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Thursday, January 5, 2012

SPX Update: Bears Have Left the Building -- Look Out Below

I think being long this market right now is exceptionally risky.

Yesterday, I suggested that the sentiment survey due out today from the American Association of Individual Investors would indicate that sentiment levels were reaching bullish extremes.  The survey actually exceeded my expectations: not from the bulls so much, but from the lack of bears.  The percentage of bearish investors is approaching the lowest levels of the past decade, and this type of sentiment is generally bad for bulls. If most of the buyers have already bought, and most of the short-sellers have already covered, the market is going to have a hard time putting together a meaningful rally.

This is when it's most challenging to be a bear -- when virtually no one else is (the same applies to being bullish, like I was at the beginning of October)... but this is also when it's most profitable. 

Sentiment data is not to be construed as a guarantee of an immediate top (or bottom) -- in fact, the last time the bearish percentage was this low was December 2010, and the SPX went on to rally another 100 points before putting in the 2011 top and crashing over the summer.  Prior to that, one has to go all the way back to July of 2005 to find bearish investors this non-existent (the market fell through the rest of July); one can also find readings this low near the 2002 top (in February/March of '02 -- market lost over 30% afterwards), and near some of the major tops of the 2001 bear market.  But one can't trade on sentiment alone, because extreme readings can last a long time; however, this is a strong confirming indicator to the wave structure of the Minor (2) top.

It also suggests an ongoing state of suspended disbelief in the fundamental problems facing the world governments and economies.  Just as a few examples of the differences between now and the last time we saw readings this extreme:  back in December 2010, the TED spread was less than half its current level of 0.57, Italy's bonds were yielding around 4.5%, and QE2 was alive and well and feeding the stock market with liquidity. 

The market action yesterday finally took some of the short-term options off the table, and the call I made yesterday now appears to be the correct read:  either the top is in already, or there's one last spike high coming (ideally, just above the October highs, but not required).  

The Minor (3) decline should be just around the corner.  To reiterate a bit, I expect the first leg of Minor (3) to take out the October low of 1074.  My ideal target for the S&P 500 (SPX) is 1000-1050, however, wave extensions are always possible, and the 800's would not be out of the question.  It's been a frustrating market for swing-trader bears since the October top, with the bullish alternate counts seeming to win at every turn (although, a lot of points should have been picked up by the more nimble traders who took profits in the target zones).  The days of bear frustration should finally be drawing to a close.

Below is the intermediate term chart, which is unchanged of late:


The second chart I'd like to share is a very short-term chart, and presents a slightly altered take on yesterday's ending diagonal.  I'm genuinely not sure yet which diagonal could prove correct (assuming the top isn't in already), but the overall feel of an ending diagonal is certainly present, and the three-wave rallies seem to confirm that.  For those not well-versed in Elliott Wave, an ending diagonal consists of five 3-wave moves, and generally indicates buying exhaustion, as a balance is being reached between buyers and sellers.


My solid expectation now is that the top is either in, or will be after one more spike high.  I would take a very cautious stance with long positions at these levels (i.e.- I wouldn't hold longs here, personally, at least not for more than a short trade).  The temptation is always to go long after the meat of the rally is over, and your linear-projecting brain thinks it's "safe."  That's essentially what fifth waves are: the stragglers who missed the turn trying to jump on a bandwagon they already missed.  Another term for these traders would be "the bag holders" because they're the ones buying at the top (or selling at the bottom).  Successful trading often involves doing the exact opposite of what your emotions want you to do.

The last chart is the ending diagonal speculative count shown yesterday.  As I said, I'm genuinely not sure exactly how the end will shake out here -- the chart above and the one below are both completely viable, as is the view that the top is in.  We're really picking nits when we're talking about a couple percentage points of upside verses 20% or more downside.  The larger point I'm trying to drive home is that I don't believe this is a zone where swing-traders want to establish long positions -- exactly the opposite; I think swing traders should continue establishing shorts.  Nimble day traders are another matter, of course. 

What I like about the chart below is the "shake-out" factor it presents, both to weak longs (who dump when this heads lower) and to weak shorts (who dump when it heads higher).  It would simply be the path of greatest confusion.  An interesting factor to keep in mind is that Friday is a non-farm payroll day.  I've mentioned this before, but it bears repeating: on non-farm payroll days, the market often reverses from the direction of the open.  So if the open is down, it often reverses up and vice-versa.  Again, like everything else, this is just another odds-on favored historical fact; it doesn't guarantee a reversal.



On the other side of the coin, what I like about the count which suggests that the top is in already is that I don't think anyone's expecting that at all.  Major tops and bottoms should always leave the majority expecting the trend to continue, even if it's "just a little farther."

In conclusion (if you haven't already figured this out from the body of the article), my expectation is unchanged from yesterday: either the top is in already, or it will be after one more lunge higher.  Trade safe.

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

338 comments:

  1. Morning, all.  Looks like the bears have gone into hibernation.  I was actually quite excited for the bear case to see those sentiment results.  :)

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  2. Hi Pretzel, just when I have decided to lick my wounds and stop trading, you tempt me with your article :P
    Are you going to wait for the bounce off the lower channel line on both charts or going short from here?  ES already down to 1262 which i guess translate to about 1266 on SPX?  meaning more than 50% of your proposed intra day drop has already taken place

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  3. Hi, would it be possible to draw a trendline from the low on 12/19 to the low on 12/30 for the bottom of the diagonal?  This would imply that the throwover occured on Monday and the diagonal is finished.

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  4. btw, I suggest everyone sign up for the FREE real-time news and data service just to the right, under the blog's real-time streaming quotes.  It's a pretty cool service for free:  comprehensive real-time market and Forex tickers and news feeds, and all sorts of real-time charting and tracking.   It's a neat site.

    I get a tiny little compensation everytime someone signs up, but if all 22,000+ blog readers sign up, it'll add up to something, and I'll treat everyone to some ice cream.   :)

    It's well-worth the 20 seconds it takes to sign up and confirm your e-mail (that's all the info you need). 

    Disclaimer:  I won't treat everyone to ice cream, but if enough people sign up, maybe it'll pay for the cost to repair my blogging laptop -- since apparently, so far, only Mav signed up for real accounts at Zecco and TradeKing.  (thanks, Mav, you da man!)

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  5. Hi, and welcome.  It's entirely possible the move up is finished, as I hope I conveyed well-enough in the aritcle.  :)

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  6. Any thoughts on the golden cross in the dow? Is it even relevant? I don't know...newbie. Looks like a failed auction for Hungary overnight. Interesting times!

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  7. I've been accumulating shorts for a couple days.  One could wait a bit for a bounce, or enter lower when there's some confirmation of a trendchange.

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  8. Oh, yes you did.  I was more curious if my interpretation of the trendline was valid.  I'm new to EWT, but have been learning a lot lately.

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  9. I don't give much relevence to that happening in the Dow.  If you look at a chart of 2000/2001, the Dow whipsawed golden crosses and death crosses like they were going out of style.

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  10. You nailed in PL, in reading previous post there was a strong suggestion of this. 17% bears, never seen it this low, glad you did a new post. Here is my DAY ED chart. Once this mother trucker gets back inside that triangle it will be very interesting. Either a back test of that top TL or a back test of the bottom one, I have seen it both ways. Strong bullish sentiment points to the first. When it drops out of the bottom of the triangle, lights out. No going back. Said on previous thread "My indicators say it will be a very bearish day today." This is what I saw yesterday afternoon and the reason I covered my BFR when it went into that parabola, bird-in-hand stuff. My call was early.

     Traders have to understand that breakin' the bull sentiment will take time, especially when it is this high. An erosion of the mrkt price will work on confirmed perma bulls until they have finally determined that something is different, that their child's education fund was cut in half, that all profits are gone, a slow switch from greed to fear. This 'mood' change is why we will get sudden drops inside the ED and outside the bottom. Smarter money will bail first; then dumb money steps up to the plate. Smartest money did not play at this level (as Pretzel stated). These drops are a bit unpredictable as when they will happen, to many they just seem to occur suddenly, are unexplainable, news items are blamed for these drops, and they are pointed out as buying opportunities. With EWaves one can see these set ups on short term charts (5 to 15 min.), I saw this set up yesterday afternoon, my call was early. If drinking the bull Koolaid, then it really won't matter, hand the cash over and keep on drinking. Most who cannot read charts hold until the lose 50% of their money, then bail out. Good luck to all, it has to be pointed out that I, and Pretzel, and many others, try to provide their best take on the market possible, a sharing of knowledge, for free. This is in an endeavor where the commercial retail brokers are considered good if they have a 50% success rate.

    http://screencast.com/t/gsR1Y0RJxQg

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  11. It's a little harder sell as a diagonal that way, because the top trendline would be so flat.  It would look more like a triangle than a diagonal the way you're suggesting.  If the rally's over, I would be more prone to view it as a conventional 5-wave c-wave of an a-b-c (y).

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  12. James, thanks for the 2nd donation!  :)

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  13. Um, 1/2 the followers here are long or have sworn off trading due to the recent bear grinder action !

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  14. GG- where do your posts go sometimes?  This is the second time I've seen one from you in my email that I can't locate on the thread.

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  15. ORD213, everyone seems to be making a big deal out of one 'golden cross' on only one index, the DOW.  Take a look at other potential crosses, non-existent. Particularly look at $RUT, an index that contains 2000 stocks. If you want to get a good sense of the market, look at $RUT and at $TRAN. Markets move in tandem, the favorite tools for PPT manipulation is the SPX and DOW. This is why I mentioned the Frankfort desk in previous thread, see that 2 to 3 am spike on ES and what happened afterwords. Nice try boys but no cigar.

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  16. eur/$$

    http://screencast.com/t/UDDIbBEeqDuu

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  17. PL...Glad to be of assistance.

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  18. Thank you all for your hard work and well-worked blog posts.

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  19. You're welcome bud.

    Quick Question: If one was hypothetically holding longs at this point, is there a level where the bounce scenario is KO-ed?/A best price point to educationally speaking sell longs and leg in shorts or at this point is it better to chase?

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  20. You don't want to hold that long.  1248 or 1202, depending on IF the diagonal is correct, and if so -- which one.   Further, even if there's a wave v up coming on the diagonal, it is NOT required that it exceed the recent highs. 

    Obviously, if the top is in, fuggedaboutit.

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  21. Here I is.  When I post on my cell phone its sometimes in an older Post by accident

    Oooooh - Planned layoffs down 1.6% in December !!  You actually have to read way down in the article to find they are UP 31% from last December and, for an added note, most companies don't make these plans until January.  Obviously the headlines of all these things are designed to produce a false hope and in an attempt to keep Obama on his socialist perch

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  22. This is what I have been doing. Please, trade your own book and  do not follow me. Every time TZA broke 26 I would buy a chunk. I determined that the horizontal yellow line was a good value level and price for it, 25.25. Protective stop is down below the recent bottom. You can see from the chart I have applied the same parameters I use to determine my entries, a slow base building and a break of MACD zero.

    http://www.screencast.com/users/katzo7/folders/Jing/media/52e108f2-b804-442c-b146-1058ca38f2f1

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  23. PL,

    Thanks for the great post.  For someone that's been holding TZA since mid-December, your post today was very encouraging...not that I took it as trading advice, of course!  :)


    I'm certainly not at the level of a day-trader, maybe somewhere between swing and trend.  Either way, I signed up for the financial news and service this morning.  Hope you see the "tiny little compensation" soon.

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  24. The headlines are always feel-good crap.  I feel like our government headlines are written by TASS retirees.

    http://en.wikipedia.org/wiki/Telegraph_Agency_of_the_Soviet_Union

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  25. ty WS.  Every little bit adds up!  :)

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  26. Whip sawed,
     Please do not take offense at what I say. I am only trying to provide my opinion and a method that seems to work for me. What time frame were you trading TZA off of? Pick a time frame and stick with it, I faithfully use the 120. Look at my chart posted down below of the 120, do not buy any stock or etf if the MACD is pointing in the opposite direction. That is what my chart is all about, identifying divergence. How did I determine the entry level? EWs. What will change my mind?  A break below the previous low, I get stopped out. That is my strategy, entry and exit. Mt tgts? That gap fill of 30.30 is T1. If T1 is hit then T2 is 31.40.

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  27. ADP report ....

    A gang buster 300+ jobs added by S/M/L private sector businesses.

    It is amazing that equity future and bond markets yawned and did jump up and down. Perhaps too many bulls are already on one side of the boat as PL said? :)

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  28. I meant to say "didn't jump up and down".

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  29. And 300+ should have been 300K+. It's too early and I didn't have my Starbucks yet. :)

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  30. It is a yawn.  Economic data looks backward and not forward - earnings warnings like Targets today and Intel and Oracle will start to lead to layoffs again as they look to prop up profit

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  31. Our local McDonalds and Target have been hiring, while the TYCO plant is not.

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  32. maybe a gift to unload longs and put in some shorts

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  33. Katz,
    No offense taken at all. I appreciate any/all advice or feedback.
    Originally I intended on only holding for a few short days. On Dec 19th I was ready to sell after a small profit but decided to hold on "one more day". The R2k hasn't looked back since. Violated many trading rules, I know. I'm a newbie in terms of transitioning between buy-and-hold and swing trader I guess. Since then, I've been waiting for the significant roll-over that Pretzel has been alluding to in many of his counts. Of course if the count is voided, I'll get out and start over again.
    You are much more experienced than I and I am grateful for the feedback. I will take a look at your chart. Do you mind if I ask you any questions after?

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  34. Personally, I would say DO NOT buy and hold any leveraged fund.  Those are for quick trades only -- personally, I wouldn't even use them for swing trades longer than a week or so.  Compare your fund to the underlying indices -- note how TZA was worth 8% *less* at the October lows than at the  August lows, even though the indexes were lower.  So if you bought at the August low, thinking the market would eventually head lower, you still lost using TZA.

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  35. ES looks promising for your long positions.  Might open about even.  Maybe we'll even get the fifth wave bounce.  :)

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  36. AF, I agree the market should have rocketed higher on the ADP report.  It goes to show how the market makers and media will put whatever spin they want on any piece of news - according to their price action playbook.

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  37. I think we are past that bounce.  Looks like it's going to open down a little to put both camps into a dilemma.  For bulls, to cut loss or not, and for bears, to add or wait for the bounce and risk missing out

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  38. Whip sawed,
    Yes, ask me any questions, and PL and others. GGecko is damn good, think I know him from elsewhere. Hell, they made a movie about him. That is what this blog should be about, a caring and sharing of information about TA. Objective. IMO blogging should be civil --  no one is always right -- with constructive polite comments. I left a blog were ppl were at each other's throats, vicious. While I measure human behavior -- I mentioned this in a much earlier post -- as one indicator (when a perma unskilled bull says 'bears, you are going to get slaughtered,' that is a signal. Too much emotion in the call. When something that should be objective turns subjective, a signal. Emotion is OUT !

    IMO we have just about concluded a triangle, so instead of gettin' out of TZA at this point, my opinion would be to hold. I will be posting each day my analysis of what I see ahead for TZA.

    Appears they are selling the (good) news.

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  39. Euro and Gold tanking and VXX rising in pre-market. Euroland's Hungary and Spain are on everyone's mind, it seems. :)

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  40.     Sold my long positions and put in a speculative 1/3 position in shorts

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  41. Forget the news. Just look at the charts.

    http://screencast.com/t/k5u4UIsi0kE

    P.S. I remember years ago reading at what I thought was a top, someone on SOH blog saying 'this is easy, we are all going to be millionaires.' Excessive optimism. Market tanked immediately.

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  42. That is one of the lessons I have been learning the hard way over recent months.  Good to have you confirm the lesson.  Hard lessons make a bigger impression. :)

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  43. Katz,
    Thanks.  I will.  I also agree about the "caring and sharing of information".

    Do you only use TZA or in a bullish market, do you move to URTY?

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  44. I can't imagine a more fitting end to this fiasco since october 4th than a truncated 5th ED

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  45. morning, jobs up, futures down, LOL what a mess. must be a top! PL, ADVFN rocks! i signed up too.

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  46. PL,
    Thanks for the feedback.  I understood the decay rate when I got in.  As you mentioned, I had intended to get out in about a week.  The 12/19 upswing caught me out.  Hard lesson to learn.  Thanks again for your reply.  I'm learning alot hear.

    P.S. I didn't choose "Whip_sawed" for no reason.    My objective with EW is to make that username obsolete.  :)

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  47. Katzy...It will be interesting to watch TPTB defend 1.28 to the last drop of printer's ink.

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  48. I think im just going to hold my positions in tvix and faz till the end of minor 3. It seems most of my day trading has only lost me money thus far. need to revise and work on trading strategy

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  49. Whip sawed,
    TZA, FAZ, ES, SPY puts and calls. Oil, gold. Other stocks, long and short. As Pretzel stated, any longs established here should have a short time frame (less than a day??).

    Here are some poster comments from a site who is calling for 1300. This guy is good but I think will miss this time. I changed content a bit and will not reveal site. Comments a bit all over the place...
    'The 50/200 cross is a terrible indicator and has a terrible track
    record.  I would check research you've
    done on it.'
    'The golden cross has about a 10% historical return.'
    'Just about everything is looking bullish'
    'Considering the current golden cross, can one assume a 5%
    "safe run" to say 1 350'

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  50. Day trading is all about entries... and bailing fast if the move goes against you.  At least, for me it is.  You can't throw darts at random entries when you day trade -- you have to have a clear defined set of entry criteria, and a clear defined exit strategy. 

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  51. ty arnie.  :) 

    Pretty cool service they offer for free.

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  52. straight down?

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  53. Probably not.  The fakeout is probably about to end.

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  54. I think my past couple entries have been more of the later than the former. I think my emotions and impatience got the best of me so I started countertrend trading in order to "make up" the losses. poor choice on my part. I'm going to print your article from a couple days ago, add some of my own "rules" and print it on a 10 ft poster on my wall in front of my trading computer. lol

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  55. lol-- years ago, I kept a notebook for all my "lessons" learned the hard way.  I wish I could find it now... but I remember it had little one sentence things written al thoughout, like: "Not losing money is as good as making money!"

    btw, glad you dumped those longs premarket.  :)

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  56. PL - felt conviction in your post today. Good one. signed up for advfn.

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  57. Good morning, all. PL, great looking write-up! But only have tine to scan it. Still gonna hang onto calls for a last bounce, basically using your last chart as the script. Waiting to see if 1269 holds.

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  58. PL  I think your point on leveraged EFTs is solid.  If the SP500 was flat for all of last year, why were the leverage EFT's down 15% or so.  The decay is very rapid and holding just a few days can destroy your exit strategy.  Also, holding overnight with uncle Ben can be very dangerous to your portfolio.  Ask me how I know (Nov 28, Dec 20).

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  59. That looked like 5 waves down btw.  This might be the general area for a first bounce...  we'll see whether they can get it back up above yesterday and play out the diagonal.  1270-72 is first resistance.

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  60. Pretzel are you still following AZO and PCLN? 

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  61. Mav - I'm with you.  I'm short and just going to hold that way because I view the bigger move coming is for the short end.  Jumping in and out hasn't gotten me very far either - I'd rather just short the market at a top and ride it down

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  62. Thanks PL! Both for your reply and the work you do. I am new here and really appreciate your insight and all the comments from your followers too! Good luck everyone! Its time for some coffee.

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  63. On and off.  Still think they're good short candidates, just not timing them directly at the moment.

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  64.  Someone asked about AAPL yesterday.

    http://www.screencast.com/users/katzo7/folders/Jing/media/12849f27-2c64-46ad-a046-f10f4fe00692

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  65. Guys, IMO do not go long here, a good move down may be setting up.

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  66. Hi Katsz,

    Thanks for the reply! Thats good info. I should know better than start discounting all the head and shoulders patterns on so many indexes just because a collection of 30 stocks doesn't follow the herd.

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  67. ISM non Manuf. at 52.6 vs 53.4 consensus.

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  68. They decay because many leverage using options -- so you have time decay on all those ETF's.  You are indirectly trading options.

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  69. If the top's in, this could be setting up a small nested third down.

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  70. Watch mrkt action at 10:10 to 10:15 EST, big move coming.

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  71. looking for that gap fill at 1260, but maybe everyone else is too

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  72. It's OK to day trade around the bounces.

    Those who use Aroon for TA would see a really hair-raising setup. :) I'm just waiting for tomorrow's BLS job number before committing to the short side. :)

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  73. Sometimes you have to wait till the Euroland is closed. :)

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  74. Signed up for ADVFN.

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  75. Why the sudden rally?  I also find it amazing AZO is always up, seems like a good short at 330?

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  76. ty jbg.  :)

    Now, if people would just start opening trading accounts at Tradeking and Zecco (neither of these need to be funded, btw, just opened), things would really be looking up for the sponsor situation since Google went bye-bye.  One opened account is worth 20 ADVFN sign ups.  :o

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  77. Signed up for ADVFN today.

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  78. Why= the price action.

    AZO fell a hair shy of my 310 target I posted the other day.  Pattern could go either way on that one ST -- I would personally hold off for the moment, but that's 'cause I hate entering when I'm that unsure on a waveform.

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  79. On the SPX chart, looks like it bounced off the 50 day MA pretty hard.  Not sure why, though.

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  80. It's one of those herd mentality things.  Other traders assume people will buy/cover there, so they buy/cover and it becomes a self-fulfilling prophecy.

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  81. Will hit the donate button monthly rather than sign up for accounts I do not need.

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  82. PL, do/have you use them?

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  83. I signed up for all of them, just to play around with their platforms and get a feel.  Haven't funded yet, but so far they look pretty darn good.  Commissions are super-competitive at all 3.

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  84. My call was based on timing bands, it went up rather than what I thought of down. A break of 63 puts down back on table. Break of86 puts rally on table. I still think down.

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  85. Also signed up for ADVFN.  All the kids are doing it!

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  86. Forgot, that should be "MY 310 target"  ;)

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  87. lol -- Don't be the last one on your block without ADVFN! 

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  88. Joined the ADVFN club. Hope that helps PL.

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  89. All 3 would include SpeedTrader.  Sorry, I just realized I hadn't mentioned SpeedTrader in the first post.

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  90. ty, every little bit helps.  A month without Adsense (plus Adsense keeping all of the income from Nov. and part of Dec.) really screwed up the "free" blog business model. 

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  91.  CORRECTION ~~ 86 should be 68 ES. This is a ST call.

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  92. As long as we stay beneath 1272, should be a good day for bears.

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  93. crashed the ADFVN party too!

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  94. Thanks katz07. I thought I saw a 5 coming but it's not pulling down even with market overall down movement..

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  95. lol- those of you who've lived in the Southwest will appreciate that I got BigO's last post in my email, followed directly by spam from Discount Tire.  lol, what are the odds?

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  96. PL, what do you make of the NDX holding at the top of resistance when it had been the weak sister of the group. The RUT is behaving nicely.

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  97. I am not liking the SPX moving sideways and not having a more pronounced downward trend.

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  98. ES 68 about to be tested,  break that and ST bullish for me.

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  99. Pretzel, now that 1272 is gone, is it going to be 1290-1300 next?  for those thinking of short and hold, that's going to hurt, even if it's in the ST

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  100. Apparently, 1269 held due to the double 618 fibs. Powerful stuff. Still hoping to make some money from those calls..and then! Short big time.

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  101. Bulls need to hold LOD now, bears need to hold yesterday's high. 

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  102. But yes, a bullish outcome looks more likely now.

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  103. sigh, finally got my futures acc, and my first trade was to sell es at 1267.  did a rough calculation, 1290-1300 would hurt quite badly

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  104. Bears need to turn it right around here to keep any ST hope going. 

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  105. ohh? How did that happen? I haven't done anything weird with the postings...

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  106. AAPL is trying to jump the hurdle to recapture the October island top. If that succeeds, there might be that last, crazy rush to buy, buy, buy!

    So I opine that yesterday and this morning, France downgrade was priced in. My caveat piece about bad risk/reward shorting into the weekend based tactically and mainly on a downgrade still seems to make sense.

    RE. sentiment numbers - I wonder if a model for sentiments should be a two phase model. First, the bullish sentiment drives things even higher, and then..vacuum.

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  107. lol- no it didn't have anything to do w/ you.  When I lived in the SW, Big O was a tire company that competed directly with Discount Tire.  Just got a kick out of your post and the Discount Tire spam following each other immediately in my email.

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  108. my shorts got kicked hard 3 times this morning... tells me this market wants to go up (defying all rational, i know, but it is what it is). i am holding a long position and expect a high in the 1290-1310 area. but that will probably be all she writes. no trading advice though! note, the dec 20 ECB $0.5T funds are at work here IMHO and I don't think the Nov 30 FED-fuck has played it's last card yet (as to provide an explanation for this gravity defying market)

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  109. got my stop limits in place for a flat trade, i do believe there is a top around here somewhere but have to stay disciplined with stops

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  110. Lately, the US market might have been complicated by European traders wanting to short/long as hedges against their positions in their own markets. Sometime, I find it easier to wait until the European markets closed when the dust finally settled to open/close positions.  Agree?

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  111. now i wish i still had my longs.... this market is riddiculous

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  112. Just a FYI ....

    The 10-y bond rate spread between France and Germany is the market informing us that - yes, the French downgrade is already priced in, at least in the bond market. :)

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  113. i always feel that even without any analysis, at the point that you decide to trade, you have 50/50 chance of winning.  even if you take out cost of trades, somehow, it feels like everyone end up losing much more than that 50% chance would suggest

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  114. Thanks. I wish I have the deep market and economic knowledge that you and others have. Stick around, if you please. I need the learning environment. Me, just a rookie.

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  115. fwiw, pretz mentioned and i agree this back and forth action frustrates everyone, its a 'you cant win' action that tell either a major top or- a bottom of the next rally.  fwiw again i think we top

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  116. LOD = low of day (lowest price of that day's trading)
    HOD = high of day

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  117. It would be great if it were not priced in.  Then the market would tank hard.  Still with it already priced in, when/if the downgrade happens, I still expect a drop in the market because there may be many out there that are still uncertain of what to do.  Fear will kick in at the point, and the heard heading down would grow.

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  118. wow all these sectors are all over the place- energy, financials, builders- kind of a mess

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  119. TJN, hold off IMO on the ES trading, timing is not quite right to be predictable. With Pretz's permission I will post some of my ES trades, but not a good time.

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  120. This is what I missed this morning. Got to keep eyes on all balls at all times. I got distracted by AAPL research. Ignore the EW count, it is not right...

    http://www.screencast.com/users/katzo7/folders/Jing/media/428190d5-07f5-4f7d-9e1b-c6e7bfac522f

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  121. thanks but i m sitting this out until 1290.  i am just getting stopped out and fleeced in both directions

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  122. This is pretty much the bears last ST stand here... if they can turn it, the wave up will be an abc, especially if they can take out 1271.80.  If the bulls take 1278.74 first, that would show an impulse off the lows and imply higher prices to come (possibly after a correction).

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  123. Another idea theft by the maui punk, with no acknowledgement.  It's like routine now.  He's like MY droolcup retarded idiotsavant kid, I got to smack his stupid head every once in a while, just to get it to work right, and see ALL the angles.

    Yesterday, in the maui punk's posts, there was NOTHING about a potential perfect SPIKE up, to finish this dead bull.  He was saying and a saying, the ultimate top os probably in, blah blah.

    Now TODAY, however, it's ALL about this potential final SPIKE, which he now mentions about 6 times, in his article.

    WHERE does this new idea come from?  FROM YOURS TRULY, once again, the maui punk, usurps one of MY detailed ideas, with not even a thanks.  Well, PLAGIARISM, whether compositional or intellectual, is the highest form of flattery.  The FACT that none of you follower imbeciles have never noted this before, does not bode well, for the collection of your bearish 'wins.'  I will wager none of you collect anything, as you all still believe in govt. WORDS.

    Here, slobbering kiddies, is what I wrote yesterday, in the middle of the trading day, and to which none of you fools commented to, but to which the maui punk looked at, after he rose from his goofball sleep, and took the idea and ran---

    --------------------
    yesterday, mid trading day, by ANON20:

    ignoramus whiny bear kiddies, as berra said, it ain't over 'til it's over, so stop shorting this damn here thing.
    maui punk did not tell you all, that his preferred (2) above is TRUNCATED---and I am certain it will not be.
    this mad rally aint over, more madness ensues further very soon, SPIKING this crazed puppy to near 1300.

    I have good news though.  There is a monster killer chart lurking, waiting to be unleashed.  I saw it today.
    it's coiled like a snake, and the worst snake of all, for this 'lunatic bull' market--full of destructive venom.
    spx NEEDS 1 more HIGH, above 1285, for EVERY amerikan fool in land, to get on the hell train--down.

    when this puppy cracks, hold on to your panties.  it will be MODDER of all gaps down.  but it aint now.
    not yet.  but MY new chart assures, that when it breaks, all hell will break loose, for ALL but---cash.--------------------------And I will keep MY explosive chart secret, for if I mention it now, for I know that the maui punk will have it as headline tomorrow, with neer a thanks.  I think I will start calling him salieri.AND I had another idea today, of a major breach spx area, where things will crater from.  All I will say, is that those that have the balls to short from the next breakout SPIKE, WHICH IN MANY WAYS WILL RESEMBLE THE --INVERSE-- PATTERN OF THE OCT. 4 LOW, WILL WIN.  However, will your broker pay you, or will he be too BROKE to? HAHA.

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  124. i'm not saying I am right or you ar wrong - just laying out some facts and my reasoning re: France downgrade priced in... SPX poised damn near at it's 6 month high with other equity indices within spitting distance. Equity markets have not priced in downgrade imo. EFSF's ability to raise money is based on AAA - when France downgraded - their ability to raise declines or Germany picks up the slack.. it is a house of cards built on matchstick table. TPTB told S&P and Moody's to hold off o nthe downgrade until the new year so that the ECB could get their LTRO in order and Italy and France could get through their first round of Q112 financings - so when market drops - it would drop from higher level and hopefully not crack through previous summer 2011 lows.... just my opinion - we will find out soon

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  125. Where's your blog where you post all your great ideas, Anon?

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  126. I have often thought that you, in particular, should be in 100% cash, watching the madness from the sidelines.

    Cash is GOOD.  There is no shame in cash.  But not in ANY retirement fund, govt. or otherwise.  they may NOT pay.


    usa t-bills or physical cash, or barter items.
    MY preferred barter item of all, due to smallness and lightweight, are BULLETS.
    For I am CERTAIN they will be govt. REGULATED soon, throughout the world.
    Because it is MUCH easier, to regulated sale of bullets, than of any types of guns.
    BUY THOUSANDS of bullets NOW, your preferred types and calibers, and think---
    of what your neighbors and friends, your community, uses most, stock up on them.

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  127. Bailed out of the call options at 13% loss at 1275. Thinking of buying back in when we revisit today's low at 1268.

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  128. I like your detailed and sophisticated reasoning. And learning from it, thanks. This morning, the marketwatch headline said europe fears returning, blah blah blah. Isn't that pricing in? AF explained that bonds have already priced in. Do bond and equity markets tend to diverge on these occassions? I don't have the experience to judge.

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  129. Ah, a day without Anon20 is like a day without sunshine.

    You are friggin' delusional.  Look at MY charts from yesterday.    MY charts from yesterday SHOW potential of a spike up.  You steal MY ideas, then regurgitate them to ME a few days later and claim I stole them from you when YOU notice them later.

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  130. MY hat (pictured in PL's post y'day) first predicted Dow 10,000 back in 1999!  MY hat STILL says DOW 10,000 and all of you should bow down and MOST IMPORTANTLY give proper attribution to MY HAT which knows much more than ANY of YOU!

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  131. LMAO . HEY, WE SHOULD ALL DO CAPS!

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  132. It's hard to tell whether the US equity market has already priced in the
    inevitable French downgrade. But from the relative performance of the
    US/EU markets, it is quite clear that money has been coming out of the EU equity market.
    Whereas the US market remains relatively stable. Which is remarkable, imho.

    So, I will not be surprised it the US market yawn when the time comes. After all, it has been well advertised.

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  133. nice comeback bulls

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  134. In case you are incapable of looking it up for yourself, here is the chart from yesterday's article.  Notice ending diagonal with move down and spike back up (classic ending diagonal move, btw). 

    You also made some comment yesterday about how I only talked about intraday prices and not closing prices until you came along.  You are completely nuts, you know that?  Intraday prices are for ST waveforms, which is why I talk about them a lot; closing prices may or may not be used for trendlines, depending on how much one wants to cheat the line.

    Anyway, here's MY super secret chart that was posted long before you commented in the comments section of the article IN WHICH MY CHART WAS POSTED (obviously).

    http://1.bp.blogspot.com/-TVMclAPAICI/TwRJCqY2QVI/AAAAAAAAA6U/1V4BZY3P7MA/s1600/spx.png

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  135. This market better roll over soon and play catchup on the euro collapse.
    I was afraid this correlation was ending back in november, and thus far it's happening big time...screwing me the whole way.

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  136. VXX is collapsing right before our eyes. SPX will go higher.

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  137. Bond markets tend to be considered smart $ by some, and many times will show trend/reality of a situation before equity markets.

    Most talking heads as well as the equities don't usually follow that thought though... untill they are brought kicking and screaming into reality, and by then, bond markets are saying something else.

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  138. Maybe PL can replace lost AdSense income with 'MY' pretzelcharts merchandise (hats, T's, boxers etc) ?

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  139. I'm expecting a significant pullback first to maybe 1270. Then I'll re-enter my calls at a better price.

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  140. What's your point? If it weren't for PL and the blog's patrons you would have long gotten a good taste of your own medicine and trust me it would be beyond bitter. Just choke on the billions of $$ you make on every CORRECT PREDICTION you make. Your so called ADVICE is self fulfilling bankruptcy fyi. 

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  141. Short term top is likely in (for the next 1 to 2 hours).

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  142. Seems like you can play this by the 5 minute oscillators.

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  143. It looks like one more wave up for SPX to 1290 - 1295 area where is the long term short for me.
    It is not a trading advice. :)

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  144. Now this chart will be with you FOREVER in ALL YOUR POSTS!

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  145. VXX is holding here - that's what I am watching also.

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  146. Gold and SPX going hand in hand. Financials are leading SPX by the nose. :)

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  147. To SPY = 127.40?  which is the 50% 2012 retrace.

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  148. Yeah, still using that ST fib drawing.

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  149. People are dumping 10-y UST, sending yield up to 2+%. What a day. :)

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  150. That's a little too cute for me for a day like this.

    I just want to cash in my chips and call it a day. Tomorrow, after the job number, I'll see what the deal is before taking a position into the weekend.

    It has been a wild day. :)

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  151. Hmm.  That would be fun to design, actually.  I could even do Anon20 merchandise!  Shirts that say things like: 

    "I got berated by Anon20 at http://www.pretzelcharts.blogspot.com"

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  152. It will be.  It is MY chart.  And I love it!

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  153. Nope.  Going parabolic?

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  154. SOMEDAY THE SHORT PLAY WILL WORK FOR MORE THAN 10 MINS.

    SORRY CAPS

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  155. STAY AWAY FROM 3 TIMES LEVERAGED ETF. FIRST LESSON IF YOU LIKE MONEY.AT ALL COSTS. A SUCKERS GAME. THANK YE

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  156. Looks linear to me ;-) I should've held onto my call options. lol

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  157. Yep, got out at the break of yesterday's high, for an average of 2 points profit!  Woo hoo!  Round up the kids, honey, we're having Burger King tonight!

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  158. MY USD TRENDLINE SHOWS THAT DX HAS HELD RESISTANCE AT THE CUP AND HANDLE FORMATION NECKLINE AND WILL BREAK OUT TO THE HIGH 80s WITHIN WEEKS. IT"S ALL ABOUT USING CAPS!!!

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  159. What the hell! Are you guys perma-bears? Always talking about a reversal which never materializes. I made a mistake listening to your advice and now have lost all of my money, $55,000.00 of it. I am out of here for good.

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  160. lol. yeah, waiting for sweet revenge.

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  161. FWIW I will give Anon20 credit for the chart he posted in the comments of an article I believe back in Nov right after the Fed's swap lines were annoounced.  That showed the 1932 bear market and the length and severity of the bull corrections along the way.  MY comment at the time was that the shortest bear market correction was 5 weeks, with most of them in the 9-15 week range (going on memory) and that even with 5 week correction, that would take us into year-end.

    So, I agree with PL / other commenters who have stated that this correction's bull sentiment is currently looking strong and it will take 'a while' to erase it.  It is likely to last a couple more weeks as market initially shrugs off bad news and buys dips until evidence becomes insurmountable that all is not well.

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  162. You must have the wrong blog.  Last 3 reversals I called all materialized:  October 4, October 28, December 2. 

    You should be way up by now if you managed your trades right and protected profits after the reversals materialized.

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  163. Volume not that great. It's a short squeeze to me. Shorts got caught expecting a so-so ADP number. Now they are scrambling to cover before tomorrow's big kahuna from the BLS. I think they are going to be nailed to the wall - until closing. :)

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  164. boy - that 5 minute chart on SPX looks like a different kind of ED on viagra ....

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  165. Yes.  Looks like a scramble for the exits.

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  166. yeah i get stopped out pretty regularly, saves my life every time

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  167. I don't know if you got the e mail, or if the link works, but that's how I imagine it.

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  168. Doesn't look like my reentry at 1270 is gonna happen. Anyway, I'm all cash and just lost a smidgin on the last trade.

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  169. I mean, I feel bad for the guy if he's for real -- but if you treat trading like it's Vegas, you're going to end up with the same results you get in Vegas.

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  170. To my knowledge, nothing on this site is, or ever was, a recommendation to buy or sell any security.  The academic discussion which takes place here has been quite prescient at predicting both ST and IT market direction IMO.

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  171. Scaling back into a few shorts at 1282 SPX.

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  172. true. same here. I'm pissed at myself for losing much less than that and going negative into my capital today. ugh

    i just hope we retrace this same price area during minor 3 so I won't be negative

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  173. speaking of reversals - I watching 5 min russell2k - a drop back out of the trendchannel near 752 is first sign of rollover for me - that last 3 hours looked like it was Custer's last stand

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  174. Intraday counting: Starting a little after 11AM...looks like an impulse with extended three wave just finishing up.  Is that right?

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  175. something the bears have had since dec 20... sorry but this bull is raging on steroids; read " the billions from the ECB"; who gave them with no strings attached to European banks that were supposed to buy debt, but instead put it into the US Market IMHO as it was the best worst performer. Don't fight this tape; go with it. Bear time will come soon. Not now, or you'll all be slaughtered.

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  176. back in short- this looks like the 'ol up and down but end flat kind of thing

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  177. PL, I have a question for you. How does CB intervention affect EWT? We've now seen the Nov 30 and Dec 20 effect (CB intervention with $Bs) at full force and I wonder when EWT was "created" if this type of market manipulation was "calculated in" so to say. Can this  no-strings attached lending/money printing completely mess-up wave counts etc, or is it simply lengthening waves (i.e. postponing the inevitable?)

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  178. ED is ending diagonal.  And the other thing. 

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  179. Speaking of steroids, pretty sure steroids eventually lead to ED...

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  180. so ED is EuroDump ?

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  181. pretzy do you have a feel for how you might want to play your positions ahead of the jobs number tomorrow?  do you think you would just keep scaling in from here or how do you see it from now until the non farm payroll?

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  182. In my experience, it simply postpones the inevitable.  November being a good example -- it took a low probability wave and made it a reality... but all it did was mess with the probabilities.  The potential was already there.  That's my read on this stuff, anyway.
     
    However, thean always do it again.  Minor (2) is the high probability wave here... but they could somehow transmute that into something else with enough capital injections.  It does get a bit frustrating at times.

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  183. PL, is there any chance a double-top is forming (Tuesday and today), so that we are now at the last major top before heading down?

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  184.  soulsurfer,
    EWT conforms to the market conditions, not the other way around.

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  185. If this is wave v of an ending diagonal it could end above or below Tuesday's high.  It is not required to make a new high (ideally, though, it would peak above 1292).

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  186. Just scaling in at potential reversal zones, like the one we just hit.  Keeping dry powder in case we get a spike up (MY spike up, lol) over 1292 and/or 1300.

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  187. Not 100%, but it looks like five waves up to me. I think we are now on 4. I'm waiting for 5 to call it a day. :)

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  188. Liquidity, liquidity, liquidity - that's all that matter, according to PL. Whatever any body, or thing, does changes the market's liquidity.

    Hence the waves waxing and waning.  :)

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  189. Are you scaling in for the Minor (3) short-and-hold down, or just ST in and outs?

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  190. I know its all relative but my losses dwarf RayK, but they aren't due to pretzel's site...it was my own inability to manage risk. I never considered a crash like this possible and the way I managed my positions during the crash are stuff of legend. If I gave you guys a play by play of the past 6 months, every one of you would cringe.

    Made a fortune since the 09 low, gave it all back in 6 months of crazy. 

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