Amazon

Tuesday, December 20, 2011

SPX and NDX Update: A Rally, or Just a Blip?

Yesterday, the market again traded right down into my target zone, but, as mentioned yesterday, there are now two solid reasons for shorts to be cautious at these levels:

1)  The alternate count suggested a bottom right in the target zone (as described yesterday).
2)  The wave down could also count as a complete impulse, or first wave (charts to follow).

Now, that said, the count I favor here doesn't believe the decline is done just yet.  It does, however, believe a corrective rally is due pretty much immediately.  Let's take a look at that chart (below)... the chart's a bit cluttered, but the move has reached a stage where I felt I needed to detail several points.

   
Let me stress here that this is a very, very difficult structure to label, and there are a lot of different ways to interpret the price action since early December.  I'm favoring this interpretation, but every system of analysis runs into limitations at times -- and that should be taken into consideration when placing trades.

This interpretation of the count can be knocked out with trade above 1231.48.  It should be noted again that the alternate count may very well have found a bottom on Monday, since the move off the December highs now counts very well as a complete a-b-c.  I don't favor that count at this stage -- but it remains a possibility to be cautious of, now more than ever since the structure no longer looks like it needs lower prices under that alternate interpretation.

The next chart I'd like to share is a completely different interpretation of the pattern on the S&P 500 (SPX).  I'm not favoring this interpretation, due to the internal structure of the wave marked by the call-out box -- however, I'm unable to rule it out because the gap down in that wave does make the structure at least somewhat veiled and difficult to interpret... so I feel obligated to call attention to this possibility.  This interpretation counts the move from the December 9-13 as a structure called a "running flat."  Under this interpretation, a larger second wave rally should now unfold.

I favor the first count shown over this one, by a margin of 60%.




The next chart I'm going to share is the Nasdaq 100 (NDX), and this chart is one of the reasons I'm favoring the SPX interpretation shown in the very first chart. The NDX seems to argue that this wave is not complete (barring the alternate count), and that would indicate that the SPX still has more downside left as well.  However, if the NDX trades above 2292.15, it’s all but guaranteed that the bullish alternate count is playing out, because that would create overlap of the first and fourth waves, and lock-in a very clear a-b-c pattern on the NDX decline.

Another reason I favor the first SPX chart, and the NDX chart below (which is essentially the same count), is that Monday was a major distribution day, and declines seldom find meaningful bottoms on such action.

 
This wave has been very difficult to track (and I'm frankly a bit amazed my targets have hit non-stop going all the way back to the week prior to last) -- but maybe that's the way it needs to be at this stage, if the preferred count is correct.  The market almost never makes it easy.

In conclusion, I remain long-term bearish.  The short term is a bit of a muddy picture at the moment, but I'm favoring the view that the market will see some type of brief rally at this stage before going on to make further new lows.  It pays to be alert to the possibility that I'm wrong, though, and trade above 1231.47 SPX would indicate that my favored interpretation is incorrect -- it's been a great run, so maybe I'm due for a flub.  Trade safe. 

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

211 comments:

  1. So, no chance for a 3of3of3of3....with an overnight gap-down, which keeps open before ending the move (maybe crash) down?

    ReplyDelete
  2. Have you looked at the futures?  Gap up,  not down today.

    ReplyDelete
  3. i mean..for the next days..probably tomorrow..

    ReplyDelete
  4. Morning.  Amazed as usual at the accuracy.

    ReplyDelete
  5. It's possible that we're forming more 1's and 2's... but I think it the less likely possibility at the moment.  If you look at the red 2 in the NDX chart... after that wave is when a crash becomes more likely.

    ReplyDelete
  6. That makes sense with the holidays being out of the way...timingwise

    ReplyDelete
  7. Good morning. It looks like the SPX might pop right up to the top of the channel in the first chart. A "pop and drop" scenario? Can it "complete" the (iv) wave in one impulse like that under EW theory?

    ReplyDelete
  8. Thanks!  I'm guessing though, that despite me really trying to overdo it with warnings in yesterday's article, that a whole bunch of people stayed short after we hit the target box.

    ReplyDelete
  9. Guilty as charged.

    ReplyDelete
  10. The fourth wave here (assuming that's what this is) is more likely to complete a complex correction, since wave (ii) was a simple zig-zag.  I should probably actually redo the chart to illustate that.  BRB

    ReplyDelete
  11. I'm short, although I should be in cash.  The problem is that I'm stuck with the constraints of my broker.  If I close my positions, I won't be able to open new positions online due to the minimum margin req's.   

    ReplyDelete
  12. morning PL! nice work! looks like a huge gap up today (SPY up $2), gap and crap or run away???

    ReplyDelete
  13. There, refresh and check out that 1st chart.  That's a more likely structure for a 4th wave.

    ReplyDelete
  14. will this market ever become a short and hold..

    ReplyDelete
  15. PL; any (substantiated) trade above 1230 and we may see 1250 area, right!?

    ReplyDelete
  16. It should eventually, but when that time hits, there will be much less uncertainty about trend.  I keep trying to tell everyone that there's no need to try to catch every move every day.  When the big leg down hits, you'll be able to jump in after it's already rolling and do well.

    ReplyDelete
  17. Gap, retrace, up again, then down.  Ideally.

    ReplyDelete
  18. Yep, or higher, if the alternate count is in force.

    ReplyDelete
  19. btw, for anyone who was reading the other thread, I got stopped a while ago for negative 2 and am now flat.

    ReplyDelete
  20. There's the short buster I was worried about. Scaling in short at 1225

    ReplyDelete
  21. Problem is, now there's going to be a lot of cash shorts stranded unless the market reverses pretty quick.  Shorts = rally fuel.

    ReplyDelete
  22. Let's see if they can take out 1232 first, though.

    ReplyDelete
  23. looking at your black trend line, 1228 would be the fight zone?

    ReplyDelete
  24. Yep, putting on a few myself just now at 1229.  Close enough to my KO to bail if needed at minimal loss.

    ReplyDelete
  25. Good morning.  Here's the Jupiter energy I wrote about - lots of hope in this energy, more hope than reality.  This should run at least to Friday and probably all the way into Tues 12/27.  It should get a reality check before 12/29 when there will be a revisit of "But, hey, what about all this debt?"

    ReplyDelete
  26. And yet another example why a position cannot be held overnight in this market.  Housing starts?  Really?  That's going to bring us back from the brink?

    Can certainly feel the short covering panic at the moment though.  Lot's of overnight shorts frying right now.

    ReplyDelete
  27. Well, there ya go.  It's either the bullish alternate count or the Wave 2 count.

    Everybody gets on my case when I try hard to warn people about hitting a target zone and bullish alternate counts -- now you know why.

    ReplyDelete
  28. Incredible, messiah complex maui boy.  Once again you use MY ideas, yet without even an acknowledgement.Because 3-4 hours ago, you were SHORTING at 1211.  I saw it, so I tried to help you, tell you it was not a good idea.And when you got stopped out, you saw MY post below, that I wrote you 2-3 hours ago on the prior thread, which you did not even answer.  Yet---I am certain you saw it, as you practically said in your new thread today, nearly exactly what I predicted, and predicted not just today, but also yesterday, due to the action of gold and silver.I am taking you to task, once again, so I cut and paste from the prior thread, read it all and weep, messiah boy:2 to 3 hours ago, I wrote this:-----------------------------Like I told you yesterday, gold is almost surely heading higher for a few days, at least enough to relieve some of the current oversold condition, and more importantly, high bearish sentiment. 

    However, on the other side of this coin, is there is some resistance in the $1630's area, and humongous resistance in the $1660's area; plus, even more importantly, gold has spent the last few days under its 200ma, something which it had not done since mid 2008, after which it then spent half a year deeply under it. 

    So, even though I concur that gold is toast, however, the bearish sentiment is now so strong, I still strongly opine gold will try to rally above $1600's, for at least a fw days this week---and as such, because I have zero doubt that there is NO gold/spx decoupling, I continue to strongly opine that spx won't crash until both are ready to crash together. 

    Therefore, I do not recommend further spx shorts, for at least 2 more days, because I feel spx will try to make one last charge, to try to take out the BEARWALL in 1250 area, which obviously, even though it won't succeed, another minirally for a couple of days at least, will bring back temporarily strengthen the bullish seasonal psychology, enough to clean up the current daily oversold rsi and macd conditions.  However, this should be a very weak minirally, with very low volume, confirming yet again, that the man trend is DOWN.

    Btw, as I expected from yesterday, silver has already rallied today around 2 percent (currently at approx $29.30), and has the ability to go even higher over next 2 days also, easily into the upper $30 area, where it will start meeting some resistance, and any penetration into the $31 area, should be shortlived.  But here also I see a minirally (min. 2 day) , to go along with gold, and the spx. ------------------------------back to the present---and after reading the above, you changed your tune quick, and 'you' (supposedly)  'discovered a minirally'. (HAHA)  And I will go further now---the alternate you have above at 30%, will prove to be the better choice, the primary one.I already said exactly why, on MY prior post above, no need to repeat.  ALL is sentiment.  And sentiment MUST return to bullish, prior to the minimum 1000dji point 1-day crash I seek, crash I have been expecting now, for nearly 2 fukking godddamm months.  Dammm, average amerikans are so stupid, they believe practically anything, for as long as their masters want them to, until it cannot be hidden any longer, due to the magnitude of the devastating lie.  Ergo, some major usa falsehood must be finally revealed, before the average amerikan capitulates, and sells bigtime.

    ReplyDelete
  29. Took a flyer - shorted at 1225.75 ES, risking 3 points.  No idea what is going on - slept in today, but saw futures ripping higher last night.  Glad I covered quite a bit of that tza short yesterday - it is getting destroyed today.

    ReplyDelete
  30. PL. you made the exact right calls and what levels to watch out for. clear as can be!

    ReplyDelete
  31. Adding a few shorts here at 1231 cash.  I'm going to keep super tight stops, though.

    ReplyDelete
  32. Nevermind, looks like 1226.50 - I put my limit at 1225.75, but apparently I was too slow and the market blew past it.  It'll probably blow past my stop now too.

    ReplyDelete
  33. ok went big in on TZA at RUT 728.  wish me luck...going to do a fast trade before i board my plane in 15mins

    ReplyDelete
  34. Anon 20, I was still playing my preferred count as interpreted.  I had already come up with the 2nd count and was almost done w/ the article when you posted.  So ty for the attempted warning, but I am not "using your ideas."  The fact that you sometimes come up with the same ideas I have only shows that you're smart.  ;)

    ReplyDelete
  35. Good to know.  And thank you.  Seems the 'feel good' Santa suckers rally is on.  Assuming anything relating to the reality of the world's financial situation can stay out of the news.  It is Christmas time though . . .

    ReplyDelete
  36. lol, making 0.5% so far, gotta give half of that to my broker.  i guess it is better to be a broker

    ReplyDelete
  37. Read them, followed them, didn't get greedy (hey I can be trained!), and got out yesterday when we tagged the target zone. Felt a little wanting when we kept falling a bit, but that went away when I looked at the green numbers on my spreadsheet!
    Looking for a reentry point this morning once we get an idea of what is going on this morning. I have a feeling that there will be time for those of us lucky enough to be in cash to short again

    ReplyDelete
  38. hi pretzel, quick check.  you said 1231.48 is the KO and we hit 1232ish, does it mean your favored count is out?

    ReplyDelete
  39. 1230 acting as support now!?

    ReplyDelete
  40. Now what's interesting is that right now the NDX is right in the projected wave iv zone.  And actually, if NDX moves above 2292.15, we're all but guaranteed the bullish alternate.

    ReplyDelete
  41. You do remain great for ongoing amusement Anon.  I'm sure Pretz was just following your lead and thank God you let him now. Yeah, that's a good one . . .

    Your analysis about market-related notions is rather sound though.  Nothing in it that I could disagree with.

    ReplyDelete
  42. Agreed and  I prefer the Wave 2 count.

    ReplyDelete
  43. I'm very glad to hear that you exited in the target zone. 

    And that there's a Xmas present coming!  I love surprises!  :)

    ReplyDelete
  44. Going to be hard to stop all this energy today - maybe Congress will rain on the parade, but astro wise, it's a strong happy risk illusion day. 

    Your next best short opportunity may not be until overnight Wed with the ingress of the Sun into Capricorn (rational strategy).  However, at the same time, the moon will be in Sagittarius (very positive hopeful emotion) and the Sun will trine Jupiter (more positive hopiness.)  

    End of day Thursday, 12/22, we do get Sun square Uranus, so there may be a little shocker in this mix that upsets the hopium cart. 

    Still, Jupiter stations direct 12/25 and that can be a lot of positive energy spilling onto everything else.

    ReplyDelete
  45. PL - to clear me up - your alternate says this is wave 2 -- is this wave 2 of the larger 3 wave of C?

    ReplyDelete
  46. From a trading perspective, there's certainly a lot of momentum to the first move, and that usually signals more to come.  It's a bit like inertia -- rallies seldom drop dead on an instant reversal.

    ReplyDelete
  47. I prefer the warnings as well as the percentage confidence.  I stayed in for 3 reasons. 
    1) It felt really good to finally be on the RIGHT side of the trade.
    2) I get locked out of funds for 3 days after closing.
    3) I was hoping for the gap down followed by the 20% decline.

    ReplyDelete
  48. im with you- 1/2 short position at 1230

    ReplyDelete
  49. I like how you downgraded the preferred probability from 70% to 60%.  Revisionist history?  lol

    ReplyDelete
  50. On a related note, are you still confident that the USD is in a primary three up?  So maybe we're in a wave 2 pullback of P3, or wave 2 of 1 of P3?

    Any downside targets for a pullback off the opening highs, assuming we don't just gap and go?

    ReplyDelete
  51. That sounds 'right' to me for at least today.  I suspect this sideways movement right now is just bulls buying as many shares as they can at this level before taking up higher.  Longs are going to capitalize on the opportunity today, so I'm not expecting a push back into the 1,220s that stays there. 

    And if it does happen, I will probably make a long trade (that will be very short lived).  Right now just watching though to see what happens.

    There are still plenty more shorts left to fry who are right now holding and hoping for a run back down.  Those shorts will cover even pretty soon if they find out that below 1,230 isn't in the cards for the day.

    ReplyDelete
  52. No, lower degree than that.  This would be wave 2 of 1 of 3 of C, most likely.

    ReplyDelete
  53. I should downgrade it to ZERO, lol.

    ReplyDelete
  54. PL, astrology aside, any chance this is a C wave of an abc started last Wednesday?   - the DJIA had overlapping waves in that last 5 count down...

    ReplyDelete
  55. Well, the dollar alternate has been wave B of an expanded flat second wave.  I have to study a dollar chart again with the last couple days action to tell you what I think of that at this moment, though.

    ReplyDelete
  56. right back t the 50dma that has been tested for 5 days.... i guess this is the big santa rally...

    ReplyDelete
  57. .....and there goes my stop.

    ReplyDelete
  58. Now going on a full hour since the open that Williams, RSI, and Stoch have remained pretty well topped out on the three, five and fifteen minute charts.  None have even come close to going below their midpoint lines.  Which doesn't happen very often. 

    Buyers are now showing their first signs of commitment to their cause in almost a week.  And for today it seems pretty apparent that that commitment is at the very least playing keepaway from 1,230.  Trying to force as much short covering as possible.

    ReplyDelete
  59. Good morning all, checking in.

    ReplyDelete
  60. i seriously doubt were going to selloff, and im short (so i heop we selloff)... holiday week, most aren't in the market, so the bulls have the field to themselves... much like Bane in the new batman trailer.  Who is going to mess with Bane the Bull?

    ReplyDelete
  61. It's possible.  I was looking at it is as an ending diagonal, due to the fact that it's hard to find a clear c wave to the larger B of the proposed ABC... but it's not impossible, especially in this market. 

    I didn't have as much time to chart last night -- lots of family stuff this week w/ the holidays.

    ReplyDelete
  62. Big hedge funds selling the hell out of their apple stake. DJIA also outflowing. Money outflows: 

    http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html?mod=topnav_2_3022

    ReplyDelete
  63. Many thanks to Farhad for his support of this community!

    Thanks, Farhad, very much appreciated!  :)

    ReplyDelete
  64. Alright, I'm out.  No need to front-run a freight train here.  I'll wait until I have a clearer picture of what's going on short-term before I get back in.

    ReplyDelete
  65. Although, it's starting to look like a fifth wave that could be nearing completion. 

    ReplyDelete
  66. I'm just too tired to screw around with this thing today.  Gotta get to sleep soon, I need to spend some quality time w/ the family tomorrow.  :)

    ReplyDelete
  67. Going short here (very small position) at 1,235.  It's hard for the market to keep the indicators topped out at these levels for so long.  Some kind of minor retrace is due.

    ReplyDelete
  68. It's probably not a bad place, and if I could keep my eyes open long enough to keep watching this market, I might consider it too.  Definitely starting to look like a fifth wave nearing completion now.

    ReplyDelete
  69. lol- I just talked myself back into putting my shorts back on.  Gonna leave it as a one-trade-cancels-other and will either get stopped out or make a few bucks.

    ReplyDelete
  70. SPX entered the blue target box for the rally count.

    ReplyDelete
  71. PL,

    Do you have an updated Bullish Alternate chart?

    ReplyDelete
  72. I did too, back in at 1229.25 ES.  The 5 minute chart is just silly at this point IMO.

    ReplyDelete
  73. Going short here as well with a small position - actually going to use TZA - RSI divergences across all the one minute charts and trading well above VWAP - hard to see us not retracing a bit here

    ReplyDelete
  74. Good know.  And thanks.  Three and five minute indicators still haven't started to trend down yet.  Though they have at least flattened at 1,236.

    ReplyDelete
  75. PL, you are welcome, the small donation from Farhad, screen name Fred, was from me.

    ReplyDelete
  76. Michael, re: bullish alt. count.  I'll do an updated chart tonight, but prelim. target would be about 1310.

    ReplyDelete
  77. Well, now I have a name to put to the... screen name. 

    Thanks again, Farhad/Fred.  :)

    ReplyDelete
  78. Covered all my shorts at 1236 with big losses. Went long with SPY 125 calls, based on the idea that 1230 is now support.

    Brian, you're *so* right about overnight risk being way too dicey. Much as I don't really want to, I'm going to have to do the day-trading thing.

    Furr, I should have kept a sticky note on my computer regarding your whipsaw warning for this week.

    The low VIX yesterday was a real warning! Maybe low VIX at topping pattern portends down moves, but yesterday, we were *not* at a topping pattern.

    ReplyDelete
  79. speaking from position - but abc off of the Dec 14 low -- the c = 161.8% of a = 1237..... can i get much shorter? yup

    ReplyDelete
  80. Right about the time this market has trained every last cash bear out there NOT to hold overnight is when we'll actually start seeing gaps down.  In a year or so, bears will be fat and sassy, and the bulls will be the ones griping about never holding overnight. 

    ReplyDelete
  81. I think the answer is: (1). Train yourself; don't let others train you. (2) Adapt. Like you said before, we face two opponents, one of whom is ourselves.

    ReplyDelete
  82. Good morning everyone.
    I have a question for you. As an inexperienced trader I'm asking you all: Is there any downside risk buying and holding TVIX after we are getting closer to the end of this rally?

    ReplyDelete
  83. Agreed.  Shorts will get rewarded for overnight holds and major gaps down only AFTER every last bear who doesn't 'learn' not to has been bankrupted.  Ha, ha. 

    ReplyDelete
  84. Hey Pretz

    Any clues on West Texas Crude?  Looking to short it since Europe / Asia aren't included in "housing starts" ;)

    ReplyDelete
  85. Bullish count:   1310...Holy crap....seriously????

    ReplyDelete
  86. Took a calculated risk and tripled my short position at 1,237.  Thinking there is NO WAY this can keep up forever.  And at least a couple point retrace is due here.

    Closed the whole thing out at 1,235 for even on the first buy made a couple points on the second purchase.  Not taking any chances that sellers can't take below 1,235.  If they do, I'll consider going long.

    ReplyDelete
  87. eur/usd is falling hard...nothing has changed ...down we go

    ReplyDelete
  88. Crude has been my nemesis lately over the ST, so take this with a grain of salt... but it looks like it could find support around 96.5 and run back up to 100 or so.  I'm assuming it's in some type of impulse up, but I haven't updated my IT crude picture, so like I said, take it with a grain of salt.

    ReplyDelete
  89. NDX bounced off resistence, so not confirming the rally quite yet.

    ReplyDelete
  90. Well, yah.  That's what I meant by "new highs above 1292."  :)

    Not ready to go there yet, but it's still on the table.

    ReplyDelete
  91. Here's a "fun fact" -- under the ABC expanded flat count that Furr referenced earlier, the likely target for SPX to reverse would be... 1237.27.

    ReplyDelete
  92. Alright, I have to get some sleep.  GL all.

    bbl

    ReplyDelete
  93. yes, we may not be at the end of this rally...plus seasonality is killing vix right now.
    TVIX is a high risk buy right now IMO.

    ReplyDelete
  94. If you are still awake, could you 'expand ' on this potential?

    ReplyDelete
  95. Hi, this is great analysis of the market from technical perspective. I agree with you that this market was oversold and I am expecting a correction and possibly breaking above 200 day MA and maybe creating a new bull trend. The only think which can kill it is a break up of Euro zone early next year and possibly a bankruptcy of Greece.

    Do you trade the market (SPY, e-minis or similar)?

    Have a great day
    Martin

    ReplyDelete
  96. Any way to count an ABC from yesterday's lows?
    Or are we likely to see more up action before the theoretically corrective move is complete?

    ReplyDelete
  97. expanded flat...could that be a completed correction?

    ReplyDelete
  98. nevermind....just read more about expanded flat...implies this move was the C move and the drop yesterday was a B...I should read before posting, might be more efficient.

    ReplyDelete
  99. 1,310???  Fuck, I'd LOOOOOOOVE to be able to get short at 1,310. 

    Are you kidding me?  Santa WOULD be showing up for bears this year in a huge way if that happens. For those who have the dinero left to capitalize on it.  Hell, he'd have gifts for bulls too.

    Now I think I'm rooting for the bullish count.  Bring that ON, baby. LOL.  That means Ben's printing press is nowhere to be found and you can pretty much short gratuitously.  Even grandma's divindend stocks.  One can only dream, right???

    And then let those Europe headlines return and the bond vigilantes show back up to drive yields through the roof again.  Again, not rooting against anyone holding short here. Merely amusing myself.

    ReplyDelete
  100. Wow, right on time.  Does that mean I shouldn't count on being able to go short at 1,310 then?  Damn.

    ReplyDelete
  101. So far the reverse from 1237 looks like the opposite of "impulse". I would not go short here. Disclosure: I am long .

    ReplyDelete
  102. Wondering the same thing.   Kind of a cliff hanger for P to put that out there.

    ReplyDelete
  103. No way I'm going short here at 1,235 ish. 

    My initial short position was ONLY due to the ST indicators being topped for virtually two straight hours.  That is extremely uncommon.  A couple point retrace was due. 

    Which was all I was hoping for.  It was just a quick scalp trade.

    ReplyDelete
  104. In the bullish count, I wonder if it can even make it past the Oct high of 1292, given that so many people have been waiting to do this big short!

    A similar thing happened at the opposite end with the Oct 3rd rally;  So many people targeted a low of 1020-1050, but they went long well before the target was hit, at around 1275.

    ReplyDelete
  105. If the expanded flat was complete at 1237, the third wave down should be kicking in now with a nosebleed drop in prices. However, it doesn't feel like we are there. 

    ReplyDelete
  106. I have just now read all the silly babble below---blah, as usual. 
    And here is what will occur---MY BEAR DOWN trendline, will hold.

    Funny indeed, PL finally acknowledging below, that I am 'smart'---
    when I am 1000 times smarter than any pansy maui ew turkey, will ever be.

    Here's deal, kiddies.   This spx puppy will hold---BELOW 1250 area.

    I just redoubled all MY put bets---against---new amerikan homebuilders.
    Today was a GIFT.   So I Tracked and DESTROYED.  Win BIG, or lose--100%.

    That's MY motto.

    And skrew HARD ALL of you pseudo-bear wimpy girly-boys herein.  HAHA.
    'oh, pretzel, please hold my hand, thank you, thank you, I will bow to you forever...'  HAHA.

    Little usa children, Like I ASSURED yesterday, and the day before ALSO,
    in TWO days max, I give to this current LAST bullshit 'bull rally', to wash away ALL bearishness,
    before---the usa SERIOUS shit is FINALLY revealed, and it will make Europe appear great, in CONTRAST.

    ReplyDelete
  107. Okay, so we have a major move coming soon.  The range between 1,235 and 1,237 has been going on for an hour now.  No one makes any money until that stalemate is broken.  So it needs to be.

    I would suspect that the next move is upward to really make shorts panic even further and help vault over 1,240.  But I'm not willing to bet any money on it either. 

    Sellers have plenty at stake here themselves just trying to get out of here alive.  I *suspect* the 'smart money' has used the last hour to do just that and as they see the 1,250 writing on the wall heading into the holiday.  And so then they'll give up all resistance soon enough.

    ReplyDelete
  108. PL, what characterizes a 'distribution day'; is it a volume thing or something that is related to calendar date?  Thanks.

    ReplyDelete
  109. Anon, your big talk is nice and all.  And I don't want it to go away, since one should invite amusement in it's various forms.  And your version does not lack for thought provoking intelligence to go with it.

    You continually equate sound, disciplined trading with lacking balls.  Why the should anyone risk losing 100%, especially when you may be 'right' overall but market may not agree with your timing.  And when the market makes is EASY to produce daily two to twenty percent returns if your trading is patient and disciplined.

    Every wonder why most billionaire traders are PATIENT and don't need to tell everyone how awesome they are in relation to others. 

    You clearly have the raw ability, insight and talent.  Take away your bust cycles and keep the major up moves and you'd probably not feel the need to compare yourself to anyone.

    ReplyDelete
  110. Fwiw: on the road, so, in brief - that Venus sq Jupiter energy today can get you in over your head in a hurry. Big risk energy, buyin what you can't afford, seemed like a good idea at the time. Like Pl says, trade safe. Hate for you to get in a situation overnight where you had to gnaw your arm off in the morning ;)

    ReplyDelete
  111. If this is going the way of PL's preferred count (2 of 3), we should be retracing 0.618 from 1267 down, which gets us to 1242.35. I am going to attempt a short here with a tight stop. If I get stopped out, next short attempt will be around 1260s with 1267 stop (100% retrace of 1 of 3). If I get stopped out again, then I shall be going big short above 1292. This is my short to intermediate term game plan...

    ReplyDelete
  112. Love the motto lil' suckling - it fits you well. My fear is that the meat grinder will get you soon, and you won't be around in the future to spread your great wisdom.

    Patience young suckling, patience - if you gorge too soon before the February feast, you will be devoured before Christmas - slow and steady, slow and steady."You fly back to school now, little Starling. Fly, fly, fly. Fly, fly, fly" - the lambs have only just begun to whimper.

    ReplyDelete
  113. Just a FYI ....

    Tomorrow, ECB is auctioning off their super low rate bonds. If its goes well, then the hopium will kick in and the Euroland problems will disappear - until after Christmas. :)

    ReplyDelete
  114. just curious, what is your time frame for the shit to hit the fan

    ReplyDelete
  115. Nice, so you have a long term plan. Actually we have triangle in progress on a lot of US indexes. End of 2008 the German DAX was in the same situation, then the index lost more than 50%

    ReplyDelete
  116. HT, we may get an ST bounce off of 1,240 on the initial try here (at 1,239 as I write this), but I myself will not be going short until we are well past 1,244 and the ST indicators have peaked. 

    Bulls have a  LOT of momentum in their favor right now.  And the street pros will be calculating that even more short covering happens after we cross 1,240 and they hold above there.

    ReplyDelete
  117. Okay, so does this mean that  the alternate count's reversal zone has been hit? The blue #2 box in the 2nd graph?

    ReplyDelete
  118. That is a VERY good point.  And I think it will go well. 

    The PTB will have buyers lined up going in.  To produce the headlines (and hopium) necessary.  And then they don't have to justify having printed overtly.  Why should then when a covert and under the radar mechanism can be devised?

    ReplyDelete
  119. We are approaching the 61.7% retracement of the Dec 7 high to yesterday's low, which is at ~ 1243 cash; this must be a good resistance!

    ReplyDelete
  120. I think it has been hit and the market will reverse and then bounce back into it to complete an ABC before the 3rd wave kicks in. Just my opinion...

    ReplyDelete
  121. Is 1268 cash the KO for this count?

    ReplyDelete
  122. I could be wrong. Thats why I have tight stops :). 

    ReplyDelete
  123. I am learning how to count intraday ....

    We had a 1,2,3 and are now on a side-way 4?

    ReplyDelete
  124. Not trying to imply that anyone is 'wrong' here.  Sellers not making it easy to cross 1,240 isn't a bad theory. 

    But I think it will mostly be just making it hard on buyers so they don't start thinking it'll be easy to get much further than here and let's not waste everyone's time and make more messes than necessary for everyone here. 

    And I DO agree that a reversal is likely somewhere in this area.  The pros who move markets aren't going to commit real money to holding up at these levels for more than a few days. 

    In the meantime I think this is selling to the hopeful and gullible.  But you have to take and hold up here in order to do it. 

    The selling on strength link that was posted earlier today (forget who it was) is VERY telling.  Look at HOW MANY high flying names are on it?  It's a virtual who's who list of hedge funds favorite holdings.  The only major symbol missing is the SPY itself.  Usually that shows up near market tops.  I look at this list most days, btw.

    Link is reposted here:  http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html

    ReplyDelete
  125. Or it could be 12345 at sp1237, then abc at 1235, and now finishing 12.

    ReplyDelete
  126. Just some more information that may be encouraging to the other Bears out there that didn't get out yesterday like me...

    http://www.thefiscaltimes.com/Columns/2011/12/20/BofA-Stocks-May-Be-Headed-for-a-20-Percent-Drop.aspx#page1

    ReplyDelete
  127. Thanks, RockyTop.

    ReplyDelete
  128. It was me who posted that link :). My intention was not to create a mess here but just thinking out loud with my count for criticism from you guys, which btw is not different from PL's preferred count listed above. Apologize if it confused anyone.

    ReplyDelete
  129. I thought about that too. Thanks.

    EW is really subjective, isn't it?  (for the short term at least)

    ReplyDelete
  130. spy is at the top now

    ReplyDelete
  131. I've sold my longs. If this wave 2 can retrace to 1236, I might go back long again for wave 3.

    Yes, pretty subjective. But since PL's alternate count has higher probability now, it seems reasonable.

    ReplyDelete
  132. I don't normally pay attention to the Dow other than to see what the headlines are reporting to the 'masses' but with it being up 300+ points, longs have more than accomplished what they needed to for the day. 

    A reinviogoration of bullish X-mas sentiment will be achieved by that alone.  If the PTB can float a few more encouraging headlines out of Europe then we'll see bear capitulation in a big way tomorrow.  And a push for 1,250-ish.  Which would surely mean the Street selling off as much overpriced inventory as they can get the retail investor to buy.

    Not saying that WILL happen.  Just reasoning out loud.

    I wouldn't therefore be surprised if buyers leave more room to print another up day tomorrow and relax a little bit here.  If we fall back below 1,235 I will consider going long.  I do think we'll hold up here for at least another day or two.  If only because the Street will want to liquidate as much at these inflated prices as possible. 

    And then they can run it all back down again.

    ReplyDelete
  133. My understanding is that wave 3 has the most drama.
    Why didn't you wait till then to bail out? Just curious.

    ReplyDelete
  134. luckily im only in a 1/2 position, so im breakeven at this point.  success is this market is 50% making gains and 50% surviving losses....

    ReplyDelete
  135. I'd encourage people to not talk their way into fighting trends.  If you trade aggressively you just can't be in the business of fighting the tape.  The market will get around to pricing in the f'd up liquidity / debt / demand issues.  But it won't be today.  Think of this as reasoning with a drug addict - yesterday he was sober and listening to you and said "in the morning, I will go to rehab."  Then you woke up this morning and he has eaten all of your hostess Ho Hos and is selling your stuff on ebay to buy his next fix.  Thems how bullz work. 

    ReplyDelete
  136. Was a mistake, as I see it now. I was hoping for a wave 2 pullback to the beginning of the second wave 1 for the day to buy in again, but it only pulled back 50%.

    ReplyDelete
  137. Acknowledging my mistake and just chased back in for the big wave 3 and 5 upwaves, the latter maybe tomorrow.

    ReplyDelete
  138. Ah, there goes 1,240.  As expected.  All ST indicators are maxed out and have been for awhile.  Longs had to really push and overcome resistance to get here.  Will be curious to see if they can hold it.  They probably need to get up to 1,243 from here and then hold off sellers attempt to run back down from here. 

    Dow is now up 335 now.  The Street is going to print a nice headline to reassure the world that all is hunky dory and okay.

    ReplyDelete
  139. Might be better, or more "convenient", to consider today a 5-wave intraday, so then, we're on wave 5 now. I'm planning on closing my long position today at the close.

    ReplyDelete
  140. oh well, they'll squeeze shorts the rest of the week... i avoided the major push but without some pullback the day is a wash....

    ReplyDelete
  141. This made me laugh.  I think everyone has to start out investing this way, believing in fairytales and what-ifs.  Until the cruel machinations of the Street show you otherwise.

    Your reasoning applies to those of a bearish persuasion as well.  Today is not the day to go short and 'fight the tape'.  Even if you do know that we have overpricing of equities and selling off to the masses going on before the rundown commences again.

    I generally expect this sort of thing to last at least a couple days whenever theres a big gap up again.  If only because the Street needs enough TIME to sell what they can to whomever will be dumb enough to buy it.  And the indexes need to be held up here long enough to print enough headlines to make enough people believe that staying in is still a good idea.  And to shake out all bears.

    I wonder how many people are saying to themselves that Apple, IBM and Intel sure look 'cheap' right now? Yeah, right. That's a good one. Ha, ha. 

    And how many hopeful bears are now thinking:  How the hell did THIS just happen?

    If I WERE holding a short position right now, I sure as hell wouldn't cover until next week.   And it's a good reason to never tie up more than fifty percent of your available purchasing power after you've just had the nice leg down we've seen the last couple days.

    ReplyDelete
  142. Thanks again Brian for your insghts, please continue with these to keep us focussed on the big picture!

    ReplyDelete
  143. Those who have the software:  Look at the RSI on the 5, 15 and 30 minute charts.  Such a topped out indicator for an ENTIRE trading session you will seldom ever see.

    ReplyDelete
  144. Wow, probably an indication that profit takers can't let a +3% day go into the last 30 minutes without some money coming out.

    ReplyDelete
  145. isn't the saying "don't go short for longer than 7 days?", we've just had a nice 7 day bear run, so it's time for the bulls. get on board; there's more to investing than shorting... once we reach the top end of week or so, we can short the pee-pee out of it, but not right now as that be suicide and literary throwing your self in front of a freight-train, 'cause that's what it is right now.

    ReplyDelete
  146. Not a bad bet, but I think buyers are pretty committed to around Dow 300+ and holding above 1,240.  And most longs will now expect another green candle tomorrow.

    Longs just impressively brought back to 1,241 after sellers lowered to 1,239.  Wouldn't be surprised if 'that's all she wrote' for bears today. 

    ReplyDelete
  147. Exactly why out of shorts now. Will get back, but later.

    ReplyDelete
  148. I second the thanks from Fred.  Also, I agree with your statement of " it's a good reason to never tie up more than fifty percent of your available purchasing power after you've just had the nice leg down we've seen the last couple days".  Now, I just need to maker sure that this lesson is learned and burned in my brain.  I sure don't want a 'fresher in the future.

    ReplyDelete
  149. guess we'll see if this was all she wrote or if santa is sticking around the rest of the year- at this rate we'll be back at 1300 by friday!

    ReplyDelete
  150. That's a good point.  I wasn't counting, but there are two 'green' doji (inverted hammer??) candlesticks on the daily chart last week that were longs getting creamed and taking it HARD in the well-you-know from sellers after a gap up on the overnight futes. 

    So the candle printed green for those two days.  But anyone who saw how it actually went down wouldn't have counted it as a good day for longs AT ALL.   

    Maybe we should have a 'seven day watch' around here.  Of course during a three of three crash that may not apply.  But since this isn't one, the 'guideline' held true rather nicely.

    ReplyDelete
  151. Got shorts on at 1242 with a tight stop. Both of my EW preferred and non preferred count show a pullback is due. Seeing bearish divergences in RSI and MACD as well. Could be throwing myself in front of a freight train but its worth a shot. If not, I shall eject quick to live and fight another day.

    ReplyDelete
  152. An important 'take away' from last night's analysis re the VIX is that though its relatively low level indicated complacency, Ms Market can get more complacent for much longer periods.
    Yesterday's VIX close not penetrating the Bollinger Band @ -2 SD was one 'tell'.

    ReplyDelete
  153. Man, 1,300 heading into all of those bond sales in Europe over the next three months would be bear's dream come true. 

    That would mean that Santa really IS showing up for EVERYONE this year.  Bulls get their wish fulfilled now.  Bears would get theirs soon afterward

    I swear I've been good this year, Santa. Really, I have . . . ;)

    ReplyDelete
  154. Brian, it takes me also some time to adjust around. I was -due to pretty much 7 days of selling- looking for the 1hr-after-open-top to short it, but this thing just kept going. Got in when it went through 1235 mid-day. 

    This is like Nov 28. This thing went through all of PL's red warning flags. Not sure if we'll hit his ALT: C targets, but 1260+ is certainly very possible IMHO. Short the rebound to 1230 and jump on the train then again. All good.

    ReplyDelete
  155. and -as I said yesterday- VIX has seasonality against it too. It's mostly low in Dec-Jan. Just look at the long term charts. Don't fight it, go with it!

    ReplyDelete
  156. I feel 1260 is possible again also, if only because the bears are beaten back so strongly. It will take a short while before they gather up courage again. Imagine a replay of December 1 to 7th. Ah! Seven days. The message seems to be: Let the bulls have it their way for the rest of the year.

    ReplyDelete
  157. BTW, I've decided on keeping my call options open. Not related to today's intraday count, just the feeling that the bulls will have continued success for a few days.

    ReplyDelete
  158. hmm, let's see what PL can make of today: it blew through his KO level of the prefered count; it hit his green target box #2 of the alternate count -but 2 days earlier...- and the NDX tagged the upper band of resistence... man, I don't envy his job ;-) 

    ReplyDelete
  159. If replaying Dec 1 to 7th, starting tomorrow, pullbacks will just set you up for more upside, till the real turnaround.

    ReplyDelete
  160. Definitely a possibility under the bullish count

    ReplyDelete
  161. Well I'd rather be him than selling some plus/ minus one day bullshit cycle 'theory' and EW count that is never explained how it was determined . . . and which constantly needs to be rationalized by the cycle date didn't turn out as 'expected' abd then is layer sold as having been hit dead on even though it wasnt at all.

    And that should lead anyone who can put two together to naturally conclude that the 'product' being offered is most likely a repackaging of others' (probably plural) work. Hence the utter lack of specifics with respect to reasoning and methodology. And who is as likely to therefore give disastrous results to anyone who trades according to the info presented.

    So yeah, I'd rather be Pretz than any individual who may fit the above general description. Sorry, couldnt help myself. Reading what's posted on there is always good for a laugh or two.

    ReplyDelete
  162. Know *exactly* what you mean and absolutely agree. I'm hurting only because of my own lack of skills - nobody else's fault. Will do my best to continue to support Pretzel in every way.

    ReplyDelete
  163. Maybe 1300 is too much to hope for, but fully expects some replay of Dec 1 to 7th. Way too soon to go back into shorts, imo. The strength, call it hopium if you will, that's evident today can't be denied.

    ReplyDelete
  164. Yep, I think it was Friday's article where I reported how many years of this decade that the VIX has made it's yearly low in December.  I'm too lazy to look right now, but it was a lot.  ;)

    ReplyDelete
  165. i don't believe Pretzel's targets are time based....so hitting the box of alternate 2 today isn't an issue.

    ReplyDelete
  166. Well, it KO's the preferred count, I mentioned that this morning.  Considering how rarely I have a preferred count KO'd (the last was October), that's a pretty good run.

    But I promise you, it won't be the last time I have a preferred count KO'd.  Show me an analyst (or *type* of analysis) with a flawless record, and I'll show you the REAL Santa Claus (he lives on Saturn's moon Titan and drinks methane -- and when he sneezes, 22 chickens fly out of his ears and assemble in chorus to sing "Ain't No Woman Like the One-Eyed Gott."  True fact.)  ;)

    What I make of this market right now can be summed up thusly: "(raspberry)!"

    ReplyDelete
  167. PL--The way you assign probabilities to the bullish count and bearish count is great!  It helps me allocate my $ between the longs and the shorts.  I was also able to turn a losing trade into one that made a small profit.     Just sent you a donation.  Thanks!

    ReplyDelete
  168. LMAO! No worries dude, that's why you have KO levels, because you know how markets work and what to look out for. If you're record was flawless, that be suspicious and you'd be working for a big firm in NY now, making tons of money instead of living-of our donations ;-) Keep up the good work, it helps us small-fish all make much more sound investing decisions.

    ReplyDelete
  169. Thanks, t_winn.  I am assuming you're Thuha?

    ReplyDelete
  170. Also, many thanks to Dave for his good-as-his-word *4th* donation earlier!  Thanks, Dave.  :) 

    ReplyDelete
  171. Thanks!  :)

    That's #2 -- don't worry, my secretary's on it.  :D

    ReplyDelete
  172. No problem, definately my pleasure for being able to do it!

    I have a question for you or anybody I guess. I have always traded the cash market, never futures. My trading software from my broker doesn't show futures that I know of. So If I was wanting to follow an "intraday" chart of futures, where would you recommend I go and what symbol?

    ReplyDelete
  173. If you use TD Ameritrade, they show /ES in their Think or Swim platform - you can chart intraday, with realtime updates. If you don't use TD Ameritrade, you can just open an account with a bit of money and use their tool for free.

    ReplyDelete
  174. Futures are, IMO, way more profitable than the cash market... as long as your remain aware of the dangers of leverage and trade accordingly.  Don't max out your account buying every futures contract you're able to, or you'll quickly go under on a bad move. 

    But you won't meet too many pros who trade cash only.

    ESH12 is the March e-mini SPX contract symbol.  Where you can find real-time charts w/out an account, I have no clue.

    ReplyDelete
  175. PL, just wanted to reiterate my appreciation for your exceelnt work. As I said before, I'm not a day trader and hold a few short equity positions for the long term. I'm learning a graet deal and am gratefuul for it. I know technical analysisi enough to know how difficult it is and how well you deal with its inherent ambiguities, your intellectual honesty is key to my admiration for your analysis. Your followers here are also intellectually honest enough to realize that you are not responsible for their trading decisions and actions...that is good to see. 

    ReplyDelete
  176. Hehe, yeah .. Never trust the 12 steps of Christmas ;)

    ReplyDelete
  177. Dave, I have an account with TDameritrade and through their Think-or Swim platform I get free access to charting and data, including SPX futures(/ES)...I don't know if it is appropriate for trading futures.

    ReplyDelete
  178. Thanks, Fred.  I appreciate that a lot.  :)

    ReplyDelete
  179. I was chewing on a nice chicken sandwich when I read "... Like the One-Eyed Gott".  Now half of it is stuck up my nose because I literally exploded with laughter.  Not sure whether to thank you for that one or not, lol.

    ReplyDelete
  180. I keep meaning to open / fund a futures and forex account myself.  But my own laziness and inertia has kept me with the trading system and platform that I am now so accustomed to using. 

    For the broker I use, I'd have to get an entirely separate account and trading platform for forex and futures.  Haven't 'gone there' yet.

    Or I could get an integrated platform and change brokers entirely. 

    ReplyDelete
  181. stop, please stop ... tequila sinus burn

    ReplyDelete
  182. So, with the KO of preferred count, I will be eager to see your 'rally strategy'.  As a swing trader still short for the larger trend, I need to decide whether to hold or bail on a pullback.

    Happy holidays to everyone, except A**20, he's still on my naughty list.

    ReplyDelete
  183. There's a website where you can view delayed futures charts without an account
    http://www.commoditycharts.com/commodities/

    ReplyDelete
  184.  
    lol.

    As a swing trader, you should be okay at the moment, since I assume you're short from somewhere within the whole week I was screaming "top!" until my lungs burned.  I guess the question you have to ask yourself is whether to take profits now, or use a stop loss and risk turning it into a loser.  Personally, I would have taken profits at the target zone which could lead to a big rally -- but barring that, I would probably take profits and wait it out.  That's just me, though, not trading advice.  :)

    Tomorrow's article is addressing trading strategy at the moment, haven't gotten to the charts yet. Taking profits/managing risk is a big part of it. Most of that stuff regards questions I can't answer for anyone personally: every trader is different. But the article is a series of points/questions to ask yourself when addressing strategy.

    All I can tell you at the moment "blind" is that moves like this seldom reverse without burning off the inertia.  Odds favor a consolidation tomorrow and then more upside, just based on momentum.

    ReplyDelete
  185. You know, I'd like to do it where I give clear "okay, go short at 1260 with a stop at 1275" -- but I've been hesitant due to legal ramifications. 
     
    Based on a few comments, it seems like too many of you wait and go short after the move has happened.  If you're going to play at swing trading, you have to go short when I'm yelling for a top -- right in the teeth of a prior rally, when you're scared to. 
     
    There are really only two strategies that work for swing-traders:
     
    1)  Try to pick the exact top or bottom and use a wide stop-loss, understanding you could get hit with a lot of drawdown.
    2) Play breakouts/breakdowns of support/resistance and try to catch 80% of a big trend.
     
    Trying to anticipate breaks of support/resistance after it seems "safe" (emotionally) to short because the market has been moving down for a while is a quick way to the poor-house for a swing trader.

    ReplyDelete
  186. I started calling for a top at 1245.  I was a little early, but that trade would still be in profit. 

    If one is swing trading within a triangle in a range-bound market, one doesn't wait until we're near the bottom line of that triangle to go short.  At that point, if one didn't get short near the top, one exercises patience and waits for a breakdown. 

    Even following a system that yields a high-percentage of correct will not make you money -- unless you know how to manage your trading strategy.

    ReplyDelete
  187. My opinion is that the way you've been doing it is the best - just give guidance on the wave positions and probabilities. Classical musicians can learn jazz if they really want to. It's not easy but it's better if they learn, imo.

    ReplyDelete
  188. Albertarocks-

    I've added your site to my sidebar under Friends and Muses.

    Thanks for showing respect.  :)

    ReplyDelete
  189. hey pretzy, i know how much you hate drawdowns.  do you generally use tight stops on each one of your trades, where if the move you're anticipating doesn't materialize you get out right away?  or are there situations like a couple weeks ago when you were maybe a day early calling the move down where you may have allowed for wider stops?  what is your strategy in this regard?  also, i was wondering how you personally define trading success for yourself?  do you have a percentage in mind you want to make each year?  do you not limit yourself like that?  what do ya say?

    ReplyDelete
  190. In a market like this (i.e., a range-bound triangle) I take a lot of quick stabs and get out of the way if nothing materializes.

    In a trending market, I swing trade at times and use wider stops.

    I have certain "minimums" that I use as my goals each month.  But I certainly don't have a maximum.  :)

    Which actually brings up a good point about having clearly defined goals, and how important that is for success in pretty much any endeavor -- but that's a topic for another day when I'm not doin' other stuff.  :)

    ReplyDelete