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Thursday, December 1, 2011

SPX Update: Uncle Ben Saves the World?

Once upon a time, in a land far, far away from Europe, there lived a very generous Central Banker named Kindly Old Uncle Ben.  One day, Kindly Old Uncle Ben was happily cleaning his printing press, while humming the theme song from The Apprentice, when suddenly a powerful sorcerer appeared before him.  The sorcerer's name was Evil Lord Keynes. 

Evil Lord Keynes wanted to gain control of Uncle Ben's vast financial resources, but Uncle Ben staunchly refused.  Upon hearing this refusal, Evil Lord Keynes became very angry, and decided to place a curse on Kindly Old Uncle Ben.  Lord Keynes took three steps back from Uncle Ben and shouted his magic words: "Caveat Emptor!"  As his green cape billowed and coursed with the Infinite Powers of Fiat Currency, Evil Lord Keynes waved his magic wand (made of gold-plated plastic) and with a flick of his wrist, forever cursed Kindly Old Uncle Ben.  This wicked curse forced Uncle Ben to lend money, print money, and just generally throw money around at random in an almost compulsive fashion.

Which is pretty much where we find ourselves today.  (It all makes sense now, doesn't it?)

Needless to say, by now everyone who doesn't live in a geodesic dome somewhere in the Montana wilderness knows that yesterday, the Federal Reserve led an effort to coordinate six Central Banks in order to make it easier for everybody to borrow more US dollars.  Well, everybody except you, of course.  Especially if you're a middle-class American. 

No, this American money isn't really for Americans.  It's for foreign entities who -- if you can believe this -- have even less fiscal discipline than we do.  Basically, the Federal Reserve has reaffirmed its willingness to operate as the World's Largest Payday Loan Company.  The big difference between them and a real payday loan company is that the Fed's interest rates are way better.  Also, in order for you to borrow money from the Fed, it's not required that you actually have a paycheck coming at some point in the future.

Anyway, the market was quite excited by this news, and the Dow rallied approximately 20,000 points in the first five minutes.  That's how I remember it, anyway.  I think it sold off a bit later, though, and only closed up 400-something.  Maybe I should look at a chart.

The challenge with any type of analysis is that it's based on probabilities.  Technical analysis and Elliott Wave are ways to increase your probability of being on the correct side of the market.  However, no form of analysis is a crystal ball, due to the complexity of the system being analyzed, and the fact that not all circumstances can be foreseen. 

I'm happy that at least my charts from Monday and Tuesday were pointing to further upside, so hopefully not too many readers got caught wrong-footed.  But even I didn't see a move this strong coming.  Needless to say, the market blew through my projections, and all lines of resistance, as if they didn't exist.

The long-shot bullish alternate count I've been mentioning each day has suddenly become less of a long-shot.  There are a few things holding the old preferred count together, but in order for it to remain viable, the market needs to slow its advance and reverse very soon.

The preferred count didn't have any key levels violated on Wednesday -- however, its odds have to be adjusted to reflect the strength of the rally.  There are a couple other things that, in my mind, allow it to remain on the table for the time being, as follows.

One is the possibility that Wednesday was an exhaustion move, similar to October 27.  If you study the charts, you will see several similarities between the two moves.  In an exhaustion bar, the majority of the buyers get sucked in all at once, and the fuel gets spent so quickly that the market falls down shortly thereafter (sometimes after another day or two of sideways/up movement).

Another is the fact that, despite the joyful news from Kindly Old Uncle Ben, the TED spread remains at its highest level in more than two years, which is an indicator of continued systemic financial stress.  And a third is the fact that the "bottom" wasn't formed with too many of the usual factors that make bottoms.

That said, this count could be eliminated quite quickly if the market doesn't oblige (see chart below):


The bullish alternate count has of course, roared into the spotlight, and could in the end prove to be the correct count.  I have illustrated on this chart one potential way for this count to unfold.  Please note that this illustration is largely speculative at this point, based on similar situations in the past (chart below).



I feel I have to increase the odds of this (short-term) bullish alternate to 35%. 

At this point, despite the massive three-day rally, there are still a few unanswered questions.  I remain medium and long term bearish, while the short term picture has become a bit clouded.  Things should clarify over the next few sessions, as the market gives us more information.  Trade safe.

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

139 comments:

  1. After one great week last week, closing out Friday at Noon.  I got greedy and put a bunch of shorts in before the close hoping for more downside.  The result is I'm still short and my account has been spanked good with the gap ups.  Lost all the gain and then some.

    Here are the choices:

    1.  Fold and wait and see
    2.  Keep some shorts and add some aggressive longs to see if the rally has legs
    3.  Go all long in a revenge move to get my money back
    4.  Screw it, I'm down big anyhoo - just add to the shorts and believe the real long term view is down and we'll get there at some point

    Anyone ?  Anyone ?  Suggestions please - looking to see what the group is doing

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  2. Pick a logical exit point if the trade continues moving against you.  Pick a logical, low-risk entry point for more if you're inclined to "average down," and know your exit before you enter.

    Pick a logical point to SAR (stop and reverse) if you think the rally has legs.

    None of that is trading advice, of course.  :)

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  3. Just to warn everybody, if today looks like it's going to be one of those "watching paint dry" days, I'm going to bed.  :o

    Been working non-stop here for 8 hours, plus put in about 3 hours earlier, plus managed to take the family to the beach for 4 hours yesterday (today for me) and I am friggin beat.  :\

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  4. weak-ish jobs data compared to yesterday's...  initial claims back over 400,000.

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  5. Anyone hear any confirmation of French banks close to failing?  That was the rumored cause of the Fed action yesterday.

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  6. Nobody liked my Kindly Old Uncle Ben fairy tale?  :( 

    That's a true story, btw.

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  7. Yes, I mentioned it in the intraday comments.  Wasn't sure of the bank nationality, but that was the word on the street -- huge European bank close to failure.

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  8. Good morning, PL. I liked your story. Going to watch how today unfolds to figure out what to do with my shorts.

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  9.  Wonder what mean Uncle Volcker would have done, through-out this decade.

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  10. Problem with the entry\exit points as you mentioned is none of the usual markers - 50 day MA, 1220 former strong resistance etc, are really doing much - market is cutting through them like a knife through butter so it makes it much more of a guessing game.  

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  11. Probably True.  They have had a ban on short selling their banks in place for awhile as they knew something was up

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  12. I might be trading my shorts for pants as its getting cold out !

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  13. I'm invested for the next wave down /correction from yesterday's euphoric blow off move. And I expect profit taking on Ben's Santa gift to longs.

    If it plays out differently, I'll bail though.

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  14. Wouldn't this just be the ultimate fake-out though?  Seems like everybody is *certain* it's going up from here, just like Oct. 27.  And who knows, maybe it is.  But it would sure blow everyone up if it didn't. 

    Just thinking out loud.

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  15. Yeah - your entry point is a lot better I as added shorts way down around 1160.  My only saving grace is I used fewer super leveraged ETFs which held the pain down.  I just don't want the next leg down to be starting from 1300 + or I'll need a freaking crash just to break even

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  16. Had some sell limit orders hit at 1245, so I have a smallish short position again. 

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  17. Vulture, you trade cash or futures?

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  18. Where we sit from the close yesterday:

    ALL indicators on EVERY chart (1, 3, 5, 15, 30, and 60 minutes) ended up pegged to the max at the close yesterday.  RSI, Stochastics, Williams, candlestick stuck to the upper BB, etc. 

    This had a lot to do with my decision to take short positions at the close yesterday.

    With the futes down slightly for the indexes, I am expecting everything to roll over and return to earth pretty soon here.  
    And if they don't, then I'll assume there is extremely strong buying pressure and bail on the short positions I took at the close.

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  19. If I was expecting the market to continue upwards, I would look for it to drop some first. Thats what I see in the charts.   Rarely do rally's sustain this rate of bullishness for long. So I'm looking for a bit of a pullback either way. Question is would my expected pullback be a reversal or not? 

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  20. Cash and lots of it unfortunately.  The futures are too easily manipulated and I'm convinced the FED is buying futures contracts with tax payer money to make things appear rosey.  That's called instilling confidence

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  21. I'm keeping about 50% of my shorts, selling some of the aggressive ones - SRTY, SQQQ and adding some hedge longs so I'll be about equal weight like a hedge fund until I see a direction.  Right now we're in that 50 dma-200dma sandwich of no-mans land.  It's F'ing aggravating.  

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  22. The thing is, these huge overnight moves are likely to keep up for some time, IMO.  Cash traders are at a big disadvantage.

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  23. Probably have a day or two of da Boyz selling their inventory to stranded shorts right near the top (assuming we're near the top here) before we roll.  We'll see.

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  24. Everything rolling over as we speak.  Keeping my finger's crossed.

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  25. My double down at the close last Friday was simply the dumbest ass thing I can remember doing.  Goes to the adage pigs to get and hogs get slaughtered.  I'm sure I'll make it back on one of the larger moves up or down, but right not it stings like a bitch - and no-one to blame but myself - or Uncle Ben LOL

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  26. Also I should clarify that I'm thinking between the top and about 1233 as a distribution zone.  If we drop faster and farther than that, it will add a lot more credence to the wave 2 scenario.  But remember what happened after Oct. 27 -- market was pretty quiet the next day.  I'm thinking we might see something similar.

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  27. Hey thanks for the look on AD, PL. We definitely have some room to extend the upward movement.

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  28. The Uncle Ben story cracked me up  +10.  I just started visiting your blog about a month ago after a referal from the Wall Street Examiner.  I have been interested in Elliot Wave for some time because my trading system lacks a cog for projecting where price may go.  I use supply and demand zones to guestimate where price may turn, but a lot of times it gets me out of my trade early because the zones are layered and I wind up cashing out on them prematurely.  With the exception of here (obviously) are there any resourses you would recommend that might lessen the learning curve?

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  29. I was all set to short LULU yesterday and then the market did that stupid rally and I had to conserve what's left of my capital....what happens? LULU drops 14% today. I can't catch a break here. One deflated bear I am.

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  30. PL interesting chart here
    http://blog.kimblechartingsolutions.com/wp-content/uploads/2011/11/500lifeinsidetheflag.gif

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  31. Indicators were turning down and are now pegged to their upper limits again.  Buyers are asserting themselves on the open.

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  32. Those are the worst. 

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  33. It makes my day to start it off with a big hearty laugh and that is exactly what I did after I read your post!  LMAO

    Stuck between 50 and 200 day.  I see it dropping down to around 1230 and then clearing the 200 day for a day or two, to make it appear like a nice consolidation pause and then down.  They have to push this rally as everyone thinks its fake.  Imperitave to the case to hold it hear for a least a little while, otherwise all CB's loose face.

    Questions is, for me, will it happen by Dec OpEx...hmmm   The VXX came down, but option prices are still unusually high....   Any thoughts?

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  34. The only thing I found was of an indirect nature.  It is zerohedge, so they have a tendency to be a little sensationalistic, but many a time you can find the pieces to confirm the puzzle.

    http://www.zerohedge.com/news/dollar-libor-market-hints-credit-agricole-was-bank-x

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  35. Ty BA, and welcome!

    The "recommended reading" list on the right sidebar has some pretty good places to start.

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  36. Thats a wonderful story.  Explains a lot.

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  37. Just anecdotal -- I've noticed that usually when it's a rally w/ real legs the put prices drop like a rock almost immediately.

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  38. Just because it's what I'm doing....  I like #4. 

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  39. Looks like a bottle of euphoria juice spilled all over the Nasdaq. Clean up on aisle 5.

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  40. As to MYSELF, ANON20, I AM SUPER GRATEFUL for yesterday's MANUFACTURED SUCKER'S rally, pure 5-wave bull-SUCKER STUPID-money, and I am now acquiring money for myself from wherever I can get it, and as soon as it is deposited and cleared TODAY, I will be ADDING MORE PUTS with both hands, and across the board, on all MY weak sisters, that I assure you, I will DEEPLY SKREW, by year's end---weak usa bumbanks, senior silver and gold overbloated miners, and more usa (insanely-overpriced) new homebuilders, which, IMO, should all be bankrupt by now. 

    I just hope this KRAP FAKE hyper-ballooned market right now, doesn't CRATER before all MY PUT bets are IN.  Because I have 2 more hours for my new cash to enter my account, and then---buy buy buy---PUTS.  Since even as a kid, I never believe in Santas, Wizards, nor even Crucified Turkey Masochists.  I ALWAYS knew they were ALL SUCKER'S play. 

    FYI, there is very LITTLE potential upside from here.  As a matter of fact, due to a whole SLEW of VERY strong resistance indicators, weighing heavily as I write, on this FAKE MANUFACTURED huge rally.  And so ALL I am worried about right now, is that I want to get MY PUTS IN, and right now, but I can't---because I have to wait 2 more hours, until the new seed money, is inside my account. 

    SO COME ON, STUPID-money 5th-wave bullish-SUCKERS, HOLD KRAP FAKE MARKET UP FOR ME, A FEW MORE HOURS, EH, so I can FULLY GO AGAINST YOU ALL, TO THE HILT. 

    And that should make you all SMILE, right, bulls?   Because I CAN ALWAYS MAKE YOU smile.  The HARD WAY.

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  41. Alrighty then......  Anyway, I am also going to average into my short positions, though slowly, since while we're in agreement this house of cards will come down, no one knows precisely when, not even Anon20.

    Stops around 1270 level maybe?  Then it will have cleared the 200 day, channel resistance lines, flat on year etc.  My guess is if we do get to 1270 we will likely test 1292 and then 1307, though this thing could obviously roll over at any time with bad news out of the EU.

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  42. Just shorted a little es here @ 1248 +change with eur tickling 1.35 and at some resistance.  I have a tight stop if eur moves significantly through 1.35.

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  43. PL- cute story, but I don't thing the Bernanke is under a spell at all. I think the Bernanke came out with his guns loaded for bear. He shot something big and scary looking. The question is when the dust settles did he shoot a bear or a bull. I have my bets on finding a dead Bull when the smoke clears.

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  44. Awesome, wishing you the best.

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  45. Anyone ever wonder if ANON20 is a bull and just here to sucker everyone into a slaughter?

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  46. Also in the last post comments was Ray saying that it is possible that blue v isn't even in yet? That gives a whole lot of clarity to a 1050 target. Learn me please.

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  47. Thanks Pretzel for your cool and rational stand despite all the mess. I Thought you may like the link below.
    http://www.flickr.com/photos/expd/6431315113/

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  48. lol- I shoulda posted that w/ the article.

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  49. I bought a little LULU Dec put at closing yesterday and bagged a 160% gain today :-)

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  50. This story took place years ago.  Everything he's done has been a result of this curse.  Poor guy, he doesn't have a clue.

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  51. Funniest picture I have seen in a long time.

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  52. No, no.  He was talking about the same end point for the count at blue 1, but a different way to count the subwaves, which alters the retracement target for blue 2.

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  53. If bears can make a new low here before it trades above 1247.45, that would confirm a 5 wave structure down from the high.  Doesn't mean it couldn't be part of a corrective sequence, but it would make very strong odds for new lows after the next bounce.

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  54. What is the figure for the "new low"?  Not all the way down to the 1150 area, is it?

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  55. covered at 1243 +change with eur bouncing off support at 1.3460.  will be trading smaller (looking to sell rips) and intra-day until near-term picture becomes clearer.  Once wave 3 is under way will get bigger and into short and hold mode.

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  56. Which just happened 10 seconds after I posted this.  I'm looking at 1-minute time frames.  Well, I suspect you guys got this next bounce under control now.  I'm going to try and get a few zzzzz's.

    Dunno where Frank is today, but if he comes by, make sure he wipes his feet off before entering the blog.  Yesterday he got mud all over the streaming charts.  :o

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  57. Kid Denver, Bernanke is a PUPPET, and if you do not know that yet, you have not even dipped your toe into the tree of human knowledge.  Got to tell you, your leader PL, is nearly as much a sucker as you, in believing in stupid fairy tales for dreamy children.  There is so much sucker innocence on this site, that it is revolting.  No wonder the masters call you all: the children.

    PL is an excellent ew analyst, first rate, plus he works like a ragged dog (except when snoring through grandsupercycles, or taking his litter wherever his boss wife orders him to);  Because, yes---in many ways, he is still a child himself, that understands nothing, of how thing truly work, on earth. 

    But, listen there's no problema here, EVERY EXISTENTIAL pays his dues, and in his OWN blood, sooner or later.  EVERYONE.

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  58. Finally, wave theory with less pomposity and wishful thinking.  Way to go Pretzel - your alternate counts and daily updates are just the reality needed in this current wonderland.  

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  59. Jason, thanks for sharing your insights.  Your chart analyses are helpful but what happens when you have a demon-possessed central bank willing to violate all principles of sound banking?  Voila!  Anyway, keep us all posted in the days ahead.  Certainly yesterday's rally was artificially induced, so let's see when the sugar high wears off.

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  60. Thanks PL for clearing this thing out.

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  61. YES, I AM HERE JUST TO DESTROY -YOU- IN PARTICULAR.  YES.  RUN FOR HILLS, PUNK BEATCH. 

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  62. Are you suggesting that Kindly Old Uncle Ben is a FAIRY TALE?  WHAT???  Oh man.  I thought he was supposed to come down the chimney and leave Mortgage Backed Securities for all the good little boys and girls!  You just ruined my whole day, not to mention my expectations for this Christmas...

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  63. TY Kurt and Furrryrocious, and welcome.  :)

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  64. That was fast, new lows after about 3 minutes.  Alright, really going to bed now.  :)

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  65. Oh, and if the bears can hold it under 1244.14 here, the next stop should be 1235 +/-.

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  66. AMZN I am stalking you :P

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  67. I know a pull back of some sorts is always expected after a huge runup like yesterday, but is anybody else surprised with the weakness so far given the psoitive economic data out today (absent the jobless claims).   i would think the headlines would have been enough to keep the day at least flat?  I am glad it is weak though, hope it continues! :)  BTW, one saving grace for me was that my only short was crude via SCO and although I had to wait it out yesterday, SO FAR AT LEAST, things are coming back my way.  Hope others here are seeing green as well! 

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  68. Wow!  Could you please sit down?  I cant see the thread through your huge head.  I bet they had to grease your ears just to get you in here.

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  69. PL, I like you, not for your ew talent, I like how hard you work. You work addicted hard---like MYSELF.
    But I consider your humor sophomoric, at best.  So save the childish prattle, all it does, is separate you, from being a serious MAN, with a true ew BIGmoney business.  And I am sure the woman you love will agree.


    Enough said.  What happened yesterday has NOT violated any IMPORTANT gsc bear market scenarios.  NONE.  If I were you, child, I would PAY for EWI core services, you will LEARN so much, that it will BLOW your intelligent maui gaskets.  EWI has so much ACCESS to backup info, that you cannot even IMAGINE, you will NEVER compete with them, 30 years in the ew business, until you MILK all their info., running like a little ew smart pony, thinking you can outsmart an ew THREE DECADE INSTITUTION, is solely FOOLS play, and you are too smart and harworking for that.  If you wont do it for you, do it for your wife, and litter.  Trust ME, ANON20, on this---after only a few months of reading all their available data, your work will stratosphere, because you are truly ew smart.  But just linear smart.  Robbing EWI of their myriad resources, data, will make you---POWERFUL, not just a smirking wiseazz ew self-doubting punk, as you are now.  THEN---you can truly grow in depth understanding, maybe even create your own ew company, and actually COMPETE with the master, prechter.  Because right now, buddy, you are just a ew whiz slaphappy kiddie, playing at a serious investment business.  DRAIN Prechter of his data, for several months, by subscribing, and your wife will adore you, when you FINALLY become the MAN, at home.

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  70. I just dropped in a BIDU JAN 140 PUT.  Let's see how that makes out

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  71. Just doin his job.   I recall the pain of Volker doin his in early 80's.   Now he is revered.

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  72. BenedictArnold - not sure you are clear on the concept here.  This is for Traders, not Traitors.

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  73. Anyone check out the Crude? Looks like it is heading south. Maybe a harbinger of things to come.

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  74. Hi PL, do you mean we have too Visions: the Bullish and the Bearish? My Selling Indicator starts to suggest to get out of the market

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  75. I decided to sell my short position here at 1,241.  Seems the Street is happy to distribute to the masses above 1,240.  Still feels like a sucker's rally. 

    I don't blame sellers for not making a bigger push today either.  They did their job just keeping things below 1,250 and can sit tight.  Their turn will happen in near the future after selling overprice equities to the masses is over.

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  76. Aww, C'mon now.  Can't a guy have a little fun with a name?  

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  77. I'd be willing to bet you're hung like a stud gerble.

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  78. The DX likes to bottom within a day or two of the NFP.

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  79. the NDX has broken 2300. Pretz says that that indicator leads the others. Support for the Bullish Case?

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  80. Sellers making a move here with the ST indicators all trending up, they pounced and turned everything back down at 1,244.  Had to  have caught bulls off guard.  And now here comes 1,240.

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  81. PL, as usual your writing
    skills match your technical analysis of the market! You CRACK me up dude! That
    said, since nobody new BEUrnankEU was about to sell our dollar cheap to banks
    in the EU and not to its needy fellow Americans, I still think your preferred analysis was spot
    on.


     


    IMHO we've seen an
    exhausting gap as you mentioned, but it could have been run-a-way gap as well.
    But, the former is more likely as of now since A) the market is not following
    up; B) no gap up, actually a minute -0.05- gap down; C) because of the
    size of the gap, which is more evident in the
    SPY candlesticks than in the SPX charts and; D) the
    near doubling of volume yesterday. (Yesterdays high volume was the giveaway
    IMHO; probably more shorts covering then actual buying!?) Often there is a last
    push to upside (was that 1250 in this case!?) before the plunge… The next few
    days will tell if this was an exhaustion gap or a run a way gap… If it’s the
    former, get ready for the plunge!

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  82. Sorry went to the wrong place. PL thanks for clearing up the wave question before

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  83. Who Ben, but he is such a nice grandfatherly type. :P

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  84. This may not help much for day traders, but it puts the long-term in perspective....Jim Rogers is not a fool!

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  85. Sorry I missed the link, try again!
    http://www.zerohedge.com/contributed/jim-rogers-qe3s-already-started-im-shorting-stocks-long-commodities-and-currencies

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  86. PL and Colorado,

    Sorry! I meant clearing up this thing.

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  87. Looks like Pretzel chose a good day to sleep..

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  88. Does it *seem* to anyone watching like the Street has ANY intention of keeping prices at this level or above after they spend the day distributing?  

    I'm currently interpreting today's upward moves as intended simply to keep prices above 1,240 to sell off as many shares as possible that were bid up in the past few days. 

    And also seller's lack of urgency being that they are just waiting for their turn, which probably comes in the next day or two.  I think they are content right now to simply hold below 1,250. 

    Curious to hear other's thoughts?

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  89. Could be consolidation before another leg higher.  Hedge funds buying the dips everytime it drifts down to 1240, looking for their chance to get in so they don't miss the 100% guaranteed Santa rally everyone is looking for.  Hedgies have been getting out of the market all year according to the news outlets.  More QE, in effect, could be luring them back in.  This could be the start of another 3-4 week push, this time to about 1307-1320.

    But then again, I am short, having averaged in further today.  Will likely bail though if we start going higher.  The bankster gamblers love their free money to gamble with in the market so its tough to go against that.

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  90. ben prints money for bankers to lend --- the bankers fuel prices instead --- the masses seem confident seeing higher stock prices, they 'buys on dips'--- oh wait! this story has already been told.

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  91. For all you maximum pain theorist, max pain = the market does nothing all day. It is like watching grass grow on a Colorado winters day. I wonder if anything happens before on the close? probably not.

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  92. Thanks for the reply.  I'll hold off on holding any short positions overnight.  Today has been a day trader's dream, though the range has been a bit compressed the last hour or so.  

    Given the upside possibility you mention, I'll wait for Pretz's update and to see what the market shows us before taking any overnight short position again.

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  93. Well there you go - there's a TA methodology out there to support just about every opinion on what's going to happen next. (Top of the Bear Market Rally: January 23, 2012 http://www.financialsense.com/node/7005) Interesting stuff, but somebody has to be wrong!

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  94. I agree Bob. That's what the last big up move looked like - Big push up, digestion day - hardly any pullbacks until the whole move ran out of steam.  

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  95. Though the similarity to Oct 27/28 is compelling - large up day on higher volume followed by a doji.  Sadly the best way to play it would be to trade futures and be flat and watch the news stream at 3 or 4am EST.  If futures take off with Europe go long, if they nosedive, go short.  Sad that either way most of the trading will be done before our cash market opens, as usual.

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  96. serious battle going here in the last 15-30min... who will win. Make your bets! 

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  97. The down days from the prior week were identical but inverse, so I'd give it a coin toss.

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  98. Looks as though we'll close the session in the red, but above the LOD. 

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  99. flat.

    i think we already had the big year rally.  wouldn't it be max pain if we just sat here for the next FOUR WEEKS!!!  hahah.

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  100. Another minor note is the fact that transports and the R2k are underperforming.  Though the NASDAQ is outperforming.  Re: the Oct. 27/28 analogy, I wonder if tomorrow will be like Oct. 5 or 6th or if it will be more like Oct. 31st.  I'm hoping the 31st, but wouldn't be surprised to see more upside.

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  101. The market NEVER sits anywhere for long.  Money is only made if it moves to somewhere. 

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  102.  Today's trading looks almost like a mini-fractal of the daily chart since the August waterfall.  We had one of those a few weeks ago, around 1,250-ish.  And the market promptly fell hard from there.

    The strong push down at the close looked to me like locking in longs and trapping all of their buying underwater. And also making EOD shorts have to take a position at a lower level.

    I didn't buy the close, but it the temptation to go short again was rather strong.

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  103. P.S. Beat off sandwich.  Every rally from march of 2009 has been fake and manufactured.  Thanks for pointing out the obvious Captain O.

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  104. Keynes had a poor theory but a good saying... "The markets can remain irrational longer than you can remain solvent."  Even Bass with his astute grasp on MBS's found this to be almost true for him in 2007.

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  105. I'll buy a December CALL on your stubbyness.

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  106. Pretzel, when you get back online I am curious about the levels you are watching on PCLN.  Hypothetically, one might consider shorting here at the backtests of moving averages at $490 (or even better $495 if we go up tomorrow), looking for a move down to $440.  Would hurt to see it go back up to $550 for the fifth time since May though.

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  107. The Nasdaq outperforming is a GREAT sign for bears.  Means money is playing the peripheral equities, while there is less action in the major industrials. 

    My understanding is that that is market top behavior.  Born of frustration and impatience with non-movement in the majors.Not being able to tell if it's October 27th or October 5th is a rather good reason to not be holding anything overnight.  So that tomorrow can be traded either way.  I actually made as much going long today off of the bounce off of 1,241 than going short.Was VERY tempted to get short again at the close with the EOD sharp move lower.  But doing that yesterday made for a more stressful evening than I'd have preferred.  It's no way to live, even though I felt serene and tranquil when I sent in the order.  After that is all of the what-ifs and second-guessing though.And with the market opening up at the same place this morning as yesterday's close, the whole thing turned out to be entirely unnecessary.  I've consigned myself to primarily trading the opens and intra-day moves and working with what the charts and indicators are signaling to me.

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  108. Looks exactly like 10/27-28 for SPX with exhaustion gap and volume surge yesterday and VIX is sitting on bottom bollinger bands. If so we could have a quick slide down soon.

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  109. Cool.  And good to know.  :)

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  110. I just compared a daily DJ chart to the 87 crash chart and the 29 crash, although I am sure there are many other comparative charts that didn't end in a crash the similarities are totally striking. If this market breaks it truly has some earth shattering capacity.

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  111. LOD and HOD closes.  A few thoughts:

    Yesterday we had an HOD close.  

    Today's close was near enough to LOD to hold virtually everything bought BOTH today and yesterday underwater.  Look at the volume traded below 1,242.  It's not much.

    I've always viewed HOD closes as bearish and LOD closes as bullish.  It's not a hard rule but a general one.  The reasoning is simple:


    HOD Closes:  Everything bought that day (and prior) IS STILL ABOVE WATER.  Which encourages more buying the next day and creates the belief that all is well by the gullible who see the chart and see strength.  

    It also discourages retail shorts who see a strong closing market.


    LOD Closes:  Everything bought that day (and prior if a rising market) IS UNDERWATER.  It closes out the recent run up and forces all ST players to sell at a loss if they want to get out.  

    It also forces shorts to enter on a declining market, which may be encouraging to shorts but also reduces their gains and makes them chase.


    So we have an HOD close yesterday on virtually NO buying run up and actual money committed to the matter by longs (it all happened in the Futures market). 

    And then a near-miss LOD close today.  And voila! all buying in the last two days is now underwater and trapped.


    Meanwhile, buyers have had to contribute very, very, VERY LITTLE ACTUAL MONEY to this whole charade.  They only had to run it up at the close yesterday and then play keepaway from 1,240 today and show strength at today's open.  That's not much all in all.

    It all points to a rather logical conclusion.  

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  112. Any chance you could post charts?

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  113. Lookslike Pretz's alternate count may be in play here ( even though I don't like it), best thing will be wait until
    it reaches 1290-1300 level, then go SHORT all in.  This again underlines, Mr.MKT can do ANYHTING, at ANYTIME, for ANYREASON. All we can do is adjust our plans accordingly. 

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  114. Today really didn't give much information either way.

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  115. Hi PL,

    I just saw the news, Germany/France agreed for more active role for ECB, which means QE for Euro, which they are likely to announce on Dec 9th. This may push the mkt little higher fromcurrent levels to 1290/1300 and then the inevitable.

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  116. High of the Day, Low of the Day

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  117. Agreed, would love to see the chart

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  118. It is not a great chart and I am sure someone gots better but here goes

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  119. FYI, Posted the charts where the discussion was

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  120. Looks like the markets went into a trash compactor. Can we get a smaller trading range? It is like waiting for a jury to come out with a verdict.

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  121. PL,

    Looking at todays charts makes me think of the classic quote from the old "Airplane" movie....."what can you make of these charts?"   "Well, you can make a hat, or a broach or, look a terradactyl!"    Thought you could use a little levity, but that movie may be a wee bit old for you!!!   Never say die!  Cheers!

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  122. "...even though I felt serene and tranquil when I sent in the order. After that is all of the what-ifs and second-guessing though."

    Perfectly sums up the feelings of taking a position anticipating a trend reversal!  At the close 0n 11/25 my gut was telling me to BUY the market.  I stayed out (to avoid the what-ifs and second guessing) thinking I'd pick it up on Monday morning... and the rest is history.

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  123.  Airplane is a classic!

    "I've got sick people here.  How long 'til we can land?"
    "I can't tell."
    "You can tell me, I'm a doctor."
    "No, I mean I just don't know."
    "Can't you take a guess?"
    "Well... probably not for another two hours."
    "You can't take a guess for another two hours?"

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  124.  btw- 

    Just a quick shout out to a certain donor (who wishes to remain anonymous) for his *third* donation!  Thanks, your support is very much appreciated.  :)

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  125. BOB, I dumped my PCLN puts for 350% first thing on Monday morning, so I'm not actively watching the chart anymore.  I'll try to get back to your question after my work's done.  :)

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  126. It was clear by the end of September that Bernanke was going to help the Eurozone.  Barron's reported that Friday, November 25, credit was seizing up in Europe.  This was not a surprise move.
    Chuck

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  127. +1 lol, this market makes about as much sense as June Cleaver talking Jive.  What it is blood, that jive ass turkey Uncle B done jacked up my bounce sell.

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  128. hey pretz, what do you think of this count? Its not my work but it seems like a possibility?

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  129. Looks exactly like my bullish alternate count, except he's viewing the whole move for the year as part of an abc.  I intend to consider and analyze that possibility more carefully when the time comes -- but in the medium term, his count and my count both get us to the exact same place.

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  130. PL do you think that we are now at 50 / 50 preferred vs. alternate? Do you think that the fact that the jury has been out for two days since the big Fed deal is bullish or bearish.

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  131. I'm still working, so my opinion is subject to alteration by morning, but currently my stance is pretty much the same as yesterday.  The market really did nothing to change it -- that I've spotted so far, anyway. 

    One thing worth noting is that today was the second close outside the lower BB on VIX.  Last time that happened was right before a big top in SPX.

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  132. Nice rising wedge on ES, may be good for a few points shortly

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  133. Nice call.  :)

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  134. Update's posted, so let's move future discussion to that thread.  :)

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