely. As he wrote, he rarely makes such a call.

    Anyway, I've had to hold my nose and begin nibbling at Gold for my investment a/c.

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  78. AMZN just impulsed down through its august low. I am holding on tight to all my shorts until proven otherwise...

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  79. Bull stops getting run?

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  80. Yes, went off memory, w/out checking my own charts.  25-27 is the next target:

    http://pretzelcharts.blogspot.com/2011/11/quick-silver-update-thats-quick-silver.html

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  81. That will be very helpful.  Thanks in adv

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  82. I have learned to keep both charts open to better follow the prices you post.

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  83. I dodged the bullet by 2 days...as long as it doesn't go over 450

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  84. Ah, December.  You got a fair to middlin shot at hitting 435/436 on expiration.  :)

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  85. morning y'all and to PL particularly. Seems like 1190 and below is in the cards IMHO. Remember that nest of hurst lows somebody send you -PL- a week or two ago suggesting ~1000 around 12/21... that could have some valid value IMHO

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  86. I have Jan puts, but bought to far OTM.  Hoping to break even on it.  Too bad, would have been a great trade with a 400 strike.

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  87. Nice!.  If so, I'll finally emerge from the rabbit hole Ben put me in...and will be in the position to donate.   The bastard shook the tree pretty hard.  Nearly knocked me down.

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  88. morning,

    Yeah, market's walking the cliff edge.  We'll see if bully can stick-save.  December crash is a rare animal.

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  89. Thinking about buying some additional march puts here, any suggestions anyone?

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  90. Ben is a heartless bastard, fer sure. 

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  91. If we continue down, how strong do you expect the support at 1190 to be?  A pause or a corrective bounce?

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  92. PL; question: I have dec 30 puts. Will they expire the 21st like most/regular puts, or Dec 30th? I am not sure.

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  93. So is a crash in an election year (2008) :)

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  94. I also have AZO and CVI Jan's, so I have a little more wiggle room.  They look like they may be next to go.

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  95. I can't believe my triple leveraged inverse etf is only up 1.3% today, its almost laughable

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  96. First break of today's intraday resistance line here.  Are we in for a rally?

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  97. I have Jan AZO as well, looking for some movement on that one starting about now...

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  98. Story out speaking to Chinese re-pegging the renimbi to the USD (to help their own export market)is a big positive for the USD bull trade and not good for almost all other risk assets

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  99. ah banks....surprisingly resilient today. Only bank I am short here is DB.

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  100. Could be -- momentum seems to be slowing, and if my "best guess" count is right, then this would be the bottom end of the target zone.

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  101. Got stopped out at ESH2 1206.  Will look for another entry higher...

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  102. ah i see. Probably the reason why we haven't crashed, financials are resilient today.

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  103. Why are the banks holding on?

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  104. pl - coupled with the massive net short position, the euro is extremely over-sold, .. doesn't this lend itself to an imminent snap back rally to 1.335 or more?  at which point all risk assets would briefly soar (santa clause) as well? 

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  105. PL,

    If your Best Guess scenario is in play here, where does the bounce off blue v down take us back up to?

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  106. Quite possibly.  One thought w/ the Euro though is that considering the giant interbank flows, the COT "massive" short position may be less of a factor.

    But yeah, markets are all right at a huge pivot point here.

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  107. Hard to say at this exact moment, charts aren't a whole lot clearer than they were yesterday, just starting to look like this is still the 3rd wave -- so depends on where 3 bottoms here... but might get a little bounce at that level.

    This stuff is hard to call too far ahead of time in these rangebound markets.  Once I get a clear read on "okay, that was wave 1 for sure," projections will get easier and farther out, time-wise.

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  108. No clue.  I would think your account would tell you days 'til expiration.

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  109. Many thanks to btb for his fourth donation.  :)

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  110. Maybe 1217-1225 -- but I would think now that this is a fourth wave bounce, if and when it ever materializes.

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  111. With max of 1227.25 so as not to overlap wave 1 of (3) down?

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  112. That's a high probability play, yes.  Hard to imagine yet another 1-2 count forming here, so above 1227, the odds favor a higher move.

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  113. NDX still looking like the sicker puppy here.  Bulls need to reclaim 1245ish to get anything going.

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  114. Hey Juan, PCLN may try to backtest the head and shoulders break down. See chart. Be a great place to add shorts if one was so inclined. Clear stops above the line, and the measured potential takes it down to about 350. Screw triple inverse -- this is a great potential short right here.

    Not trading advice! :)

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  115. Thanks.  I doubt my broker will let me.  It's got me restricted to closing orders only after the beating I took, but I'm still here.  Damn the torpedoes!

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  116. Alright, I need to hit the hay, which is the cue for the rowdy types to show up.  ;)

    Watch out for a whipsaw back into the "diagonal" and watch that 1227 level next.  Trade safe!

    bbl.  :)

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  117. did it already get rejected?

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  118. This is one everyone should consider, hypothetically and all that.

    Not trading advice, of course.  :o

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  119. nite and thanks for the advice; I'll check my account for expiration dates etc!

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  120. Hasn't made it back.  Might not, that is seriously one of the sickest looking charts out there right now.

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  121. Thanks.  Get some rest.  You deserve it.

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  122. Pl, with NDX leading the down trend, is this yet another confirmation of the bearish trend in place?

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  123. EURO came back from the brink- i think thats a tell

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  124. I need a little help, with "backtest the H&S pattern on PCLN.  I think PL hit the sack (well earned), so could somebody help me understand a little better what exactly this means.

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  125. ive been short pcln since 480 :)
    350 would be quite nice :D

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  126. Here is a picture of something that reminds me of PCLN
    http://www.google.com/imgres?imgurl=http://www.sshs57.com/photos/JPEGS/08Aug2005/MinaretBackpack/Dave%2520Mammoth%2520Mtns%2520038.jpg&imgrefurl=http://www.sshs57.com/photos/050807Minaret%2520LakeB.htm&h=592&w=843&sz=190&tbnid=tMrPDdmoUBTzeM:&tbnh=92&tbnw=131&zoom=1&docid=7La4EV5_WWtSsM&sa=X&ei=lOLoTtrQJOnniAL965z0Cw&ved=0CFQQ9QEwDA&dur=9141

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  127. If it rallies to 449-450 ish, that would be a resistance level from which to short...one would think...not advice.

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  128. Rallies back up to test the "blue" line....and fails....then short......Thanks very much Juan!!!

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  129. have to put it on my places to visit!!!

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  130. Just got back online.  Anybody see this posted by a user Max Cherry at Daneric's site?  Compelling similarities, both in seasonally bullish months.

    http://img560.imageshack.us/img560/4020/martodec2011.png

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  131. Taking some flyers - bought some Jan calls on the q's.  They're either tripling or going to zero (or possibly both before expiration).  Tiny position, rolling dice.  Might consider selling if we get to 1226 and it looks like we're falling back down, or averaging down if we go lower and PL suggests a bounce in the next few days.

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  132. Can the bulls break 1227?

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  133. I see today's initial dip in $SPX as completion of wave 3 which began yesterday morning. Then today's runup as "a" of "abc" correction.  Opinions?

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  134. Yes, possibly just completed wave 4 of (3) down topping out at SPX 1219.88.  We'll see if this is indeed wave 5 of (3) that just started breaking.

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  135. Pretzel - Played your target zones over the last couple of days, did so conservatively, but made for a nice week so far. Thank you! Hit the button and looking for the next entry point....

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  136. Yeah, that's what I'm hoping for my qqq's purchase.  If we're in b down now, we'll get one more leg higher to about 1225-1226, then reassess - might get another push down to complete the fifth or might continue on for the wave 2 bounce scenario.  Of course, the market could just tank right here as PL is warning, so I think it's safer to remain net short or flat and see if we get to that level and see what happens next.

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  137. Michael, I think 1219 was the a of the abc correction within wave 4.  Currently headed back down as part of b.  I think that is what GC meant.

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  138. There are only two things to really watch -

    The Euro and Crude.

    All of the planet's macro is tied up in those two things.  All policy.  All business decisions. The big bets (which need volume opposite of what the position they want for them to take the position).

    Be very very careful.

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  139. key support broken in crude.

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  140. On the other hand, I can discern a fine, five wave structure on todays runup from 1211 to 1220, so maybe Michael was right: we did complete wave 4.

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  141. tug of war at 1214... i say we rally into close for max frustration

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  142. I don't think 5 sub-waves within wave 4 of a larger downtrend is common in EW.  5 sub-waves within a of abc correction I believe better follows the the EW rules.  What do others think?

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  143. Hi PL and friends, is this Christmas rally? let's have a look also at Oil, Gold and Silver

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  144. Crude watchers -check BOTH West Texas and Brent.

    Brent defending 104 at the moment.  If that fails then 100.  Convergence with West Texas is inevitable and will signal oversupply is being priced.

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  145. Meanwhile the Euro is attempting a cup and handle on 1.30.  If that fails then I think PLs preferred count sticks.

    All IMO

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  146. It's now looking like GC was right on the first call of the abc.  Looks we just started c back up now.

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  147. A backtest on Brent fails on the tick chart.  Give it 20 minutes - if < 104 then 100 is the last line.

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  148. Seems to fit an a-b-c (b) wave and now c up to fish the wave iv.  Could also be a i-ii of a bigger 2 up though I guess.  I would reassess if we hit 1225 or wait to see what PL makes of the price action tonight.

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  149. An hour to go, do the bulls fight back or do the bears win this onw???

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  150. .....and spx makes a new LOD.  Dow had made it 20-30 minutes ago.  Breakdown or sharp reversal ahead?

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  151. bulls going to try to push 1227

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  152. Wow, can't look away for a minute, massive engulfing candlestick up on the short term charts as I wrote that.

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  153. well, if they are going to push us up they need to do it soon, otherwise bears are going to come in and kill the close for some dramatic effect...

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  154. on a side note- its good to see some tradeable ranges intra day, that a change in character from the last few weeks...

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  155. Could complete c of abc in after-hours around 1225 as PL indicated somewhere in today's comments.

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  156. Yep, will watch and short ES if it follows through.

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  157. If we can stay below 1227, is the preferred count towards 1190???

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  158. Could be if wave 5 = wave 3, but I don't think that is likely, especially with the converging channel.  My completely uneducated guess would be 1200 since it is a natural support line anyway.

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  159. VXX driving me freakin crazy!  SPX down, VIX up and VXX flat!  When the heck is VXX going to break out?

    btw, is that a Cup n' Handle formation on the 1 yr weekly chart of the VIX or am I just reading tea leaves?

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  160. Hi Melissa, I do not believe SPX is in crash mode yet explaining the complacency in VIX.  I think it needs one more leg up, and then if it will break down, it will break down from there.  But I believe it needs to take one more leg up.

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  161. seems like we (almost?) finished wave iv of 3 today? 4 and 5 still to come, which would bring us in the 1200-1190 area.

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  162. I think we may have completed iv and v of 3 before 11:40 this morning.  Maybe now started back up wave 4.

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  163. this currency pair (Aussie/USD) looks ripe for the picking - low vol on options but big moves in RISK OFF event a la 2008. Looks like wave 3 is right around the corner.

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  164. I also think we almost finished wave iv of 3 today, which completed wave a, b and continued on wave c in wave iv.
    Therefore, we have unfinished wave c of iv and wave v to go tomorrow to complete wave 3.  Wave 4 and 5 still to come.

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  165. Euro banks downgraded, maybe that will take us down to 1200

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  166. Imo... We have crossed the rubicon. Hedge funds and long only managers were waiting and hoping for theyear end rally - hoping they could get paid some incent fee on their aum this year. That now looks very unlikely. In addition, redemption requests are high and everyone knows that Jan and Feb will be difficult given the 100 billion of bonds that need to be financed in Europe. So the buy the dipmhas now become the sel the rally. Funds have 7 trading days to raise cash for year end and be in a defensive position for Jan. no one wants to try and sell anything in the last weekof the year..look at what happened on the week of Thanksgiving! I think a minor retrace and then a waterfall.

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  167. 4 quick shout-outs today!

    1)  Michael R. for his *4th* donation

    2) A donor who wishes to remain anonymous for his *2nd* donation

    3) Dave, for his *2nd* donation

    and

    4) Joe D. for his first donation!

    My deepest appreciation to all of you. 

    All you guys and gals are amazing, and I really and truly appreciate the strong showing of support lately -- and all those who read and/or benefit each day in anonymity no doubt appreciate it too.  For lack of a better way to put this, every one of you who donates makes me proud to be a member of the human race.  :)

    Thank you all.  =)

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  168. Things lookin' pretty ugly across the board. Quick glance reveals the likelihood that we're still in a corrective fourth wave.

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  169. Quick correction: Dave's *3rd* donation!  Sorry, Dave, still refining my tracking system here.  I actually fired my secretary yesterday over a clerical error, then a little later I realized that I'm my own secretary... so I grudgingly hired myself back.  Hard to find good help these days... 

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  170. There does not seem to be a lot to hope for in the near term...the summit is over and the issues where kicked down the road...the Fed is holding tight for once and any suprise move would likely be in reaction to market events, not proactive...the earnings season is largely over and all " good news" with the US economy has been baked into current pricing...IMHO we are primed for a trigger as there is starting to be a " mainstream"  realization that the World is screwed and the glassy eyed Bulls are are starting to clean their glasses...my best guess is that near term trigger will be the  down grade of European Soverigns by S$P and followed closely by Moody's and/or Fitch's...that down grade should grease the rails ...My educated guess would be that S$P leads off, and over the next week the other grow the courage to follow suit...And then all will know that the "Emperor has no cloths"....the "mainstream" becomming aware of just how overleveraged the Euro banks are will flush out during the slide as the media starts to probe for collateral issues...then out of a short term bottom  say 4-8 weeks from now...King Bernackie will steathly ride to the rescue with a multinational rescue plan, claiming  that his recent Senate testimony promising "no bailout of Europe" wasn't valid because he did not sign the "no taker-- bakers contract"... and like October 4th, the masses deluded the spell of hope, will fall back into a trance and back to the trading range we go...anyway that's the bedtime story I have been telling my kids

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  171. Wh you callin ugly Willis?

    (Doing a Gary Coleman imitation)

    Which reminds me - tonight's torture music from NDXCLF are theme songs from 80s sitcoms

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  172. "Come and knock on our door (come and knock on our door)...
    We've been waiting for you (we've been waiting for you)...
    Where the kisses are hers and hers and his, Three's Company, too!"

    "Movin' on up!  (movin' on up)
    To the top!
    To a deeeeLUXE apartment in the sky-hi-hi
    We're movin on up!"

    Actually, I could deal with most of them... as long as there's no:

    "LOOOOOOOOOOVE!!!!  Exciting and new!
    blahblahblah
    blah blah blah
    blah
    The LOOOOOOOVE Boat!"

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  173. Many thanks to Kevin G for his donation!

    Thanks, Kevin.  :)

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  174. Hmm, futures seemed to jump on the China flash PMI, but are now a few points lower.  CNBC says its 49, final PMI in Nov. was 47.7.  Not sure what the 'expectation' was, but 49 is still contraction.  Besides two big caveats: its Chinese data, and the usual downward revision of official data.  ZH had a stat - I believe it was that 91% of this year's weekly jobless claims have been revised downward subsequently.

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  175. BTW, after finally breaking 2300 two nights ago, the SSEC broke 2200 tonight.

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  176. 2200 was my line in the sand for a 3rd wave down decline in SSEC.  That trend should stick for a while.

    btw-- gov't statistics are almost always revised down, under the theory that the average joe never reads the revisions, lol.

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  177. A quick shout out to Thuha N. for the donation!  Many thanks!  :)

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  178. Looking at the charts so far, I'm thinking 1200-1205 to finish this wave down, then a decent bounce.

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  179. Think we'll bounce to 1220+?  Trying to decide next ES trade.  I covered last night's trade today and also more tna short (down to just my IT core now).  If we have 8 points down, but then a 20+ point bounce, might wait and put a buy limit at 1204 [cash] (previous pivot) and a stop around 1198 (on the assumption 1200-1204 area will be defended by bulls).  Looking forward to seeing the falling knife-into-hand picture again PL......

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  180. For those who are interested in the black sticky stuff, check out this chart

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  181. Pretz- What's your take through mid Jan?  Will we consolidate for a few weeks once we hit 1200 before the next impulse down?

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  182. can't seem to post the chart.  but in a nutshell, Aluminium prices and Oil prices have traded in roughly the same manner until Oct when they started to diverge.  Oil has a lot more downside to catch up, but then again, imho, oil is much more difficult to trade compared to other commodities given the ME factor.

    another interesting post for those who are keen on VIX:
    http://vixandmore.blogspot.com/2011/12/december-is-cruelest-monthfor-vix.html

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  183. and now the chart appears...

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  184. L,

    OMG, you've driven him insane....PL's going to be humming 80's sitcom songs all night now.   What nefarious thing did he do to deserve such torture.  You are a cruel, cruel person!    :-)

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  185. PL,

    I'll piggyback on Blah's question, but I'll be blunt.  I'm holding Jan puts.  Not seeking trading advice, but am wondering what your take is on the bounce after 1200-1205.   We talking 1265, back up to test the 1290-1300 range or are you talking about 1235?  As I am sure you can anticipate my next questions.....after the bounce are talking about a waterfall decline or something less dramatic?......and, of course timeframe.

    I am sure your update will answer all my questions and anything you can't answer......would you do me a favor and ask the cat!   Hope you got some rest and thanks for all your work!!!

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  186. Does anyone know when the Spanish Bond auction is due?  I know its tomorrow, but is it early or late?

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  187. PL; Amazing technical work; Amazing blog, Thanks’ for sharing
    your knowledge and insights. I am learning soooo much from you and your
    impressive group of regulars, Thanks to everybody for making it fun and
    instructive. It really helps me navigate trough this tough market. My question
    to you is; you posted a chart mid November which you seem to be  impressed by the work even tough it is not a
    EW chart and this technician nailed the 11/28 bullish count and seem to
    forecast a 12/21 very bearish count’ Are you seeing this upcoming possibility
    also trough your charts?   

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  188. Just scanning through my chartbook here, and realized Silver just brokedown through a support trendline that goes back to 2009.  Very bearish development for the PM's.

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