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Thursday, December 29, 2011

SPX and RUT Update: Are We There Yet?

In studying the charts tonight, one conclusion is certain:  the market has no intention of making this one easy right now.  I can see at least half a dozen viable short term counts in the charts tonight.  And then, just as I was about to publish this article, I caught something which is potentially very revealing in the Russell 2000 chart... so this article has a lot of charts, and a fair number of short-term possibilities are reflected herein. 

I simply need more price information at the moment.  The next couple sessions should let me weed some of them out.

Let's start with something I'm reasonably confident of at the moment:  Wednesday's low won't hold.  The very short term counts are suggesting a possible bounce, and then further declines.  That's my favored view of the very short term.  The slightly bigger picture is sloppier, though.

The hunt for the Minor Wave (2) top is still on.  The earlier technical breakouts have now whipsawed, and the market is currently set at a potentially important pivot point.  Significant follow through to lower prices could lead this market into a deep and extended decline -- more on this later.  Conversely, if the bulls can reverse the SPX higher before it breaks 1229.51, the projection up to (as high as) 1310 will remain on the table.  The one-minute chart shown below highlights the key KO levels for the bull and bear counts shown on this chart.  The blue target box represents the expected rebound level for both of these counts.


I want to expand a little on the short-term alternate count shown in passing on the chart above.  I have no way of knowing for sure what the market will do tomorrow, so if the recent highs are broken, the chart below shows how the alternate count could unfold.

The reason I'm favoring the count shown above verses the alternate count below revolves around the technical breakouts on low volume and the subsequent whipsaws during Wednesday's session.  Usually, whipsaws lead to strong moves in the opposite direction.  Nevertheless, there is no confirmation of either count yet, so I thought readers might find this illustration helpful.  The blue wave 2 bottom is the knockout level for this scenario.


The expectation of a large sustained decline is starting to sound like a pipe dream to some bears, but I believe that's exactly how it needs to be.  At several points in the past, I've mentioned that if the market is roughly following the 2008 script (which I believe it is), it needed to start throwing some curveballs.  The repeat trips back up into the mid-1200's have certainly thrown many bears off, and have made the counts challenging at times.  It sometimes pays to remember that bear markets try to take everybody's money -- even the bears. 

Let's see what else we can discern of the market's intentions.

The indicator below is one I've shared before.  It's a combination of the TRIN and down-volume to up-volume ratio (high levels in this ratio indicate heavy distribution).  When the two indicators fire off a signal simultaneously, there are extremely good odds that the market will make a lower low over the coming sessions.  On Wednesday, this signal was triggered again (below):


The next chart shows an interesting potential on the Russell 2000 (RUT).  The information on this Russell chart is potentially explosive, because it argues that the C-wave many Elliotticians think we're in the midst of hasn't even started yet.  The Russell counts fairly well as a triple zigzag off the October lows, but argues that the market is forming a b-wave flat in b of (z).  This means we'll have a retest of the December lows, which will fool everyone into going short again, and then launch back up one more time to finally complete Minor (2). 


Below is how the SPX will look if this situation unfolds. It's a bit premature to worry about, since the market hasn't broken any key levels yet... but this is going to be one to watch very closely if Wednesday's decline continues. 



Just in case this isn't enough charts for everyone, I also want to touch on an alternate count which several readers have asked about.  This alternate has the same intermediate-term impact as my preferred big picture count -- namely it takes the SPX down below the October lows.  But this alternate triangle count wouldn't entail the devastating drop I ultimately foresee down into the SPX 400's.  I'm not too concerned about this count at this point, because as I see it, we need to see where the exact top comes in first, and see the SPX break the October lows -- so I feel this is putting the cart before the horse.  But nevertheless, I'm presenting it due to popular demand.


One factor which does fit the count above is that volume has been steadily decreasing since October, but let's see what happens over the next few sessions before we get too invested in this count.

My conclusion is that the top, if not already in, is much closer than the bottom.  We're trying to sift through the pennies here to nail it down exactly, but my view is that we're dealing with limited upside potential at these levels (low 1300's) and major downside potential (below 1000).  The rally is starting to look a bit worn overall, and buyers may be reaching exhaustion.  Let's see what information the market gives us over the next few sessions to help eliminate some of these short-term possibilities, and to confirm or deny the potential that the top is already in.  Either way, longer-term, I currently see little hope for an extended rally which reaches much beyond the 1310 area.  Trade safe.

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

202 comments:

  1. Good morning.  Hope it's not too overwhelming.  Need more price info from this market right now! 

    Pretty sure the decline continues soon -- how far is the question. 

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  2. Worth noting, all of the counts except one lead to a bounce, and then a break of Wednesday's low.  That's my heavily odds-on favored short-term move.

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  3. Too overwhelming?  Next time, should I baby-step everyone instead and just wait until the market does something and I can narrow it down more?

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  4. Interesting results from a recent Gallup poll:

    http://www.insideinvestingdaily.com/images/web/taipandaily/charts/092811-img1.jpg?sub=TD&o=569703&s=573816&u=34969738&l=357091&r=Milo

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  5. Damn!!!!! My head is spinning :)

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  6. No, this is just great as always,ty

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  7. lol- and now you have some idea of what I sift through each night.  This isn't even half of it, either.  ;)

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  8. Hey pretZ- just for discussions sake, what will happen to the overall economy if we hit Spx 400s? What's the timeframe for that- years?

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  9. I have no doubt of the hard work it takes.

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  10. Oh, and the overall economy would be quite bad obviously.  2008 on steroids.

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  11. Just ignore his disclaimers and fine prints. :)

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  12. Thank you PL.  Great hard work.

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  13. no, this was perfect...us would-be elliotticians can garner a lot from seeing how you break down all the possibilities. TY!

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  14. Thanks Pretzel for the B wave Triangle chart.

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  15. The Italians sold 8+ billion Euros' worth of bonds, barely.
    Rate was about 7%. It is hard to imagine how they can pull off another 400+ billion early next year. :)

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  16. hi Pretzel, or RUT or SPX today, how far do you see them rise before heading south again?

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  17. BTW ....

    The spread between Italian and Spanish bonds expanded since after the election in Spain. It is the market's way of saying that it doesn't believe the technocratic government in Italy can administer bitter medicine to the unwilling.

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  18. Not much to draw from yet, since no rebound has started, but blue target box on the first chart is what the odds favor, assuming Wednesday marked a very short term low.

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  19. Glad you guys so far liked it... now I just have to figure out how to dumb it down some for Minyanville.

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  20. The Hungarian bond auction went no where - long or short. No one wanted to touch them with a 10-foot pole. :)

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  21. Oh, goody.  This poll is going to attach itself to every post I make from now on.

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  22. WOW PL; you have outdone yourself. Next time do I need to get up an hour earlier to digest all this. I agree that short term a low is coming, but I really like your -fool 'em all- count. why? just doesn't seem the markets are ready for a breakdown yet somehow. Maybe one more leg up?! Yeah why not?

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  23. Uh oh, could lead to Hungarians starting a war with a nearby nation.  Maybe I'll finally get to see my dream headline:

    "Hungary Gobbles Turkey"

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  24. The thing is: that's what's in the charts, and (once you see it, anyway) it looks clear as day on the RUT.  If there's no new high, it's probably going to be my preferred count, depending on how a decline looks.

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  25. Ditto, thank you. Head spinning stuff.

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  26. got it. rebound started, but looks weak

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  27. don't you love discuss... ;-)

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  28. Chicago PMI is about to come up. It is a low volume day. If nobody wants to sell, then it is infinity and beyond. :)

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  29. Chicago PMI Dec 62.5 vs Nov 62.6

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  30. we hit 1256 and dropped..

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  31. tested 1256 and 740 twice.  might be it for the rebound

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  32. As Furrr just posted, Chicago PMI = 62.5 This implies next Tuesday's ISM PMI will be good.   Also, based on retail sales in Dec., ISM Non-Manufacturing on next Thursday could be good also.  Italy debt and Euro are the wildcards. Market peak somewhere between Jan. 6th through Jan. 12th, 2012???

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  33. will ~1255 be all she writes for "da bounce"???

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  34. Possible, but seems more likely that this is wave A of the rebound -- possibly wave 4 of A, with a slight new high to come -- maybe 1257/8... then B down and C back up to come.

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  35. Certainly looks pretty weak, doesn't it?

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  36. Based on Chicago PMI and EOY window dressing, this could go much higher.

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  37. i think 745 on RUT will be a good place to short..

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  38. Here's what I replied to TJN a couple posts down:

    Possible, but seems more likely that this is wave A of the rebound -- possibly wave 4 of A, with a slight new high to come -- maybe 1257/8... then B down and C back up to come.

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  39. PL *is* good. Didn't hit the blue target box on chart 1 when the quesiton came up.

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  40. Based on yesterday, I expect the rally today to hold beneath yesterday's low, and then reverse to make a new low.  No guarantees of course, and "not trading advice."  But 90% of the time you see this pattern, that's what happens.

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  41. i agree, the charts are full of these type of rebounce/pause days. I am patiently waiting for the top and will then enter. I am back on a daily-trading schedule again, after a nice break with just watching and learning, while enjoying family time!

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  42. Here's what I mean about charts vs. news.  Just got this in my email from MarketCrotch:

    U.S. stocks extend gains as investors applaud data on pending home sales, Italian auction
    Hmm.  Who could have known?  It's not like the bounce was showing in the charts already or anything.  ;)

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  43. Oh brother.  I'm never gonna get rid of that poll now.  :D

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  44. PL, do you mean below Tuesday's low of around SPY = 126?

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  45. ps: I will enter the top to go short and long put. I missed yesterday so today is nice re-entry day.

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  46. Sorry, beneath yesterday's HIGH. lol

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  47. Good Moaning

    We are having some family over tonight and with the strong US market I'm starting to consider covering

    Do you think a high could be in until we test the 200 dma? Theoretically speaking of course....

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  48. And actually, I really mean Tuesday's high.  Sorry, getting really tired now.  :)

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  49. Sorry, just saw your reeply to SoulsurferUSA when I refreshed!

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  50. So maybe B will take us to 1234 where I'll theoretically cover. (If we get there theoretically, of course)

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  51. call me arnie. 200dma is at 1258.68. seems like it bounced off it right when PL wrote "1257/8..."

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  52. Actually, when I wrote it the first time, the SPX was at 1255.  :)

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  53. LMFAO. I think you attach it on purpose ;-) yep, news is just covering up for the masses so they think it's all news driven, whereas it's all mathematical/programmed.

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  54. Family time is good.  Been trying to get some in this past week, my quality time level suffers when I'm working non-stop.

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  55. 12 hours today on charts and now still up = bad for quality family time.  :)

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  56. Sorry about adding confusion to your post.  I understand you mean below Tuesday's high.  When I posted "...this could go much higher.", I meant higher than 1255 in reply to soulsurferusa's post.  I didn't pretend to imply/ know whether it will break Tuesday's high.

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  57. ah, your are too honest (sorry can't see time stamps on Chrome...)

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  58. No worries.  I'm glad you mentioned it, actually -- it made no sense the way I wrote it.  :D

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  59. Thanks Arnie, sorry I was referring to the S&P futures market where the 200 dma is around 1230

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  60. I hope the current 1259 is the end of A. What would be its KO? 

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  61. ugh, take a rest. those days are way too long.

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  62. will it be another 2 point retrace and then back up another 4 like we've seen for the last 1hr? (Brianhut's "BOT re-entry mechanism")

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  63. ok Pretzel, if we drop big from here you can expect a belated xmas gift from me

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  64. Burn-out is not far away if you don't scale back. :-(

    But don't know what the answer is. Analysis takes time. Write less, maybe? Six charts is a lot to post. There will be many days ahead with many interesting observations to educate us on.

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  65. The problem isn't really the article.  Article usually takes an hour or two at most.  The time is in sifting through 2o, 30, 40 charts or more, and then annotating the charts fer the articles.  And then trying to be awake and "here" for at least part of the market day. 

    Funny thing is, today, I actually had 2 more charts fer today than I posted.  Nixed 'em, cause I didn't want it to get too overwhelming for readers.  :D

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  66. ok feels like it's just going to be 1259.7 and 744

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  67. RE article is 1 or 2 hours -- Well, all those hours add up. I'm sure annotating all those charts helps sharpen your thinking, so that's a good side-effect, but very costly.

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  68. 0.5 point range for the last 20min... going parabolic?

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  69. Haven't heard from Brian today yet.  Wonder if he over slept again. :)

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  70. Anyone know what just happened to cause the sharp drop?

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  71. They do... but it's a small part of what I'm doing now.  Funny thing is, I don't really swing trade very often anymore -- so the whole time investment on trying to really nail down the market in a way that's understandable and actionable to the average reader is a lot more time consuming than what I used to do when it was just for me.     

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  72. Pretzel, do you think we will plunge then rebound by end of the day or the drop will last till tomorrow's close?  My primitive trading platform does not have stop sells and if the drop will continue tomorrow, i can sleep in peace now

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  73. Parabolic generally refers to a very strong move up.  If you were anticipating down, you may want to work on the nomenclature -- "rolling over" would mean down.  :)

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  74. Not sure if this has anything to do with it, but at 11:08, Fidelity's active trader pro came out with the news "--Initial jobless claims rose by 15,000 to 381,000 in the week ended Dec. 24"

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  75. Perhaps wave B just finnished?
    Roughly 50% retractment of wave A.

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  76. There's a reasonable chance that was it for the rally.  One-minute patterns are a little screwy, though, so I don't have complete confidence.  In any case, sticking w/ my call that it stays below Tuesday's high and that Wednesday's low won't hold. 

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  77. Lik jaco. "moaning?

    Freudian slip?

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  78. PL, Your efforts are greatly appreciated. :)

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  79. PL,
    I'm not sure how many folks here trade full time for a living.  It sounded like a few, including myself, were interested in the idea.  From your experience, what might be some things to keep in mind for someone that might plan to leave the corporate world and trade full time?
    Thanks.

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  80. sorry, let me rephrase my question.  do you think the drop will last until the open of the cash market tomorrow or will it be a flash crash and rebound by end of today/gap up tomorrow?  i want to know if i should close my positions by end of today (which would mean waking up in the wee hours to do so)

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  81. it went parabolic; no more gain, slow drop down and then boom, down she goes. always happens

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  82. That's a *really* open-ended question, and the answers could fill a book.  :) 

    If you're trying to do it for a living, here's a simple cardinal rule that people who chase every move seem to forget: protect your capital.  Spend a lot of time developing your strategy and rules for entries/exits early on, and stick to 'em.  You really have to formulate a system that works for you -- otherwise you'll be acting essentially on impulse, and the market is designed to send your impulses (and thus your trades) in the wrong direction.

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  83. Oh, I would expect the next ST low to take a couple days to be reached, once the market gets done correcting here (which could possible take most of the session). 

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  84. well spotted, i was in fact 'bemoaning' the open ;-)

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  85. Got it.  Thanks.  Cue for me to sleep now then.  See you folks tomorrow

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  86. Arnie, I've never heard the term used this way in regards to a market drop.  :D

    Parabolic is what the Nasdaq did during the dot.com bubble.  As in: to the moon on a sharp trajectory.

    I realize that as a scientist, you're probably using the term to refer to something in the shape of a parabola... but you know, when in Rome...  :)

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  87. Alright, I need to get some sleep now.  bbl.  :)

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  88. Stupid poll.  People are going to be clicking on it, thinking it's a meaningful chart or something.  Or, it's going to seem like I'm really trying hard to make a political statement.

    But it's just Disqus trying to drive me nuts by attaching the same thing to every post I make!

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  89. God Bless this NEW Bull market !!  I can't take it any more - who's with me ??? Anyone ?  Anyone ???  99% of CNBC guests surveyed said the S & P will be up in 2012 some say 20% +  - Doug Cass says S & P 1500 !!!  I'm closing my shorts and going long - any objections ??????????? jk

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  90. Lets look at the positives in the numbers:  Italian bond yields were pushed down to 6.9999995% based on ECB threats to banks !!   All those holiday stock boys who made up 50% of new hires in the last employment report will be back in Occupy their mom's basement - but the headline number was OK.   Home permits surge !!! - wait, those are low income apartment complex units - but we'll call them homes !!!   What else ---- I know there is bullish news everywhere - just having trouble finding it - because I can actually read the body of the bullshit reports that come out

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  91. Hi Pretzel, of the successful traders you know who do trade for a living full time, do you know what their average annualized rate of return would be?  The investment world always try to brain wash the public that the individual/professional alike cannot outperform the market indexes (SPX) over the long term, but many traders who can make a living must be able to do better than that right?  Unless they are trading a multi million dollar portfolio in which case a meager few percent return would earn thema nice living :-)  But I suppose most of us are not that rich the average joe.

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  92. PL, I agree that parabolic = accelerating trend.  I think soulsurferusa was refering to a "rounding top".

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  93. and have at least a $25K account so your not classified as a margin account with only MAX 4 day-trades per 5 (rolling) trading days (SEC rules). Set your loss/pain level at 5-10% and STICK to it. Losers NEVER turn into winners.

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  94. On another note, I was taught not to look at my own lousy performance in 2011 otherwise I'd be depressed :-), and not to pay so much attention as to the fruit of the action, but rather the action itself... the power of NOW, kind of you know...

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  95. In hindsight, it was a sharp technical move before working its way higher.  A sudden move like that usually only happens with news.

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  96. Lol I thought you might be partaking in other extracurricular activities whilst trading ;). Living the dream jaco!

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  97. Or, alternatively, have an infinite supply of capital. :)

    But seriously, trading for a living is not for everyone. You have to behave like a robot - totally and completely devoid of all emotions. Like real estate, it has three cardinal principles: principal, principal and principal.

    The name of the game is  not about making money, but not losing your shirt. :)

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  98. Hmmm.  Finally at least one half of the nation gets it.  Centralized power.  It generally doesn't work out well for most of the particpants.

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  99. GGekko
    turn off CNBC...and take a bit of zero hedge..where you will find all the good reasons to go long...this market...

    when  everybody is bullish that's bearish....

    As for Doug Kaas this guy change his mind at the speed of light...Cramer lookalike...

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  100. Don't get frustrated.  That is exactly what they want from you.  Just step aside for a while and see how the pattern develops over the first few days of the year.

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  101. Just checking in here. I've been short since 1,257 and added at 1,260.  That this market is rising is pretty laughable to me.  And until proven otherwise this just seems like the final act of this 'rally' to just fake everyone out. 

    And this to be expected after yesterdays' rundown.  A day to scare shorts out of their positions.  Then the real rundown can commence.

    I still think there are no real buyers up here. At least not in enough numbers. The Street can do this on these light volume weeks.  Real and normal volume is only going to happen once we run back down again.

    I'm starting think that we are about to enter another one week or so period where you will be able to short the market gratuitously again.  And as long as you aren't stupid about it, you'll make some money.



    This market is now reaching the point

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  102. ok guys, here she goes: down!

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  103. Before even thinking about that move, remember that this "job" requires an enourmous time effort, has no benefits, and at the end of the day, week, month, or year, you may have been far better off taking a 1 year vacation.  (i.e.- negative income for the year is very possible and most likely when you start)

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  104. ps: i meant to write this at the 1260 peak, but forgot to click "post"...lol

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  105. One of my greatest posts and not a single response :(

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  106. 1260 is great entry level imho (also since I entered at 1259, lol)

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  107. William, I am certain that I could now 'make a living' trading if I wanted to, though it will ALWAYS be a side project and distraction for me, since my primary pursuit is running businesses. 

    And by 'making a living' I mean at least $200K per year in gains with a $100K account to work with.  The 'market' is very easy to beat IF you are disciplined about it and you know when to add on even more 'risk' when the move is against you.  I do it pretty much every single day.

    That probably helped with me becoming a better and more dispassionate trader though, because I did not NEED for it to work out and I could experiment and develop systems.

    Pretz is right below, btw.  The market is specifically designed to scare the bejesus out of you, fool you, and make you feel optimistic and 'safe' precisely when you shouldn't.  It's the primary mechanisms it has to get you to buy in and then sell at precisely the wrong moments.

    As for becoming a full time trader: there is an EASY way to find out.  I strongly suggest getting out a note pad and 'paper trading' the market for at least two weeks.  And don't put any actual money on it.

    And BE HONEST with yourself about the choices you'd have made.  Especially the bad buy ins, early exits, bailing when you should have ridden through it, would you have had the balls to add to a losing position because you know the snap back is coming, etc.

    I think you'll find it illuminating.  Especially if you take copious notes and study all of the less than optimal choices you made for why they turned out the way they did and what were the things you bit on.

    I learned more from that exercise than just about any other.  It became a LOT easier to recognize the obvious entry points and easy set ups, how to avoid many of the fakeouts moves, what can happen to a winning position when you hold it overnight and the market gaps against you, etc.

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  108. Speaking of books (as PL mentioned): Before making that decision, I recommend "High Probability Trading" by Marcel Link and "A Beginner's Guide to Short Term Trading" by Toni Turner.

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  109. It all depends on whether you're 'moaning on impulse or correction, doesn't it?

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  110. I don't know how many hours you put in now, but anticipate very long days and always needing to second guess ever decision you make. Wanna live in this world? Ain't as cush as it may appear.

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  111. ....if you do go this route, tatoo this to your forehead......know where you are going to exit a trade BEFORE you place it.

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  112. The trick is to be a contrarian's contrarian, didn't you know? :-)

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  113. great post man! ;)

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  114. This made me laugh, GG. Why the hell ANYONE would seriously buy stocks up here at these levels?  Who f-ing knows.  It's rather reassuring though that there are apparently THAT many gullible suckers around to make today's market a trader's paradise.

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  115.  
    It may be helpful to do 'paper trading' for a couple of weeks to better understand yourself and learn from your mistakes before trading with your real money.  One of the most difficult things to do is to conquer yourself!
     
    Even for a part-time trader like me, 'paper trading' has been a good practice to find out what works & what doesn't work.   Also, not trading/sitting on cash is a very valid trade position when it is confusing and difficult to trade!

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  116. Actually, my shorts are holding up decent except for Silver - what the hell happened there ???

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  117. Well I do agree.  I've actually made a couple trades now just playing the 1,260 to 1,258 range. It's easy small money. 

    It could not be more obvious that bots are just hovering up here and have no real intention to waste the money it'll cost to cross and hold above 1,260. Other than a couple random trading sessions here and there 1,260 has been the go no further point of this range bound market since the October high.

    If we do head up toward 1,270ish again, then I am really missing something.  Or this is a headline event that's about to get printed that no one sees coming.  I'll believe it when I see it though.

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  118. Thank you so much for this, Brian. I do have one question with respect to the issue of doubling down. At the time of doubling down, by definition, your stop loss hasn't been hit or you wouldn't have your original position anymore to double down on. After you double down, do you keep the original stop level or do you move the level further back? I would think that if the latter, that would mean eroding your trading discipline. On the other hand, pegging the new position increment to the same stop level leaves only a small space for volatility.

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  119. Bounce from 1st line of defense near $26

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  120. Okay, the two HARD rejections off of 1,261 we've seen today could not be more telling.  Sellers still control the ball here, and today's green candle day is an ILLUSION.   

    I don't think sellers going to spend their bullets today other than to defend 1,260 and hold the range.  But just as they simply pushed longs around at will yesterday and won all crucial battles the day before that, they are winning when it MATTERS today. 

    Today in a nutshell can be summarized as:  Okay, we'll let it go to 1,260.  After that we'll simply play keepaway. 

    From here I might expect an EOD fakeout move above 1,260 to close out.  But that should be about it.

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  121. Seems like we've been pinned in the same spot for 2 hours

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  122. zzzzzzzzzzzzzzzzzzzz

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  123. rising wedge meets zzzzzzzz!

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  124. Cup and Handle?  Handle right at 50% retrace.  Closing the year at Tuesday's high?  Then taking it higher in the New Year?

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  125. Looks like the end of the wedge that formed for today's session is coming soon.  There will be a move pretty soon here and probably before the end of the session. 

    The Street doesn't make money trading these tight ranges. Which means that those pros expect to make something on whatever they were purchased or shorted while in this range.

    Given how weak the buying is up here and how easily sellers have pushed back when they needed to, I'd hard to imagine longs trying to take higher than here other than for a brief fakeout move. 

    My suspicion is that market pros were more than happy to allow 1,260ish to be traded all day to allow more short positions to be taken, provide hope for longs and to sell more stocks to the gullible.

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  126. Yes.  And market pros must LIKE it here for a reason.  Otherwise we wouldn't be hanging out here.  This isn't any nonsense like 'pefect balance' between sellers and buyers.  No way.  This is hovering with purpose.

    I think the pros on the Street are selling while up here.  And pro bears are just waiting their turn.  As they did on Tuesday, which was a very telling green candle day. Sellers won all crucial fights that day and then completely ran over bulls yesterday.  I expect more of the same coming soon.

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  127. It's just amazing watching the BBs squeeze together.

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  128. Just thought I'd drop in and show you what a lie looks like visually.  According to any number of measures within the bond markets, this is about as good as it gets for a shorting opportunity in equities.  $TNX and TLT are call BS on today's action... totally: http://stockcharts.com/h-sc/ui?s=$TNX&p=30&b=3&g=0&id=p88186209099&a=252175560&r=263&cmd=print

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  129. Thanks PL, Brian, and everyone for your great pointers.  I left the question "open" because I wanted to hear what everyone might have to say.  At the same time, I don't want to make this about me at so I will not get into my trading details (unless you want me to :) ).  I appreciate everyone's great suggestions.

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  130. Wow, now there's a chart that says it all.  Thanks for posting that.  Very cool of you.  End of year Street shenanigans in full effect.  :)

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  131. Still think this is a total fakeout move.  Just shorted from 1,262.

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  132. They are bringing it up now.  I am wonderring if they will keep it up tomorrow and into the new year.

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  133. also keeping my shorts from this morning

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  134. I'm expecting them to keep this green until tomorrow afternoon.  It'll be new years soon and many will want to cash out.

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  135. My pleasure Brian.  I'm glad you approved.  That helped to strip away  a wee bit of my reluctance to post much here.  Don't want to step on any toes... you know how it goes. :-)

    It looks to me like the market is probably going to close on or near its HOD.  But it also looks like today's action is probably an 'abc' upward correction...  and in its entirety.  So I think tomorrow could be a bloodbath right from the git go.  A gap lower seems just about guaranteed in my twisted little world, lol.

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  136. just an observation- the attitude on the board today is either complacency, overconfidence, or maybe denial?  I'm short at 1261, but am worried the bears on here don't really seem worried at all that the market keeps climbing... and there seems to be a lot of posting today too.. just a thought...

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  137. i really enjoyed this too. thanks for posting. generally all post are helpful so dont hesitate

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  138. my opinion is that there are just too many problems with all banks, us and europe, that have not been fixed.  with italy's bonds coming up due in Feburary and March (i believe in the tune of over 90billion), that will create an enormous amount of volatility in the market.  additionally, i am expecting the AAA rating for france to be downgraded in january.  there is too much green for a while in the market now, and not enough red.  so i expect to see red.

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  139. that's 97.1 billions in euros for all of next year for italy. this morning, they did not even get their 8.5 billion goal.

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  140. the euro snapped back too

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  141. Oh, I thought my suggestions were constructive.  I sure hope I didn't dissuade you.  And our perspectives seem to be rather in agreement.  Pretz has linked on the side bar for a reason.  You both having mutually beneficial arrangement is probably everyone's preference all in all.

    Thanks again.  And your read on the market is similar to mine at this point.

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  142. Ok, here are a couple others quickies to consider.  It looks to me like the Russell and $SPX might also close the day today at their 62% retracement levels:

    Russell Fib:  http://stockcharts.com/h-sc/ui?s=$RUT&p=10&b=3&g=0&id=p68479607909&a=252182401&r=13&cmd=print
    $SPX Fib: http://stockcharts.com/h-sc/ui?s=$SPX&p=10&b=3&g=0&id=t86173609760&a=234033022&r=9653&cmd=print

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  143. you were spot on on this. very impressive

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  144. William, do you know when in February is the first auction?

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  145. Holding my position into the close.  I added to it again at 1,263, but didn't sell in time on the fallback to 1,262.  This is one that I'm just not too worried about though. 

    Of note though: Sellers did not push back in the last hour like they did earlier.  Which may have been more of a 'why bother' kind of indifference to a three point EOD run up move.  Countering those is a lot less important than during the middle of trading. 

    Where we sit now, most shorts that took their positions in the last day are now trapped and most longs are feeling comfortable again.  Complacency and confidence are still preserved for longs.

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  146. I agree, Firstfeature.

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  147. Yes - crushed my silver position

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  148. good stuff AR!

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  149. I don't think it's complacency so much as the trading has a discernible qualitity to it. 

    If you closely watched the action Tuesday (green candle) and Wednesday (big red candle), Sellers won pretty much all crucial battles.  And they did today as well until the last half an hour. 

    The market makes it easy to confuse green candle days with bulls 'winning' even when they really aren't.  And what is really going on is holding in a higher range to SELL.  Which is exactly what has been going on during these holiday weeks.

    Doesn't mean that sellers won't capitulate or roll over, but they sure aren't looking like it to me right now.  I see sellers controlling the upside and biding their time.  End of year, the Italian bond auction, jobs report etc. needed to be gotten out of the way. 

    There isn't a whole lot more for longs to hang their hats on at this point.  Unless I am really missing something.

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  150. Oh no, no Brian... I'm just referring to my own natural reluctance to step on other peoples' toes.  Especially Pretzel's because I flat out love his work.  I don't really know how this site works yet either, that's all I meant.

    If there 'is' anything mutually beneficial, it would be in the area of traffic to our sites.  For me that doesn't relate to anything financial and I don't think Pretzel gets much traffic from my site because it's less than 3 weeks old.  I don't have a lot of traffic yet, but way, way more than I was expecting.  A lot of it comes from Seeking Alpha.

    Anyway, no worries Brian... we're on great terms.  Everything is way cool.

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  151. In response to William Li, below;
    Italy has a total finance need (sell bonds) of ~ 225B euros in 2012.  The amount this week ~14B is not really even a down payment for what is coming next year.  And this is just Italy!I would also like to state that I really appreciate all the technical analysis by PL and others.  It's a great way to learn.But I've been thinking about the fundamentals... you know, company earnings, etc..I'm sure that almost everyone visiting this board has been aware of the strong company earnings which have helped support the market since the '09 low.  Up until very recently we weren't really seeing any signs of the SPX company earnings being under pressure.  So I never felt we were in jeopardy of the massive waterfall until company earnings started to weaken.  Well, my list of companies warning about weakness is now;Texas InstrumentsAlteraDupontOracleXilinxIntelSearsNucorSteel DynamicsSchnitzer SteelFSLRBest Buy (poor earnings announced)This list of companies cuts across many industry segments.  I'm starting to believe that one of the catalysts that starts the slide will be the upcoming earnings season.  I feel many companies will do the "Last quarter was great (or met expectations) but the outlook is uncertain due to blah, blah, blah..."  And over we go.Maintaining a short position.

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  152. Guest, I found this information just last night from another blog I visit at http://vixandmore.blogspot.com/2011/12/italys-sovereign-debt-schedule-and-vix.html .  He has the months and their respective amounts there, but not the exact date of each month.

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  153. This earnings season should be terrible - tough comparisons, slowing global economy, stronger dollar - that's what will ultimately drive the market down - you can add intel to your list and in advance you can add amzn and appl again

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  154. I agree 100%.  I think the market will continue to grind higher for the next 1 to 2 weeks on earnings optimism.  Then earnings expectations for Q1 will set the tone for the future. 

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  155. Tried to post this as a link yesterday - this answers a few recent questions. From yesterday's WSJ:
    Here are some key dates to watch:• Thursday, Dec. 29: €5.23 billion of Greek debt falls due. Italian bond auction.• Friday, Dec. 30: €715 million of Greek debt falls due. Presentation of emergency Spanish budget measures.• Monday, Jan. 2: Euro-zone December manufacturing purchasing-managers index.• Wednesday, Jan. 4: Euro-zone December services purchasing-managers index. ECB 84-day and seven-day dollar operations.• Thursday, Jan. 5: French bond auction.• Saturday, Jan. 7: Spanish government deadline for unions and business leaders to agree on labor-market overhauls.• Wednesday, Jan. 11, and Thursday, Jan. 12: European Commission visits Danish presidency in Copenhagen. ECB seven-day dollar operation.• Thursday, Jan. 12: ECB interest rate statement and press conference. Spanish and Italian bond auctions.• Friday, Jan. 13: Italian bond auction.• Monday, Jan. 16: Troika of international inspectors expected to return to Greece to resume talks on new bailout deal.• Tuesday, Jan. 17: Spanish T-bill auction.• Wednesday, Jan. 18: ECB seven-day dollar operation.• Thursday, Jan. 19: Spanish and French bond auction.• Friday, Jan. 20: Troika talks in Greece expected to end.• Monday, Jan. 23: Euro-zone January flash purchasing-managers index. Euro-zone finance ministers meeting.• Tuesday, Jan. 24: European Union finance ministers meeting. Spanish T-bill auction.• Wednesday, Jan. 25: Preliminary data on the Spanish government's annual budget deficit expected around this time. German January Ifo business climate index. ECB seven-day dollar operation. ECB three-month long-term refinancing operation.• Thursday, Jan. 26: Italian bond auction.• Friday, Jan. 27: Italian T-bill auction.• Monday, Jan. 30: EU leaders summit. Italian and Belgian bond auctions.• Tuesday, Jan. 31: Ireland's troika of lenders releases its latest quarterly review of the country's bailout. Greece aims to conclude talks detailing new €130 billion loan deal, debt-exchange program with private-sector creditors by this date.• Wednesday, Feb. 1: €25.8 billion of Italian BTP bonds due.—Emese Bartha, David Roman, Neelabh Chaturvedim Alkman Granitsas, Patricia Kowsmann and Eamon Quinn contributed to this article.

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  156. Sorry, formatting doesn't hold up...

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  157. This quarter's comparisons are not as difficult as the first and second quarter of 2012 will be - that's when all companies ordered extra of everything (just in case) as a result of the Japan quake.  That's why I expect the market to roll over sometime in January.  I agree with you on INTC, AMZN, and AAPL.  If AAPL misses it will be game over. 

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  158. looks to me like we're heading lower tomorrow -see attachment- since this wave 2 was merely corrective (though impressive), and most TI's, especially the SSTO are screaming O V E R B O U G H T...

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  159. interesting EWT reading: Market Looks Poised to Reverse Hard to Downside Within Days
    (By David Banister Dec 29, 2011) http://www.minyanville.com/businessmarkets/articles/elliott-wave-theory-fibonacci-fibonacci-retracement/12/29/2011/id/38598

    and to add to the "earnings season" discussion: 
    Record S&P 500 Companies Warned in Q4 
    http://www.streetinsider.com/Guidance/Record+S%26P+500+Companies+Warned+in+Q4/7046155.html

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  160. Haha. When I was growing up P/E of 12 was normal. Now, in a world that's "compromised" it is considered cheap!

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  161. I mean, the disconnect between the theme of "warning" and the dissociated talking-head verbalization is kinda remarkable.

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  162. Ah, details details. We'll be OK. Consumer confidence is up!!
     
    A Serious question for the group though. Was listening to a very interesting radio interview with an econ professor from Brown I think - can't remember his name - An Irish ex-pat. He actually had some very good insight into the problems we currently face as a global economy, and was of the mind that we face some real rough road ahead financially. Ugly actually.
    He did have a somewhat different view as to what was going to be a "safe haven" though. His theory is that Europe will collapse financially, pressuring China greatly and all financial investors worldwide will run to the safety of the US dollar, pressuring our markets, however they will also run to US Stocks as a safe play, creating a rising Dollar and S&P500.
     
    I'm just trying to wrap my head around the thought of European investments pulling from there and pouring intoour markets and the Dollar/Euro/S&P trade decoupling. In his scenerio US Dollars, US Stocks and I believe he mentioned US Treasuries rise.
     
    Any thoughts?

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  163. The only thing I can't understand is gold. Otherwise, his theory sounds right.

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  164. Dave,

    I agree that the US will eventually gain to benefit; but only after the Europe faces the actual financial collapse.  Banks have been withdrawing from Europe already but they are in the midst of selling their non-core businesses to raise cash.  They do not yet have resources and calm order to signficantly invest outside their core geographies and into the US to have any impact felt (by the US).  Before the US benefits, the global markets will need to feel  the pain of a European collapse.  That means the S&P and global indexes will plummet first before they rise again.

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  165. Great article, Arnie. My theory is that longs are about to get ruthlessly run over on a move back down to at least 1,225 in the very near future. There are no buyers up here. This light volume nonsense and slow motion up days wuth EOD runs of a couple points to print an HOD close is great for fakeout bull sentiment and to close out a dismal year. And for the Street to sell to the hopeful.

    But if anyone wants to see who can push around whom when there's a real move to make, you need look no further than yesterday's session. That was a preview. Today was necessry to clear out weak shorts and lull longs.

    Those same sellers that ran the market yesterday are still very much in play though. Just biding their time. And this market just doesn't have enough buyers left.

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  166. BR, I agree. Why short at 1255 when you can at 1265! Added 10-point bonus. I placed some SPY Jan' 12 puts (23 days until expiration) at 126. Should be profitable.

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  167. "Occupy Their Mom's Basement" classic.  :)

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  168. Today was an inside compression bar, which implies buyers will come in above yesterday's high, and sellers below yesterday's low. 

    NDX looks like the weaker sister again.  Could have been it for da snap-back rally...  at the very least, we should see some lower prices than the close tomorrow.  It looks like it could turn into a flat correction.

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  169. Latest AAII sentiment:

     Bullish: 40.6%, up 6.9 pointsNeutral: 28.6%, down 9.4 pointsBearish: 30.8%, up 2.6 points

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  170. Looks like we may have lured in enough bulls up here to mark a top eh?

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  171. I'm confused as to whether "correction" means a move up or down these days as its so trendless

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  172. financial collapse in Eu/Eu banks will neccesarily bring down US banking/financial system...they are tied at the hip...no way to decouple the! The derivatives domino collapse is just one part of the joint hips!

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  173. PL, isn't 45+% extreme bullish sentiment reading?

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  174. I have a feeling you're not asking a serious question, but more making a point... but I'll answer it as if it were a question.  :)

    I always use "correction" in reference to the trend at the very next highest degree.  So, in this case, a correction is against yesterday's move down, which I feel was, at its most bullish, the A leg down of an ABC.  It's possible that today was a-up of the B leg of that correction and we still have B down and C up to come, but that could unfold as a trip back to yesterday's lows and then back to today's highs -- in other words, a "flat" correction.

    Or it's always possible that yesterday was something else entirely.  When the market is "trendless" as you mention, it's sometimes much harder to get a read on what the wave is "supposed" to be.

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  175. Flat correction? what's that? another useless sideways day? would be the perfect close for the year to sum the whole year up in one trading day; the last one. nobody wins, nobody losses, everybody frustrated. That's what you get when central banks start to tinker with the markets on a weekly basis to keep up appearances... 

    Shoot, I completely forgot to check the NDX today; been sleeping at the wheel 'cause it was so boring. That one looks also ripe for the picking.

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  176. I'm not complacent, FWIW.  I'm still quite leary of a run toward 1310, however I do believe at least some further downside is due first.  The market is in total limbo at this level, further highlighted by the inside compression day today.

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  177. LT average for AAII is 39% bulls, 30% bears.  So it's about average right now, as opposed to extreme.  However, it's not required that it be extreme at this point for a top to form.  If the larger trend is down, then a slightly above average level of bulls is bad for longs.

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  178. Something along those lines.  I would really have to draw a chart for it to make more sense, I think.  But the ABC is only the bullish count, and ignores the bearish potential.

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  179. just saw your response- ironically this would coincide with the mayan calendar 'end of world' thing

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  180. Solid work the past few days Pretz.

    When you get a chance, which might be never and that's okay, curious what you see in silver. Last update I believe you had done was on 11/21. Great call on the $25-$27 range BTW as it touched down near $26 early today with a big bounce back near $28 as of this pm. I see a test of the low $20's but interested to see your take on it, as you did show a bounce higher from around here on your previous chart

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  181. Very interesting correlation!

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  182. ty!  I'll try to take a look at it over the weekend.  You might want to remind me on Saturday or so. 

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