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Wednesday, January 11, 2012

SPX and Nasdaq Updates: Long-term Charts Show Market Faces Key Resistance Levels

Yesterday, I spoke about the possibility that Minor Wave (2) up could complete its top within hours, and it's entirely conceivable that came to pass yesterday.  Once again, the market gapped up, and once again, the bulls took it nowhere after the futures gap. Back in December, I dubbed this the Buyerless Rally due to the fact that the majority of the rally has taken place in the overnight futures market, with very little movement coming in the cash market.  That continues to hold true, and I still believe this is a sign of distribution.

The Minor (2) top could have completed yesterday, however, the very short-term wave structure also allows for the possibility of one small thrust higher, so we'll see what happens in the next couple sessions.  1300-1310 remains as the next level for this market to beat.  Given the extreme bullish sentiment, and the fact that indicators such as RSI and MACD have been losing momentum and diverging bearishly for some time now, it's difficult to imagine the market will find the steam to push through right now. 

It bears repeating that Elliott Wave patterns are created by mass psychology.  When the majority are in one camp (i.e.- bulls), it's time to start betting the other way.  All the talk of a new bull market, and the recent laws passed in several states which now make it legal to hold public stonings of bearish investors, are both fully consistent with a major second wave top.

Several key long term resistance levels are now lurking just overhead.  The market has already broken out over a few important levels, but still has a lot of work to do before I consider turning long-term bullish.  The first chart is a daily look at the S&P 500 (SPX), and shows some significant overhead resistance in the 1300-1310 zone.  If the market can somehow break through that zone, it would open up the 1330-1350 area as a possible target.  My expectation, however, is that it will not break through this zone.


The next chart is the Nasdaq Composite (COMP), and shows it's in a similar position as the SPX, with key resistance just overhead.


The next chart is my preferred short term wave count, which shows the rally may have ended yesterday. The one-minute chart suggests the possibility that yesterday's spike high may have only been the internal third wave of wave c of v of C of (y) of Minor (2).  If that's the case, then there's one more ever-so-slightly higher high coming before it rolls over for real.  But it's not required, and the market could very well roll over immediately.

A break of 1283.05 would take that very short-term option off the table -- however it would not rule out the alternate count shown in the chart which follows this.  A break of the first wave a high at 1242.82 should serve as final confirmation that this wave up is complete. 


The next chart is the alternate interpretation of the wave structure (not the interpretation I'm favoring, in other words), and suggests that 1310 +/- might be the final target for the rally.



I want to follow that chart immediately with an interesting analog from 2001-2002.  What I find most interesting in the following chart is the fractal comparison between the first leg of its rally and the first leg of the current rally (from the October lows).  The structures look almost identical.  You can also see that in 2002, the market lolly-gagged around near that first high for several months (much like the current market) before finally rolling over and dropping 35%.


Another chart I wanted to share was the put/call ratio, which has reached extreme levels that are generally consistent with tops... however, Stockcharts has gremlins which randomly delete my charts (this is the third one that's gone missing without a trace; the Stockcharts server is apparently located in the Bermuda Triangle), and I simply don't have time to recreate it tonight. 

The last chart's the Dow, labeled with the preferred ending diagonal count.



In conclusion, I remain long-term bearish on this market, and unless the market can break overhead resistance, I am now short and medium term bearish as well.  Based on the wave structure, I believe something is "destined" to occur in the very near future to wake investors up from Bullish Happy Fun Land, and this wake-up call will rapidly turn sentiment from bullish to bearish.  When that happens, there will be a fast stampede for the exits.  Trade safe. 

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

355 comments:

  1. Gotta tag it and bag it for Minyanville.  Be back in a few to answer questions.  btw, people invariably ask 10 minutes after the article's posted what I think is going to happen today.  Umm... that's in the article.  ;)

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  2. Nice post PL. "...passed in several states which now make it legal to hold public stonings
    of bearish investors." I am from Massachusetts where we elect Democrats to Presidency and senate and Republicans for Governor. As far as any public stonings goes, they would have to form a PC committee, hold plenty of open discussions, and then go into a closed door session, providing an answer within a year. By that time I would be in Bolivia.

    http://www.youtube.com/watch?v=ck6vqsOt-Pc

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  3. ES futures currently 'look' like a correction into a flat open with an implied impulse down to follow.

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  4. Goood morning all, and thanks to Pretyz for another nice posting...it looks like a little more patience is the virtue needed here.

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  5. Alberto, thank you very much for your donation! 

    Everybody thank Alberto for helping to support this community.  :) 

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  6. Thanks Mr Easter Bunny

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  7. Not "hopping" to support this community, silly!  "Helping" to support this community.

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  8. Thanks Alberto! Everybody follow Alberto's example! I sure will follow as soon as possible! Although I tend to call payments (not tops) one or two days in advance! :-) PL, I've promised a donation is on its way soon.

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  9. It seems that the SPY is fighting between  S1 and S2 so it's very tough at this moment...

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  10. Not sure what to make of the dollar's little rally yet.  There's some overlap at 81.39 that makes it a little fuzzy.

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  11. got out at the premarket high, waiting for a retest of yesterday before coming back in

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  12. It may broke pivot resistance to close the gap so be careful... 

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  13. This is my favorite time of night/morning.  Update's *done*, article has been sent to Minyanville (which takes like half an hour most nights to package it the way they want), and I can just focus on the markets and trading.  It's like a huge burden lifted everytime I get to this point... too bad I'm usually too exhausted to enjoy it much.  :)

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  14. PL, in the absence of any exogenous headline shock, do you still expect markets can just roll over?  I understand news has less correlation to price action than people think, but with the absence of a news will not the trend simply continue on it's merry way?  This morning looks promising, but I suspect, once Europe closes, they'll just melt the markets up in the afternoon as usual.

    People seem laser focused on the Euro/equity divergence or the commodity/equity divergence but the markets don't seem to care either way.

    BTW, thanks Alberto.

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  15. Yes, it can absolutely roll over w/out news... but it seems like for it to roll over Minor (3) style, there's probably going to be some corresponding news event.

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  16. We always enjoy it when you are awake to comment intra-day.

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  17. not really seeing what you all are seeing . though sentiment is in your favor. but not trend as i see it. need to see a crack which im not seeing yet. 1250 is bull/ bear line. gl

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  18. so true!!  i relish pretzy's intra-day analysis.  the saddest part of my day is when he goes to bed :)

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  19. Trend hasn't turned yet, agreed.  Trying to anticipate the turn.  :0

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  20. Is Brian still checking in ??  How about Anon20 ??  Helllllo out there

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  21. Jesus - I'd take a modest correction at this point - its gap up, flat, gap up.  Only way to play that shit is long

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  22. Well, if I could just get Anon20 to do the updates, then I could sleep like a normal human and be up intraday.  As long as everyone would be okay with updates that are WRITTEN MAINLY IN CAPS AND CONTAIN A LOT OF OFF-COLOR LANGUANGE and are peppered with condescention, then we'd have a winning combo.  ;)

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  23. We have been since October :(((((((((((((

    I usually use the 200 day MA as the bull/bear line.  Longer it hangs out above the more "bullish" that is

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  24. spx down 6 points?  that should be it for the day, the rest we'll be chopping away :)

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  25. Anon20 earned himself a week-long vacation.  If he can behave, I might give him a last chance.  Brian I think will be back in time, we've communicated a bit by email.

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  26. OK - I like Brian and appreciate his insights.  Anon20 - I enjoy his insight less the playground taunting and crudeness.  Not sure while interested comments need to be imbedded in name calling

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  27. Pretty sure Anon20 is in time-out.

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  28. love reading minyanville. that jeff cooper is different dude lolz

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  29. The moment you decide to do that is when it will reverse down hard. It's important in bear in mind the big picture, resistance at 1300 neckline, etc. Respectfully, long is bad odds, Mr. Gekko. If you had gone long at 1210 mid December, yeah, but not now. :-)

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  30. It's too bad you guys weren't around following to catch the rally up with me... that would have probably made this a lot less painful for you.  I had a realy solid 2nd half of the year trading.  Of course, I also took profits after the decline to 1158 (gave back 20 or so of the 100 point profit right after), and took profits again at 1210ish.  All depends on how you played it, I suppose.

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  31. lol i feel you there

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  32. morning guys. checkin in.

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  33. Me thinks IT direction is down at least a couple of days. Problem with being LT bullish is that no one can tell if this is the start of something or just a retrace before more higher move. I think the first...

    ES levels ~ 1272, 67, 62.

    A break of 85-6 will change my mind.

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  34. PL, I wish I had found you sooner, would have saved me a good chunk.  Wishing you continued success.  This next wave 3 down seems so damn elusive.

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  35. A20 posted yesterday Pretz - showed up on the Iphone comments. If you guys are that lonely I can cut and paste it fer ya. Basically, something like this: "TOP IS IN MAUIBOY"

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  36. So far, the decline doesn't look terribly impulsive.  That could always change, but not too impressed with it yet so far.  A strong break down today/tomorrow would change that look... otherwise...

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  37. missed my entry, got in too high, pretty sure we're going to rally today.  nuts.

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  38. Yeah, I saw it.  It got filtered out automatically, so apparently only shows on Iphone.  If I wanted to post it, I'd have done so.  ;)

    Yes, basically he called for a gap down today, etc.

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  39. you're right. it looks pretty weak and non committal.

    otherwise alt bull count?!? nooo

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  40. This market is a friggin' nightmare for all the less-nimble swingtraders.  Personally, I loved the volatility we had for so long.  I hate markets that just sit for days...

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  41. Covered at ES 1284 for basically break-even.  Thinking I can get a better entry.

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  42. Shorted again at 1284.50, lol.  Rally looks stuck.  Tight stops.

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  43. scalpers market seems to be the new norm, swing trading hasn't worked for a while... of course from the basic chart this market has been riding a very tight channel for 10 days... my stops are in, the die is cast!

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  44. I agree. Looks like the second high of SPX 1289 might be it for the day. Down from here.

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  45. 1 stop got triggered, 1 more to go and i can be angry the rest of the day!! yippee!

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  46. Last really good swing trade was the October rally.  November decline worked out well for me as a swing trade, but I covered at 1150 (then went short again and got burned by the futures gap -- but covered immediately).  Been doing mostly quick hops since, although I rode December down from almost the exact top... 1266 if I recall, to about 1210 or so. 

    I don't think the Nov. decline worked out well for the cash traders with the huge gaps up...

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  47. I think Interactive Brokers and Fidelity should merge.  They should fire IB"s customer service staff and replace it with Fidelity's, and fire fidelity's operational staff and replace it wit IB's.  The people left on the street should join the "occupy movement."

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  48. Yeah, my 85-6 ES tested/broke... A big question mark.

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  49. INTC and MSFT price action is amazing!!!... considering both have warned and have said the first quarter will be affected further due to the HDD issue.  Any thoughts?

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  50. This rally looks like an abc expanded flat right now, with c finishing up.

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  51. Eric,
    What time frame you trading? It broke my 85-6 level ES so any down is pushed out. You have to survive to trade a bigger move, this is slop.

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  52. This market has been rigged of late so that all/most price action takes place after hours in the futures market.  Very little happens during RTHs.

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  53. just went long USD/CHF added long units to NZD/USD and USD/SEK
    holding shorts on EUR/USD, USD/JPY, and GBP/USD.

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  54. nice 5 wave structure to that c, which even I could see.

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  55. "amazing" as in mind boggling...  Does anyone have any thoughts or comments on what is happening between the fundamentals vs the price action in these 2 names?

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  56. The trick is whether I got the a-b part right.  B was lower than the a-wave bottom, which will cause most to think c was the start of a new impulse up... which it could be if I'm seeing it wrong.  HOD/LOD all that matters now, ST.

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  57. Hi PL,
    In ES 5min - at 2am PT the market went down with a clean 5 waves down - please take a look . So, in my opinion, this current sloppy wave up  maybe is just wave b or 2. It can be a big wave 3 or c down.

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  58. You got the caps thing all WRONG. It must BE interrupted like a STUMBLING drunk FOR emphasis. Or maybe a new keyboard is in order.  Kinda reminds me of Kinison.

    http://www.youtube.com/watch?v=8bfgrj_62-Y

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  59. This is what I'm thinking as well.

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  60. just undoing my early short this morning- now im flat here... it is truly slopppy

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  61. Think we have just finished or are finishing the EW2 up move on the 120 ES, so a good 3 down move should be next.

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  62. Covered for 1.5 points profit.  Now we'll see who's got the ball here...

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  63. Great idea!  You could be the CEO.

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  64. INTC finally cracking?

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  65. 2nd try above Dec. high failing...

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  66. The tough part is that the end of this maybe wave b or 2 is above my pivot level - bullish. However, it may be ok with risk/reward to short and keep our stop just above the beginning of wave a or 1.

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  67. Shorted again at 1284 ES.  Basically, all I've accomplished today is to improve my short position by about 2 points, less commissions.

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  68. I would love to take a look, but I'm too busy staring at ES/SPX charts and trying to figure out exactly what I'm seeing.  :)

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  69. Is that nimbleness or nibbleless?

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  70. Thanks for your trading updates PL. They do give us courage and comfort! 

    Looks like the EUR/USD is in a downward trading channel for the past 4 hrs, that should break hopefully to the downside...

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  71. High tech companies, especially Hardware and PC-related, are significantly impacted by the recent flooding in Thailand.  Many are expecting revenue/earnings decline.  I and many of my friends work for high-tech companies in the Bay Area, and we've talked about this quite a bit.  So the rev/earnings warning by MSFT can be extended to many other names.

    However, there appears to be a rotation into large-cap, div paying stocks since before Xmas.  And, slow-performing stocks like MSFT, GE, PG, etc. have pgone up .  My guess is that long-only mutual funds are shuffling their holdings ahead of the upcoming market decline.  They can't short the market.  They can't sit too much on cash either in order to receive more allocation of cash coming in from 401k / pension fund contributions.

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  72. I should have stressed 'are' finishing up. See 87 ES as new resistance to upside. This is gonna take a while, maybe a couple more hours, if it happens.

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  73. Uh oh... my ultra reliable top indicator just triggered.  :)

    Doesn't guarantee a LT top... but super reliable for at least a ST top forming soon (or formed) w/ a decent lower-low to come from this level.

    It'll be in tomorrow's update. 

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  74. I should say to reach below this level, not necessarily to start here.  Could go a bit higher first.

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  75. PL,
    It's tough... Please take a look at 15min chart of the dollar index. It seems at top of wave 3...

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  76. Re: dollar.  End of C or 3 -- I'd like to see one more wave up which takes out the recent high to confirm a motive wave.

    Alright, I'm having trouble keeping my eyes open.  Gonna put this trade on auto-pilot and catch up w/ everyone later.  Night.  :)

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  77. Thank you for your response, t_winn.  Greatly appreciated.  Does that imply that they aggressively  jump ship right before earnings announcements (both on 1/19/12 after the close) or do they step up to buy more after the announcements and hold both stocks up regardless of miss / Q1 earnings warning?  That is the question...  either could happen.

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  78. Do you mean it could go a bit higher than today's high before dropping?

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  79. Eric, are you swing trader or day trader?

    Could be this low-volatility phase is a sign of a breakout that is but isn't - very stretched to the top side - no more elasticity. From PL's analysis, one would think that this eventually must resolve back down to the previous trendless range, assuming the super decline doesn't happen. So back to the 1160 - 1270 range initially, or lower, would mean back to the wildly oscillating swing trade nirvana, where PL's EW would work wonders. If we can just repeat Sep, Oct, Nov indefinitely, I will become very rich. :-)

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  80. Thanks for the response, PL.  No worries.  I know that you are extremely busy and appreciate everything you do.

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  81. Looking at SPX 1h chart since yesterday at 10am, downtrend looks intact. Possibly in wave 4 of a 5 down off yesterdays high?

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  82. Yes -- meaning the market could go a bit higher -- but the indicator suggests topping action.

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  83. Could this be PL's famed indicator:

    Hostess Brands, the storied American manufacturer of snack cakes, filed for Chapter 11 bankruptcy Wednesday..

    http://money.cnn.com/2012/01/11/news/companies/hostess_bankruptcy/index.htm?hpt=hp_t2

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  84. YIPPEEEEEE!!!!!!!

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  85. PL, you always surprise me with a whole new fresh look on things even when the market has been stuck in 3rd gear for 2 weeks. let's hope this flatliner is soon over!

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  86. Not sure exactly.  It crosses over 1289, so it could only be wave 4 if it's a leading diagonal.  For the bear case, it would have to be a 1-2, 1-2.  Otherwise it's just a correction to yesterday's rally. 

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  87. This cracked me up.  :D

    Alright, I'm really going to bed now!

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  88. Feels like the sucker wants to go up, no matter what. Agree?

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  89. I just went long on SPX - for the day.

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  90. SPX sure looks like a triangle on the 1-minute.  Okay, I swear -- bed now.

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  91. I want to say yes, but feeling devastated.

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  92. i do agree with that... never short a dull market and all that.  still, i think  modest dip would setup a rally and right now all we have is chop and slop

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  93. looking at the 5 min SPX action..it looks like (i know Im not gonna say this right) and ending diagonal to complete 4 of c of v???..could imply a move up to test 1296 and complete v? Does it make sense?

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  94. also, 2 weeks ago everyone was panicking over the euro (fxe) dropping below 129, and its around 126 now and... no one cares?

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  95. Great.  Who'se with me to start a leveraged buyout firm?  You'd think that out of all these brokerage firms, you'd be able to piece together a decent one.

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  96. Earnings time and January effect. Europe, where's Europe? :)

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  97. here are more ideas for your 'leader' P-head to steal---because, as you all recall, without even a thanks---
    he stole MY idea from last week, that dollar index was now READY to explode upward, off the 81.5 area.
    (he did not mention in the article, however, that breakout reason was the end of the usa dollar carrytrade,
    but that would have made his intellectual thievery too obvious--and this is not the 1st time he does this.) 
    And to make MYSELF perfectly clear, I NEVER plot EW MYSELF, to make ANY 'put' buying decisions.
    and that's why I read P-head, and other sources, to confirm MY OWN fundamentals and technicals.  
     
    1.  the count for gold is now complete today at $1645 area, gold is now ready to fall---BIGtime. 
    MY final target for the FIRST leg down in upcoming gold drop, along with spx drop= $1,350 area.
    this gold imminent turnaround, confirms that top is in for spx, and the dollar rally about to explode.
     
    2. usa major homebuilders stocks today have gone totally BALLISTIC, they are SO overpriced,
    that when the unavoidable mass realization finally hits, thet there will be 'NO amerika recovery',
    they will provide the GREATEST of FAST bearish profits, even FASTER than usa worthless banks.
     
    And out of all these stocks, I especially single out toll brothers (tol), not because it is the worst,
    but because, chartwise, it has just hit today its top price of the last 2 years, touched FOUR times,
    $23.10 close, and each time this occurred, reversal is FAST NASTY.  But, even more importantly,
    the company's INSIDERS ALWAYS dump their own stock to retail investors, in the $20-22 range,
    since Oct. 2008, have seen them do it 2 times before, and this December, they did it again, BIGtime---
    http://seekingalpha.com/article/318059-consumer-and-retail-stocks-experiencing-heavy-and-unusual-insider-selling-in-december?source=yahoo 
     
    3. spx top is in.  there will be no CLOSE above yesterday's (I leave intraday nonsense to P-head, I don't do futures).
    scumbag loser 'juan' immortalized MY EXACT words last week with MY 'there will be NO truncation in GSC5' speech--
    for I have been stating, that a retest of h&s neckline was a surety, since dec.24, when spx broke MY 1255 trendline.
    as to peepsqueak scuzzo 'juan', who contributes nothing but mockery of MYSELF--I assure you, he WILL pay for it.
    for I had no problem with his baby cartoons when he was quoting ME VERBATIM---but, in his last cartoon, he took what I said and totally distorted it, to say something completely different--and this worthless bitch will PAY for that.

    4. what is still holding up this market today, are the usa major homebuilders, that have all gone totally insanely ballistic, up as a group close to 10 percent, believe it or not.  and all this because lennar reported this morning that their new home orders were up 20% (up 20% from WHAT, I don't know, but CERTAINLY from some already record LOW level of new orders).  Interestingly, this made their shareholders ignore today, that their 4q earning reports came in 5% BELOW expected.  BLOWOFF.  ONE DAY WONDER, I SAY.

    5. P-head (MY new name for you), feel free to edit whatever you want, it's your site.
    HOWEVER, NEVER AGAIN CHANGE MY EXACT WORDS, LIKE YOU DID LAST TIME,
    MAKING THEM SOMETHING ELSE--THAT IS WHY GARBAGE 'JUAN' DID THE SAME.

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  98. That's the part I don't get...Time to up the Xanax...and my Alzheimer meds...maybe it'll make more sense.

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  99.  This is what we are dealing with. Said below this will take some time, maybe into mid-afternoon or even tomorrow, to sort out. ~ES 87 is key. Recent history says they play with us during RTH and drop it overnite, that is if down is the direction.

    http://www.screencast.com/users/katzo7/folders/Jing/media/6c905fd0-dfc7-4ba7-9be1-8d564b845ca1

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  100. Mind boggling, yes.  And volume in FXE is quite low.  Next FXE resistance at 125.71

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  101. It looks like we'll stay flat or head lower until at least 2:00PM (ET).  Then beige book comes out which will probably say that all FED regions experienced modest or accelerating growth (based on PMI numbers already released). 

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  102. good point on the January effect- if it's this dull maybe the bulls really have nothing left...

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  103. yeah i see the triangle- looks like it broke to the upside though...

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  104. Unless the thinking has shifted to: "Lower Euro will help with exports and therefore help lessen or reverse the move toward recession in the Euro zone." 

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  105. Has not broken the triangle on 5 minutes chart.

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  106. They could also drive the market sharply higher on beige book data after 2:00PM today... all the way to the close.  Then they could cause a gap down tomorrow for maximum frustration.

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  107. Operating in distribution mode, with negative money outflow, as per the Buyerless Rally mentioned in PL's article. Give it  some time to work its magic. http://online.wsj.com/mdc/public/page/2_3022-mfsctrscan-moneyflow.html

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  108. We've got to be near a top.  The internal pressure (inside myself) to sell my short ETFs is killing me...

    "STOP THE PAIN!!!  THIS SUCKER IS NEVER GOING DOWN!!!"  That's what it's saying.  Don't know if I can handle another day.  Then again, if I sell now, I know the market will absolutely tank.  That's where PL's invalidation thresholds are helping to keep me anchored.

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  109.  Those friggin overnights are getting ridiculous. Talk about the fix being in....&#&!^#%)@

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  110. pain builds character . lol

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  111. True.  It's happening in individual names as well.  JNPR warned after Monday's close.  It dropped $2.50 after hours, but by Tuesday morning it opened up $1.00 higher than Monday's close.  That's a $3.50 swing (16.3%)  outside of RTH - and it opened up to boot!

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  112. Whip, I know exactly how you feel.  I don't doubt something has to give at some point, my pain is deciding whether any drop will be a short term drop to blow off some steam or a longer term trend change.  I guess I'm being a bit premature, we still have to wait for this mythical top to reveal itself.  I hope PL's uber indicator trigger is spot on this time, but even he admits this is only a short term signal. 

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  113. Relax...I feel your pain...No pain, no gain(?) Just realize that we are *probably* at the top. Just tell yourself "They want me to sell, they want my ETFs for themselves. They know, THEY KNOW. They're trying to wear me down."  Laugh maniacally and turn off your computer. This market is truly a grind.

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  114. dust_devil,

    That's true.  This market is building alot of character for a lot of people then!  :)

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  115. The beatings will continue until morale improves.

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  116. Thanks foomer.  I hope so too.

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  117. Thanks jbg.  That's exactly the kind of stuff I'm telling myself and now I am going to step away for a bit.

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  118. Just a reminder ....

    Tomorrow is ECB's rate decision day. If they decide to cut rate, then Europe, Asia and the USA will exhale. And world markets may explode to the upside. If they decide to stay put, then it may be a non-event. If they raise rate, then it is bye-bye Europe. :)

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  119. There are also some Spanish and Italian bond auctions tomorrow (overnight) and additional Italian bond auctions on Friday. 

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  120. yup...  bought it today at 32.90...  :-(  should i capitulate now or wait till tomorrow's open?

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  121. With that said... note that Italian bond yields dropped today: http://www.bloomberg.com/apps/quote?ticker=GBTPGR10:IND 

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  122. The worst part about it is the decision has already been made. It will be whispered overnight, and we will likely be on the short end of the stick...Other than that, things are just dandy...LOL  The good thing is that the news half-life has shortened dramatically. I thinks it's down to 20 minutes at this point.

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  123. It all depends on your comfort level. Some folks would be sweating bullets, others might not. You must always find peace with your trades, so there is no sleep lost. Your health/sanity is the most important asset you own.

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  124. King Dollar is up - again.
    It has been on fire for a while. Looks like world money is running for cover - into US Bonds and Equity?

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  125. faz is a portfolio killer,  its at 31.9 and im thinking of bailing... if this market moved to the downside it would fly, but we could be here for weeks with this upside chop

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  126. yours truly is included :)

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  127. Here's a funny thought. What if Markozy wanted to jettison some members we won't mention by name? The way to do it is put the screws onto Mario to raise rate, trigger the defaults, get rid of those losers, then lower rates again?

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  128. excellent advice jbg1911, thanks! btw, does your work suggest a top (either yesterday or tonight), and therefore the beginning of a downward trend starting tomorrow?

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  129. ECB will very likely cut rate tomorrow.  The big unknown is the Spanish and Italian auctions.

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  130. Germany's GDP just went red, never mind about the rest of Euroland. Mario is under a lot of pressure to cut. He may just want to stay put and wait it out, however.

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  131. Yeah I think we roll over here.  Gap filled and looked like an a-b-c correction completed to me.

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  132. It's Europe...the land of two world wars. I really think the animosities haven't really left, but ya never know. It's like sharing an apartment with more than one other person. At some point somebody get's booted off of the island...even if they are the island.

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  133. Beige Book ....

    Expanding moderately, economic conditions improving, housing still challenged, tourism, agriculture and energy on fire.

    Inflation? What inflation? :)

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  134. I don't know if I'd say 'very likely'.  I'd say 50-50, with a bias toward leaving it unch this meeting.

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  135. Economists surveyed say the ECB will not change rate tomorrow. http://www.bloomberg.com/news/2012-01-11/euro-approaches-16-month-low-on-speculation-france-s-aaa-rating-may-be-cut.html

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  136. I am still stuck between a top, or a consolidation before a move to below 1310. But I am just a newb. Both PL  and another guide are leaning towards this being a top. Both are impeccable sources of info so I would defer to them. Sorry for the lame answer.

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  137. Hi katz07,
    Be careful if today's ES high is above 1289.25 (or SPY = 129.36). If the market went that high then it may gap up tomorrow. It's hard to tell at this moment.  However, since gap down today the market may close at today low.

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  138. $TNX just fell right out of bed today.  Down 3.45% at the moment.  Equities should be doing the same.

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  139. The bond market and the equity market do diverge from time to time. 1.9% yield is not red alert yet. Certainly, it would be nice to see financial chickens moving out of their hiding places to take risks. :)

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  140. Yes.  Then we'll get a gap up or gap down at tomorrow's open.  Place your bets...  This doesn't feel like investing anymore.  It's gambling against the house, and the house always wins.  Or just stand aside.

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  141. Tomorrow is Spanish and Italian bond auction day.
    Watch for the bid/cover ratio. It should tell us who has been swiming naked. :)

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  142. im going in flat, with a micro loss today.  no point in playing this market, ill miss the first 10 points but can position myself for a move. 

    this chop isnt how i want to spend my time

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  143. Speaking of Bonds:

    By David Wilson     Jan. 11 (Bloomberg) -- Investors may be about to turntoward government bonds and away from stocks and other riskierassets, according to Bob Janjuah, global head of tactical assetallocation at Nomura International Plc.     This shift may begin by the end of the week, Janjuah wroteyesterday in a report. Yields on 10-year U.S., U.K. and Germannotes will be closer to 1.5 percent than 2 percent during thefirst quarter, he predicted.     The CHART OF THE DAY tracks yields on these securitiessince the start of last year, and illustrates his prediction.Yields on the 10-year Treasury note and its German counterpartfell below 1.75 percent, the middle of his range, in September.The U.K. note’s yield set a low of 1.955 percent last month.     The first quarter “is going to be extremely bearish forrisk,” according to Janjuah, based in London. He cited thepossibility that Greece may default on its debt before thequarter ends, along with other concerns.     Janjuah, who predicted last year’s second-half retreat inU.S. stocks, estimated that the Standard & Poor’s 500 Index mayfall to 1,000 or lower this quarter. That would be a decline ofat least 20 percent from last year’s close.     Appetite for risk may return next quarter, he wrote, as theFederal Reserve and the Bank of England buy bonds in a so-calledquantitative easing and the European Central Bank possibly doesthe same. After that, he expects a second-half slump that sendsthe S&P 500 tumbling to 800.

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  144. Interesting.  I know ZH covers Janjuah a lot but I don't know whether it's to mock him or applaud him as I don't read a lot of those external type posts.  Anyone know if Janjuah has any track record?

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  145. True enough, they do diverge once in a while.  Most investors also don't realize that the dollar and US equities run in tandem half the time and go inverse half the time.  It may sound almost blasphemous, but that relationship doesn't even really exist with any regularity at all:
    http://stockcharts.com/h-sc/ui?s=$USD&p=W&yr=6&mn=0&dy=0&id=p97604971655&a=209611420

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  146. solar is up huge today- im seeing some stocks 30-40%- traders are desperate for momentum

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  147. SPY 5min is showing head & shoulder reversal pattern. Shorts be careful if the market goes above 129.20...

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  148. today's chart of sol-

    http://www.google.com/finance?q=NYSE:SOL

    "nothing going on in the rest of the market?  lets run this one up guys!!"

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  149. $VIX up 2.17% at 21.14????

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  150. I have watched live 3 great long trades bounce off the lower trend line of this channel we have been exploring for the past few weeks.    Every time I have thought to myself, "this would be a great low risk place to take a long position for a short term trade", and I have not done it.  This whole experience over the last month has really revealed just how married I am to my bearish view.  Those trades off the trendline do not get much better than that.

    Anybody else experienced this through this mess?

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  151. Looks like you just did.  2 pt jump in $SPX in no time flat.

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  152. PL has been very good at providing alternative counts. One has to be open minded about all possibilities and be flexible and nimble. A rigid POV is dangerous to one's financial health. :)

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  153. Tell me about it...lol. 

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  154. starting to sund like Annon-

    "the market will go up.  Or it will go down.  Otherwise, it will go sideways" :)

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  155. Yepper - the trend is your friend - since we bottomed way back the play would have been load up under 1100 and just sit and add on pullbacks.  If done I'd be up 100% not down 20% trying to short against the grain - that beez dumb

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  156.  If they drop this in a/h trading it will lock in longs. My 120 triangle may be set up for a fake out to the upside with a down after.

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  157. Absolutly.  I have been bearish since the beginning of October.  Missed all of October and the Christmas market.  What was I thinking???

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  158. Unlike Annon and PL, I do pay a lot of attention to fundamentals and always ask what and where are the catalysts coming from. It is good to say the market is going into a sink hole. But I like to know what triggers it and when. :)

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  159. I've been moaning and complaining all day.  sorry!

    just want the market to do: ANYTHING.

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  160. Most excellent chart Berta!

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  161. Not sure if you mean that as in the VIX being high or low.  It is still historically low.  Selling VIX calls since Monday would have garnered profits; but I would  not hold any over night just because I do not know what might happen after hours.

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  162. Lol - swing and a miss!  This video game sure is incredible to watch sometimes.  Got a feeling we're going to gap up tomorrow because if sh*t was going to hit the fan tomorrow with the ECB meeting and bond auctions, we'd probably be selling off at least a little bit here not zooming higher.

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  163. It seems like your bearish view is for the longer term, and that time frame may not be consistent with the way you trade--short-term to intermediate term, perhaps?

    For short-term, either day trading or 1-5 day trading, I find it's best for me to stick to the charts.  PL's charts have helped a great deal since I found this site in November.

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  164. Still holding short however, and will add in upper 1290s, and stop near 1307 methinks.

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  165. Ending like on the ninth?

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  166. Really though, in terms of news, trying to figure out what could trigger the bearish case ???  If Romney wins the nod - to me that's bullish.  China ??  Probably too smart to have a crash.  Europe ?  Market just doesn't seem to care.  Earnings ?  Not sure anyone is saying things look great - but that might be baked into the cake.  Hmmnnn.  I guess that leaves the outbreak of war.
    On a chart what I'd like to see - finally - is some lower highs and lower lows and get back below S & P 200 DMA - that would be a trend change - else all we are praying for is a correction which right now is a flat day.  Someone tell me I'm wrong ??  My only decent holdings are muni and short terms bond funds which have seen money flowing in

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  167. I look for liquidity events related news. If ECB decided to cut rate, for example, that is a big deal because that is pumping money into the Euroland. EWT is based on three principles - liquidity, liquidity and liquidity. :)

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  168. This is a freakin' beautiful set up, hope I am right..... Will post my triangle chart tomorrow morn. They gave the bulls hope and washed out the bears.

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  169. You mean anything during regular market hours.

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  170. lol... right there with you man.  i am sure there are many others on the side lines waiting and w a i t i n g for the right time.  everyone thinks it's near to a drop, but who knows.  although if the auctions for spain and italy do not go well tomorrow, and IF S&P announces theire downgrade on france friday, that could be enough of a shock to the system to get everyone bailing. :)  but who knows!?  S&P does not seem to care about their reputation enouogh to warn people sooner than later about France's credit worth.

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  171. Six and a half hours to move the $SPX less than a half point for the day.  Not much of an opportunity to earn a living this way.  A couple of months ago we had 2% daily volitility versus a normal 1%.  No we are stuck in 1/2% volitility. Like watching a football game where the score is zero to zero.

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  172. No one is making money up here. Bullls are waiting for a higher high. Bears are waiting for a break down. Stalemate. 

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  173. Second that.

    I day trade all the time. I found the EWT framework very helpful for me. It tells me what to look for in planning my entries and exits. Today, for example, SPX was moving up after Euroland closed. I knew that I had to hold on until wave 5 to bail out. That eventually came towards the end of the session. It was a nail biter.

    I would have bailed out much earlier had I not been using EWT to do intraday counting.

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  174. Looking forward to your chart Katz.  I'm not a day trader but I appreciate your analysis.

    On another note, I was reading about these Demark indicators.  I know nothing about them, but Tom went on the record recently by claiming that when the S&P has 3-4 consecutive closes above the October highs, then the drop will begin.  He also suggested this would happen in the first half of January.  I have no idea how he makes these kinds of calls but I thought I'd bring it up, lol.

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  175. t_winn,

    I am long term bearish.  And I took a sizable ES short position a while ago knowing well that I could take some pain waiting for a top.   I cannot monitor my positions constantly with my recent schedule.  Normally I would trade short term, preferring bearish set ups.  A few weeks ago I decided to go short and hold, obviously I have taken considerable damage.  My thinking is when it turns, if it turns, it will come back quick.  With the swing that I am expecting I feel like I will get more out of it if I just hold and not try to game it.  Obviously, that has not worked out so well so far.  Hopefully, in the longer term I will pat myself on the back for my patience.  As of right now though doubts are creeping in. 

    What keeps me holding on is how well the psychology of the market is reinforcing a Wave 2 peak.  This is a great test for Elliott Wave in my opinion. 

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  176. Sounds exactly like my story. The thing is, I just don't know anymore what my true emotional driven impulses are telling me. Am i shorting this b/c I am truly fighting my instinct to go long-hold? or is my shorting behavior the true emotion and thus this market will go parabollic from here? Really I'm beggining to believe I have market schizophrenia B-)... I agree, there have been many instances where I see the entry point to go long, check against all the "preferred scenarios" here and say...Nahhh!... Then look 2 hours later and SURE ENOUGH..the alternate is playing out again...AGGGHHH!!!!

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  177. hey katz, could you give a heads up of what you see?

    headfake up then crash/ pop and crash?

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  178. With these low volatile sessions, the VIX is just a spring that has been compressed so tightly for a while now, it is just ready to spring up at the next case of big-bad news.

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  179. This will only work if trading is in the open market and not the futures market.  For weeks all the action has been in the futures market with most of the large rises not available to day traders.  After being severly burned several times this past month, I am no longer holding positions overnight.

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  180. Hi katz07,
    Be patient... There's no sign from the market' close telling us anything so sideline is the best choice... As you can see from my post below to you ES is just stop at its high = 1289.25. It's amazing... Believe it or not.

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