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Tuesday, January 3, 2012

SPX and Euro Updates: Still No Change Since Thursday

There's been no material change in the counts from as far back as last year (always wanted to say that).  The market remains balanced at a short term pivot point, and there's literally been no change at all since the updates which were published for Thursday and Friday.  As of this writing, US futures markets are closed; however, the rest of the world's markets seem to be very excited about 2012.  The German DAX closed up 3% on Monday, and Asian markets have been generally positive as well. 

Although the SPX reached its target zone (1269-1310), this zone remains an active target.  On Thursday, I felt prices needed to head lower on Friday, which they did -- however, I was looking for more of a move.  I'll admit that the world market party has left me feeling in doubt about the potential of lower prices over the very short term.  It bears repeating that a break above the recent 1269 highs could lead the SPX above 1300 -- however a top could form anywhere in this zone and until the short-term picture makes more sense, it's very difficult to nail down an exact price.  Since the short term questions from Thursday and Friday haven't changed in the slightest, I'm going to focus on the larger picture tonight. 

The first chart I'd like to share is of the NYSE Composite (NYA).  This index remains a favorite of mine, due to the fact that it's a much broader index than the indices generally reported by the mainstream media.  The NYA shows the same basic Elliott pattern as the Dow, however the NYA remains well-shy of its October highs, while the Dow has bested its October highs.  This suggests that there's been something of a "flight to safety" into larger companies and dividend-yielding stock, as opposed to a broad-based recovery rally.



The chart above highlights some interesting volume trends.  Going back to the March '09 bottom, one can see that the volume was quite strong off the lows, and then surged again in July '09 as the market rebounded higher off its first correction.  Moving into the 2010 correction, one can again see that volume was trending upward as prices rose off the base.  Contrast both of these with what has happened since summer of 2011, where volume has been steadily decreasing across the board.  Some have suggested that a new bull market is forming, but in my view, the decreasing volume doesn't give much support to that thesis. 

The next chart is the SPX.  Back on November 20, this chart was the bullish alternate count, but it has since shifted into the preferred role.  I wanted to share this chart because it provides a nice view of the October top, which was erratic and something of a blow-off top.  That type of top leaves a lot of confusion in its wake, as it tends to get market participants looking "up," blows up a lot of short positions, and then reverses somewhat dramatically.  It will be interesting to see if the market does something similar this time around.   

Also note on this chart how the market behaved at the last two target zones (blue boxes) in early and mid-December -- it tagged the target zones, reversed, and then surged back into them.  We may see a similar occurence this time around.


On December 4, I published a target for the Euro, which was hit.  On December 26, I discussed how the Euro looked like it needed to make another new low, and that has also happened.  It's worth noting that the Euro has now completed the minimum expectations for lower prices in this wave, and as such, could be forming a short-term bottom.  This would imply that if the Euro corrects higher into the wave (4) target zone, then equities will probably head higher right along with it.



As I shared on Friday, the sentiment among retail stock investors is very bullish, and this suggests that the market is in the process of forming a top.  Sentiment is never a call for immediate reversal, however.  The market can always continue moving in the same direction as the extreme sentiment levels for a time -- but high bullish sentiment does tend to argue against a large and sustainable move higher.

The first couple days of January are often bullish, as money from various fund sources flows into the market.  The short-term charts remain inconclusive -- but the expectation that the Minor (2) top is forming hasn't changed yet.  Hopefully, this week will finally answer some of the questions of the short term.  Trade safe.

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

173 comments:

  1. Yepper - going to be tough sledding on the short side as everyone will be bailing.  I think a lot of the members are holding the short hand so you gotta believe we are getting close to a top if you're going to short.  I'm holding a blend so my longs will partially offset my shorts.  I'll probably double up my longs at the open as this will probably last more than a day.  It's gapping out of a cup/handle

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  2. Morning all.

    I'm really tired tonight, not sure how much longer I can stay awake.  :(

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  3. Pretzel, I notice you didn't really talk much about your preferred and alt cases this time.  Did the ES movements this morning KO your previous preferred bear case completely?  any good idea where to cut losses?  Looking at your chart, I guess around the red trend line at around 1269?

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  4. The short term count for the last couple days has been, pardon the expression, a bear, since there's been no real movement.  TJ, you might want to check my response to you on the last thread for an answer to your question. 

    One could call this the shorting zone... so asking where to cover in the shorting zone is a bit of a tough call.  ;)

    Anway, this is one that the less nimble day traders might want to sit out until it clarifies.  Unless you're swing trading.  If you're swing trading, we're at levels where one might look to start scaling into shorts if one believes in the bear case. 

    If you're day trading, there are simply a *lot* of possible short term counts.  I have one which says this is the last wave up, similar to Oct. 27.  But that's not the only possible count by any means -- and there's not enough in the charts to lean me too much one way or the other to a specific short term count.

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  5. I guess a better question will be: where will you be covering or have you covered? :)

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  6. dude, he touched on that in the previous thread.  just under hod (1280). 

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  7. Actually, I'm out now at 1273.  Not gonna mess around w/ it all day.

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  8. morning PL. the bullish count makes so much sense: yank it up to unsustainable highs (1300 range) and then she really needs to crack. if 1260 is already overbought, wow think about 1310... futures up 20 points... crazy...

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  9. Wow. 1,280 already.  Quite the parabolic open. 

    I definitely did not hold anything short into the first trading day of the year.  This looks like it's going to be a short seller's dream come true just twenty points or so higher than this.  And I expect that I will be mostly trading long for today.

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  10. So 3 days have passed. Economists and hedge fund managers have started a brand new calendar that they got for Christmas and created brand new blank spread sheets that don't have all those ugly red numbers on it. With that clear view and such a huge change in the world economic situation in those 3 days (?) , they've decided that Europe will have no effect on the US economy any more. In fact, the market will be up to new highs in 2012 because it's a new year and all of the problems of last year are gone with the turning of a new page.

    Sounds like a sales brochure created to lure in retail investors and allow big boys to off inventory before reality strikes and they get stuck with it themselves.

    Methinks a top is near. Plus... it's really quiet in here... we must be topping out!

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  11. my SPY 126 put got vaporized, big loss... happy new year... 

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  12. You've got good discipline w/ not holding overnight.  I made the mistake of thinking I was reasonably safe w/ my futures positions.  Had to give a few bucks back to the house this morning.

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  13. Pretty much everything got fixed when the calendar rolled over.  

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  14. its okay. i got destroyed too so you're not the only one. kicking myself for holding

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  15. wow, i covered at the low of the day so far.  amazing how they managed to push TZA down just enough to clear out my stops at 24.35

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  16. ISM out at 10.  Bloomberg updates it live at this link:

    http://www.bloomberg.com/apps/quote?ticker=NAPMPMI:IND

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  17. warned you about KATZO on the minyanville site comments 2 weeks ago lol. when he makes a grand proclamation time to go opposite of him lolz

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  18. Sitting on some TZA I got in the mid 25 range. Would have been nice to have made the same decision as you, but am only off $1 or so right now, so still waiting to see how this plays out before I start the year with a  red number. Humbling, but not hobbling so far. Haven't hit my stops... yet.

    Hoping for reality to kick in... crazy, I know!

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  19. Put on a little short at ES 1275.75 just for fun in case ISM is hugely disappointing.  Tight stops.

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  20. Yes, I do. Have been burned way too many times.  And took into consideration that the first week of the year is not hold short against.  Too much happy and hopeful sentiment nonsense. 

    I did think last week that we were at the top though. But also thought that any run down would be easy to jump on as it unfolds.

    What's happening right now feels like the real trap though.  Big time.  We sit only 12 points away from the October 27th high.  I think there is NO WAY that the Street doesn't take that out and then cross 1,300 as well. 

    Which means we'll see massive bullish sentiment scores and indicators in the very near future.  Should be fun.

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  21. 53.9, up 2.277%. that's probably good so 1300 here we come?!

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  22. seems like good ism numbers

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  23. brian, exactly. makes so much sense.

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  24. Would be nice if this were an F'ing blow off top

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  25. Yep.  Everybody gonna jump on that bull bandwagon soon, if they haven't already. 

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  26. taking a 1/2 short here at around 1285, as the we retest the October high... imho we'll be seeing a drift upward as bulls squeeze the bears who held over the weekend....

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  27. Hi Pretz
    Happy New Year.  Got out of PCLN lat week at a small loss.  How is it looking now?

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  28. Wholly possible.  And somewhat likely, IMO.

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  29. can't beat them, joined them.  went into TFH at 754 before announcement

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  30. Only eight points from 1,292. And every bear pro on the Street has to know that this is not the time and place to be making a stand.  I don't expect longs to face much resistance other than to slow down the advance here and there. 

    All of the ST indicators I watch have been pretty much pegged to their upper ranges since the open.  Buying conviction and euphoria that lulls everyone to the soon to follow slaughter.

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  31. Hi, marc HNY-

    I don't have a good ST read on PCLN at the moment.  I'm just taking it slow right here -- there'll be plenty of trades to make when the charts clarify a bit more.  :)

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  32. I think there is no question that's what this is in process.  The bad headlines and pessimism will be back soon enough.  Reality will return.  And this market has a LONG ways to fall from here.

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  33. yea - the thing with economic data is it generally looks backward to last month or last week or last quarter.  That's why when you're in a recession the market tends to go up while people stare at crappy numbers and say WTF ?  Of course economic data looks backward and the market looks forward

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  34. this market has been overbought since 12/27 according to daily SSTO and Wm%R. the last time SPX  stayed overbought pro-longed was in october (10-27). The drop then was hard and steep.  expect the same to happen sooner or later. the higher SPX goes the harder the drop.

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  35. Would fit w/ a Minor (2) top.  Buyers piling in, shorts bailing... then *something* triggers a psychological shift and suddenly everyone stampedes for the exits.

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  36. Thanks -- I'll keep an eye out....

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  37. PL, isn't this the typical mood before the final onslaught? all is great, all is well. I recall you mentioning it in your "grand overview".

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  38. Yessir.  The more bullish the sentiment, the better it is for bears.  :)

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  39. stop sold at 756.5.  little consolation for this morning's bloodbath

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  40. Astro $.02 - The first two weeks of January are replete with positive and constructive energy  - 

    1/7 - Mercury (contracts/agreements/communications) interacts with Saturn (strategy/structure) and Neptune (merger potential).

    1/8 - Mercury ingress Capricorn and trines Jupiter (growth/expansion/potential).

    This energy runs all the way into Jan. 13 when Venus conjuncts Neptune (think rose-colored glasses) and trines Saturn (constructive strategy). 
    That same day, 1/13, Mercury conjuncts Pluto (contracts/communication regarding debt/taxes) and there is an Italian bond auction.
    Possible surprise days are around 1/8-9 (Sarkozy Merkel mtg 1/9) with Mercury square Uranus - this meeting may have some surprise statements/agreements involved.The first strong negative energy occurs on January 19 when the Sun squares Saturn (leadership runs smack into reality).This is followed by Mars retrograde on 1/23 - more about that later.Summation - Not a lot of bearish energy in the picture short term.  

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  41. I haven't had too many times recently where the short-term charts looked this sloppy to me -- but that's fine.  Even if I have to wait a couple days or a week before taking another postion, so be it -- sometimes discretion is the better part of valor.

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  42. Agreed. AAPL is lagging and the RUT should be up 3.5% by now but is not. Some conviction is lacking here, imo.

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  43. It's entirely possible that this scenario from Thurdsay's article is at play here:

    http://1.bp.blogspot.com/-iLdUYz77lOI/TvxMl9JVyWI/AAAAAAAAA3g/uYMcNdXd6Ec/s1600/spx+alt.png

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  44. S&P downgrade me thinks is the trigger. They said they would publish sometime in january

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  45. We would be up near (3) w/ today's rally.

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  46. where would the theoretical bottom of the blow off top be assuming this is the top right now

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  47. Hi PL! This is my first post! Congratulations you seem to have a really good grasp of things. I am about to make a good contribution as soon as I make up my losses so far. :-)

    I bought TVIX and FAZ last Thursday and I am considering bailing out (selling) today or waiting to see whether this rally will run out of steam today or tomorrow. So far it looks like we might have reached a top early in the session.

    What would your experience and/or instinct suggest?

    Thanks a lot for your continuous assistance and persistence!

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  48. Yep.  This is all very, very good bear stuff.  You don't want to hold against it, of course.  But being bearish AND making money at it means being very PATIENT while the market works through all of it's falsehoods and irrationality.  Which is generally not a fast process. 
     
    The doldrums of mid-January and the reality of the world's economic situation will be back with us soon enough.
     
    Really looking forward to seeing the sentiment scores by the end of the week.  Assuming the market holds up here for that long and no headlines come along to ruin the buyer's party.

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  49. i so think this is at play and by the time minor 2 is in the market is so over bought it ain't funny anymore (for the bulls), for the bears it will be!

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  50. Cool.  That now 'looks' right.  Though hell, I though the market was going to get driven downward big time to start the week.

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  51. Hi pretzel

    concerning nasdaq 100= $NDX
     as 1295/1310 is a good place to add short on the Spx via SDS (what i do and did  at 1257)  where will you initiate a short position on the nasdaq 100...???
    I use QID

    for the rest i remain convinced a very cold shower is going to fall soon....

    thks a lot

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  52. Hi Panos, welcome.  :)

    Short term, there are literally about 8 viable possibilities.  I'm sitting out in cash at the moment, so I don't have any brilliant suggestions to help bail you out right now - sorry.  See my post below for one of the short term possibilities. 

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  53. Good morning PL. Thanks again for all your hard work and this "map of the future" which will help with planning.

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  54. I *suspect* that this is a good place to go long at 1,282.  Buyers grabbing all the shares they can at this level before ratcheting up higher.  May get a small fakeout move down before that, but this seems an ideal place to go with the flow.

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  55. NDX looks like it's gunning for a double-top around 2375-2410.  2402 would be the perfect world target.

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  56. lol - If this is (3), why not wait for retrace back to say, 1277 first? Looking at you thru contrarian glasses. lol

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  57. Market should find support around 1279-80 under the wave (3) scenario.  It's not *required* to, and could certainly fall to 1277 without it creating any issues for that count... but that's the most likely support zone.

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  58. PL, good call on your SLV chart from back in Nov.--this one could run.

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  59. nice. hopefully I can unload some shorts on the pullback and go on from there. thanks for your analysis pretz

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  60. Thanks, Dale.  Yeah, that one was definitely a winner:

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

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  61. ok, when the bears start to go long, i know the top is in :)

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  62. At this point, bulls don't want to see 1269 violated.

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  63. I hate Disqus... That's not a new chart I was trying to post, so you can ignore it.  It's the same chart from before, it will just attach itself to every post I make now.

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  64. Topping is a process, didn't ya hear? :-)

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  65. There's another viable short term count here (NOT SHOWN ON THE CHART THAT IS ATTACHING ITSELF TO MY POSTS), which says that this is the final C-wave of an expanding ending diagonal.  If that's the case, SPX could be within a few points of the top. 

    That's one of the reasons I'm taking a neutral stance here until I can make more sense of the very short term. 

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  66. Just a FYI ....

    Throughout 2012, the world sovereigns will have to sell USD 8 trillions of bonds. Most of which will be from developed economies - USA 3- T, Japan 3+ T, Italy 0.5+T,  France 0.4-T, Germany 0.3+T. It is not clear where the cash will come from, nor how will the competitions for money affect interest rates.

    This may have ST/IT/LT impacts on world markets.

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  67. Toppings are a process too.  Like pepperoni.  You can't just throw one big pepperoni on the pizza and call it done. 

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  68. hahaha a little comic humor to brighten my day

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  69. Brian,

    That fakeout may have just happend starting at 11:45am ESt.  This is certainly an exciting day. 

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  70. I'm not a perma bear, and there are very, very few days that I don't make at least one or two long trades, even on down days.  Because there are obvious moments where a bounce is due. 

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  71. I HAVE BEEN WARNING YOU PUNKS FOR OVER A WEEK, ONCE MY MAJOR TRENDLINE AT 1255 AREA WAS EASILY BROKEN ON XMAS, PLUS ON LIGHT VOLUME, WHAT IS HAPPENING NOW, AS I TOLD YOU, WAS A SLAMDUNK, A FAST RIDE TO MID 1290'S AREA---I HAVE WARNED YOU ALL REPEATEDLY, FOOLS.  THOUGH I DID EXPECT IT TO OCCUR LAST WEEK, NOT THIS WEEK.  WHATEVER.  ONCE BROKEN, IT WAS A SURE THING, AS THERE WAS NO RESISTANCE AT ALL, UNTIL THE NECKLINE (THE OCT. 27 1285 TOP IS MINOR RESISTANCE, NOT MAJOR).

    I CONTINUE TO BELIEVE THE NECKLINE OF THE MULTI-MONTH H&S WON'T BE VIOLATED WITH A CLOSE ABOVE IT.  INTRADAY YES, BUT NOT A CLOSE.  AND WHERE IS THE NECKLINE RISING TO, RIGHT NOW?  ITS AROUND 1300, ONE OF YOU LABEL IT, EXACTLY, I WANT TO KNOW, TURKEYS.

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  72. Chart's gonna come up with this post, but *the chart attached to this post has no bearing on anything!*

    I just published an article I've been working on, w/ some thoughts on trading... and at the end, it discusses a way for folks to help support the blaaaaawg if they're so inclined.  :)

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  73. Hi Pretz, happy new year.

    Not sure if you were able to look at SLV over the weekend. Seems it may uncover hidden messages. Do you still believe this is the start of big Red 4 in your preferred count, or have you been able to uncover the more "bearish" trend you mentioned. I believe it has high implications b/c if SLV is truly starting big Red 4....then the implication is that bears are in for a LOT of pain. If the more bearish trend is unfolding, than it would fit nicely with the "near top" call for the equity markets. Your thoughts?
    Thanks!

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  74. Sorry... meant "this is the start of big Red 5"..."If SLV is truly starting big Red 5".... Apologies for the confusion.

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  75. Yeah, I remember this warning:

    "Imbeciles, I have already told you all for 3 days, what the story is---if you know how to read, that is.A closingprice above mid1250's spx is IMpossible. MY primary trendline stops it; plus, so does 200day ma.I give this 5thwave of 5thwave of 5thwave STUPIDmoney SUCKERSrally--that I PREDICTED--MAX until this friday."

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  76. I haven't taken a hard look at silver -- but its big brother gold looks like it just started an impulse down and is now in a 4th wave sideways/up.  Could be bad news for PM's.

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  77. you know, if you say every scenario under the sun, eventually one will be right

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  78. Thanks...yeah...Definetely see that implication with GLD...If so then SLV still has room to go down end extent ALT3, trouble is I don't see how the recent run-up fits ALT3 count to go lower.... :( Need more EW training for sure!! Thoughts on how this run up would fit within ALT3 at glance?

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  79. You know, it would actually be forgivable to make a wrong call -- if you didn't pepper your posts with "Imbeciles"; "Fools"; "Morons"; "(expletives deleted)" etc., and then go on to use the same derogatory terms when you reverse your call.

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  80. Well, the recent low wouldn't be Alt: (3) -- it would be another wave 1 -- wave 1 of alt: (3).  With wave 2 of alt: (3) unfolding up now.  Make more sense?

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  81. Now this is an interesting development for the market -- fell below the prior wave 4 base.  Depending on how far this falls move falls, it might really help take some of the ST options off the table.

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  82. Pretzel i have been monitoring the RUT charts closely since the lines you drew appear easier to understand to my untrained eye.  This morning, we clearly broke the 753 resistance easily, and I was thinking it will serve as a support next but we just crashed through it, now at 751ish.   what do you make of this and the overall implications for SPX?  Whipsaw and crash from here?  Or do the RUT lines need redrawing?

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  83. No, doesn't need redrawing: that's a pretty clear resistance area.  Keep that in mind, though -- it's not like an impassable "line"... those lines are more representative of areas/zones.  Classic TA says you don't consider it a breakout until there's 3% penetration of the line.  And closing prices are important -- intraday penetration of support/resistance is one thing, but once a full daily bar is printed above/below, that's much more meaningful.

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  84.  Is this where to post Pretzel?
    Take a look at the candles on ES/120 and that gap, all of that has to
    get filled in.

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  85. I'd like to - post one that shows a real crash starting NOW !! :)

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  86. LOL - Stop the hate

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  87. Make sense... but WOW extremely bearish... end of world kind of thing!@! I know, I know ...that's exactly what you said :)...

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  88. Yes, this is the correct thread.  :)

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  89. It's entirely possible.  Look at Friday's chart with the Alt: 4 -- this wave would be 5-up, then that's all she wrote for C of (y).  It's just throwing darts right now, though -- there's still so much on the table ST.  SPX below 1269 would help eliminate at least *some* options.

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  90. GGecko, what you give me if that happens (a down starting now) lol

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  91. Hmnnnnnnnnn - a big thank you

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  92. PL, thanks for being so honest.  If the ST charts are inconclusive, you say so, give us fair warning and remind us that there are times when it is best to wait on the sidelines.

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  93. np -- drives me nuts when there's nothing that jumps out of the charts as significantly more likely...

    But what I keep thinking here is that this is how tops usually are, especially in a second wave in a bear market.  :)  The fact that it *is* so inconclusive is, by itself, an argument in favor of a top being very nearby, IMO.

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  94. You are truly pathetic, punk beatch maui shit.  you revert way back to when WE BOTH opined strongly, that the 1255 area would hold, due to major resistances there.

    BOTH OF US WERE BIGTIME WRONG, BY XMAS DAY.
    And I also explained WHY---THIS was supercycle grand bear TRAP, since start of shhthole amerika.

    However, moron, IF you had the BALLS, to truly quote ME, after we BOTH were wrong, after that day, you will see, and so will your likkazz minions herein, that you and I diverged, after that day.

    You continued to opine, that the LOW volume of the xmas breakout, was insignificant, and I CLEARLY STATED, it was HIGHLY significant, that it broke above an 8th month trendline, so EASILY.

    You have continued bearish ST for 6 days, when I TOLD YOU, IDIOT, that that breakout WAS important, at least shortterm, and it would ride the spx, st, to mid 1290's.

    Now make yourself USEFUL ( for a change, over this last week your PREFERRED count has been DEAD WRONG), and tell ME EXACTLY WHERE, the neckline of the h&s plots, EXACTLY, RIGHT NOW, child.

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  95. As I said, it's not about being wrong -- EVERYBODY is wrong sometimes.  It's about being wrong and obnoxiously condescending at the same time.

    Now, regarding where exactly to find your head and shoulders...  not sure where your shoulders are, but I'm pretty sure your head is up your @ss.

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  96. Can we relegate the hate speech, name calling, SCREAMING in all caps, and I-told-you-so's to the Yahoo message boards?   One of the reasons I like this board is the mutual respect among those who post here, as well as the absence of all that kind of crap.

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  97. PL - regarding WYN... currently painting a very ugly (for the bull case) candlestick today on higher volume.  Might be the beginning of longer term holders rolling out.

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  98. Yeah, I might have been a little early on that one -- but today is looking very ugly.  And it's still holding to the bearish rising wedge shape... it just moved the bottom line a little.  Then it had a nice textbook-looking upside head-fake breakout.  Might finally be time for WYN to lose.  I've been watching that stock *forever*.  I think it's going to get ugly fast there.

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  99. Yup - we are going to start the whipsaw to make all the bears cover and the bulls sell

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  100. PL,

    Do you think AZO may be in a wave 4 correction right now, and, if so, could wave 5 down possibly break MY ; )bottom trend line and head lower?

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  101. Look at this Forbes article, nothing particulaly indicting, but syas Wyn is over bought!
    http://www.forbes.com/sites/dividendchannel/2011/12/27/wyndham-worldwide-corp-shares-enter-overbought-territory/?partner=yahootix

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  102. lol... AZO looks like it's either in C-down or a third wave down.  Next ST target under that interpretation:  297-310

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  103. Let's hope so.  310, and lower, and all's well.

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  104. What i should have asked is if you thought it was in (4) of 3 down?  But I get your interpretation.  Thx!

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  105. Definitely time for me to get some rest.  Sheesh, didn't realize what time it was!  Been up for about 24 hours now...

    bbl 

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  106. As always, an evasive attack answer, NOT responsive to the EXACT point being stated.
    It is YOU, shithead maui punk, that has your head up your beatch pussy-whipped ass.

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  107. while its hard to argue with everyone saying a strong market is the sign of a major downturn, the big dip this afternoon appears to be being bought, and we know these overbought trends can go on for a long time... still holding my morning's short but if we close near im out for the night session, not risking it

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  108. DEFINITELY go to sleep, punk.  your opinion over last several weeks, has been utterly worthless.

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  109. SPY (cash) currently hovering right at the H&S neckline through the March and June lows....

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  110. Intraday count ....

    I think we are on wave 3 up, after 1 to HOD this morning, then 2 to LOD at noon. Agree?

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  111. Looks to me like we are in wave 5 of 5 of C of (2), going back to the end of day last Wed as the end of wave 4 of C.

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  112. MY READING ;-) is an abc correction after the initial gap wave 1, i.e. the entire is a wave 2. So I, DUST DEVIL, AM waiting for decline at the close to buy in on the long side.

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  113. Mine already came off, so I'm might be looking at the charts from the wrong side of my monitor.  :)

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  114.  a break of 1269 ES starts the gap fill...

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  115. Looks to you we are riding down the c wave now?

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  116. Looks like we are riding down c now, right?

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  117. yes, MY c-wave -- lmao

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  118. Yes, c of 4 of 5 of C of (2).  Probably have the nomenclature all messed up.  Also, in order for 3 of C to not be the shortest, it appears that SPX 1288.5 would have to be the max for wave 5.  There are all sorts of extended counts that may be in play though.

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  119. TY.

    Does c have to be below b according to EWT, or not really?

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  120. No, corrective waves can forms such as a flat that does not require c to retrace back to a.

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  121. Waiting for last 2 minutes before placing my long orders.

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  122. I got almost the best price for the day. Couldn't trust my manual method to go down to the wire in the last 60 seconds, so had to go in 1 minute before the close.

    AF, you must have had an *extremely* tight stop!

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  123. The integrated oils had a nice gap and pop today.
    They are a late sequence group on an apparent exhaustion gap. Caution is warranted for a  group which may have  market-wide implications. This action supports PL's contention ...and mine, as well...that we are  close to a top.

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  124. Yes, it was a real tight stop.

    I don't usually go long or short at or near end of day. I was just playing around to make sure that I can really count waves.

    It was not a big position. I would have close it out no matter what anyway.

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  125. Bought this today at the opening.

    http://www.screencast.com/users/katzo7/folders/Jing/media/8e5cc5b6-317a-449a-99c9-b14c93da5260

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  126. Does this look right to you guys?

    http://www.screencast.com/users/katzo7/folders/Jing/media/fddb2e56-ae44-485e-ae5a-b2ab790c3712

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  127. Buddy, the market is ALWAYS right.

    Interesting though, if you squint your eyes, you can see the new rising wedge starting from where you labeled 0.500 on your fib time.

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  128. Well I should have read your article on trading a little more carefully.  I did not make good trading choices today.  

    Did a great job of buying as we headed lower throughout the day and then holding through it all get back to well above even when we pushed back above 1,280 to 1,281.  

    And at that point, I really needed to sell at least half of what I was holding to reduce the size of my position, but instead I was SURE we were going to get to 1,282.   And then that we'd recapture above 1,280 again to close out the day.

    So instead I turned what would have been a solidly profitable day into one of the biggest one day trading losses I've ever experienced.  Damn.  

    Moral of the story:  when you can get a trade back to solidly profitable and you don't do it, because you are so SURE that there is more to come, then you deserve to lose.  And so I lost . . . . 

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  129. Did you liquidate at the close? Sounds like you did. But you said this morning that you expected a couple of days of this made rally.

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  130. brianhut, sorry to hear that. This is what I was watching for for a short entry, remember I said a break of 1269 would start the gap fill move ball rolling. Draw your TLs.

    http://www.screencast.com/users/katzo7/folders/Jing/media/8caf5485-8d1f-44bb-bf8a-400c95de0cb6

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  131. I'm sorry to hear of your bad day Brian.  I, and many on this blog, know how you feel because we have been there...
    I am still trying to get over my December performance... It was a painful month... I started trading VIX around August and never had a bad month until December.  Before December, I was a Bull and I had about a 110% return on my intial investment.  In December, I started becoming a big bear and made some bad decisions.  I was sure that the market would tank;but it was just not ready to.  I was so certain of it, but the market proved my emotions to be wrong.  I may have been just too early to have been a bear, but I cost me about 50% of my profits. 
    You can think, "oh, it's just the house's money"; but the truth is that it was REAL money that could have been used on paying off a car, or helping out your significant other's debts, etc.  It was REAL money.
    The other painful part was the thought of all the time that it may take to get back up to that balance I had...  I am still ahead... and now crawling back up.
    Likewise, you are still here; and can trade tomorrow to eventually get you back on track.

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  132. sorry dude, you're not the only one. My Jan 31 SPY @ 126 put from last week went kaput this morning. What are you gonna do? Hope for a recovery (and be on the wrong side of the trade for who knows how long)? Or cut the BIG looser, step aside, watch the tape-action unfold and re-enter when things clear up? We all know the answer: CUT!!!
    It will take me 3-5 trades to get even again (while I was just break-even from the Nov 30 debacle...). That's why there are stop losses, trailing stops etc. Set them, set them tight (5-10%) and let them do the work. Otherwise our emotions get the better part and we'll never sell the loser as we always think it will go up sometime. We'll with options, time is against you, so it better hurry up real fast...

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  133. Brain:

    While I have traded for years, this sound all to familiar.  I lost a fortune in 2000/01 and 2008/09 trying to squeeze a little more out of the market instead of packing it up and waiting.  Waiting is the hardest thing in the world to do but it is often the best path forward.  I sat out today, not enough volitility to find a good entry point or exit with enough profit to justify the risk.  PL's article today on trading is worth its weight in gold.

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  134. So Kat what does the chart tell us? New to this
    Thanks

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  135. Sorry to hear about this.  I suspect your desciption of "burns quite a bit" is probably an understatement.

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  136. Man, the op-eds on marketwatch are all bullish. Titles like "Your major risk in 2012 is missing the upside" and "Risk creates opportunity." Even the Aden sisters are guardedly bullish on stocks, to quote, "could surprise on the upside."

    I'm holding calls presently but it's only for the short term. At the present rate, we should approach 1300 pretty soon. I expect a reversal then, because PL's Minor (2) c on today's 2nd chart fits perfectly.

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  137. Earlier, I noted that the negative divergence on 10-minutes Stochastics printed on 12/29 failed on 12/30. In hindsight, I wonder if that was a warning of a gap up the next day (today)? Just wondering.

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  138. its okay brian, i was also burned today. I was up 15% for the year and now im only up 4%

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  139. And another newsletter just came into my inbox proclaiming a new bull market is in the cards!

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  140. Yeah, I've been getting a lot of the same.  It reminds me of an article I saw about 3 days ago: "Why Gold is Due for a Big Correction."  I started laughing.  Gold just HAD a big correction -- where was this guy when gold was $1900/oz? 

    That's the trick with calling big turns -- they always seem wrong, because most of the time, things have been moving in the opposite direction.

    But yeah, it's good to hear so many are bullish now.  Usually, these are the same folks who were bearish in early October.

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  141. Thanks for the condolences everyone.  I only lost today because I violated MULTIPLE very basic and understandable rules that I know VERY, VERY WELL.  

    But I thought I could ignore them today.  And I substituted a few other assumptions that simply know far better than to be entertaining.  I was actually at even just eight minutes before the close, and when we climbed up to 1,281 I was up pretty huge.  The position itself became very, very large as we moved down to 1,276.  That part of the trade I executed perfectly.  Buying the exact right amounts at the right times to be able to get myself back to being even or ahead.I call this a 'stick save' trade.  I generally have a two to four per week.  They're very fucking nerve-wracking.  Because you are buying ever larger positions into the teeth of the move against you, under the assumption that the market has predictable retraces that will get you back to even, especially in slow moving markets, which today was.The whole point of the stick save is JUST TO GET BACK TO EVEN or just slightly ahead if you are lucky.  You are NEVER supposed to hold out for greater gains though, even if it means you will be selling most of your position 'early', meaning before the retrace is over.  Retraces are NOT dependable for big gains.  And should NEVER be used to produce big profits.  And with stick save trades your FIRST JOB IS TO REDUCE RISK once you are back to even by getting back to an appropriate position size.  It's a very cardinal rule for me.  And which I broke repeatedly on numerous occasions through the last hour of trading. There were NO LESS THAN FOUR distinct moments that would have been normal sell moments.  And had I acted on any one of them, I wouldn't have lost a cent.  So because I was the holding out for more when EVERYTHING should have been screaming to me to unload and sell, I lost one hell of a lot.All in all, it was TOTAL amateur hour bullshit and wishful thinking that I should know way better than to EVER allow at this point in my understanding of things.  It happens to everyone sometimes, I suppose.  But there really is no excusing this in my mind.  I know way better than to do what I did.  Especially by now.  And so in that sense, I had it coming.

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  142. RE Usually, these are the same folks who were bearish in early October
    Yup. So many of these "professionals" are nothing more than trend followers. So if I may throw something back rhetorically at those guys: We saw tremendous whipsaw within a huge lateral range last year. So if THAT's the trend, why should it suddenly become a linear upclining market? The justification is, the PTB will have things fixed; they know about all the problems. Hmm.

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  143. It is insofar it was total amateur hour nonsense that got me there.  

    This one was SO AVOIDABLE. The market actually performed EXACTLY as needed for me to do just fine and come out ahead.  I just decided that it wasn't good enough for me and I'd hold out for more.

    Something that in my rulebook you are NEVER supposed to do when you are on the wrong side of the trade and the market gives you enough of a bounce to get back to netting out even.  

    In this case, the market actually gave me a larger than expected bounce to make some real money. 1,276 back up to 1,281 is five points.  I never count on getting more than three.In another sense though, I'd be one hell of a lot more panicked if I traded that move exactly right to get back to even or ahead . . . but not even that ever materialized.But when it does give me that . . . and then I don't take it.  And even worse I end up with a huge loss, well yeah that burns hard.  Feeling pretty damn gullible and amateurish right about now. 

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  144. I agree.  I'd have sold as well.  Especially if we are facing the possibility of 1,300.  

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  145. Don't beat yourself up too bad.  Happens to the best of us.  We are, after all, still humans, and we are emotionally-driven beings.  Regardless of whether we personally think of ourselves as highly rational or not, every single human on the planet is motivated to action by emotion *first*, and logic second.  Trading forces us to try to go against our natural and deep-seated instincts -- and sometimes instinct wins. 

    You're a very smart guy -- I have faith that you'll learn from it, and it'll make you a better trader in the long run.  :)

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  146. Yes, I absolutely liquidated and even if there is a major gap up tomorrow morning, there is NO WAY that I'd have held that position overnight and exposed myself to the possibility of a devastating gap down.  

    I got into the mess I got into due to a rather amateurish form of 'holding and hoping'.  Continuing to hold overnight would have been more of the same.

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  147. Brian I'm interested in where you learned or developed your rules? I've only been trading for a short time now so I'm keen on developing a winning system/strategy.

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  148. yeah, this thing needs to rollover soon, I'm sweating quite a bit at this point. This santa rally has cost me nearly all of my gains since early november.

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  149. What really killed me was that Bernanke gap up after Thanksgiving. Killed me big time, with those triple inverse ETFs.

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  150. same here. I think i've had shorts every time we've gapped up huge. or at least it feels like that

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  151. One of the lessons I've learned from that was that snap ups following declines are quick and vicious. It's part of the challenges of shorting. One must take profit *before* reaching the target. But then - and this is a problem I was/am wrestling with in coming up with a good short-side trading strategy - one cheats oneself of the "let your winners run" half of the asymetric bargain, the half that's supposed to make up for all the little losses from stops. Currently, my thinking is this. At the top, in anticipation of the big drop, buy a combination of inverse ETF and far out-of-the-money put options. The options will be cheap. Then on the downslide, take profit at logical places with the ETF and leave the options to run at the "final" support level that you hope, hope will break. If it snaps back, you can still sell the options for some money. In the worst case, the options become worthless, but your life is spared.

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  152. BTW, the other thing I like about the swing trade with (some) options idea is that at or before the pivot, the implied volatility will be low, hence the options will be relatively cheap. Far out of the money makes them even cheaper.

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  153. RT, I sympathize with your sweating - not a good feeling. Right now, we're in a no-man's land. We've broken above the 12/7 high, tied the 11/8 high, but have yet to take out the 10/28 high. And even if we take out the 10/28 high, there's the 1303 neckline resistance. And yet, the sentiment is very bullish, which in the short terms translates to momentum, not reversal, imo. And yet, the EW count from PL suggests a reversal now or sometimes soon. It's crazy, all these "and yets."

    Suppose we open tomorrow at where we closed today. If I were in your shoes, I would cover all the shorts and buy a long straddle. That way, there's a chance of making some money on either sides of this crazy (possible) whipsaw and it might get you back to, or close to, break-even. At least, you've taken away the (presumably) huge short position you're holding now and can then relax a bit.

    Your objective at present should be two-fold: (a) Take away the "unlimited" risk. (b) Give you a shot at making back some of your loss.

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  154. Rookie, what the chart says is correction to this move was and is not upon us yet. I said below 1269 would start the ball rolling, we got to 1267-8 and the set up is not there yet.But it is close. On a previous thread I stated that I felt that A could equal C (120 min.), this is what happened. Will this be an island top? A gap down tomorrow will do that. Gaps like this IMO are not sustainable.

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  155. Take a look at the MACD on my 120 posted chart and you can see why the corrective portion of this move was not set up yet. And then take a look at the MACD now on ES 120.

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  156. Something will cause a gap down this morning, some news article, etc. putting in an island top. The set up is there now. Look on my chart, EW5s are  a bit unpredictable. We also have a Bollinger Band breakout (BBB) which means we will at least move to the lower Bollinger Band level which is around 1248 ES. Also too many indicator candles are appearing at the 5.

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  157. Is it me or have the news wires been eerily quiet for the past 3 weeks?  There are events out there that would've tanked the markets a month ago, but now are getting little press and no reaction:  Italy's disappointing bond auction last week with yields approaching the magic 7% mark; Iran's naval exercises in the Strait of Hormuz threatening the flow of 40% of the global oil supply.  It feels like we are due for some bad "news".

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  158. I want to touch back on some things I said on a previous thread.
    "Is a triangle a trending form or oscillating one?" We broke out of that triangle, obviously on Tuesday.
    "By all rights the $SPX
    should have hit (or will hit) 1319; that is the top of EW5 for this up
    move." There are measures I take that say this will not happen, that the EW5 will abort before this level is reached. BUT, we trade what we see, not what we think.
    "Break out of triangle or fake out, to be determined? TL on
    stochs await a break to the downside, displays RUT triangle in a
    different way." I just took a look at $RUT/DAY. Hmmmm, the stoch high on Dec. 27th still stands and the stochs are sloping down?? Still awaiting the break of that TL.
    "Is this action really an ABC corrective move to balance the first
    impulse off the head? Or is it a base (a break of 770 of the $RUT and it
    will be a base)." We are now exactly at were we should be for the C to be played, $RUT is 752.28.
    "If corrective at first C insert an A; at second C insert a B; at extant
    right 5 insert a C -- this still could go a bit higher if A = C." It did.
    "About triangles ... they tend to break out
    to one side, then do the opposite." Is this one normal, or is it the exception? 

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  159.  ESH2 1253.50 closes the Tuesday's gap, 1248 is bottom of Bollinger Band.

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