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Thursday, January 26, 2012

SPX and VIX Updates: Bears Running Out of Real Estate

Yesterday, the Fed announced that it will continue to keep interest rates low "until late 2014 or until we all get fired, whichever comes first."  The market immediately rallied, as hopeful investors cheered the news that the Fed could get fired.  As I predicted, there was no announcement of QE3, however the Fed has effectively stated that they're going to keep juicing the money supply as much as they feel is necessary to continue driving inflation higher.  Inflation creates higher prices in all asset classes, including of course, stocks and commodities.

It seems to me that the Fed realized some time ago that the scenario they face now is basically "inflate or die."  The practical difficulty they are challenged with is outlined in the quote below (from Paul Samuelson's 1948 Economics textbook):
By increasing the volume of their government securities and loans and by lowering Member Bank legal reserve requirements, the Reserve Banks can encourage an increase in the supply of money and bank deposits. They can encourage but, without taking drastic action, they cannot compel. For in the middle of a deep depression just when we want Reserve policy to be most effective, the Member Banks are likely to be timid about buying new investments or making loans. If the Reserve authorities buy government bonds in the open market and thereby swell bank reserves, the banks will not put these funds to work but will simply hold reserves. Result: no 5 for 1, "no nothing," simply a substitution on the bank's balance sheet of idle cash for old government bonds.
Their hope seems to be that they can keep everything afloat just long enough to move into a recovery period, at which time the economy will pick up and the banks should start lending again.  So far, it's been a pretty tepid recovery, and it's difficult to see what, if anything, has changed since 2011.  The market sure seems to have gotten ahead of itself -- but since the money the Fed pumps to its primary dealers ends up in stocks and bonds, which drives higher prices, reality isn't much of a factor in the market these days.  If you want some illustration of that fact, consider that the Dow is currently at the same price level it was at in early 2007 -- and then compare the fundamentals between then and now.

Fundamentals don't drive the market; liquidity does.

So, fundamentals aside, there's a cardinal rule to Elliott Wave Theory that wave 2 cannot exceed the start of wave 1.  Several indices are still some distance away from violating that rule, however, the Dow Jones Industrial Average (INDU) is only 120 points away from its 2011 high.  12,876 would be the line in the sand for the bear count in the INDU.  And since the Dow leads, it is probably safe to assume that if the Dow knocks out its bear count, the S&P 500 (SPX) would follow soon after.

We're not quite there yet, but it's an awfully close shave for bears right now.  As such, today I'm going to present an alternate long-term bull count alongside the bear count.  If the Dow knocks out its bear count, this bull count is likely to become my preferred view, though I'll have to do a lot more cross-market studies before committing fully to a new preferred count.  I'll need to see what form the knockout takes.  However, I'm getting a bit ahead of myself here, since the market still hasn't knocked out the bear count.  In any case, I wanted readers to get an idea of one possibility (chart below).


There are of course, always other possibilities, but we'll burn that bridge if and when we come to it.  First things first, though. 

Part of the reason I'm giving serious consideration to the bull counts at this stage is that numerous overbought indicators have been failing to generate any sort of meaningful pull-backs in the rally.  This is usually a hallmark of bull markets.  But price is the ultimate indicator, so let's see whether the bear counts get knocked-out or not.

Speaking of indicators, below is yet another top indicator that triggered recently.  This indicator uses the ratio of the Volatility Index (VIX), which measures one-month volatility, to the VXV, which measures three-month volatility.  The VXV is generally more stable, so low readings in this ratio indicate investors have become complacent quite rapidly, which is often a recipe for disaster for equities.  It's not my best "top" indicator, with roughly a 64% win ratio over the prior four years -- but it is yet another addition to a long list of recently-triggered top indicators.


Note the current development of this second signal trigger, about a month after the last one.  The last time this happened at a one month interval is highlighted on the chart, and in that prior instance, the second signal did nail the top.  I've also noted the bullish falling wedge in the VIX (bottom panel), mainly to point out that it might not mean anything.  Recall that the VIX acting bullishly is actually bearish for the broad market, as the VIX rises when the market goes down... however, I recall similar talk of these VIX patterns in the past, and indeed you can see on the chart that the prior two falling wedges both failed.  It seems that VIX traces out falling wedges with some regularity, and I think it's an error to read too much into that pattern on VIX.

But maybe in concurrence with the sell signal trigger, this time will be different.  We'll find out soon enough.

Last but not least, the SPX short term count.  Once again, my alternate count is the one that played out yesterday.  I keep favoring the bearish counts based on the indicators, and as the indicators fail, the bear counts fail with them.  Be that as it may, the current preferred count appeals to me a great deal.  I continue to feel that the first portion of the rally counts best as a leading diagonal first wave, and that suggests the market is now in the final stage of this leg upwards.  This might be the last hope for bears over the intermediate term.  However, until the market knocks out the long-term bear case as outlined earlier, I will continue to play this rally as a bear.

The count below suggests that the market is due one final gasp into the target zone.  If that count is correct, then the rally is finally getting ready to roll over.  Yesterday did have some hallmarks of an exhaustion day.  If that count's not correct and the rally keeps going, then it's likely the INDU will knockout its bear count.

     
In conclusion, if the bear case still holds water, then it's time for the bears to make a stand.  The indicators continue to signal a top -- but if this is no longer a bear market, it would not be uncommon for these indicators to fail.  The price action over the next few sessions is key.  Trade safe.

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

419 comments:

  1. Outstanding job as usual. It will be an interesting day.

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  2. truerangeballisticJanuary 26, 2012 at 3:17 AM

    Morning and anothr great job. Thanks for your work

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  3. Thanks!

    Just added the following sentence to the article:

    ...reality isn't much of a factor in the market these days. If you want some illustration of that fact, consider that the Dow is currently at the same price level it was at in early 2007 -- and then compare the fundametals between then and now.

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  4. Thanks PL. Concerned that the 2 failed readings on the VIX:VXN indicator during summer/fall 2010 and this readings were the lowest on the charts - and close to recent reading - and both were influenced by QE as we are today. What really has me concerned is that there is a 2nd round of LTRO that will happen Feb 29th...more QE - more upside? Is there a bigger picture count that can take us through the May 2011 highs in a B wave while still allowing for a severe decline C wave? 

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  5. nice post PL. I would keep a very close eye on the $VIX today, i'm just getting a feeling.

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  6. While it's technically possible, this sure doesn't feel like a characteristic B-wave.  It feels like a C wave or a 2nd wave.  That could change, of course.  I'm waiting for a KO before I put too much more analysis into it. 

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  7. This thread seems so quiet compared to the last one.  :)

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  8. Note to Whip Sawed about your most recent post on the last thread:  Don't worry about it.  Everybody needs to "talk it out" sometimes.  :)

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  9. btw, here's an interesting thought: EU LTRO drives us up to 1500ish over the next few MONTHS, which is entirely possible... *then* we get the real bear market.

    Note that I'm not currently considering the massive nested 1-2 series that most bullish Elliotticians are favoring.  That would be Weimar Republic style inflation, IMO.  I suppose my opinion could change going forward, but I'm not seeing Dow 30,000 anytime soon here...

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  10. a good or bad feeling for Vix? 

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  11. I'll call Anon if ya want :)

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  12. lol, was thinking that.  He was an obnoxious, but hilarious, last night.

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  13. yeah he was...actually I think he was feeling good.

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  14. I've been trading for about 10 yrs and I've been this wrong once before (July '09) .  I feel like the Zombie Bull March has started up yet again.  I think we'll see a long, slow, low volatility, green everyday, machine governed, zombie limp to 1500 from here... the only hope for the bear case is a world altering natural disaster

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  15. Zombie Bull March... I like that. 

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  16. I am actually going to need to head off now. My wife's got the Martian Death Flu, so I need to try to get a couple hours of sleep so I can be up early enough to help out with our youngest.

    Got a couple orders standing, so my perfect world would be to wake up with my orders filled, and the market down 10%. :)

    GL!

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  17. It probably won't be a natural disaster...I'd keep an eye out for new moon nights on the calendar...that's when the Stealths work best. March 22nd is my best guess...curiously around the same time as a possible Greek default (wasn't that March 23rd)...just me being cynical.

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  18. Led by zombie banks

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  19. We havent yet seen a large UP or DOWN day in 2012 to muddy the pond..(VIX in lala land)  lots of layers of clean water on top and is market is getting tight and rigid. (some call a slow grind higher,ok ur probably correct)    Yet, Headlines calmed. why?  Example, on first day of 2012 CNBC two of the morning anchors said on air they were told  to be more optimistic and less negative (gloom n doom).  Sooo, have they put fresh drywall over a mold infested room, or, have they ripped open the walls where they have noticed dust and its sparkly clean?? 

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  20. This is better, or worse (depending on your POV), than 2009 ....

    Collectively, the entire world is engaging in QE of one form or another. When one adds up all the money ECB alone is, and will be, pumping into the Euroland economy alone, bears should sit up and be sweating profusely. It has many, many trailing zero's.

    China, Japan and India (world's 2, 3, 4 economies) are coming aboard the QE train very soon. The emerging market ETF is now in full bull mode. :)

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  21. My beginner's luck as a newbie in ES trading happened yesterday when I sent in an order to short ES at 1320 and it did NOT get executed.  Apparently my account was not ready for futures trading because I forgot to send in my signed paperwork.  It felt pretty good to not short a day like yesterday!

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  22. out of ES at my 27.5 (just below)

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  23. Katz,

    I am planning on a wave4 retrace (yesterday was wave 3). Do you agree?

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  24. Hilarious.  After fighting every step of this bull advance, you're now admitting this may be a bull market but you want to see it go higher first.  LMFAO!!!  Elliot Waves are useless hindsight charts that mean nothing.  Only after losing a ton of money can you see that you were wrong.

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  25. Paolo Giacobbe PiolJanuary 26, 2012 at 4:33 AM

    And when wave five will end, please let have your prediction

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  26. and yet you're only here after the fact.. too bad you didn't convey your wisdom here at 1200 :(

    oh well, katzy isn't this the sort of lord of the flies rant you referenced previously?

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  27. Paolo Giacobbe PiolJanuary 26, 2012 at 4:40 AM

    Todat Tresury Yeld are down 0,86% and they are down 1,2% from Monday High, this is tipical od a bear market. The market now is suggeting to invest in band and stay away from shares

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  28. I like your commentary today. :) Thanks.

    Please consider my count from a while ago, that your red (b) will just be the a of this (b). And as this (b) is a 3-wave, the now running b/(b) can even overshoot and the red (b) I have in mind can be a running b. That will drive everyone crazy. 

    http://img715.imageshack.us/img715/2821/lenaspdez2011.jpg

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  29. truerangeballisticJanuary 26, 2012 at 4:54 AM

    For RUT fans. Entered the 820\830 vcs for Feb 18 @ 2.60 per contract. RUT has broken some upside resistance so we will see how this plays out. A 5 point decline and I am out. Don't trust it much but the fight has been hard

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  30. Presenting...Trollius Erectus...Let's watch as he raises his head for a few minutes until he climaxes and then rolls over back to sleep.

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  31. katz just a serious question-  do you consistently make money as a trader?  just been following your counts for the last few weeks, i play the larger swings wondering if the micro penny technique works any better

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  32. Make me reply from bed. Called all the prior turns since September. Every single one. Some before they happened, some in real time as key levels were hit or violated. This last one, I was early. But if you think I "lost a ton of money," then you haven't the foggiest idea of how to be a successful trader. If you think the system doesn't work, then you obviously haven't paid attention.
    Why I have to bother replying to people who know nothing is beyond me. Go troll another site. "Oh Elliott Waves are useless, because sometimes you can't predict the market 5 months in advance!" WTF kind of moronic statement is that.
    Sent from my Windows Phone
    ________________________________

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  33. ANON- we are past the dji 12800 mark- thoughts?

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  34. Sold my SPY calls from yesterday at 1330. Going to wait to see if the bear count gets knocked out to load up on calls again. If it holds, going to short...

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  35. Scotty_Doesnt_KnowJanuary 26, 2012 at 5:01 AM

    30 year bond auction on Feb. 9.  Don't we usually experience an equities selloff before these long bond auctions?  This could be the trigger.

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  36. The RUT fans thank you

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  37. Short term top is in (IMHO).  New Home sales and leading indicators below consensus.  When you're this overbought, there is no room for disappointments.

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  38. Paolo Giacobbe PiolJanuary 26, 2012 at 5:03 AM

    Hi PL, if you do not work you never make a mistake! It can happens that some times we make a mistake  

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  39. truerangeballisticJanuary 26, 2012 at 5:05 AM

    The Few of us. I will see how this goes. Been a slow grind up here. 4 an 5 pts a day. Usually on up days the RUT gets more. It is looking tired but with all this fiat money around who knows.

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  40. truerangeballisticJanuary 26, 2012 at 5:06 AM

    The Few of us. I will see how this goes. Been a slow grind up here. 4 an 5 pts a day. Usually on up days the RUT gets more. It is looking tired but with all this fiat money around who knows.

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  41. It's a crazy, crazy thing that RUT...I'm a TNA/TZA addict (all cash until this thing actually proves a direction.)

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  42.  he is a cruel troll

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  43. Paolo, doesn't sound as you are in the bull camp.  What are your charts and indicators telling you?

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  44. truerangeballisticJanuary 26, 2012 at 5:12 AM

    I agree. Here is another point of view I looked at. It may be of interest. http://blog.kimblechartingsolutions.com/2012/01/russell-2000-breaks-above-resistance-going-to-rally-back-to-all-time-highs/

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  45. Paolo Giacobbe PiolJanuary 26, 2012 at 5:13 AM

    Bernanke speach is the trigger, he correcly said he cannot higher interest rate, also a student od Political Economics knows that

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  46. Thank you. I was looking a at 860. I was going to TZA at 780 but held off until some clarity.

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  47. something is brewing

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  48. Turn off your phone Pretz...get some sleep.

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  49. truerangeballisticJanuary 26, 2012 at 5:25 AM

    My wave counts on the RUT have been horrible but I think 860 is possible. That would be some hard resistance up there

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  50. I don't necessarily agree with your characterization of the market being "...due one final gasp into the target zone", as you put it in the paragraph just above the 3rd chart. Actually, the latest few weeks have seen a move up with some conviction. Aside from the low volume, it's been hardly a series of weak moves or "series of gasps".

    I suspect that what's fueling this stubborn move up is likely anticipation for more FED-juice amplified by significant European outflows finding a "perceived" safe haven in US equities.

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  51. he said yesterday he makes 8 points a day for 365 days if i read it right. he said he had very few losses

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  52. SPY closed its July'2011 GAP at 133.33, and then market has reversed.

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  53. Tell me, Tizz, have you tracked the forecasting records of other analysts? Are they better than PL's? By how much? What time periods and for what trading strategies? Please do that analysis, then report the findings. We'll talk then, because you know, anybody can have a BS opinion.

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  54. good t winn
    sorry about last nite, growing pains of a fairly new and successful blog

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  55. totally hard resistance

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  56. any ES traders, I have spent considerable time developing my levels and am not offering trading advice, just postin what i am doin and seeing. when it hits my levels, there was potential to jump the TL and head even higher, BUT i get out, no if, ands, or buts.

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  57. a gap down on ES 15????

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  58. What is your entry target on that long?

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  59. I agree wholeheartedly that it is better not to pass judgements on the market. To me, price is truth, no if's and buts. Otherwise, it can be dangerous to one's financial health. :)

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  60. that is completely your choice

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  61.  Uh Oh...GS is saying 860. That means it will more than likely be TZA using the ZH's virtual GS advice Inverse ETF

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  62. VIX  VXX is reversing (for now) also w some nice volume. 

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  63. truerangeballisticJanuary 26, 2012 at 5:48 AM

    For February 18 expiration I have an ATR of 104 pts. My high would be 887 and my low would be 679. I used an absolute deviation to the the 6 month ATR of  78.05 to get the 104. I sell credit spreads so anything below and above those numbers is what I am looking to sell in february.

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  64. here is the daily bear trap...

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  65. does this have to be filled or not??

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  66. All the numbers will be disappointing as we get 1st quarter numbers and earnings, sans Apple, have by and large sucked - and no-one has enacted any austerity yet etc - and worse, the Republicans are going to fumbled away the white house.  So the battle is going to be: liquidity and money printing vs reality which will be a declining economic picture.  The FED has been saying all along that things are going to get worse.  The question is whether the market will care or the buying will continue

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  67. truerangeballisticJanuary 26, 2012 at 5:53 AM

    Good old Tyler Durden. Yep do the opposite of GS is a good call. I may close out my 820/830's right now and look to sell the 840/850 spread. below my ATR but combined with last month this has run way above anything I have seen. Even QE 1 did not have the range that this move has had on a monthly basis.

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  68. check out size of candle on 120 ES, while you may be correct, I think megaphone is in play (headed towards bottom TL)

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  69. double 666 and you get selloff right there

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  70. truerangeballisticJanuary 26, 2012 at 5:54 AM

    Good old Tyler Durden. Yep do the opposite of GS is a good call. I may close out my 820/830's right now and look to sell the 840/850 spread. below my ATR but combined with last month this has run way above anything I have seen. Even QE 1 did not have the range that this move has had on a monthly basis.

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  71. And may I ask where do Bot-Katzo have the megaphone bottom TL?

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  72. Today's reversal at SPX 1333.47 happened just above what is probably the last significant TL between here an 1370.  It is TL from the 2007 high to last May's 1307 high.  That TL is at about 1328, so we are below it now.  Whether that marked the top of this rally of just the top of a wave we'll know in time. 

    It appears that it should only take a few closes above todays high to for the Golden Cross to signal, the two lines are almost touching.  If  a cross is signaled,  the bull market would be confirmed for a few weeks/months as they tend to last. 

    I expect that we will know which way we are headed next before Feb 6, but should we trade sideways for a bit the TL from 2007 and the support TL from late Dec will intersect on that day. 

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  73. 1297 but previous thrusts have turned up before the pure form

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  74. Down volume in last 30 minutes (SPY 30min) exceeded opening 30 minutes' volume on gap up.  Maybe this will develop into an impulse move down.  Then again, I feel like I've been saying that for months!

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  75. I waited for VXX to turn back to 26.50 (twice) and then bought a VXX Feb call.  My upside target for VXX is $32-$33.

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  76. ES gap fill would be 1323

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  77. posted "I would keep a very close eye on the $VIX today, i'm just getting a feeling."

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  78. nice. i think we will get that..  good luck to us.  patience is a virtue

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  79. Out of this morning's short. Waiting for a chance to short into closing.

    Today is OpEx for JanWk4. It has a high probability of closing at 133 or 132. Trade safe. :)

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  80. I took a substantial position in TVIX today.  After looking at a long term chart of that, we are getting pretty close to where it flatlined on the low end and should have a lot of support in the 16-17 area.  I've been wrong a lot and actually am using that as a hedge against a few other things

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  81. Wow.  Great observation, billa.  1333.47 right at 100% retrace of March 6, 2009 intraday low.  Some sentimental value for PL right there.  Was that the top?  Time will tell.  

    Fibonacci for life!  FFL!

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  82. truerangeballisticJanuary 26, 2012 at 6:22 AM

    Here is my chart and count. Needs to break 785 first TL then the next TL

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  83. truerangeballisticJanuary 26, 2012 at 6:23 AM

    Here is my chart and count. Needs to break 785 first TL then the next TL

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  84. truerangeballisticJanuary 26, 2012 at 6:24 AM

    Here is my chart and count. Needs to break 785 first TL then the next TL

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  85. That trajectory is intimidating. Must be the Eurocash looking for the most interesting moves...still not making a move until confirmation up/down. I don't mind being the most gutless bastard in the room...especially with leverage.

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  86. Katz,  The more I look at your megaphone the more I like it.  It is setting up very cleanly.

    http://www.trending123.com/patterns/reverse_symmetrical_triangle.html

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  87. I have one also GG.  do you have near term price target or long term? 

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  88. 22 straight days of megaphone continue :)

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  89. European market closing ....

    Hopefully, this is not a drop and pop day. But, who knows. :)

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  90. you guys be careful with your short positions, are they ST, IT, or LT, you decide that. A megaphone can have up to 14 points. I am a firm believer in taking profits, you can always reenter but no one can take a profit away from you. if this is a megaphone it could have a messy end.

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  91. Katzo, I must have missed your link to the megaphone chart. Can you repost?

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  92. No, but viewed an entry here as having a somewhat limited downside with a huge upside.  I'm also getting the feeling that even if the market corrects, which I expect, that gold may hold up or start acting like a fear hedge again

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  93. 1313-1315 today

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  94. Yep, gets me every time

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  95. OpEx for futures?

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  96. ES/120 megaphone

    http://www.screencast.com/users/katzo7/folders/Jing/media/046c18ce-bc08-4406-99a0-8fcaec4a8e7c

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  97. not as bad as usual- wondering if the month rally was fed frontruning and we might get a sell the news type thing.  or maybe not,

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  98. For the month of Jan. I meant. As well as the weekly's.

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  99. marketcycle studentJanuary 26, 2012 at 6:58 AM

    Guys, today is the time to short ES for next 50-60 points drop in next 1-2 weeks. After that you have to long it again for 1370+. But for now, SHORT IT TODAY.

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  100. whoa has anyone seen the moneyflows, major input

    http://stockcharts.com/freecharts/gallery.html?$SPX

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  101. Watching for up or down movement?

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  102. Down, I think.

    I think it is either a c or a 2 down. As a newbie, I don't know how to tell. :)

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  103. Today's action looks like controlled trading of bringing down the dow and spx.  They take it up fast, and then gradually bring it down, then take it back up fast, and the gradually bring it down even further.  I wonder if bots or professional traders are trying to entice any remaining shorts back in just so they can take the market higher again.  If the pros think they may have taken almost all remain shorts, then that is when they might truly let the market go down, but gradually.  Unless a big negative event happens, this market may just move side ways or a very gradual decline.

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  104. On dji just had a near-perfect 5 waves down and only a 38.2% retracement. Now, if we can just make a new low...

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  105. If it will be a gradual decline for long term, then VIX long contracts will be in trouble.

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  106. I WANT MY SELLOFF AND I WANT IT NOW!

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  107. Looking at the H&S on the 1-minute chart?  It broke the neckline, back-tested, and dropped toward the bottom of the megaphone.  Head and shoulders within a megaphone?  Total mndfk.

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  108. Thank you for the chartage

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  109. Here's your Daily  VIX Volatility trade report video. 

    http://www.youtube.com/watch?v=SKcE9Ebsifw&feature=plcp&context=C37ae530UDOEgsToPDskL-IUXhphP6mZlq0g2UyL23

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  110. The VIX has less than 5% movement thus far today and the SPX is moving less than 5 points down, this will not cause long VIX contracts to go up in value if this trend continues for today.  Instead, it will bring the long VIX contracts back down by the end of the day due to time decay.  These low volatility days kill long VIX contracts.  Best to sell some VIX Call contracts in this scenario.  Time decay will be in VIX shorts favor.

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  111. I read this from a web site earlier today:  "From Goldman: “We are recommending long positions in the Russell 2000 with a target of 860 (c+8%) and a stop of 765 (c-3%), marked relative to today’s open.” As a reminder, for every client who is buying from Goldman, Goldman is selling. That is all."

    Once Goldman finishes sucking in all their clients, they will let the market drop faster!

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  112. It was not a mistake. it was not negligence or something, it was a funded prognosis. It is not like you misread a crystal ball and got it wrong. that is just what it is. some you hit, some you miss. But it is not a mistake if you miss. Mistake would to loose more money, then you make.

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  113. this thing is on a knife's edge right now

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  114. It was not a mistake. it was not negligence or something, it was a funded prognosis. It is not like you misread a crystal ball and got it wrong. that is just what it is. some you hit, some you miss. But it is not a mistake if you miss. Mistake would to loose more money, then you make.

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  115. I am very sorry... That you have to have a Windows Phone... First a HP laptop and now this... you buying hardware seems to be a story better not told... ;)

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  116. I am very sorry... That you have to have a Windows Phone... First a HP laptop and now this... you buying hardware seems to be a story better not told... :D

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  117. Looks like 1320 held. Wave C done, now 1 up?

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  118. a better update video on VIX options.. same guy. 

    http://www.youtube.com/watch?v=b1e2q_UqFo8&feature=plcp&context=C33df8f9UDOEgsToPDskI34taj0Z9dAhnClITeAwyO

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  119. Isn't it disgusting seeing a whole company try to lie directly to everyone in the market?

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  120. but it is not a EW typical megaphone... The up moves are impulsive and only the last down move looks like it could be an impulse. So I expect at least one c down.

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  121. Just do the opposite of what they say....sorry for being redundant but ZH has a long-standing theory about this

    http://www.zerohedge.com/news/another-top-goldman-recommends-opening-long-positions-russell-2000

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  122. gap fill 1322 area then down me thinks 

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  123. Paolo Giacobbe PiolJanuary 26, 2012 at 8:05 AM

    According to TB it looks like it has done a maximum like end of April and October, we will see

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  124. you remember when the said oil was goin' to 150 a barrel to their clients then shorted the hell out of oil the same day, sent out a memo to go long. created a spike high on this parabolic move

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  125. Thanks for posting.  Note that moneyflows are of their peak.

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  126. I am not sure I understand.  Jan. OpEx (cash) was Jan. 20th.  Weekly OpEx is tomorrow's close.

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  127. How do you calculate this?

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  128. short ES, down into EOD, dunno but will take profit when I see a turn, bottom of megaphone eventual tgt, not today tho imo

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  129. Market forming a reverse H&S in order to push back up toward late afternoon or close? 

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  130. careful here. . .  imo

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  131. or...a retest of the neck of the h&s

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  132. Nope. I think it was nested 1,2s (2 of). 5.40am in Australia. Glad I stayed up for this now.

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  133. oops, just checked ES, I was looking at dow. No sign of nested 1,2 on ES, sorry.

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  134. Just curious.  PL mentioning that the Bear knockout count on the Dow would be the 2011 high of 12,876.  But the intraday high on May 2, 2011 was 12,928.45.  So wouldn't that be the Bear knockout count?

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  135. Earlier PL mentioned in today's blog that ultimate Bear knockout count for the Dow is 12,876, which he mentioned was the 2011 high.  However, the Dow hit an intraday high on May 2, 2011 of 12,928.45.  So wouldn't this be the Bear knockout count?

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  136. Pretzel! Today's article was admiring! Why? Well,  I 10000000% admire your willingness, and ability to change your perspective and view of the market, it's cycles etc, as the market dictates that. Anybody who says you are a perma-bear, a broken clock, not-wiling to change your view etc has no clue. I admire your ability for adapting as such.  Great work. 

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  137. has this mrkt been typical? you short?

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  138. marketcycle studentJanuary 26, 2012 at 9:09 AM

    38% retrace of move from 1200 to 1330 is 1278. So 1280-70 should be the next low and then continue to 1370 from there.

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  139. watch now
    watch now
    watch now

    sell program at 1316 me thinks

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  140. You'll get it. Waterfall crash coming soon! I think it will co-inside with a major event ie Greek default. So my mid_March/early April Dow will be at 10,476. I can sense it.

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  141. You'll get it. Waterfall crash coming soon! I think it will co-inside with a major event ie Greek default. So my mid_March/early April Dow will be at 10,476. I can sense it.

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  142. covered, 19.75 at 1:11 EST>>12.50 Go look at timing on an ES chart

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  143. Very nice trade!

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  144. trying hard to keep it away from your 1316 level

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  145. exit my ES short. nice trade.

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  146. stagnant zone now, not goo for anything

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  147. And would you look at that....just in time for beer thirty!!!

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  148. Katzo’s buying!

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  149. could be bullish falling wedge breaking out now, I'm long ES from 1312 (tight stop)....i was short from 1330, first good day of ES trading for this newbie :)

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  150. HAL 2000 got 4 hours sleep last nite, (shut down time) you @$#%^&# Amerikans get too much sleep, overrated. lol Who do i sound like?

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  151. ...like ANNON double-0 7.

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  152. If we think back to the last crash in 2008, when a major event occurred(Bear & Lehman), it takes control of the forces driving the market ie crash. Even when the powers that be tried to talk their way out of it, nobody listened. I predict a similar event to occur in 2012. Will it be a Greek default? or something else that surprises us. Once the news is out, the market will react before anyone can do anything about it. I can sense it. You can't make any money going long at this point because a 1987 moment coming soon will more likely rip you apart and take every penny back. 

    The problem is, there are so many fundamental problems out there, its like a massive ticking time-bomb. Cash or Short entry below a key trend-line for Conservative investors. 

    Don't listen to me - do your own thing. Be careful!

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  153. that might be it, hard call

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  154. Very nice trade!

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  155. Katzo,

    In the ES market, how much can you make for every point gain? How much is the commission?

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  156. Could you post a chart about what you saw at this point (approx. 2:15PM ET) later on?

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  157. What did you see at this point?

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  158. katzy?

    what do you think about a trip to the lower end of the one month up channel in es from here?  1308ish?

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  159. Some may say that this 1987 moment is now delayed into 2013 because of the amount of liquidity out there.   If the republicans win the presidential election and Ben Bernanke gets replaced, that can also do the trick!

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  160. I think that's the TOP to me. 1333. Would be surprised if that is taken out. Not sure the bulls have any BS rumors to circulate at this point to take it any higher. Will be watching close at candlestick pattern at end of trade. Think PL chart has good entry points for shorts. I like 1292 & 1282. 

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  161. 12.50 per tick, 50$ per point, commish very low, less than 1/4 pt.

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  162. TY.

    What's tick vs point?

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  163. Ed Carlson, Seattle Technical Advisors (30-day free look):"Again, it looks like we may have a sell-signal from the Confirmation Model.

    If the S&P500 closes at the current level (1,320.24) or below today, it will trigger the sell-signal."

     

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  164. could, look at megaphone chart. . . as I said could stall before bottom TL (ES1297 ish), could break through it (dont think so immediately), could go sideways.

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  165. 4 ticks or pips per point

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  166. That's the cool thing about black swans...you don't know what they are and you don't know when they're coming...Everyone tries to predict them...but by definition you can't.   I still think that Greece will bring this puppy down in a real or imagined event, and TPTB are just positioning themselves in the event that the BS wagon loses a wheel ahead of time (they still have time).

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  167. Last Bears out there (all 6 of us LOL) - don't worry about losing a few points here and there. SPX 666 will be tested early 2013. So stay the course. I have a take profits target level 851 and 500 SPX. I can see 2008 all over again, but instead of banks it will be countries going broke. The 500 target I may change depending on the fundamentals around at the time - I mean I want to be paid out.LOL! The only reason I have a 851 target is to get my original money out plus a decent profit, leaving the rest to make even more profits.

    The last 4 weeks price action has not changed my mind. I just think the powers that be are digging an even deeper hole - and they are still digging.

    Think of Japan 1989 - thats where we are now. AS always trade safe and make your own conclusions for your own money. Good luck.  

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  168. Yeah, I'm watching that too.  Just double-tapped the the lower channel boundary dating back to 12/19 LOD.  Next stop:  Top of channel or bottom of megaphone.

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  169. Are you leveraged 50 to 1?
    What's the max allowed and a reasonable number?

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  170. Are you leveraged 50 to 1?
    What's the max allowed and a reasonable number?

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  171. i am elated that it faked me out early this morning (no position, but prediction) and went up and double tapped that megaphone TL. WHen you see that, with a certain set of iunderlying, you can somewhat rest assured that it has exhausted itself, mentioned that this am very early. we are headed towards bottom of megaphone TL, 97 ish area is value, and have done some heavy lifting today, this appears to be EW1 and 2 stuff on a grander scale. it is getting late in the day foe any major move, suspect chop for ROD (rest of day). Possible spike down at 3:30 pm, who knows, I am done. 

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  172. Exactly, Black Swan. Everyone has forgotten how dangerous the stock market is for your money. Thats when it hurts you the most! 

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  173. great!  we want them to sell...

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  174. Exactly, Black Swan. Everyone has forgotten how dangerous the stock market is for your money. Thats when it hurts you the most! 

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  175. i am looking for another put victim after the GOOG play, having trouble finding one. trade in the ST direction of the mrkt. Any ideas???

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  176. I am looking at NFLX. :)

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  177. Ok folks thats defo the to. Regional bank index SPDR KBW regional banking index has broke trendline down. LOL.

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  178. check out FLR. I have done it in the past. See what you think of their chart

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  179. Anon has a bullet left...but I think he's saving it. I hope he go some well-deserved rest :)

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