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Friday, January 27, 2012

SPX Update: Using Elliott Wave Theory to Choose Entries and Stop Losses

Yesterday the market formed a bearish reversal bar: it gapped higher at the open, but closed solidly in the red.  These types of bars sometimes indicate buying exhaustion.

The market is now as overbought as I've seen it, and if this is still a bear market, then this is a dangerous condition ripe for a serious decline.  If this is a new bull market, then it's par for the course, and the indicators could get even more overbought from here.  Materially, there isn't much to add to the last couple weeks of updates, so I'm going to discuss some of the ways I use Elliott Wave Theory for trading.

The market tagged my target zone yesterday before reversing, and there are now two ways to view the current structure.  I'm going to present both of them -- and then I'm going to talk a little bit about how one can use Elliott Waves to pick entries and exits for a trade, using the the current charts as examples.  This is not going to cover it exhaustively, by any means, but it could serve as a quick primer.  The disclaimer, of course being that none of this is to be taken as trading advice, and you should always consult your investment advisor, your spouse, your lawyer, your doctor, your priest, and a Magic 8 Ball before making any trading or investment decisions, etc..

Anyway, the charts below are the same time frame for the S&P 500 (SPX), but are each labeled slightly differently.  Both interpretations are viable.  So what does one do with this information, when the market "could go up or down"? 

Let's start with the bearish interpretation.  The bearish interpretation would view this as a complete five-wave rally, which would mean a larger decline is due. 

On the bearish chart below, the "c" label marks the potential end of the wave.  Obviously, any trade above that price point indicates that the wave isn't complete, so that becomes one's stop loss level for shorts.  On my charts, I label these as "KO" levels, meaning, in this case, that trade above that level knocks out (invalidates) that interpretation. 

In this particular instance, if one was inclined to go short, as I did yesterday when the rally reached the target zone, then the bullish interpretation (next chart) shows why you don't want to chase the decline and go short at random (you really never want to do anything at random as a trader, but the chart after this one emphasizes that point).




So, one would either wait for a bounce and short from higher levels, where one's stop loss is closer and manageable -- or one would stand aside and wait for the bullish interpretation to get knocked out entirely, since that should act as confirmation that the rally is indeed over.

The chart below shows the bullish interpretation and the knockout level.  If one was undisciplined and shorted at random -- say at a really dumb spot, like 1310 -- then one would be risking 23 points (from 1310 to the 1333 bearish knockout) to gain 14.  Why 14?  Well, because the bullish knockout level is only 14 points lower, at 1296.  If one missed going short near the top and can't get a better entry than our hypothetical dumb trader at 1310, then it's really much smarter to either:

1) Stand aside and wait for the bull count to get knocked out (1296) before considering taking any action on the short side. 
2)  Wait for a bounce back up toward the bearish knockout level (1333), where one can get a lower-risk short entry.

Is this starting to make sense?  There's a method to this madness.


Conversely, if one wanted to play the move from the long side, one could go long near the 1310 support zone and use the 1296 KO as a stop loss level. 

If one was already short, the 1310 zone is a good area to consider taking profits, since it seems almost certain that some type of bounce will develop there -- either a small bounce, or a stronger bounce to brand-new highs.  Needless to say, if the brand-new high scenario plays out, one gives back all of one's short profits and then some.  That's why I take profits often.  Bears can still make money in a bull run; they just have to be smart and nimble, and not turn into pigs (greedy). 

Once one is safely back in cash, one has several options, including the following:

1)  If one is still bearish, one can always short again from higher levels after a bounce. 
2)  Still using the hypothetical 1310 profit-taking level, if no bounce develops -- then worst case, one misses out on 14 points between 1310 and the bull count KO level.  Once the bull count is KO'd, one can always consider fresh shorts, since that should validate the bear case.
3)  If one is bullish, long positions could be taken for a ride up into the bull count target zone.  1296 becomes the SAR level (stop and reverse) for that trade.

Going back to the first chart, I personally wouldn't use the bear count's KO as a SAR level to go long, because it appears that even if the bullish count is playing out, then the rally is entering its final leg -- and with the KO level at 1333 and the lower portion of the target zone only a couple points above, at 1335, the risk/reward seems marginal.

Those are a few basic concepts.  As I said, it's by no means exhaustive.

So, which of the two counts am I favoring?  I thought you'd never ask!  (Yeah, right.)  Well, currently the decline is only three waves, which -- if it stays that way -- indicates it's corrective, which means it's just what it sounds like: a correction to the next larger trend -- which is up.  Tomorrow's action could change that -- if it adds another wave down in a proper Elliott way and turns the decline into a five-wave move, then that could be an indication of a trend change.  But at this exact moment, there's nothing to indicate that the trend has reversed.

If the bullish count is unfolding, then what would usually play out in this type of wave would be a bounce back up toward the mid-1320s and a subsequent decline to roughly 1310, before rallying up into the target zone.  It's also possible that the three wave decline the market formed yesterday was it, in which case all my talk about 1310 is meaningless, because the market is on its way to immediate new highs. 

If the bear count is unfolding instead, then ideally the market needs to keep the bounce that started just before yesterday's close below 1325.30 to keep open the bearish possibility of a nested series of first and second waves, or it needs to head down off the open to create a five wave move.  Note that the bull count could clear 1325.30 and then decline to 1310 without creating any rule violations.  Trade safe! 

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

351 comments:

  1. Morning.  Hope some find this article helpful!  :)

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  2. Awesome article!!! Thanks for everything you do. Enjoy this blog daily.

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  3. Very well done as usual. 

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  4. perfect post PL, right on tgt, I am short from my 18 level (entry 17), my levels/tgts are derived from EWT, SL was 19.5 but is now slid lower

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  5. "Al Wright" on the old thread -- lmao

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  6. Laugh if you want, but lately my magic 8-ball has had as good a track record as most of the reasoned analysis I've seen.

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  7. Outstanding work...I wish I had known you in college...I would have gladly paid you to write my papers. :)

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  8. Im the dummy that's short at 1284 LOL I've so much more to learn..

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  9. Wouldn't surprise me in the slightest.  I've been considering using stichomancy to determine the market's next move...

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  10. Im the dummy that's short at 1284 LOL I've so much more to learn..

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  11. Out, 17>>07.5, +9.5

    Someone just gave me my daily quota.

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  12. GDP sank the futures...Are they telling the truth now?

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  13. Excellent...that counts as a good day when it happens this early :)

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  14. If it opens here, that's suddenly going to look a lot more like a five-wave decline.

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  15. just need clarity....and more coffee

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  16. Is that what happened? I was just sitting here looking at the ES and wondering why these violent morning moves always seem to happen around 8:30 EST, instead of 8:00 AM when early trading opens.

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  17. Right neighborly of them, I'd say.

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  18. I'm so glad you said something.  I've been so busy writing, I didn't realize that my Java ES platform apparently froze sometime ago and was giving me bad quotes.  It was showing ES near 1315!

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  19. That was the smart move....Don't worry about my lawyer....he's still trying to find me.

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  20. look at my megaphone triangle TL, that was what it was about, it broke through. time on the 5 minute ES chart, 8:30 AM !

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  21. Great advice - thanks.

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  22. I crapped myself when I saw the drop....I was thinking "What did Anon do now?"

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  23. Great post PL, as usual.

    My only beef is, from what I've learn so far, wave counting is often a creative endeavor. :) Moreover, it can be dangerous at times. Because it reinforces one's preconceived view of the market. May be I'm just a newbie. My hope is that I'll improve over time.

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  24. Use this Economic Calendar to see data releases in realtime.

    http://www.forexpros.com/fundamental/ 

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  25. Good Morning Pretz!

    Thank you. As usual excellent article with simple explanations, examples and detail. I wish I had read this last week :)

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  26. Yeah, I just closed out at 1308.50 for 20+.  I missed the bottom due to computer malfunction...  I suspect it's going lower, but no need to get too greedy -- as you just said. 

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  27. looks like we open at the bottom of the old reliable channel- do we rally back to top or break for the first time in 2 months?

    SUSPENSE!

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  28. "2)  Wait for a bounce back up toward the bearish knockout level (1333), where one can get a lower-risk short entry." 
    What I do, I check how the market bounces back into its RT. With an impulse? Then me thinks not to try a short, as normally one more will show. If that impulse could be a last c up for a running/expanding 2, then my appetite for short would not cease. Here I prefer a rebreak entry with stoop loss on top of this c.

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  29. Wave counting is as much art as science -- but understanding the alternates allows you to use the science part of it for your trades.  It can be dangerous if you are unwilling to *rigorously* challenge your assumptions on a regular basis -- this is the death of many an Elliottician.  That's why you see me publishing bullish counts and what have you... trying to look at the market from different angles keeps me from getting complacent and forces me to revisit my assumptions regularly.

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  30. New Greek rumor....they are about to finalize the deal (again) :O

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  31. Still have the power. Careful...

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  32. could retrace to 1212.
    I monitor another site to garner investor sentiment from a select group. I have my faves. We have gone from1330 to 1307 ES now in IT time. The raging bulls  -- remember I said they ate their young and are now devouring the others -- were sayin' at 1330 "see, I told you f*cking a$$holes we are in a bull mrkt, and we are going to 1500. BUY !" Shouldn't smart bulls be cautious around an IT top and pounding the table during the sell offs? WTF. I thought it was buy low and sell high? Right?

    Will be out of touch for 3 to 5 hours. Trade safe. . . 

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  33. going long to the channel top, see if i can play both today...

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  34. thx for the heads up, this is useful info for the board!

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  35. imo not true, there are good wave counters and the others. and no one gets it right all of the time

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  36. Seriously though...Your topic today was an excellent choice. You really have a handle on what needs to be addressed and that's what makes you really good at what you do. You take a Socratic rather than dogmatic approach. Most folks fall back to dogma when they are unsure of their decisions. Thanks for keeping a clear head...It helps your readers keep an open mind.

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  37. PL, this was a very helpful article for us less experienced traders.  It also helps me understand your particular terminology, ie use the KO as your stop loss position.

    This one should go in your list of saved articles.

    I like your trend this week of more focused articles with fewer charts.  I think you wear yourself out needlessly when you try to do too much, although I appreciate how much you care for us.  You can always tackle the longer articles on the weekend.

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  38. above 13-4 and we go up

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  39. NO TEXTING WHILE DRIVING!!!   I like ya Katzo...I wanna keep ya around!

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  40. gs and appl are the tell here

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  41. Now we have to watch out for the redaction, "We never said that."

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  42. Thanks, Spiker. 

    Honestly, it seems like it all takes about the same amount of time, though.  :) 

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  43. Wow, did they really just hold the SPX open TWO CENTS above yesterday's low?  That keeps it from being a five wave move down at this point.

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  44. Ya ever get the feeling that "they" are busting your stones on purpose LOL

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  45. Pretz, that means the bullish count is in? Drop to 1310 and then bounce and rally up?

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  46. Right. I do the same.  However, I assumed this thought has already occurred to everyone who understands EW well enough to count an impulse wave or not, so it seemed unnecessary to restate it.  Also, this level of detail would simply not be understood by the majority who *don't already understand it* in which case, they don't need this article.   :D

    It's a fine line I try to walk everyday between finding the right level of detail to convey an idea, while trying to stay shy of the level of detail where it just starts confusing the less-experienced.  :)

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  47. Not yet... If they drop to 1310 from here, the bearish count will look a LOT better.  That would make it a five wave move down.

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  48. Just exceeded yesterday's low, so the bear count is alive an well.  :)

    Now the bear count KO is yesterday's high fer sure.

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  49. Excellent link. Thanks!

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  50. right on the channel support at 1314ish, surprised bulls are missing so far

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  51. oh, there they are lol

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  52. Thanks, that's a really nice compliment.  I honestly never thought about it in those terms, it's really just how I am.  I suppose I picked it up from my father, who was an excellent teacher.  He ran his own business, but on the side, he taught entrepreneurship at some places you'll recognize:  Penn State, Moravian, and Lehigh. 

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  53. This looks like a corrective consolidation right now.

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  54. Lena and PL, this is why the message board is so useful.  The value add to the article is important too.  Some, like me, want to understand EW more fully.  At the same time, I know that a full out EW article can mess with my mind and requires multiple rereads (which is fine by me, but may not be to other readers).  Your two posts are greatly appreciated!

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  55. great post PL! I am 100% waiting for the market to make its intentions clear. 1310 is indeed key and a close below 1307 (78.6% FIB) would for sure show some sort of top is in. 

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  56. welcome to a fine day of chop... see you monday

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  57. The bigger problem is, a full out EW article can easily turn into a book... or two.  :D

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  58. Thank you for the post, Jason. I am glad I am

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  59. Today is a trader's f-ing paradise so far.  Two runs to the top of the downward channel that were made to be shorted gratuitously.  Nice to see some semblance of normalcy and rationallity return to the market.  And for two days straight even . . . what fuck is going on here??? I must be dreaming . . . ;)

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  60. es at 1310!  an ideal level to go short :)

    pretzy, seriously brother -- thanks for everything you do.  what a fantastic read today.  i've stated it many times before, but you're such a phenomenal teacher.  the way you break everything down and simplify it, you make trading look so easy.  you're a true pro in every sense. 

    ever drive the road to hana?  will be in maui in a few weeks and i hear it comes highly recommended. 

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  61. This is the third try higher.  If they can't pull it off, then I think we head meaningfully below yesterday's low.

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  62. Nice! Thanks. Definitely going in my bookmarks.

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  63. I'm going to bookmark this post and keep rereading it until I can recite it from memory.

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  64. What we meant to say is that we are fairly confident it will occur soon.  No, nevermind, there are still issues to be worked through.  We are almost there really.  We are taking a break now for personal reasons. This is not going to happen.  No wait, definitely thiiiis close I can smell it.  Ah, heck, I don't know any more.

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  65. lol

    The bots must be down for maintenance.

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  66. He must have been a cool guy. You are *very* lucky to have had that influence. Entrepreneurship is what drives most of the fun things in life. I've always had businesses since I was 19 (45 now), also inspired by my Dad. He still is always up for a new idea...always thinking...never blowing off an idea. I used to think he was crazy until I grew up a little. He told me in 1980 that a great idea would be to "bring back" coffee houses like he went to in the '60's. I thought he was nuts.

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  67. "We are taking a break for personal reasons." -- lmao!

    Yeah, Greece needs a vacation!

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  68. WRITE A BOOK!!! SELF-PUBLISH AMERIKAN!!! You know ya want too. I'd read it...It would be less painful than Prechter's. :D

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  69. Thanks, bastiat.  :)

    Road to Hana is a must do.  I don't remember if I told you this last time we talked about it... you need to make sure you buy the book "Maui Revealed."  Everything you need to know is in that book.  :)

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  70. I dont this will even be a 'try'.  This is just the traders and bots playing the channel both long and short.  And sellers will be holding their bullets for another touch of the top of the channel.

    I suspect the Street's pros don't give a crap about taking the market higher today, and they'll be more than fine with having a market to trade.  And this one is looking pretty damn tradable right about now.  I'll be going heavily short again on any stab back above 1,317.

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  71. Hi Charles, thanks, and welcome to the blaaaaaaaaaaaawg!  :)

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  72. Snikeys....Bloomberg has gone total reality check today on the market...Gloomberg is talking in bearspeak...really unusual for them. Just an observation.

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  73. Katzo did mysteriously disappear to "go to work"...that's it...Bot status confirmed...I'm calling Alex Jones right now.

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  74. But they're already on vacation.

    Speaking of vacation...where the hell would you go for vacation...you're living it everyday!

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  75. lmao- I didn't even make the connection.  But now that you mention it, I can't recall ever seeing Katzo and the bots in the same room together at the same time...

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  76. ROFLMAO...friggin tears in my eyes...just snotted on my screen a little. OMG

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  77. Yeah, my Mirus daily technical levels have suddenly changed to bearish when I wasn't looking.

    Just a caution, even though a bit down at the moment, the DJI is still within striking distance of the 2011 closing high at 12811. After today's digestion of GDP, monday's a whole new day. :-)

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  78. "Less painful than Prechter's" could be a t-shirt!  

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  79. I'm still laughing over the book comment....friggin tears. I gotta go make some widgets...I'm telling ya, my business is a declining economy indicator...Don't worry...I don't sell tinfoil hats...even though that does look like a good racket on some days.

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  80. Soooo if anyone hasn't figured it out yet . . . the channel is your friend today. 

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  81. I don't believe the F'rs at all (except for Keene)...just another day....followed by a weekend...followed by another trip to Bizarro World. :)

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  82. Third attempt higher failed.  I think we are headed lower.  No guarantees...

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  83. I like this channel...

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  84. Easy to spot within the 15 min BB's.

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  85. Software can be multiply instantiated at will, wrt the "not one person" implication, as suggested to anon20 ;-)

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  86. Hey PL...got an idea...You and AlbertaRocks need to join forces...kinda like Clik and Clak...it would be awesome...guest appearance moolah...a newsletter...blah, blah, blah...I know it sounds crazy, but it just might work.

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  87. Priceless...You could also sell Prechter as a book on tape as a safe sleep aid.

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  88. I've just been trying to figure out what the channel actually is, EW-wise... kinda looks like some type of triangle/diagonal. 

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  89. Alright, I need to get to sleep.  These are the hours that are destroying my personal life.  :)

    GL!

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  90. remember to turn off your phone

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  91. Who knows?  And I'll leave it up to an expert like yourself.

    But what I do know is that I've shorted the crap out of the top of it three times this morning, and I now have my biggest day of gains of the year so far.  These four points up, four points down moves are a thing of beauty.

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  92. Yeah, good advice. I'll definitely remember to do that...

    Sent from my Windows Phone
    ________________________________

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  93. Are you trading SPX futures?

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  94. No problem. I thought of the guys stuck in the middle, who want to get to the other side. Anyway in english there is really a shortage of good books on EW. I read most and think they are crappy. It is so easy to teach good EW, why they do it so shitty?

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  95. I'm sure I don't need to warn you... But on the off chance that it is an ending diagonal (which I'm not certain it is), it could lead to a strong rally. Think October 4 in miniature. :) Anyway, fwiw.
    Okay, turning phone off now...

    Sent from my Windows Phone
    ________________________________

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  96. Prechter says: "When you read this, please go short, as the unforgiving three is coming. And ya, the book... Pretzelboy is a good guy, he got it all wrong, put it is less painful than Prechter's."

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  97. Investment Advisor: Village Idiot
    Spouse: Always BUY
    Lawyer/Doctor: Too much burden for one person
    Priest: Pedophile Prick
    Magic 8 - Ball: Got me the spouse :) But also the priest :(

    For those of you wanting to discern fantasy from reality, the Baltic Dry Index continues to drop like a stone sitting at 753 a mere 90 points from its 2008 low. Take it FWIW, many would argue that this is an archaic indicator of the global economy, citing an oversupply of vessels, Chinese holiday, blah blah blah. But the facts is the facts and this a “non-manipulated” daily index which is not painting a pretty picture: 

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

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  98. Great post!  Thanks.

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  99. Good to know and I'll keep that in mind. Given how well the day has gone and it's actually sunny (but cold) here in Seattle today, I may just take the rest of the session off.  And if I do make any more trades today, it will be at such obvious entry points that are screaming at me. 

    Bulls seem content right now to play keepaway from a break of 1,310.  And a big rally seems unlikely for at least today. 

    Pro sellers are clearly committed (so far) and we aren't at an October 4th type of situation where instituions would move in an buy after the bottom has dropped out.  If I were a bull, I'd be saving for next week and today would just be about holding the channel with three to four point moves up off the channel bottom.

    What does worry me though is the 'buying switch' suddenly gets flipped on again and we just see another grind back up.  That switch is something artificial and not a part of the private sector in my firm opinion.  It's the only thing that explains the up moves that defy all normal market movements.

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  100. There's nothing floatin' that boat right now, that's for sure.

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  101. Hi PL, on E.W counts, (i'm knew and learning thanks to this site and  your analysis, yet i showed my mom (retired chartist w E.W. premise) she asked me about the count. On the first chart it shows IV is overlapping (lower than) I.  can you add your input?  she said that rule cant be broken.  thanks again for awesome articles! ps heading to Kauai today :)

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  102. The Baltic Dry Index is not as reliable as it once was.

    The reason being that more bulk ships were built and are now being released into service. Consequently, there is a glut of capacity. Which is the primary reason for the rate tanking. (pun intended :))

    Naturally, a global slowdown does not help the rate.

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  103. THOSE WHO KNOW THEIR HISTORY ARE CONDEMNED TO HAVE THE EDGE ;-)

    Just preparing myself mentally for the Wave3 crash coming, checking out some data from Wave3 2008 crash. 
    On the last part of wave2 jul 13th to Aug 12th 2008 the SPX went up from 1200 to 1313? Ring any bells - frustrating everyone at the time, probably wiping out a lot of short positions. 

    But then...a little bit later on ... straight after black Swan event (Bear , Lehman,etc) 

    Over a 11 day trading period (You remember when the world was ending and the banks were going to shut down for the weekend or something like that) (25Sept to 8th Oct 2008) the SPX went down from 1213 to 836 - Wow (nearly 400 points) before entering Wave 4 triangle. This is what we Elliott people live for, hey, don't you think? At the end of the day - THE WORLD DID NOT END! The big pay day is coming! Now put Greece or Hungary or any other PIG or something we are not aware of into the equation for 2012 and bravo its 2008 again. I could have said Italy bonds rates or even Iran Oil trouble or even Japan interest rates rising or CHINA bubble bursting or whatever. It doesn't really matter. Can you see my point.Its just with the last four weeks price action (totally frustrating for bear positions) its easy to loose sight of how quickly this market could collapse. After analyzing the data in 2008, I should expect 100 point falls in a day, with 50 up the next day, following by a none day, followed by mores falls. I will not be shaken out of my position, as the profits rise and the temptation increases to take it. I will say to myself, if you want to take a profit before the target, first spend a hour re-checking 2008 and reading up on Wave 3 behavior/ 1929 CRASH/ 1987 CRASH, and then take a cold shower and think about how you could spend 400 SPX points decline! Then think the worst I could do is break even if I'm wrong. Ok, mentally prepared now. All I want now is the opportunity to test my skills.Part of this trading game is learning to control your own emotions, hence my preparations!LOL Remember, do your own research and and don't listen to me ;-) Just airing my personal strategy to try to help others on here.

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  104. Please tell your mom, that LDTs are allowed to overlap. It is a pretty ugly one though, because of the time it consumed and the little RT in the 2, but well, that's how it is. Everything pretty bullish in this count.

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  105. The rate has dropped by 65% since November, 2011.  Beside the glut of ships, there is likely a demand problem.  The ship release schedule has been well known.

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  106. DJIA and SPX are charting a similar tune. with really choppy overlapping waves in a channel that looks corrective of some type.
    The Nasdaq comp is doing the funky chicken.

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  107. Here a pic

    http://img201.imageshack.us/img201/7702/economiccalendarforexpr.jpg

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  108. Agree... and I agree 1000% with your last paragraph.

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  109. What is to be made of the disparity between the Dow/S&P and R2K/NASDAQ on back to back days?

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  110. Group,

    What is to be made of the disparity between the Dow/S&P and R2K/NASDAQ on back to back days?

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  111. Very helpful notes on entry/exit strategies using EW concepts;thanks PL.

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  112. HEY KATZO ARE YOU STILL IN TZA. I KNOW U SAID U WERE A BUYER BELOW 26 and i never saw u post an exit with your losses.

     if you tell us about your winners tell us about the other side. i see a few poor souls follow your every word. fair and balanced. this is the TRUTH

    http://stockcharts.com/h-sc/ui?s=TZA&p=D&yr=0&mn=2&dy=0&id=p63079882014

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  113. What was the stuff that happend in the last five minutes....somebody got their buttons wrong...

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  114. about 20% down in 20 days. another 3x etf grave

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  115. btw. I am in for a long... but looks pretty dangerous.

    http://img193.imageshack.us/img193/7200/futureschartsrealtimeful.jpg

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  116. Bought SPY 132.00 puts /exp Feb 03/ @ $1.39

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  117. I am by no means a pro at this, but my book states:
    "Within motive waves, wave 2 always retraces less than 100% of wave 1, and wave 4 retraces less that 100% of wave 3."
     
    So I'm assuming that it can happen given that description.
     
    The book does go on to say this about Impulse Waves - which she may be referring to:
    "In an impulse, wave 4 does not enter the territory of (i.e., "overlap") wave 1."

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  118. HFT sell then buy - trying to make it look like "THE" bottom... ?

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  119. Anybody watching that triangle in the 15 ES?

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  120. I'm waiting for it to break to the downside at the close, when I would sell my put opt.

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  121. VXZ just spiked upwards.

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  122. Pretzel logic is counting there a LDT. At least that is what I see. :) 

    LDTs can happen in a 1 or a A. Normally they contract like the ones in my picture and in PLs count with 1_3 und 2_4 closing. But sometimes (very uncommon) they expand. Every time the wave 3 has to be not the smallest wave of 1, 3, 5.

    But I know, there are some other forms of EW around, thats just my take. :)

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  123. DD, this could play out as a big ABC, so a bounce  back up is very possible.

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  124. And in fact, the triangle has already been broken. See chart.

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  125. I'm also using Flux timing, which says likely drop from here to close. But I'm watching it closely, to see if it violates the already closed triangle.

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  126. Now VXZ is headed lower also.

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  127. Flux "broadhead" indicator also says that where we are now is a divergent price. Prob will not hold.

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  128. I'm watching the intersection of your green descending TL and your red support TL....

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  129. I'll let him defend his own trades, but that thread did mention a stop at 24. I agree that 3X ETF's are a dangerous tool that need to be played carefully, but I've done very well over the last few years with them as one tool in the box. Am flat with the things this year day trading them - which is all I've ever done. When you put a trade on with them you can't blink, and if you do hold them overnight, you don't sleep.

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  130. You want him to stop posting what he does? You pay him? He get a cut, when you profit? You build a lot of pressure on him for nothing...

    As far I can see, he does not give advice for trading, just telling how he trades. So if you cannot trade without him, better you stop trading. Trading sounds like an expensive hobby of yours. Better quit and try heart surgery. Ahh, you won't try that without years of learning and practice on dead pigs... 

    Do not take a trade you don't know why you would take it, where your stop is and what you expect it to do to you. Markets are Piranha Pots. They love their prey. Don't be. :) 

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  131. MS volume spike on Facebook IPO filing announcement.  GS moving higher.

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  132. slowly rolling downward topping process is being created, for MY 'flashcrash 2', that's what I see.
    according to ralphie's premises, you do not need ANY event, all you need is a MOOD change.
    p-head said 1296 spx is the 'KO', and I have not even checked.  However, the market 'knows.'
    probably a few more days, until 1296 spx is pitilessly raped.  then, fast down acceleration.

    I am certain that greek 'payback' of loans is a charade, zorbas will not re-pay 1 drachma.
    I have known this without doubt, since I read in mid2011, the oct.2010 excellent article:
    http://www.vanityfair.com/business/features/2010/10/greeks-bearing-bonds-201010
    BEWARE OF GREEKS BEARING BONDS, michael lewis, 'modern-oddity' novelist.

    as to MY mention above on MY 'flashcrash 2', I posted detailed account yesterday.
    because, while computers are NOW bull's friend, when worm turns, they won't be.

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  133. just want to see him tell about losers and not just winners. he doesnt give stops. when a trade goes against him he conveniently forgets about it! modus operandi

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  134. Dang. I read my Flux indicators wrong. Sold my put @ 1.22 for 12% loss.

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  135. Facebook filing for IPO is another indication we are near the top of the market.

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  136. Should rally from here to close. But I'm not trading.

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  137. stop up to 1,309.40. 
    from initial stop 1,307.00. Trade is safe.a=c danger. should move or die.

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  138. Ok, no stop...
    if I would copy a trade, I would ask for a stop before I go into the market. The exit should always be known before. If I do not copy a trade, I would not care to much about some other fails. Would be happy with him for his hits. Just a thought. :)

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  139. Scrub that, "from here to close" ARGH! I'm *really* reading myh Flux indicators wrong.

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  140. True indeed, it is very difficult to make the leap from the industry’s own supply/demand interworkings over to that of the global economy.
    However, coupling the slowing demand of goods, especially in emerging markets, and the fact that the industry is facing declining rates, all the while saddled with a high inventory of vessels and beaucoup debt, does not create a good outlook in the least bit for the industry - whether it’s a leading, lagging or archaic indicator to the macroeconomy, I can’t answer that, as I’m just not that smart. Plus, I’m just getting accustomed to our new world of Oz economics where reality is just not that important.
    Also, the european banks are on the hook for over $500 billion in shipping loans - wonder if they’ll be keen on writing down more than the projected $100 billion, if shipping rates continue to plummet. Oh sorry, forgot we don’t worry about that stuff anymore ;)  

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  141. Facebook IPO expected by Wednesday.

    http://www.chicagotribune.com/business/breaking/chi-facebook-ipo-expected-by-wednesday-20120127,0,2667263.story

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  142. So which is more dangerous, a frustrated bear, a cornered bull, or El Zorro?

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  143. If we close at or very near SPY (cash) = 131.54, we'll have a doji on the weekly chart. 

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  144. sounds like your DeLorean needs to go to the shop.   :)

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  145. It's the driver :-(

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  146. said reset to 1212, looks like 1213 hit, always give levels leeway as the extra is a candle wick.below 1210 and another plunge to next level, our friend 05-6 again

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  147. Today, I sold some SPY 131/132 call spread (expiring end of the day) for seventy+ cents.

    If SPY tank, then I pocket 70 cents. If SPY spike to 132 of above, they I lost thirty cents. So my risk/reward ratio is a bit better that 1:2. In reality, it can be better because it can end the day somewhere between 131 and 132. That's how you should play option.

    If you don't do a rr calculation, you can loss your shirt. :)

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  148. El Zorro - wouldn't want to get in front of this

    http://en.wikipedia.org/wiki/File:El_Zorro_livery_Y145.jpg

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  149. Well said A1 - anything that drops that fast should raise up a flag and like you said its not like the release schedule has not been well known.
    Any further slowdown and rate decline could really break the back of the shipping companies. But hell, they're already strangled with debt, what's a little more. Most of these shippers need the index at about 1500 just to break even. It'll be very interesting to see just how low this thing can go.

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  150. This weekend, I need to look into the spread info you posted from before. ty

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  151. TY, welcome back for rational guidance.

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  152. so you see it closing higher?

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  153. It's fantasy land Alberta, anythings possible! If they can build vacant cities in China why can't they line up empty cargo ships at the ports - don't you see how great everything is, dontcha! Take another pill buddy, you'll see it soon!

    BTW, great article Sunday - did you beat ole KHRYSOS to death yet?

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  154. nothing going to happen today, close flat around here

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  155. From the fwiw file:
    At 12:30 today, basis the SPX, it appears that a 535 correction was completed (began @ 1333)...with the C wave being an ending diagonal.
    Since 12:30, SPX seems to have formed a wave 1 motive wave 'til around 3 PM.
    If so, a wave 2 pullback is in order toward the close and toward Monday AM.

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  156. yes going higher next week to 1350 then 1370 then...

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  157. In same SPY put again @ $1.17.

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  158. What is a 535 correction?

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  159. what does doji me     tia

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  160. I dunno, WWWCI is firing off like mad

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  161. Is Wanda a bullish or bearish indicator?

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  162. Wanda is a contrarian indicator, do opposite of what is stated. Can work immediately or sometimes 8 hours after a post

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  163. Out @ $1.03. Not my day.

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  164. an ABC pattern of 5 - 3 - 5 wave count

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  165. I see that, the one hour (60 ES) trendline is holding...

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  166. back t the range top, then back down, then back up- went long but got stopped, 10 cents below the bottom.... missed the bog move up, oh well

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  167. 41 mins ago- i wrote that 4 hours ago- anyway nothing happened- rangebound market, very very tradeable, just ahve to open your mind

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  168. ALSO MAJOR NOTE

    as we churn we QUICKLY work of the overbought condition that everyone is using as a main bearish indicator

    all cash now, maybe news over the weekend but why front run it- it the market breaks there will be hundreds of points after that initial drop

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  169. wow, its doesnt get any more flat than the close today...

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  170. anyone remember what i said about the change in the character of the mrkt? BULLISH ~ mrkt's character was to start off strong, then appear like it was gonna sell of mid day, draw in the bear, then finish at the HOD. a BEAR mrkt does the opposite, starts out weak, tries to rally mid day, then finishes EOD down. these are normal days, not talking about waterfall days, they come later in the progress. bulltards show up calling for 1350-70, no charts just empty words, another way to tell. pay close attention ot the EOD, let us see what happens. it actually looked like it was gonna rally there for a bit. dynamic is to draw the other side in, the suckers or the sheeple as some call them, and leave them high and dry. . . . 

    only trust verifiable posters, those who provide the entry levels, exit levels real time. lots of anonymous games played on the net, some have multiple personae for devious reasons. anyone not versed in trading might sit and watch, there will be some good action in the future. all comes down to timing

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  171. lock in da bull but good. . . . .

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  172. greece deal this weekend- will short on the ensuing party

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  173. It will be interesting to see what happens after the FaceBook IPO.  Could that create the high top from which everyone finally feels is high enough to take down the market in a hurry; or could it start another rally?

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  174. nuts, did w just see PL's prefered or alternate count materialize today? looks like we had wave 1, 2 and 3 in the run up since 1pm, but was the close part of a wave 4 ? and was this wave a's bottom and wave b's top today? so going down into 4 next week and then wave 5 still to come? aaargghhhhh PL HELP

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  175. We heard that one last weekend. :) 

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  176. hmmm . looks like a goldie cross is next up.

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=3&dy=0&id=p52464373303

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  177. We heard that one last weekend. :)

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  178. Billa Buster, you're quite the joker. Pray tell, what are your targets based on? I'm really interested. Gann? Fibonacci spiral? What?

    Last night, I offered one reason why I thought 1377 might be a possible target. I have an open mind. I also explained. Did you read my post?

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  179. Sorry, the message "We heard that one last weekend. :)" is a reply to anderaverov's "greece deal this weekend- will short on the ensuing party"

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  180. http://img3.imageshack.us/img3/9950/futureschartsrealtimefu.jpg

    That's how it worked out...

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  181. Closing chart, ES/120 look how the red TL held, yup it was tested but it held nicely. EOD sell down happened right on time. WWWCI right on time EXACTLY, perfect day. follow your charts don't get distracted

    http://www.screencast.com/users/katzo7/folders/Jing/media/84859347-42db-4b93-90af-51d5a01b0c7a

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  182. Where can I find this Wanda contrarian indicator?  Another board?

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  183. If you want to front-run the cross, that's up to you. Did you see that the RSI is at overbought? Look at 4/29/2011 and compare to now.

    Honestly, I don't see why I should take your forecast seriously. I still stick to my opinion, "you're quite the joker" ... Please try to prove me wrong with more evidence.

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  184. No, it is Billabuster. . .

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  185. Can you refresh my memory, what WWWCI stands for?

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  186. EUR was up big but equities did not follow.  Disconnect during equity rally was on days when Eur fell, market ingnored it, and on days when it rose, equities went up.  Now we see equities ignoring rally in Eur.  Will be interesting if this continues to see what happens when Eur heads down...

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  187. this is bottomline story, without constantly excessive katz palaver.
    until the DJI 12,810.57 prior 2011 top is broken on a closing basis, NO BULL.
     
    As I have said repeatedly, the spx is NOT the primary measure of the usa masses.
    IT IS ONLY THE DOW INDUSTRIALS that is.   And until the DJI gives up 12810.57 at closing,
    NOTHNG has been violated, for the MEGABEAR case.  I wrote earlier today, of slow rolling DJI TOP being formed.  Today's CLOSE fulfilled MY prophesy, DJI now down to 12,660.  And monday should bring another lower (grudging) close.
     
    UNDER NO CIRCUMSTANCE GO LONG OVERNIGHT. 
    Until 12810.57 DJI is broken at CLOSE, do NOT go LONG.

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  188. soul...initial examination says that going into the close should not be a 4 on an impulse wave due to the overlap with the projected 1 started around 1 pm time frame.  A look at DJIA, SPX, RUT, NASDAQ looks like we had an A corrective starting Thursday, a B bounce today and Monday?  Going into the close may be the beginning of the C which could complete the correction (ST) or it could be a more complex structure.

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  189. Wrong Way Wanda Contrarian Indicator

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  190. Wrong Way Wanda Contrarian Indicator

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