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Wednesday, January 25, 2012

SPX Update: Giving the Bulls Some Airtime

"Everybody knows that the dice are loaded, everybody rolls with their fingers crossed.
Everybody knows the war is over, everybody knows the good guys lost.

Everybody knows the fight was fixed, the poor stay poor and the rich get rich.
That's how it goes... and everybody knows.

Everybody knows that the boat is leaking, everybody knows that the captain lied,
Everybody got this broken feeling, like their father or their dog just died..."

- Leonard Cohen, Everybody Knows

Bears need a game changer.  On Tuesday, the market tested, and held, the critical 1300-1310 zone.  If the bears can't get something going pretty soon here, it's going to turn my system long-term bullish.  The next week or two could become critical.

As I've said before, I'm not a perma-bear.  My system turned long-term bearish some time ago, and it currently remains bearish -- but it's now very, very close to flipping to long-term bullish.  This is as opposed to October 4, when it turned intermediate-term bullish, but remained long-term bearish.

Lest people read this wrong, we're not there yet.  But it seems appropriate to give some thought to the possibility.

While "everybody knows" that the world is in long-term trouble with its mountains of debt and contracting economies, these lousy fundamentals do not preclude a bull market.  The market is driven solely by liquidity -- and if the central banks of the world keep flooding the market with liquidity, then stocks can continue to rally.  This doesn't necessarily mean stocks will be increasing in value in real dollar terms, but it doesn't really matter from a chartist's perspective.  A rally is a rally.   

With Europe now doing its own form of QE, the interesting dynamic at play is that the U.S. equities markets could rally in lock-step with the dollar as Europe floods the system and devalues the Euro.  So for a time, stocks could actually increase in terms of real U.S. dollars as well. 

It seems to me that this gigantic central bank shell game must end eventually; and when it does, it will end very badly.  The governments of the world have been eating all the economic bubbles they themselves created... and as a result, the governments have now become the final massive bubble in this grand economic experiment.  You are what you eat.  They're a bit like the Blob in that old Steve McQueen movie, consuming everything in their path and growing ever more massive -- except the Blob was somewhat more discerning about what it consumed. 

When this massive government bubble does finally burst, as it inevitably must, then there will be nothing and no one left to back-stop it.  And that, my friends, will be a very dark time -- and one that none of us should look forward to. 

Personally, I don't look forward to it; however, I do believe it to be necessary for things to become healthy.  Things can't last when built on a faulty foundation.  The writing on this wall has been pretty obvious since the late 90's, but each time the markets have tried to move back in line with reality, the government steps in and creates more pretend money.  That's how the internet bubble came about; how the housing bubble came about; how the mortgage-backed security mess came about; and why the national debt now borders on being completely unmanageable.

So here we sit, unable to create anything of real value, and unable to produce anything other than greater and greater quantities of pretend money.

But in the meantime, the question on my mind is whether the can has been successfully kicked yet again.  The answer to that question should be revealed by the signals the market sends over the next couple weeks. 

The bullish interpretation of the charts reeks of massive inflation.  I view that as perhaps a scarier resolution to the current ongoing and unresolved crises, because it will ultimately be that much farther to fall.  In any case, I'm watching these things carefully, and if my system flips to long term bullish, then that's how I'll play it going forward.

Let's see if the FOMC meeting can have any impact on the market.  As I've stated, I don't believe there's even a remote chance that QE3 is coming out of this meeting, so it will be interesting to see how the market reacts to that (assuming I'm right, of course).

I'm only going to present one chart tonight, because there's simply not much to add over the last couple weeks-worth of data.  There are two ways to look at the recent decline from the 1322 high.  The bullish view counts the decline as an a-b-c down to a fourth wave bottom, although fourth waves can be quite complex, and as such it could bounce around in a sideways fashion a few more times before rallying again.  If that interpretation is playing out, then the S&P 500 (SPX) is ultimately on its way to 1330 as its next test. 

The bearish count would view the decline as two sets of first and second waves.  If that's correct, then the move lower should accelerate if the recent lows are broken.  If the recent lows are broken, but the move fails to accelerate, then suspect that a more complex correction is playing out, which should ultimately resolve with higher prices. 

On the chart below, I have highlighted some key levels for the bull and bear counts, and also drawn an upside target box in the event the bull count is in play.  I'm hesitant to suggest a target for the bearish possibility at this juncture.  If there's downside follow-through, then I'll add some downside targets in the future.


In conclusion, the market appears to be at an important pivot point for the big picture.  My system remains on a long-term bearish signal, but it's on the cusp of turning bullish.  The next week or two are potentially critical to the bear case.  Trade safe. 

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

530 comments:

  1. Excellent post PL

    After listening to our Glorious Leader last
    night. He mentioned a couple of points of interest. Most specifically a
    trade war with China, so that got me thinking about the EU (start up the
    hamsters)...

    Since we are always at some level of trade conflict
    at all time (with everyone), could the current flows of European
    liquidity into U.S. markets serve as a purposeful "police action" to
    devalue USD by the EU? The ultimate goal being to secure U.S. assets at a
    time when EUR retains a higher value  while at the same time increasing
    inflationary pressures in the US to stifle the buying power of the USD.
    Sort of like the same actions the IMF took in Latin American countries a
    couple of decades ago. And it would also just be a repeat of exactly what central banks have done for the past 300 years or so....build a bubble, and then either exhaust it, or use it as a weapon by threatening to pull the rug out. For some reason...this usually ends up very bloody in the end. I have likened it to the breakup of a married couple...first you fight about money (bills don't get paid)...then sex (trade wars)...then divorce (hot war).

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  2. But European money buying dollar denominated assets (and thus needing to be converted into dollars to do so, i.e.- "buying" dollars) has the effect of increasing the dollar's value.  More demand for dollars.
     
    As to the other part, about buying US assets while the Euro's value is still good --- that's exactly the reason the money is fleeing into our system.  European investors are looking at us as a better store of long-term value.

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  3. Got it...Zero Sum...I have a hard head. :)

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  4. wow.

    for an ew blog, you have a lot of fundamental thoughts. I keep it simple. Trade what I see. What do I know will happen in the future? I simply do not care. I trade what I see in the charts thanks to Elliott's algorithms. Pattern discovering, prognosis, trade. That's it. That's the beauty of EW. Why care to bring fundamentals into my chart? Why try to justify my action with fundamental arguments, who most of times can easily be interpreted just the other way round? I see no value in that. It is interesting though, to get the head around, intellectually, but does it help to discover the course of the waves? Not for me. 

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  5. Nice article PL. Dramatic, full of danger. Funny you quoted Leonard Cohen as my friend only yesterday sent me a newspaper link about him. According to this critic, Cohen's works average about 4 starts out of 5. Pretty good for an average. http://www.montrealgazette.com/Leonard+Cohen+catalogue+goes+back+astonishing+debut/6027465/story.html

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  6. But it's not just an EW blog.  If it was, I'd just post a chart or two and leave it at that.  :)  

    That's why, up at the top, it says "charts and commentary."  I like to give people stuff to think about.  I believe that more thinking makes the world a better place.  You might just care about the waves, but you're in the minority.  Most people are the exact opposite: they don't get the waves, but they understand the other stuff.

    Beyond that, I think combining waves with fundamentals helps one get a better read on what's likely or possible of the available counts. 

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  7. Everybody Knows

    http://www.youtube.com/watch?v=yG5e1oaen-M

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  8. Let's see if I can get this to work... Don Henley's version:

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  9. as my father says..."we are the best lookin horse in the glue factory"

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  10. just 110 cars on the es 1305.50............was wanting them to blow thru it!             05 support still

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  11. If you like Cohen and Henley, you might like this by another Canadian singer/writer, The Last Night of the World. http://www.youtube.com/watch?v=Lc1x37VAw2k

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  12. EW seems to be an earlier version of game theory...a pretty sophisticated one considering modern game theory requires computers to really function well. It's pretty cool stuff.

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  13. Interesting point Lena and I also do not pay much attention to other issues like the news. I am solely an EW chartist who applies pattern recognition (Bulkowski), keep it simple, do not look much beyond that. Part of my process is that I am at work and do not have time to watch the news so my environment influences my behavior. On the other hand, Pretzel writes for a larger audience in the Minny posts; EWT may be too specific for them or too technical. So his behavior (no spanking yet PL lol) is influenced by his environment (a Darwinian concept). I always enjoy your posts and would love to see you post even more Lena.

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  14. Someday...we shall all laugh about this...I'm pretty sure it will be the drugs talking.

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  15. This is going to sound silly, but it was really nice only having one chart to send to Minyanville.  They want all the charts sent as separate attachments, and they want them in the order they appear.  So I usually have to refer back and forth to the article and the chart names on my hard drive, and then upload them.  And it adds like 15 minutes to sending it.  This time, bam!  One chart.  Piece of pie.  Easy as cake.  ;)

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  16. btw, today's the day.  If the rally's ever going to end, this is it.  I put "bulls" in the title of the article.  :D

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  17.  A simple life is often the best.

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  18. It seems that capitulation may be at hand...everyone's  tired and beat up. Isn't that supposed to happen before a turn?

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  19. Ha! Montreal Gazette is my local newspaper. Funny you quoted Leonard Cohen. He lives down the street from me.

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  20. Of course, that "one chart" article was the result of 7 hours of writing and study...  but for some reason I dread the Minyanville packaging the most.  It's like, I'm done at the point when I click "publish post."  The creative part is over, and I want to go do something else. Truth be told, I actually want to run, screaming, from the computer at that point.  But nooooo... I have to get it all ready for MV.  It's like filing tax returns or something.  Just paperwork and formalities.   

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  21. Master, do you mean that a Shaolin monk should eat, drink and be merry?

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  22. Hmm.  Lots of Leonard Cohen connections today.  Small world... but I wouldn't want to paint it.  (Steven Wright)

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  23. That's because you have to do it the way they want...not how you want to....You're a rebel. :)

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  24. Right.  You just have to realize that I'm writing for a very broad audience, and if I solely talk about EW, only about 37 people of the thousands who read my work would understand what I'm talking about.  Beyond that, I'm hoping to have an influence, however small, to maybe cause a few people to think about things they haven't thought about before.  In a perfect world, we'd learn from our government's mistakes.  :)

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  25. It is, theoretically.  But it's also supposed to happen if the market's going to keep going up forever.  :D

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  26. Ok, and he does a pretty convincing job, that's for sure. I do not want to say, that I am right and he is wrong. Just what I do to get a setup. Everyone should stay in the own comfort zone of trading. :) 

    But sometimes is really funny, after a long day trading, I check the news and then most often I think, good I did not know that before. *ggg

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  27. Lena, I think you misread me.  I follow charts first and liquidity second.  Fundamentals are a distant third.  But I'm writing for an audience, and I have to write in words that they understand.  Maybe that helps you make sense of it.  :)

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  28. Great article PL. Loved your piece from yesterday as well.

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  29. Think of it this way:  If I'm talking to people who speak French, then I need to speak French too.  If I speak Spanish to them, there are probably a few who will understand (since a few probably know Spanish), but most will be confused and have no clue what I'm saying.

    That's what my articles have to be.  Maybe one-half of one percent of the population has even *heard* of EWT.  Maybe 10% of those people understand it.  So if I just throw up a few charts and say, "Hey, wave 2 blah blah blah, expanded flat blah blah blah, double zigzag!"  They're going to scratch their heads and go read something else -- never to return.  :)

    Beyond that, tracking liquidity is very nearly as important as tracking price.  Liquidity is like the egg that hatches and turns into a price chart.  :D 

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  30. So the answer is: C. All of the above.

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  31. lol.  That's pretty much always the answer.  Or:  D. None of the above.

    That's what makes it such a challenge!

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  32.  LOL...beats crying.

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  33. I always like the Concrete Blonde version, but never knew the origin:

    http://www.youtube.com/watch?v=RaJAxdGeZ4E

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  34. R.E. jbg's comment about a simple life, Confucius states "Be not ashamed of mistakes and thus make them crimes." & "It does not matter how slowly you go as long as you do not stop."

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  35. "Our corporate philosophy" -- Confucious Global Trading LLC ;)

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  36. Good Morning PL. Nice article.

    Good Afternoon Annon20. Going to a Bull Fight today?

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  37. Would really like to break 1305 at some point.

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  38. nice sell off......repeat again or down?

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  39. Short again from 1305.  Here's what I was looking at when I covered, but it doesn't look like the market cares about forming a triangle.

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  40. Here is a visual, what were we taught by the mrkt and AAPL last nite? This chart may be a bit premature, it is not a H&S until neckline is crossed and it hits its tgt. Seen too much strange stuff in this mrkt.

    http://www.screencast.com/users/katzo7/folders/Jing/media/03faea7d-ba28-44f4-887a-b2ba0640f105

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  41. I refuse to go Amish...I work with them a lot...but then again, some of them even have iPhones. I do like their corporate philosophy however -- "I shall gladly pay in cash or goods, after some further negotiations"

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  42. Little to add, except to say that of the market commentators whose opinion I attach some weight to, it seems they are either already or are nearly all on the cusp of turning bullish - albeit quite guardedly so for some. Aside from any discomfort towards somewhat consensus views, my only other observation is that no one likes to stand against a market up 20% from its lows that has central bank policy response tailwinds. Politics and central banks have always had a part to play in markets, but we're in a period where such influences and interventionist aspects are paramount, trumping other factors for much of the time.
    It'll be interesting to see what path eventually returns us to more normal times, when markets are largely allowed to get on with it themselves, plus how long that journey takes.

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  43. If I'm understanding it right, the neckline is SPX 1306?

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  44. only 340 cars went off at 03.25..........the 04 level had 4000 on it then they went thru to see if sellers and wernt any .....for now

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  45. we need an impluse down to finally shake some bulls....yest es low 1301.50 needs to give up ghost

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  46. Free markets.  What a nostalgic idea. 

    btw, thanks.  :)

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  47. here is another view

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  48. Bulls need to give up fighting over this trendline first.  C'mon bulls, it's just one little trendline.  What's the harm?  I know, I know, give up one trendline and then the bears want the next.  But really.  It's just *one* little trendline... what's the worst that could happen?  A crash?  Ah, c'mon, not in this world!  Give it up already.  :)

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  49. pend home sales index down 3.50% in dec....expected down 1%

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  50. Note inner channel potentially failing.  This is why the bulls are fighting here.

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  51. All your friends are doin' it...the first one's on me.

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  52. Added long on seeing people dumping VIX and VXX.  It may be a run-of-the-mill profit taking. Could be wrong, will see.

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  53. FINALLY!!!...I gotcha to laugh....My work here is done. Off to make some widgets and fill a gummint order.

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  54. Apple getting sold relentlessly off the gap open.  Down 10 points from the open. 

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  55. putting up a HUGE fight here

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  56. People are dumping VXX, be warned.

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  57. Apple is a fickle fruit.

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  58. This is like a space chart from the future, man.  Or like a schematic of some Viet Cong tunnels.  I wouldn't have the foggiest notion how to trade off those lines.  :D

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  59. btw, you have to read what I wrote above in a Dennis Hopper voice to get the full impact. 

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  60. Thnx, have to drive to work and did not want to let this gain sit unattended. Watch it drop like a stone now. LOL ppl, last comment made in jest, careful if you do not know what you are doin' with options

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  61. Good indicators on chart... Could you explain what the blue channels are and their parameters?  Also, what are your parameters on the parabolic indicator and indicator name?  Also what is the time frame on the chart... 30min, 60min?  It is very hard to read the parameters.

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  62. It's a space chart from the future, man!  You're not supposed to understand it.  Unless... you're from the future too!  Right on, man!  

    (Sorry, I'm stuck in Dennis Hopper mode now.)

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  63. I followed that Goog trade of yours. Nice swing trade! Helped my account :)

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  64. Fall dammit! Fall like the pregnant pole vaulter you are!

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  65. Average true range I get.  Parabolic SAR I know exists, but never tried to actually use it for anything.

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  66. I should have said, I followed your analysis and concurred, not that I shadowed your trade. You're not going to have to worry about being responsible for my trades. Just sayin' so you don't get nervous. :-)

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  67. btw, when you click the chart image, at the bottom of the pop up window is a link that says "original" -- if you click that, the chart will come up in a separate window as a full-size chart.  :)

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  68. Breaking news: Pregnant pole vaulter Sally Poe Xi (SPX) falls from a 9 foot height while attempting a pole vault!

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  69. Alright, I need to make like a tree and get some sleep.  Apparently they're just going to bounce the market along the underside of this channel for the rest of my life anyway.  GL

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  70. Seems like it's just walking up the underside of the broken trend channel. Gonna either pop through it or drop away from it. I vote for the latter.

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  71. thanks for your analysis and commentary; great job!

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  72. For a market that is not giving you much to work with, this is one of your better posts, Pretzel.  The dot com bubble should have busted sooner than it did... the housing/mbs bubble should have burst sooner than 2008... and now we must acknowledge the possibility that the sovereign debt and insolvency crisis (the last stand) may last longer than it should.  It is likely that the Central Bankers will go down swinging.  And you're right, the higher this plane flies on jet fuel (liquidity), the farther and harder it will crash when the fuel is no longer viable.  I truly fear what the next few years will bring.  We are looking over the edge into the abyss of an economic disaster equivalent to or greater than the Great Depression.  I have four children.  I have and will be stocking the shelves with food.  Some people may think that type of talk is crazy, but it is becoming more and more apparent that the structural problems are not and will not be fixed.  The social engineering and central planning utopias are experiments that too many powerful groups have put their hopes in to let fail.  But fail, they will.  It is just a matter of when.  

    PS -  This sovereign insolvency problem can still be fixed.  We can choose recession over depression.  But, the hard choice of allowing the free markets to purge illness must be made to avoid terminal results.

    PPS - There is other classical TA out there that points to 1329 has the perfect retrace before the ride down.  I would post a chart, but it is not my work.

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  73. Thanks, PL.  That helps a lot.  

    I should have tried clicking on the "original" button, but I didn't want to break anything.  Not sure how clicking on that link might affect your HP laptop over in Maui. :D

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  74. it aint crazy.....im with ya

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  75. Hmm... so after some great earnings by many companies, this is the best the market can do??  doji's showing up on the daily chart of SPX...  I'm actually starting to be more bullish on the bearish case.  Liquidity will continue to be pumped into the system.  When it stops working is the $300T question.

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  76. Parabolic SAR seems pretty good at capturing the majority of the moves.  Maybe tightening the parameters a bit more may protect profits better.  I have heard of it but never tried it, but it is definitely something to look into. 

    The Chan(20) is the one I don't understand what it is, or how it plots as a step function?  Curious about what it indicates.

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  77. AAPL may be changing the game ....

    Today, consumer discretionaries are on fire. A sign that people are not only spending, but on high price items. Yesterday's blow out Q and their rosy outlook may life the entire food chain. Will see.

    BTW: From SPX's latest low, we are not that far off (about 0.3%) from official definition of a bull market (20%)

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  78. Shorted SPX at 1313 with stop at 1315.6.

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  79. My reading as a newbie ....

    Is that SPX is at the end of impulsive wave 3. I just sold my long opt. and is waiting to get back in at the bottom of wave 4.

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  80. Same EW count as me. 

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  81. Today with the FED. Expect some firework. The market always does a headfake before reversing. Which way will it be today? Up first then down big (I hope), or down first then up big?? Just so the MM can screw with both bulls and bears, run all their stops to take all their money. So they can have all the money to themselves with the real move??

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  82. so much appreciate perspective you all provide....thanks

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  83. HI HT100, if this is an abc correction and it starts to turn down with that make it a wave 1with a continual decline to wave 5

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  84. 10 year treasury has come from 2.07% down to 2.02%    30 yr from 3.16% to 3.13%      some buying coming into bonds

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  85. Good point.  In addition to the intraday head fake, it is often the case that the next trading day (after FED) reverses the move that took place from the FED announcement to the close.

    The market could also just stay pinned right here, even after the FED meeting.

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  86. I replied via email but do not see this comment posted, so placing it here: 
    VIX Traders, this mornings SPX drop then gradual up move and MACD 3 minute chart of VIX tells me that the market is preparing for a sell off.  The MACD 3 minute chart shows VIX holding below 0 for a very long time.  Now it is preparing to go up as the SPX is preparing to go down.   I bought longs this morning and plan to sell as VIX goes up and SPX goes down early after the FED announcement.

    I may be wrong of course.  I'm just sharing what my move is in case some may be curious.

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  87. It was a A auction ....

    The USA appears to be on the way to become the world's safe harbor for capital. It may be a dirty shirt, but is now the shinning hill for world capitalists. The US markets will be up to their eye balls with liquidity. Some of that should rub off on the equity market. :)

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  88. It isn't crazy, it's called being prepared and responsible for your family.  If you are wrong, then you can laugh about it with your grandchildren on your lap in 20 yrs.  Some people think I'm crazy for all of the precision rifle classes I've taken but I can now hit a ten inch target out to 1000 yds if I read the wind correctly.  Under 500 yds, I don't miss.  I'm not worried about getting food if the shit hits the fan.  Ever since 2008, I've worked to get physically strong (squat 400+ lbs), and emotionally, mentally, and spiritually prepared to do what it takes for my family and my local community.  All in the name of "just in case we need it".

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  89. Yes, I noted my T-Bill holdings were up yesterday after getting hit mid-late last week

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  90. correct...as it has and is currently

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  91. Only if it falls down hard and breaks PL's channel lines above, that I would count it as wave 1 of 3 down. For now, I am assuming this is the 4th wave of C up. But shorting at 1313 let me play both outcomes. Just have to keep an eye out for the unexpected with stops.

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  92. I think there can be a 30 minute lag between reply via email and appearance on blog. I've seen that lag before.

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  93. Don't forget to stockpile bullets.  They will be as valuable as food in a scenario like that.  Some call it paranoid -- I call it prudent.

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  94. Paolo Giacobbe PiolJanuary 25, 2012 at 7:21 AM

    SPX should stay below 1320/1330 otherwise the market will become bullish as expected by GS (Great Supermarket)

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  95. GLD startog its run higher, TA done here last week.

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  96. That was a pretty big drop on the VIX at 12:30.

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  97. QE 2.5 ....

    I'm all in - long. :)

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  98.  Ed Carlson / Seattle Technical Advisors has just sent an alert (30-day free-look):"If the
    S&P 500 closes at the current level (1,308.90) or lower today, it
    will trigger a sell-signal in the Confirmation model."

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  99. got stopped out...hmmm.

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  100. Here's the Daily VIX option trade report (video), for those that care and have 2 minutes to spare. 

    http://www.youtube.com/watch?v=5eqpdzAKWbI&feature=plcp&context=C33df8f9UDOEgsToPDskI34taj0Z9dAhnClITeAwyO

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  101. I appreciate these. Keep 'em comin'.  Thanks.

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  102. First, I think this market is being held up vs being held down so I expect a down move. Second, I wanted to share a cycle chart I've been watching for several weeks. I was disappointed when it recently inverted but now I'm thinking it called the high to the day. We'll see. But I could be wrong. http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=1&mn=0&dy=0&id=p68600331950&a=254850073&listNum=7#

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  103. What a mess.  Liquidity vs. scary macro events waiting just outside the door.  Don't open the closet and stay under the covers.  Massive liquidity... but I've been looking for the start of fundamental news that will start rolling over the market.  Fundamental news stories starting to state what we already know... 2012 will be so so at best.  But ECB LTRO and Uncle Ben have lots of paper and ink.

    Sideline for me (small Euro/$$ short) until a clear direction is established. 

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  104. In jest ~ am I the only guy who rewards good posts/research with a LIKE around here for info I might not be privy to? Doesn't cost a cent.
    TODAY ~ sandyone, direfighter, infidelserf, William Li, HTOO, Authentic, Davez

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  105. hmm... head-fake? or continuation of zombie bull march? 

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  106. I use Likes often. :)

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  107. One should not, and could not, fight the Fed. It just announced its QE 2.5. So enjoy while the good time last. SPX will go to 1375 - 25 points higher that mymodest expectation of 1350. :)

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  108. Waiting for a good point to short VXX ....

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  109. It looks like the DJI wants to go up, but I still think the SPX will go back down and VIX will make a small pop today.  I am still looking for that VIX pop today to close out of my long VIX calls from this morning.  Glad I took just nibbles.

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  110. ".... the Committee expects to maintain a highly accommodative stance for monetary policy" - to QE infinity and beyond!

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  111. I visualize a triple head in the making, if you look at the 120 minute ES chart. You can also see a successful inverse h&s on the 15 minute ES. So my expectation is that the high from Monday should hold since the up momentum has been expended for now. If the Monday high is broken, then I would go with PL's bullish scenario as per his line in the sand.

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  112. Triple top... I hope.

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  113. This is not the time to get too hang up on TA. The market just exhaled. And short covering will ensure a powerful ride - up. Don't get caught in this firework. Just take a look back at SPX when Fed unleashed its QE 2.

    This is QE 2.3 ....

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  114. I think we may have just witnessed the short covering. Remember, short interest is very low these days.

    Always greatly appreciate your caveats, AF. Thanks!

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  115. feels like a 3 of 5 on the bull count

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  116. There's bona fide short covering. And there's virtual short covering. Funds that have not been buying AAPL, for example, will have a lot of explaining to do to their investors. They are forced, albeit kicking and screaming, to buy AAPL - just to keep their job.

    That, is short covering as well. :)

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  117. Short VXX?  Now?

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  118. That's a very good point, AF.

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  119. And with only one dissent ....

    The buttons are all lined up, armed and ready, at the pleasure of the Fed Chairman. :)

    "Ron Paul?", the Chairman calmly inquired, "Who is Ron Paul?" ....

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  120. Sure wants to look like that.  

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  121. Just gave you a LIKE for pointing out that I should use them!

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  122. Just cleared Mondays high.  I think its time to close out shorts and go long.

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  123. SPX just crossed KO for bear case. I closed all inverse ETF positions. Big loss. Life goes on. Won't be doing any more swing trade. Only day trades from here on. :-)

    I kept my put options though, just in case. It's a minor position, relatively.

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  124. You're right.

    I just looked at its 3 year chart, there's not a lot of meat left. It may just stay at historical low throughout this rally. :)

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  125. Anon's Gold bear/bull line of $1680 taken out in seconds after Fed announcements.  Anon, is your threshold intraday or close?

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  126. That is an excellent point!

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  127. Thanks for the reminder Katzy

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  128. Yeah, good point. Just an awful time to be a fund manager, or an individual position or swing trader - if you go by the logic of macros and are "conservative."

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  129. Market too overbought and way too many bulls for it to be iii of 1 of 5 up. Just my 2cents. 

    I am waiting on the sidelines after being stopped out earlier...Not sure what to do...So I shall wait...

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  130. You are right. That is often the case indeed. Let's wait for Ben to open his mouth and see what it does to the market? 

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  131. To me, my single most important job is to not to lose money, but to keep the shirt on my back. This way, by definition, I'll always live to fight another day. This way, I'll be the house.

    The house always make money, in the long run, doesn't it? :)

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  132. I think (pure speculation) that the top for today occurs at some point before Ben begins his conference at 2:15PM.  No guarantees, just pure speculation.

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  133.  thought we would hit 1320. see  wha happens at 1322. 1370 next up if we close strong. said stay long above 1295. no since playing short i switched long last week. direction still up it seems. 

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  134. We may pause here a bit but it certainly looks like we will test the trend line from the 2007 top.  The ultimate pain zone was / is too much for me.  I'm on the sideline for now.  If we can move above the 2007 trend line I may be tempted to go long.  The problem I have with taking a long position is the overnight risk.  Sooner or later the market is going to get hammered due to a macro event in the world.  Holding a long position overnight is like juggling, throw everything as high as you can, go to sleep and wake up and hope you can catch everything before it hits the ground.

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  135. I concur.   May play long intraday, but to hold long overnight, is too great a risk.  At some point, this market will implode.

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  136. Where is K?   Did you go out for Chinese food.....again? 

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  137. Just wonder ....

    When will the US 10-Y yield 1%? Pension funds/endowments must be hurting, big time.
    The stock market may have one very powerful rally coming.

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  138. Yeah... I've been thinking that when Europe eventually implodes US Bond prices will explode.

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  139. Never mess with the Wizard : )

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  140. yes I did, just got back. wow.

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  141. Has anyone watched the VIX intraday?  It just had a mini flash crash and reset in the past 10 minutes.  It's actually had two fast dips today both into the 17's.  It is now back above 18, but by dropping below 17.9 twice today, it moved below the lower BB (not looking as though it will close below BB for the day) and it filled a gap which goes back to July 22-25 of last year.

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  142. I am shorting off ES top. ST.

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  143. You might have hit the jackpot on that one. I hope that is the case certanly.

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  144. Katz,

    In the fog or war, it is hard to be nice. But I always pay attention to your instantaneous POV's on the market - whether I agree with them or not. It is always good to have a competent technician's POV's, backed up by impressive quantified data and experienced rationales. TY.

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  145. I hope know, that comment was just in jest!   :)

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  146. Katz,

    In the fog or war, it is hard to be nice at all times. But I always pay attention to your instantaneous POV's on the market - whether I agree with them or not. It is always good to have a competent technician's POV's, backed up by impressive quantified data and experienced rationales.

    TY.

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  147. always, twin pipes on the $VIX 15.

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  148. i actually was out for chinese and saw the announcement on my iPhone

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  149. Yes, very interesting. Did it once yesterday..  I think its old gap filling and orders are coming into call in a big way..(MM's doing some juggling) or i can wait for the VIX to reach zero so i know i'll 100% it will go higher.. Uggggg

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  150. see that latest spike down in $VIX?

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  151. Well... those fund managers that were correct up to now are probably using this "virtual" short covering to dump at least some of their holdings.  The question is who outnumbers who?

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  152. Looks like we're in a iv wave - at least another push up.

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  153. Lol!

    That was a funny exchange, Jim and Katz.

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  154. Despite the huge run up, money flows are negative:

    http://online.wsj.com/mdc/public/page/2_3022-mfsctrscan-moneyflow.html?mod=topnav_2_3022

    Maybe the market is working its way towards a blow-off top?

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  155. I think you are probably right. When no new QE measures are confirmed - I think that will be the top, hopefully.LOL! Have not got the stomach to go long! 

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  156. thnx, just watch out for a pimply faced teenager who calls out entries two days after the bottom and exits one day after the top. Funny story, was over a housewife's house showing EW charting and she said, "ohh, that is easy, you just buy right there at the low (pointing to my chart) and exit right there." I asked her, "where would you short?" She said "what is that"?

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  157. My reading is a v ....

    Undergoing the a leg of the a-b-c correction. No?

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  158. Me too. Clueless after the recent market behaviour!?!

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  159. Yes, I think iv of that v or (5)

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  160. second set of twin pipes on the $VIS/15 and this one is a BIG one.

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  161. FED out of Bullets..  Switching to Bow n Arrow and an air horn next quarter.  lol. my stressful  humor. (Yet, i still want it to work for the global good..)

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  162. If it goes back above Monday's high, the theory is probably wrong.  If it trades higher than the high at 2:00PM, then its probably a short squeeze all the way to the close.

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  163. i am staying short EShere til prolly EOD or until stopped out

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  164. If it goes back above Monday's high, the theory is probably wrong.  If it trades higher than the high at 2:00PM, then its probably a short squeeze all the way to the close.

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  165. I remember telling me wife how I made money during the Lehman crash ....

    After trying in vain to explain what shorting was, I said, "Sell high, buy low." :)

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  166. No jackpot... just a 50% chance of being right. 

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  167. Dear katz, would you please explain the twin pipes pattern and its likely implication, since I am a newbie? TIA!

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  168. Just checked out a 30 year weekly chart on the NASDAQ 100. I believe that recent high has just kissed the underside of the trend line up from Nov 2008 low. I call this a bearish signal if, and only if, it starts to fall away soon. This could be the last high for sometime. I think too many shorts have thrown the towel in too early. There are not enough buyers (volume) now to take this rally any further - just my opinion. QE is being talked about but the market wanted QE3 to take it higher. Its all noise. I agree next two weeks are critical, but even bull markets and third waves have pullbacks. One is due as we speak, although I am still bearish for now. Taking this market long for me is not an option - massive bull trap in the making. Sidelines at best.

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  169. out, 19>>17.75, a buy program set at 1317.75

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  170. Expecting incremental new HOD for a full v count.

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  171. ditto katz if you may

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  172. Exhaustion, a run down, and an equal run up on the candles. Look at the $VIX/15 and you will see it. Pipes do not have to be exactly equal tho.

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  173. short ES again, 19.5

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  174. I think you are probably right. When no new QE measures are confirmed - I think that will be the top, hopefully.LOL! Have not got the stomach to go long! 

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  175. Yep, I see it! Thanks for the detailed response! :-)

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  176. entered 3pm, usa et time.

    Few important comments, on today's action.

    1. As I repeatedly said herein, gold HAD HUGE MAJOR resistance, at 1681 area, and IF it was broken, it would EXPLODE upward quickly, to $1760 area.  Well, today that explosion occurred, sliced right through $1681 like a rocket to $1705, due to some idiotic stupidity, like the uberlords amerikan primaryduncecap CB mouthpiece, mainpuppet babyface benny, simply saying he is passively limp, and won't do notin', ´cause he can´t get it up.  Wow. such powerful announcement.  should have been totally expected, but, nowadays, doing notin', which was OBVIOUS, passes off for EXCITING (ST market interpretating) INflationary ACTION.  Therefore, the everlying usa mickeymouse lookalike, benny wizard of oz, wins again, just by doing notin'.  And even though I always meant $1681 CLOSING price, the impetus and power of the rise, makes it appears HIGHLY unlikely,  that it will turn around today, in a major whipsaw move, and come back down and close under $1681.  However, stranger things have happened, just remember oct. 4, and its crazed intraday whipsaw major move in the dji and spx, due to some latenight announcement out of europe, yet still within (NO coincidence, DA BOYZ) the last hour of trading that major whipsaw day.  And I say all this, as I figure a huge amount of today gold (and silver) explosive rise, was simply: HUGE SHORT COVERING, because I am sure I was not the only one that knew, that $1681 area, was a HUGE 5 trend and ma resistance.  So, will gold return back under $1681 today?  I only give it a 15% chance, yet, IF it does do it, THAT will EXTREMELY negative, in the instant ST, MT, LT, and for ALL markets, except cash.

    2. very interestingly, on the other hand, is that the dji and spx have NOT responded nearly as 'exuberantly', as gold and silver did.  As a matter of fact, the dji has not even been able yet to take out this monday's high of 12,760 area, much less the prior peak of may 2011, as I have also stated repeatedly herein, as being crucial to take out, and soon, for the bull case to remain alive.  I care much less about the spx you all cream your panties about, it is an inferior SENTIMENT indicator in comparison to the dji, because the dji averages are ALL the plain and simply amerikan MASSES follow in teevee, since that is what the news media feeds to them, the 120 year old known by all dow jones BIG number.  And until 12810.5 is taken out on a CLOSING basis, I will NOT concede to the bulls.  BUT, if it's taken out today, I concede, it's crazed bullish case, amerikans are even crazier en masse than I thought previously, and THAT'S saying a lot.  HAHAHA.  Whatever.

    3. today reminds ME  a lot, of 3 crazed one-day mad rally days from 2008, on which each of these 3 days bennyboobyboytoy came out and stated some 'happy' INflationary inanity, and the market went wild upward, shooting it's cream off the top----only to be TOTALLY reversed BIGTIME that very same day, or the next, or in a few days.  So BEWARE, BEARS, stay the course, or go neutral, just cash is very good, remember, it's GSC5, but DO NOT GO LONG, THIS MARKET IS STILL A FAKE, UNTIL 12810.5 dji is taken out, in a close.

    4. I ONLY play for the DA BEARS.  So just see ME as middle linebacker BUTKUS, because when I tackle under the pile, I BITE. 
    When I go down, I go down SWINGING.  Only have feb. puts, this is MY last shot, and I will go down SWINGING, WIN or lose.

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  177. The closing numbers will be interesting today. The market is all over the market at the minute!

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  178. Wait for it...one more little five count wave up.

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