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Sunday, February 26, 2012

SPX and VIX Update: VIX Diverging from SPX, and a Look at the Big Picture

Still no material change in the counts since February 8.  The higher prices we've been expecting since then have finally arrived, and I believe that this standing target zone remains the bears' best chance for a meaningful correction, due to a number of factors:

1)  The wave structure now counts as a complete five-wave move at higher degree.
2)  The SPX has reached the 2011 highs, which should offer resistance and present a zone from which bears could attempt a counter-attack.
3)  Bullish sentiment has been extreme for 8 weeks.

There are also some new developments which add some confidence to the view that a correction or reversal may be nearby, but again I would warn that anticipating trend changes is the toughest, and most dangerous, gig in trading.   So take these developments as cautionary signals -- but until the trend lines break, they are only signals.  The trend is your friend... at least, it is until it beats you over the head with a blunt instrument and leaves you for dead in a back alley.

Last week, I talked about the potential that VIX could be in the process of bottoming, due to the VIX:VXV ratio, and this next chart lends further credence to that idea.  There is also a divergence forming between VIX and SPX -- VIX has been making higher lows while SPX has been making higher highs.  VIX usually leads SPX, as the chart shows, since VIX tends to be a "smart money" indicator.


Next is the 10-minute SPX chart, which suggests that a solid correction is due very soon.   I would still like to see the 2011 highs broken, and ideally see the 1376-1378 Fib zone reached, though it's not impossible that wave 5 is complete with Friday's high. 



I would again caution bears that while the current price zone offers good odds for a correction, if said correction does not materialize soon, the rally could stretch on for a lot longer than most bears are willing to consider. Long-time readers will recall that I gave similar warnings about the 1300-1310 zone.

Trying to be smarter than the market is almost always a losing stance. If the market signals strength by breaking decisively through the 2011 highs, then that must be respected; just as 1300-1310 turning from resistance into support was a signal that needed to be respected.

I'd also like to discuss a couple of big picture potentials.  I'm going to discuss the preferred counts and the permutations of those counts, and then at the end of this discussion, I'll summarize quite succinctly what my preferred view currently is -- so keep reading if you become confused.   

The preferred count considers that the SPX is in a (c)-wave rally.  The main question still in my mind is whether the fourth wave of this rally has already unfolded or not.  My preferred view is that it has not, which suggests that a correction is due soon, followed by new highs.  I'll simply need to see what the next decline looks like to aid in determining degree of trend.

 

As shown in red on the chart, my preferred view is that the red Minute Wave (iv) correction hasn't happened yet, which means red (iv)-down and red (v)-up still to come.  The big challenge is that until some type of meaningful correction ensues, it is very difficult to triangulate exactly where we are in this count.

The alternate count is in gray and shows the potential that wave (iv) has completed already.  If it's already completed, then the market is closer to an important top than I think it is -- but this remains my alternate count for the time being.

The next chart is the big picture, and has a very large target zone as a result of factoring in both the preferred and alternate counts into that zone.  If the wave (iv) correction has occurred, as shown by the alternate count in the previous chart, then we're in that target zone already, so the chart below reflects that.

Sometimes we can anticipate the market well into the future, but other times we can only see as far as the next bend.  Once a meaningful correction takes place, that will allow me to refine the longer-term target zones.

EDITOR'S NOTE:  The first black 1-2 of blue Wave (5) of red Primary 5 isn't labeled.  I think most readers can see where those labels are supposed to go, and it doesn't change the count at all -- just an oversight on my part when I ran out of the allotted number of Stockcharts annotations.


 
The next chart is a slight twist on the long-term count, and is currently my first alternate for the big picture.  I don't like this count as much for several reasons, the main being that I feel it "forces" the count a bit.  However, this alternate count would confuse and frustrate both bulls and bears alike, and that alone gives it some degree of appeal.  I also like that it retains the idea that this current rally is the third wave of a third wave (c-waves are also third waves), which certainly fits the character of the rally.


In conclusion, let's see if I can sum all this up in a way that minimizes reader confusion...  to aid in this goal, I'm only going to summarize my preferred count; the alternates have already been discussed.

Over the short-term, I'm anticipating that the market is due for a correction very soon.  Over the intermediate-term, I'm anticipating that this will be a fourth wave correction at minute degree, with higher prices still to come after that correction completes.  Over the long-term, I'm anticipating that after this rally unfolds in its entirety (potential time-frame would be May 2012 for completion of the entire rally), the 2008 lows will be revisited, and likely broken. 

In the meantime, the trend lines remain critical.  While this talk of corrections is based on well-informed speculation and historical precedent, it remains merely a potential unless the market validates it. Trade safe.

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

213 comments:

  1. Whoops, I accidentally uploaded the wrong chart for the first SPX chart.  If you loaded the page more than 9 minutes ago, hit refresh.  Not a big difference, but it's the right chart now.

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  2. Those bears gonna be so annoyed if a minor wave'4 is yet to play out.  There is so much doom-chatter out the murky corners of the net, and yet..the delusion continues, the market can not move significantly lower for more than a few hours.
    --

    Good wishes Pretzel

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  3. need to crack July 2011 peak of 1,356 and the 20 day for a bearish lean. hope this post makes it past moderator. some ppl seem to not like my bullish calls....  gn and gluck

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  4. Light at the end of the tunnel?  Or will the creative accounting continue?
    http://www.bloomberg.com/video/87093648/

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  5.  good evening bud. its good to see you're updated and ready to go so early!

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  6. PL, thanks for the update. Wow the long term chart sure looks interesting. Thanks for keeping all of us in perspective. Have you, in the past, seen so many indicators flashing warning signs and yet the market keeps chugging higher and higher each day? I guess we live in unprecedented time....

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  7. out of short, 65>>56.5, cracked 60 area but running out of ST down pressure

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  8. retest & reset to 60 es

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  9. K.A. "you make me sad"
    ANON "I move for no man."
    K.A. "so be it."
    ANON, lookin' down at arm "?"

    http://www.youtube.com/watch?v=zKhEw7nD9C4

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  10. Usually I get the weekend update posted just before or just after the futures open... but I wanted to spend some quality time with my family this weekend, so I was actually a little slow getting it posted.  :) 

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  11. Some of these indicators, yes, I've seen flashes that are ignored by the trend.  Others, no, I honestly haven't seen them ignored this way.  If the market corrects in the reasonably near future, though, that will make the indicators "right" again.

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  12. lol -- 'tis but a scratch!  One of my favorite movies.  :)

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  13. typical reaction, when ppl make money they are the biggest guru in history, when they lose it must have been someone else's fault. the sheer emotion in that guy should show that trading is not the right place for him, arms laying on ground.

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  14. You all deserve some quality time. A great family is the best long you can have.

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  15. dojis on the 5 & 15, tgt 59-61 es

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  16. It is a good information, Thanks.

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  17. I agree. Health and family are no. 1 priority.

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  18. Sell in May and don't go away - short !

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  19. I like and agree with the longer term view.  I don't think we can get a powerful correction here as volume sucks and too many people are waiting for a pullback to buy - feeling they missed the last move.  Also, a lot of people are looking for a pullback.  Once that 5th wave starts and the bullishness ensues, you'll get more of the regular Joe on board to throw caution to the wind and that's when you'll revisit 2008 - right around all those nasty European Elections.  Some of the bullishness around the residential market is comical though.  None of those optimistic homebuilders are going to find banks super-excited to lend on new projects

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  20. Thanks CFO...Keene is the only guy out there who brings on objective guests...Thanks for that link. AlbertaRocks was kind enough to suggest bnn.ca for excellent info. He was absolutely right. The Canucks do a great job with it (even better than Bloomers.)

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  21. All this optimism is like a bunch of drunks on the road at 2:15 a.m. all looking for the nearest Denny's...just trying to hug that trend line so they stay on the road, telling themselves, "I drive even better when I'm drunk."...It's just a matter of time until they wreck. This is gonna be one hell of a Spring and Summer.

    \/ \/ \/ I'm looking for this guy.

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  22. mrkt lookin' for the last sucker. . . UUP popping a bit this mornin'

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  23. Well, the indicator *did* fire. Friggin' uncanny how that works.

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  24. Good morning, PL. Any insight on RUT from an EWT perspective? Unlike ES, RUT futures have tanked and traded within a well defined range since Feb 3rd (last jobs report Friday). Consolidating before a next leg up or breathlessly anticipating an overall market correction? Comments are appreciated. Thank you.

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  25. i know, been following that for years, never let me down. . . 

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  26. Me thinks Buffett will "retire" just before market tanks to preserve his iconic status...besides the fact that he's lookin' like he's 10 minutes older than dirt.

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  27. Thanks for the link.  I was wondering if the improved employment #s had
    caused the ECRI to change their call for recession.  Good to get an
    update.  Just a matter of time for the headlines to turn bearish, but it sure is taking its time.

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  28. bringing forward from last thread .. anywhoo gluck

    http://stockcharts.com/h-sc/ui?s=$NYSI&p=D&yr=3&mn=0&dy=0&id=p43192049978
    summation index maybe a crack in bull / dunno not a pro like some ppl. tranny needs up run for dow theory confirmation. oil still up spx still up moving aveages look up. maybe runnin out of steam tho. watching dollar on verge of breakdown which means up for spx. apple still riding goldie cross for 400% gain. so maybe 1000 is up next. that just 100% more so who knows but the pros. need to see more crack in spx but run is looking tired so im lightening up on my longs. target was 1370 and i think we hit 1368.92 so we will see if we can get over 1370. if we do could be quick ride up off short squeeze. yes there are a few bears left after 3 years..gn and gluck.

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  29. And just before he gets any more pressure to "just write a check and shut up".

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  30. Excellent observation...I never thought of it that way...He was the de facto BAC bailout.

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  31. And presently the number of loans given to homebuyers in my area are close to ...  zero. What residential market?

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  32. possible bear flag on the 120 es

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  33. short at 56 1/4, very ST trade

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  34. rule, down 80 DJIA, break that and down 120, retrace to 70 to 90 minus DJIA, back to minus 120, break that and down 140

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  35. PL, I like your new color scheme, with alternate count shown in gray. Thanks also for mentioning that (iv) is a minute wave.

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  36. Yeah...$RUT finally broke 814

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  37. nice work PL. Me think: so AAPL goes so goes the market. Especially considering it's extreme weight in the SPX ($10 SPX

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  38. Question, katzo: In what units are these numbers for your 80,120,70/90,120,140 rule measured in?

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  39. next fall setting up, should hit minus DJIA 120

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  40. well were at July 2011 peak of 1,356. let see whahappens  

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  41. Would be nice to see it break 811.86 from the 16th. IMO we go to 790 from there. Just my opinion. Come on 7.

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  42.  I'm thinking 788...let's split the difference.

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  43. I am easy. Sounds good to me. lol.

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  44.  Yes NYSI is negatively diverging, as its underlying driver the McClellan Oscillator is forming its ninth consecutive day below the zero line....today.
    However, its best to remember the the NYMO and its derivative NYSI, are primarily bottom picking indicators.
    While the NYSI can show divergence at price tops, the record shows that it is usually early.

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  45. I'm cheap...least that's what my wife says...It's a plan. :)

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  46. AAPL, not to 1,000 today, lol down 4 points, headed lower imo

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  47. I think we still have a lot of buy the dips out there. Need to weed some that out imo before things can correct as they should. Then again I could be all wrong.

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  48. my thinkin is that it needs to touch 60.5 es to back test, then more down. could be wrong

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  49. Only 52 of the 57 Apple analysts have a Buy or Strong Buy rating..  when it gets to all 57, then we can see the top :)

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  50. Yep. when they go all in things will get interesting.

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  51. AAPL just did a h&S on the 120

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  52. Yeah really - it's got a bit of convincing to do before that - being an Apple agnostic is not such a bad idea at this point

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  53. POSTED 2 DAYS AGO...AFTER CLOSE ON FRIDAY: 
    I wonder if we'll gap open to the downside on Monday, finish off wave five down (1) and then rally back up to put in wave (2) before having the rug pulled out from under the longs. See ya Monday......stay well. (further)....S&P 500 wave one down is 2.98, wave three down is 3.88, or less than 161.8% - therefore five down is likely to extend. We know extensions are often quickly retraced back to wave 2 within the fifth.......I love this stuff.

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  54. Won't happen. Those holdout analysts will be fired tomorrow.

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  55. Gap filled...now lets see what happens.

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  56. Tim, we should at least get to 58 es

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  57. I don't like this action right now. Maybe I need to be patient but it has that steriod feel to it again. Like, oops a little stumble but I still ran a 4.5 40 in the tryouts. No problem and the scouts are all amazed.

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  58. cov at 63.25   -1/4....wouldnt pull back

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  59.  ~1.5% down, ~1.5% up, rinse, repeat...831 to 816 range, 3 trips + chop since 02/09. Makes a hell of a bull flag, or just stuck at the top and getting ready for a correction. The pros are running this table IMO.

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  60. Good time to go short with a stop at 1368.93

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  61. short squeeze in effect

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  62. Fear??  what fear??  i'm scratching my head with 14 fingers...  kinda feels like i should get into house flipping..   what could go wrong..

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  63. I was reading on flags that they last 3 weeks or less. If they go longer then it turns into a new channel. This flag does not have the descending look to it for the bull case imo. Maybe it is a running flat. Been in your above mentioned range since Feb 3. I have not seen the RUT run flat like this. Any ideas are greatly welcomed.

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  64. covered 1/6th position at 65.75, we sell it out again if we get to 1367.50 today.

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  65. http://www.youtube.com/watch?v=9QS0q3mGPGg

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  66. At least MM says this morning's V action smells like the PPT at work. Quick! The bubble gum! Before it sinks!

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  67. House flipping...awesome...you crack me up :)

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  68. this is gunna go sideways for next two hours, no hurry to do anything imo

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  69.  TZA in @ 830, swap out with TNA @ 817.  That would be too simple...nothing is ever that simple.

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  70. 1369.14....is that all you've got?

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  71. Thanks Katzo...I'm going out for Vietnamese... :O

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  72. I think es will re-visit 62.5 area before the day is over.  We went from 53 to @ 68 pretty quick, she'll give a 1/3 of that big, at least temporarily.

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  73. Just curious ....

    It seems like everyone here is waiting to short. Anyone buying on the dips? :)

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  74. AAPL has the most selling on strength per the WSJ money flows page. Looks like some hedgies may be headed for the exits here. A slow moving train imo.

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  75. Closed out my one short E7H12 @ 1.3388 from 1.3481.  I may start trading Euro directly more.  Seems to have less noise.

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  76. i dont get it either. path of least resistance is up. one of the very basics in trading is to trade with the trend, not against it. buying dips in this uptrend since the beginning of the year has been so easy and profitable for me. i dunno why ppl keep trying to short it.

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  77. this is why, had the best day ever this morning. i do not trust the upside moves one bit up here.

    http://screencast.com/t/CozrdpUW

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  78. Crude floor traders expect oil to go to 115 shortly.

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  79. you guys are good. no shorting for me with all my moving averages up. did take some profit on longs but watching dollar for the key. oil breakout also is important. holding till 113 then take some profit if all goes well

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  80.  Nice entry.  Is this just based on a TICK spike, or are you thinking it's a possible terminal spike just to blow out shorts, with a much lower target in mind?

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  81. TICK spike, ST trade at this point. . . 

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  82. Do you get this information from a paid Bloomberg terminal?  Just curious...

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  83. bounced perfectly it seems

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  84. Does the 1370 (ES) area hold as resistance or do we break through to more highs.  Looks like the third test of this area is underway.
    $2 range chart shown

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  85. today's VIX option report... (sign says FEB 24th though?)
    http://www.youtube.com/watch?v=sPNZyq1rlfk&feature=plcp&context=C3df9796UDOEgsToPDskJ5N41U4D0i_zo85AWy0h1a

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  86. Not withstanding the surgein liquidity about to be released on the markets in the next couple of days,  the reversal this morning and rally to 1370.89 - a smidgen above the 2011 highs would seem to meet the minimum pf Pretzel's first chart in today's article.
    Dare we hope that this is it .  or if not the final 5 of 5 at leat 5 of 3 and some sort of pullback 

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  87. The  last hour or so has seen the lowest volume traded for any hour in the last five days for the SPY.  And we have what looks an intraday head and shoulders forming with declining volume at the right shoulder. 

    Doesn't look like there's a lot of interest for buying up here.  And I would suspect that the smart money will close out the day wanting to sell off what they can. 

    Also the fifteen minute chart is now trending sharply down, but the retrace from 1370 is only two point deep so far.  

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  88. the calm before the storm..   very queit

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  89. Thank you, sandyone44.

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  90. possible new es tgt 61-3 if this breaks through my 63-5 level

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  91. Unfortunately, I feel like the bear is hybernating after a heroin binge and might sleep thru spring.

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  92.  Today, everything that's not nailed down is floating - skywards. Both bonds and stocks are rising. Normally, they go in opposite directions. That's sign of liquidity coming ashore - from across the pond. :)

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  93. Heroin is an easy fix...a shot of Narcan and he wakes up raging...if he's on Propofol, that's another story altogether.

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  94. ER/Trauma RN...too long.

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  95. Short ES 68.78... bottom of highest red candle...
    MACD rolling over, STO slight down trend, RSI moving out of overbought range, WI% coming out of overbought range
    $2 range chart

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  96. No wonder you work the markets.....a way to come down off your daily mania. Thanks for your service to those in crisis. I'll remember you have a cool head when things get "out of hand" in the markets.

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  97. This is in line with PL's preferred view.
    Correction soon and then followed by new highs later.... Then we finally roll over. 

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  98. Right you are...........and PL!

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  99. Looks like buyers remained rather committed to holding anything shorted below 1,368 under water for the remainder of the session. Meaning anything that was shorted on the big morning move up. 

    I went short at 1,370 myself and then doubled my position on the stab up to 1,372. With the declining volume, it was total fakeout move if there ever was one. 
     
    Often after these big moves up of 12+ points, the bigger retrace doesn't happen until around five trading hours after the peak .  And after another minor gap up the following morning that will scare short postions that were held overnight out of their positions on the open.

    If recent patterns hold, we will see a morning open tomorrow that quickly prints a new high, hovers for a bit, and then a quick waterfall move of at least five points. 

    Which would mean an eventual move down to 1,267-ish.

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  100. Can we get NArcan put into the public water supply?

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  101. See what happens when everyone flushes their old Vicodin, Percocet, and Xanax down the toilet...Zzzzzzzzzzzzzzzz. :)

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  102. Actually the market is more exciting at this point...I'm a total bot during a medical crisis, totally focused...Kinda like Katzo but with blood or puke covering my gown, just working through it methodically. Still working on my trading skills though...I'm a little tooo calm when I should be saying to myself, "Gee, I shoulda set those stops a little tighter." lol I'm actually taking a self-imposed hiatus to spend more time with my family. But here's a little pic I like to call, "A Day at the office, there was actually blood on the ceiling. Messy.

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  103. greece downgraded

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  104. saved some for occassions such as these.  Thought I had plenty but the bulls are stretching supplies.
    PS: used to be RockR, not sure why this email was used instead

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  105. Looks like Katrina came thru just minutes before the pic. You in the military?

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  106. text on downgrade by S&P:
    http://www.reuters.com/article/2012/02/27/idUSL2E8DRDTJ20120227

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  107. three nice doji/inverted hammers on the 120 es, time to screw the bulls. . . . every other day is up or down, alternating

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  108. Since it is a "Selective Default", does that mean it will not trigger the CDS's? Will that only happen if the bondholders refuse to accept the CAC's? If anybody anywhere does something to trigger the insurance, you can bet that Merkel will hunt them down like rats. 

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  109. This market is designed to screw everyone, Katzo. 

    Which means it CAN be shorted quite profitably pretty much every time we print a new high that is at least two points higher than the previous  one.

    And you can go long pretty much every time we see a waterfall move of greater than ten points and the fifteen minute chart indicators bottom.

    Until we see that pattern break decisively, I think we remain more or less on the trajectory we've been seeing.

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  110. Actually I was merely a civilian instructor teaching the finer points of interpersonal relations and non-verbal communication of a less than friendly nature, to energetic young men and women who I think they were from the Peace Corps or missionary groups. I never asked. I was the "bad guy" they had to beat (I let them win per protocol.) Never in the military (I got out of ROTC...limited opportunities), always a civilian. Those days are loooong ago, and I don't miss them at all. I hope they learned something.

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  111. fully agree, bulls 1, bears 1, even. . . 

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  112. There is no way that they would ever allow the CDs to trigger, and if by some absolute miracle they would the devastation would be something to behold.

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  113. Bounced perfectly off the lower trend line, and finally took out the 2011 highs.

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  114. That's freaking awesome!  I need to get up to date on the new technology and figure out how to do that on my home studio.  This has inspired me -- now I just have to find another 12 hours hidden somewhere in the day to devote to my old hobby...

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  115. the more tests of 1370 the weaker it becomes

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  116. amazing trend.  wish i could look out a year and see how this era plays out.. 

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  117. It's an app?  Really?  Man, the kids have it easy these days...

    btw, this one had me in tears:

    http://www.youtube.com/watch?v=FCSBoOcGFFE&feature=relmfu

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  118. Is it just me or is there an ascending triangle forming?

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  119. Means, double the opportunity to make money, right? Just have to be agnostic about the EW counts, anything above micro minute degree.

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  120. Does Merkel have the jurisdiction though? What about counterparties located in The City?

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  121. Finally, technical euphemism for "screwed"!

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  122. top line should be more horizontal for an ascending triangle -- if it slant upward, it's a wedge.

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  123. hahaha..  classic mixes

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  124. Now that I've figured out $RUTs apparent pattern, they'll go and change it up...Damn it all. lol

    http://www.youtube.com/watch?v=5aUpHP8IkRE

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  125. PL, i am having difficulties counting the waves assuming we are now in (v) of of v of 5. was this morning's drop ii or iv of (v)? If you can get such a detailed count that'd be awesome. Somehow I'd "think" one more up day and then down on wednesday when the LTRO may be disappointing (the crack junkie, aka the market, not getting a big enough of a fix as the junkie craves more and more to keep going, aka the 2nd LTRO may not be as big as hoped for.) That's just a thought though.

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  126. I'll try to hammer it out tonight.  Don't feel too bad -- this market has been a b*tch of a structure.  Despite the fact that the trend is holding up amazingly well, it's still a weak trend, which makes triangulating the waves a challenge.  There's little in the way of clarity.

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  127. interesting outlook Brian. I am of the opinion that there will be some more upside too (mainly cause my bad-wave-counting doesn't show a v of (v) of V of 5 yet, but hopefully PL can help). Then the 2nd LTRO will disappoint on wednesday, correction to upper 1200s, lower 1300s, and back up to new highs, since it's still additional liquidity that becomes available and that will drive the market, but this 2nd -if not as large as the 1st- will thus cause less upside. Just speculating though.

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  128. The one day I read the article four times and didn't keep the charts up all day...DOH!

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  129. "Voluntary" default does not trigger the CDS -- that's why they're working so hard to make it "voluntary."  Don Corleone-type voluntary, anyway.

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  130. The smaller pattern suggests this is very do-able.

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  131. Elliott Wave International has a "free" week going on currencies. There is an interesting chart on the eur/usd suggesting a meaningful decline is in the near future (wave 2 top). Not sure what the "legality's" are with regard to showing their chart. What's the verdict PL?

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  132. PL, what do you make of the fact that the DJI is slightly down, whereas SPX and COMP are (slightly) up? IMHO since the DJI is the senior index it's leading the pack? Also, I noticed how the ADX for "all" indices (SPX, DJI, COMP, NDX) has peaked and is trending down. That means that the -DI is going up and the +DI is going down; showing that the uptrend is weakening.The +DI has been decreasing ever since early February. The -DI is moving up and getting closer to cross or touch the +DI , which often signals a trend change. I find the ADX often very reliable, especially in overbought/liquidity driven markets compared to other stochastic based indicators.

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  133. just like a car jacking in L.A.   they say give me the keys and you 'voluntarily'  hand em over...  p.s.  your intro to your website said doses of sarcasm are expected..  :)

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  134. Yeah, that would have been a pretty safe long entry for at least a ST trade.  A support zone was reached, as was the lower trendline.  Stops just below those lines, and that trade offered as good an entry as there ever is.

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  135. Because you are expecting 2nd LTRO to disappoint on Wednesday, it will not. :-)

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  136. Well, that all jives with the idea of a fifth wave in progress.

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  137. If it's free, then it's okay as far as I'm concerned.

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  138. KB03; nice trend line for AAPL. I never thought of plotting it on a log-scale. Boy, I wish I was doing stocks back in the early 2000s (still in college then...) and bought 100 AAPL stocks at $6.25, and sell it 10 yrs later at $525... hehehe (keep on dreaming...lol). That would have made $625 into $52,500... snot bad! hehehe

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  139. Interesting observation on the DJIA:

    http://blog.stocktradersalmanac.com/post/DJIA-Flashes-Down-FridayDown-Monday-Warning-2

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  140. I will counter soulsurferusa's anticipation of an LTRO disappointment with my anticipation of jubilation with the LTRO free money free-for-all. So we should be flat.

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  141. I find it quite interesting that the SPX chart forecast is due to top out in May. It seems SELLING AT THE START OF MAY has been very profitable of late. Like that saying goes ' Sell in May and go away and come back St Ledger day' Makes me wonder why I have been using technical analysis when may be I should have just stuck with the famous old saying. lol... Any thoughts anyone that it will be different this time...just speaking whats on my mind.

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  142. following the GANN line, number of dojis, Living Dead mrkt. . . 

    http://www.screencast.com/users/katzo7/folders/Jing/media/ca6e6fa7-5c43-4673-82df-777aea1c182d

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  143. DD, I am mindful of the EW counts, but currently trade the structure this market currently is following.  

    Which is pretty much following the 15 minute chart waves, while using the three minute chart to time actual entries and exits at the tops and bottoms.  What has proved extremely reliable is going long after a ten to twelve point move down, where the fifteen minute chart and the three minute chart have both bottomed out.

    I go short when we are one point above a new high and then I progressively double my position with every two points further up that we travel.

    In between the major turns, I am taking smaller trades depending on where the count and the 15 minute chart is at.  That's more of a feeling the market out kind of thing, but most of those trades revolve around the three minute chart indicators being taken in context with where we are at on the 15.

    I don't EVER go short when the fifteen minute chart has bottomed pr before we have traveled at least twelve full points up from the last time it has bottomed.  

    And once we have printed a new high, I won't go long either.

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  144. http://gbr.pepperdine.edu/2010/08/presidential-elections-and-stock-market-cycles/

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  145. LMAO! that's the spirit!

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  146. Ahh, zen mind, beginner .. ripe in wisdom

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  147. With the LTRO announcment not coming until Wednesday, I think we may not be following our 'normal'[pattern of a waterfall shakeout move right after we print another incremental new high.  

    Makes sense that any major move back down will come after Wednesday, similar to how the market reacted when the Greece deal was announced. The indexes ran up in anticipation of the Greece deal, then promptly tanked right after it was announced.  As planned and coordinated as anyone could ever ask for.  Even though we just printed a new high and will most likely see another one printed by mid-morning tomorrow, I'll be hesitant about going short until the LTRO news is announced.  Or until it's apparent that we don't have a market that wants to break out in anticipation of it.  Today was clearly a market that wants to milk this one for all it's worth.

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  148. The May time frame wasn't lost on me, either. 

    But seasonality doesn't work consistently.  If you bought in late 2007 and held through May 2008, you lost money.  Seasonality looks great in hindsight this year -- it's when you do it and it *doesn't work* that it doesn't look so good anymore.

    In other words, if you'd tried the seasonality strategy in 2007-2008, you'd be saying, "I'm never doing that again!"  :)

    And technical analysis has worked, in its most simplistic form:  following the trend.  As long as you haven't initiated LT short positions while the trend line has held, you haven't lost any money.  And if you went long each time the trendline was touched, you've made money. 

    The part that isn't working right now is primarily indicators and sentiment.  The market isn't cycling at all right now, so indicators are topping and being ignored -- and the fact that it's not cycling is making the wave structures hard to triangulate.  

    It's been a very strange market.  But if it tops in this 1371-1380 zone, at least with *some* type of top (i.e.- heading down in a fourth wave, etc.), it won't seem so strange anymore. 

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  149. April is the cruelest month, Breeding lilacs out of the dead land.

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  150. I don't know Katzo. When buyers can still flip on the pema-bid and produce a 14 1/2 point uninterrupted move to print yet another new high, walking dead isn't the phrase that comes to mind.

    It's not an accident either that the bots stopped at around fifteen points up from starting 1355 1/2 and just traced out three to four point range at the top of the run either.  Holding everything sold below 1,268 under water.  And printing successive incremental new highs to scare those shorts into bailing.  

    Beyond thirteen to fifteen points without at least a three point retrace from the top produces serious problems for the market's math and symmetry.  So it's not very often we see it.

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  151. Pretz, Thanks for detailed reply - much appreciated. Food for thought.

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  152. An inverse relationship has been in effect between the dollar and the euro. Also when the dollar has appreciated the markets have declined. Therefore, I post this chart (free week at EWI) in that the near term peak of Wave 2 suggests a meaningful decline in the euro.

    [Nearing
    a peak]Key
    Level: 1.3340? and 1.3212The
    thrust from a triangle not only warns a top is looming but also clears the air
    regarding the count.  First, the important part, the EURUSD advance is nearing
    an end, though without a decline in five waves it's premature to call the top in
    place at 1.3487.Thrusts
    from triangles are terminal and the surge late last week is a thrust from a
    triangle.  At 1.3531 the thrust from the triangle will equal the rally into the
    triangle from 1.2975.  The location of the triangle, in the center of the rally
    from 1.2975, suggests the rally from 1.2975 is a zigzag and that points to the
    rally from 1.2621 taking the form of a double zigzag.  At 1.3589 the two zigzags
    will be equal.   As
    EURUSD approached the 1.3531-89 area we'll be watching for evidence of a
    downturn, which would come with an impulsive decline at small
    degree.
     

     

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  153. PL,  Love your charts and web sites.  I pick up alot of good information.
    I typically do not throw out projections but I think your charts support my expectations so
    I thought I would share. what ever they are worth.
    I trade SPX using Gann vibratiions and astro cycles:
    I will go out on limb with a projection for the rest of the week.
    Tues morning will be bearish, look to retest Mondays lows.
    After 10am reports we will see another strong rally into the close testing and possibly breaking todays high.
    Wed will be a consolidation.
    Thurs employment # will generate rally to 1380-84.
    Thurs mid afternoon will start a sell off until Monday of next week.
    At a min we will test the break out 1365-1369. and possible the 1355 area.
    I think we will rally up to 1402-1404 area before we see a real significant break.
    1356, 1368, 1380, 1392 and 1404 are all important support/resistance Gann vibration cycle.

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  154. [Nearing a peak]
    Key Level: 1.3340? and 1.3212


    The thrust from a triangle not only warns a top is looming but also clears the air regarding the count.  First, the important part, the EURUSD advance is nearing an end, though without a decline in five waves it's premature to call the top in place at 1.3487.

    Thrusts from triangles are terminal and the surge late last week is a thrust from a triangle.  At 1.3531 the thrust from the triangle will equal the rally into the triangle from 1.2975.  The location of the triangle, in the center of the rally from 1.2975, suggests the rally from 1.2975 is a zigzag and that points to the rally from 1.2621 taking the form of a double zigzag.  At 1.3589 the two zigzags will be equal.   

    As EURUSD approached the 1.3531-89 area we'll be watching for evidence of a downturn, which would come with an impulsive decline at small degree.


    Jim Martens   
    SSteam@elliottwave.com -- Customer Support
    Currency Q&A Forum (Beta)  --  Analyst Questions

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  155. Free week at EW Int'l......with the inverse relationship between dollar and the euro and the markets often decling as the dollar appreciates, I thought this chart might hold some interest.   




    [Nearing a peak]
    Key Level: 1.3340? and 1.3212


    The thrust from a triangle not only warns a top is looming but also clears the air regarding the count.  First, the important part, the EURUSD advance is nearing an end, though without a decline in five waves it's premature to call the top in place at 1.3487.

    Thrusts from triangles are terminal and the surge late last week is a thrust from a triangle.  At 1.3531 the thrust from the triangle will equal the rally into the triangle from 1.2975.  The location of the triangle, in the center of the rally from 1.2975, suggests the rally from 1.2975 is a zigzag and that points to the rally from 1.2621 taking the form of a double zigzag.  At 1.3589 the two zigzags will be equal.   

    As EURUSD approached the 1.3531-89 area we'll be watching for evidence of a downturn, which would come with an impulsive decline at small degree.


    Jim Martens   
    SSteam@elliottwave.com -- Customer Support
    Currency Q&A Forum (Beta)  --  Analyst Questions

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  156.  You know according to Alexander Elder, Gann made like no money in the stock market. Elder tracked down his son and basically his entire estate consisted of the house they lived in.

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  157.  But walking dead market? That I totally buy.

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  158. Thanks for detailing. I don't think I can do the double per 2 pt procedure. Interesting method.

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  159.  A free week with Wrong-way Bob and the Legion of Doom is a bargain at twice the price.

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  160. Yeah Arnie, not a shabby ROI - I woulda probably cashed out at $12.50 and felt pretty good about it. Those moves from 03 to 05 and 09 to 12 have been pretty impressive to say the least. Never owned a single share in my life although I've been a Mac fan for 10 years - should have taken the ole advice about investing in products you use. When I was in college it was Microsoft making those type moves - now you making me feel old!

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  161. Interesting, I heard Gann died rich.  Maybe my source was mistaken.

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  162. Not sure why the sudden gap up in the ES.

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  163. Because of the jump in Nikkei and Hang Seng.

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  164. They must be handing out free money again...let's see if it's a pump'n'dump.

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  165. I'm incapable of following and understanding any and all of the economic and political events. I'm just focused on technicals now. Last time this happened, I looked closely at the price jump in Hang Seng and compared it to the jump in ES. I noted then that the HS jump was easily detectable because it was big and you could easily pick up where/when it left the base. At that point in time, the corresponding jump in ES was relatively minor. In other words, there was a wide time/price lag. I thought that if I were to write a robot to handle my overnight ES trades, I could/should include a safety handler to monitor the Asia markets. So if short, you can exit before much harm from detecting the Asian jump. Straightforward, right? :-)

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  166. Whatever happened there isn't impacting Europe yet so I am curious why here?
    I guess since nothing makes since anymore just quit trying to figure it out and when in doubt go with the trend.
    I would love for this to be the last thrust up and a nice reversal but I am not holding my breath.  Ben just put a new ink cartridge in the press and more worthless paper will soon be flying out.  Anyone else think Ben looks like the Caddyshack gopher?  No
    disrespect to the gopher!  At least he has a personality.

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  167. I'm not holding my breath on "this is the last little rally", not even on "we should now get a meaningful correction before the final rally".

    I'm just re-examining indicators in current market conditions. I just noticed that Williams %R is really good at positioning before up spikes if you require that it touches the 0.00 (absolute zero) level. Ditto the other way, too. I'm looking at the 30 minute chart of ES. :-)

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  168. Agree with you.  In fact, the market may keep going up until the FOMC meeting on 3/13.   Then, as the Fed announces no new QE (not yet anyway), the market can pull back then.

    The way it's been going, it's possible that we may see ES 1400 before seeing 1330!

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  169. I think the bears have finally given up hope of a pullback *ever* taking place.  Not saying it'll happen... but it fits with the wave 5 mentality.   FWIW

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  170. meaning was the pops have zero buying power, as you have stated.

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  171. EWaves say 1374.50 is next short entry. watchin'

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