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Wednesday, February 22, 2012

SPX and VIX Updates: VIX Likely to Be Forming a Bottom

Yesterday the market traded up a little farther into the target zone, and has now satisfied the minimum requirements for the fifth wave up we've been looking for since February 8.   I literally spent six straight hours charting 10 different indices trying to decipher whether the fifth wave was complete or not, and basically all I accomplished was to give myself an absolute monster headache.  I'll just have to take another look after Wednesday's session.

Before we cover the future, a quick look at the recent past.  Certain readers who don't pay much attention seem to think I've been looking for lower prices recently -- but since the 1307 level was back-tested at the end of January, I have been looking for higher prices virtually every day.  At one point, I did suspect that a top might be in at 1333, but I also expected price to retrace most of that decline from 1333 to 1307 -- my target retrace was 1328, so there were only a few points missed on the upside there. 

After 1333 was subsequently broken, I have remained in anticipation of higher prices -- and while there have been some adjustments to the extremely short term projections (not all of which were successful) the preferred count hasn't changed at all since February 8.

For example, here's the chart from February 9, which I'm sharing because it illustrates why Elliott Wave remains a key tool in my arsenal.  When a system allows you to clearly and accurately predict not only a reversal, but also the reversal off that reversal, it's a pretty good system.


It seems that some people may get confused by the indicators and warning signals I share, and neglect the upward projections as a result.  I try to deliver all the relevant information I come across after each session, and then do my best to draw some type of conclusion from it.  Hopefully, it's not too overwhelming for most readers.

Anyway, moving forward; here's the updated 10 minute chart for the S&P 500 (SPX).  As I stated earlier, I am uncertain if the fifth wave has now unfolded in its entirety or not.  I still feel that the SPX "should" break the 2011 highs, due to the Dow and Nasdaq having done so, but I'm certainly not smarter than the market.


I also want to share my current view of the bigger picture, lest readers become confused as to what type of top I'm looking for here.  At this stage, I'm only anticipating a correction in the 4-7% range, though that target could certainly change depending on the shape of the initial leg of any forthcoming decline.  There's still an outside chance it could turn into a much deeper decline, as illustrated by the alternate count. 

Of course, this is all assuming the market ever corrects again.  This rally has gone on for a long time, and few people still alive have ever seen a correction as deep as 5%.  Hopefully it doesn't incite mass panic and suicides.


The final chart I'd like to share is a system that's been very reliable at picking bottoms in the Volatility Index (VIX).  For new readers, this indicator compares the ratio of the VIX, which measures one-month volatility, to the VXV, which measures three-month volatility.  When the ratio becomes too low, the VIX is usually due to bounce.  Sometimes it's only a small bounce, sometimes it's a big bounce -- the indicator can't predict magnitude.  But it's 11 for 12 at predicting bounces.

I'm not sure what the correlation may be, if any, to the last time this indicator gave three signals close together like this, but I've highlighted the last occurrence on the chart anyway.  VIX is shown in the bottom panel.


In conclusion, the SPX has reached the wave 5 target zone, and if the market is ever to have another correction in our lifetimes, then this zone would be a really good place to start.  The VIX indicator may lend some credence to that view.  I feel like a broken record with the trend line warnings, but the song remains the same in that regard: until the up-sloping trend lines are broken, there's still no reason for bears to get overly excited.  Trade safe.

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

180 comments:

  1. Good Morning PL! Glad to see you back safe and sound.
    $-)

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  2. HaHa - panic and suicides - the last 1 down day created headlines everywhere and had CNBC asking if that was capitulation !!!  4-7% you may well see suicides and Central bank panic

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  3. Okay, I have to step away from the computer for a bit, before my head explodes.  8 hours without a single break is too long.  :/

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  4. if the market is ever to have another correction in our lifetimes .....  lol. A top indicator if ever I saw one.

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  5. Pretzel,

    You might want to take a look at the SKEW as opposed to the VIX for a measure of "Fear" in the market.

    As you well know, the VIX merely looks at the front-month implied volatility of "at-the-money" options.
    Meanwhile, the SKEW demonstrates the difference between the "at-the-money" AND "out-of-the-money" options.
    Another way to look at this is that the SKEW better represents the real market value of the Bernanke Put.

    One more index that provides a lot more value than the VIX is the Credit Suisse Fear Barometer.
    It measures investor sentiment for 3-month investment horizons by pricing a zero-cost collar.  The collar is implimented by the selling of a 10% out-of-the-money SPX Call Option and using the proceeeds to buy an out-of-the-money Put. The higher the level, the higher the fear.

    Just some food for thought...
    :)

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  6. morning pretz. good work!

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  7. AAPL looks to be opening down 2-3 points.  I still think that a solid break of 515 on the upside hurts the near-term bearish case quite a bit.

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  8. ES

    http://www.screencast.com/users/katzo7/folders/Jing/media/4db77a86-d066-4a77-8a03-7e827f8d6f39

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  9.  EURUSD looks like it wants to break \/ (don't want to jinx it)

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  10. SSSShhhhhhhhhh! Bernanke is watching...

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  11. The Slog reports that Fitch rating agency has downgraded Greek bonds and intends to declare Default when the main bond swap occurs, scheduled for March 10.

    http://hat4uk.wordpress.com/

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  12. shhhh is right... I was hesitant to say anything...that's why I used a \/....why am I actually whispering  :)

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  13. I am with you. I always jinx whatever I said too...

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  14. that is one big V, where did you get such a big v?

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  15. He's always watching - always. He's trying to pump up the USD this week to keep rates lower this week ahead of note auction. He sent out one Hawk yesterday with Kocher..... and today he busts out the big guns Hoenig and Plosser at 12:30 and 1:30 respectively, then Bullard tomorrow. After auctions are over, then he'll turn loose the Doves with Yellen on Friday expounding the wonders of more QE. There is always a method to the madness with that lunatic - very very slick!

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  16.  that's what he and/or she said.....(sorry...that was too easy lol)   \ + / = \/

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  17. Does anyone know if that will trigger the CDS default actions?

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  18.  More snake oil keepin the wobbly wheels greased.

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  19.  uh correction.... /\

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  20. what is happening is that the stochs/W%R are set to the bottom on recent down movement, they have to be reset to the top to add some punch power to break through the 57 level. so imo it is in an oscillating mode in this range of 57 to 61, it could even go a bit higher, slowly resetting these indicators back to the top, this is gunna take some time, maybe even all day. there is a breakdown coming but timing it is difficult. tons of ABCs being thrown off

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  21. LOL I was about to tell you that...

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  22. dollar up market down , right KB?

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  23. I know...F me...once again...I think I'll keep my mouth shut...I don't want to end up being WWWCI-2 :)

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  24. Alert for bond watchers ....

    Portugal's 2/10 yield curve inverted. That was what happened to Greece prior to the current crisis.  Watch out. :)

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  25. Can you put too much grease? If the wobbly wheels fall off, maybe it'll just keep sliding awhile!

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  26. Thanks Katzo...I finally get that the time factor has a big influence on how you conduct TA, and one day is not the same as the next...I know it sounds ridiculously basic. But apparently, I've been missing it.

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  27. time and price, now the price is 56-57, it keps on punching at that level, cannot break it.  WAIT, just BROKE

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  28. Only if you get to the top of the hill first.

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  29. i count 8 or 9 attempts of trying to break to 61 level from the close

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  30. this early break of 57 prolly means ROD will be down with close lower than where we are now

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  31. remember the 80 to 120 to 140 rule

    break of 80 and we go to 120, then retrace to 70 to 90, then back to 120, break of 120 and to 140

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  32. They are next.  No doubt about it.  They are where Greece was in about July 2011.

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  33. So now the rest of the PIIGS are getting closer to the butcher.

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  34. That's EOD, right?  Unless you mean "Rollover Day"

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  35.  Thanks Katzo.  Nice call on ES 54!  I had a nice overnight short a 63, but I wimped out and covered early at 58.50, fearing that a double-bottom might hold.  I guess in the larger sense, fearing the bullish moves has worked well recently! 

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  36. Divergence currently in this fifth wave down, covering 2/3 position. Setting up for wave 2.

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  37. ROD = rest of day

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  38. I did not know there was a rule...Thanks :)

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  39. works same to upside too

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  40. Looks like the RUT is having some trouble breaking the down TL from earlier last year.  Also looks to be breaking below the uptrend from late Nov.

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  41. dude, you are crazy! i'd be brain dead by then. good work. Not trying to suggest much, but COMPQ, NDX (aka TECH) are not leading the markets anymore. DJT has been lagging for 2 weeks now.

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  42. Wow!  Apparently Fitch recognizes the bond swap for what it really is.  I've suddenly grown to love Fitch as though it was my own son, lol

    Oh yeah... they're my favorite ratings agency today.

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  43. Retest of 56-57 neckline?

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  44. dude, you are crazy! i'd be brain dead by then. good work. Not trying to suggest much, but COMPQ, NDX (aka TECH) are not leading the markets anymore. DJT has been lagging for 2 weeks now.

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  45. AAPL holding steady at 512

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  46. Me too.  When my younger brother was with us, he used to claim that he was the "king of the crow-eaters".  We actually found that if we shot our mouths off with any kind of prediction or a premature statement such as "Oh yeah, I've got that sale in the books.", it would almost never pan out.  We discovered that if we just kept our mouths shut we would be successful.  That revelation for me these days is bible.  I swear, if I make a bold statement I'll end up looking like an idiot more often than I'm comfortable with.  That's why when I'm probed for "what trades do you have on", which is what I constantly get from one particular troll, I just will not reveal it.

    "Jinx" is the perfect word Curious.

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  47. Good eye man, I walked right past that one and missed it.

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  48. ()xxxxxxxx[]:::::::::::::::::::::::::::::::::::::::>

    Troll slaying device.

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  49.  Katzo mentioned 780ish potential on the downside...makes sense to me...it's been struggling for sure.

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  50. Isn't that an awfully long time for the stochs to be up there and running sideways? 

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  51. "Only retail noobs and CNBC talk about the VIX, which merely measures
    implied vol of at the money options. Its literally worthless. Far
    better to look at the SKEW, which measures the difference in implied vol
    between at the money and out of the money options.

    The VIX holds very little predictive value."  [Mike Wagner aka. TradeToWin].

    Isn't this what you really meant to say Mike?  It appears you have the capacity to make a non-vitriolic statement.  If you do that more often you'd be a lot better off.  Congratulations.

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  52. Short XOM $86.81, target $80, cover $87.95

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  53. that is called embedded stochs, stochs do not work well for rises like that, they work best in oscillating mrkts where they define the tops and bottoms. well actually the do work if you interpret them as a sign of strength by being embedded.

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  54. Not if POMO money is propping it...just a theory.

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  55.  Whole sale gasoline is now at 3.50+. It is still marching steadily towards that economy wrecking point of 4.00. That is the line in the sand for S&P500. :)

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  56. I agree with you on the source of funds, but it's just weird to see so many technicals stretched and warped beyond their historical norms. It's my personal feeling that Ben has some bullet brain friends who have figured out how to do that stretching and warping, so that it fulfills his Fed plan and makes his cooperating friends lots of money. Bots who know how to game the EWT and Fib charting, and have enough cash to do it.

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  57. Divergence again...S&P in fifth of fifth?

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  58. PL, if some readers truly interpret your position as having been bearish in the short or even in the medium term for the past few weeks, thay are confused as you suggest...you left no ambiguity in your posts, in my opinio! 

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  59. The entire decline in ES futures since the Greek deal announcement is looking more and more like a bull flag.  It appears to orderly and shallow in descent to turn into a selling rout.  VIX is also not behaving "properly". This is my opinion and not trading advice. 

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  60. overlap of wave 1 within fifth wave down.

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  61. By "bull flag", do you mean that which looks like an backward wedge?

    TVIX is losing ground on the slightest uptick, and not doing much to reflect the 12 point decline in this "flag".

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  62. watching paint dry.

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  63. It is just a very shallow decline in ES for 3 straight days with little to no acceleration.  It looks corrective - implying that it is just burning off overbought conditions before making another push higher (another test of or through the 2011 high?) into the LTRO date on February 29th.  That is what it looks like to me.

    The action in VIX, VXX, and TVIX is exactly what would be expected in a flag.  If it were the start of a more serious decline, these 3 should be at least holding their ground.

    I could be completely wrong here, and the decline could accelerate over the coming days.  Also, any sudden negative news would change the picture completely.

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  64. Katzo, many thanks for your chart posted earlier!  I put in a limit order to sell at 1359.50 which got hit and half an hour later got filled on the cover at 1355.50

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  65. This does not look like a bull flag. There was gap fill. The current upward move in price is more like a EW4 up (seen on esignal 120 minute chart) than a EW5 up (seen on the esignal 60 minute chart). The latter has esignal indicators that suggest that this proposed EW5 is not going to happen. So I still think that the IT (days?) trend is still down and we may still break ES 1355 on the downside. There might be a TVIX blip at that point. Would be sensible to take profit then.

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  66. AAPL "plummeting"; not looking healthy 

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  67. GLD up to 172+, rising
    AAPL holding steadya break of ES 55 soon & we will see waves of selling

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  68. tgt ES 52

    this drop will set up for weakness tomorrow

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  69. just a pull back in AAPL.......499 would be plummeting

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  70. If ES trades below 1353 and closes in the red, will be outside reversal day...

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  71. i absolutely agree! that's why I wrote plummeting in between " ". it's just an intra-day scribble, which surprised me as I thought the long-steady way was up.

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  72. Thanks for the preview.

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  73. Looking to go 100% short again at 1362.89

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  74. ... it would be a 2 day reversal.  An outside reversal day would require that today's high be higher than yesterday's and that we close below yesterday's low.

    Anything is possible... : )  ... there is still time.

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  75. Just bought a couple hundred shares of SPXU at $10.24 with a stop at $10.02... because f*** it, that's why. For $50 bucks, it's worth it for the entertainment value alone.

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    1. Does everyone here trade this small???

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  76. ES is in a downward channel here, question is, is this is a bull flag?

    http://dl.dropbox.com/u/59021800/2012-02-22-TOS_CHARTS.png

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  77. That's also how I see it, but it could just keep on going...

    Only time will tell.

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  78. I have no conviction here.  Only time will tell.

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  79. 3:30 to 4 pm, anything can happen, very hard to call

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    1. u say down and then u say maybe up and then u say either up or down. wtf....

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  80. I'm confused. That looks to be an AUD/USD chart, not ES...

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  81. Good point, CalD!  I just noticed that, but it is tracking the market incredibly well.

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  82. LOL... I see.

    I like you're style CalD :-)

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  83. "Submerged" twin pipes have printed on the ES 60 minute chart. So now, it looks like ES is clamped at 1356. But the IT trend is down, so would not be surprised to see 1356 broken. That would be interesting, because that would build/confirm an EW5 down as viewed on the 120 minute chart. Target would be approx 1345 maybe tomorrow or Friday.

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  84. Just got a confirmation that my spanky new futures trading account is open, funded and ready for action. Yikes.

    I think I'll practice a little more before I try shooting real bullets. I'm actually up $1995 in pretend money for the past week, but still making a lot of rookie errors.

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  85. It is definitely frustrating to be the ultimate contrarian. Whenever, I say something should be in range, I dip a toe to go long, then it breaks down, dip a toe to go short, it breaks out...this happened too many times to count. When I keep my mouth shut, things seem to go a little my way, but did I learn to just keep my mouth shut? Oh no, always eager to share my "observation" with others...old dog can never learn new tricks...

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  86. what is WWWCI-2?

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  87. Nice....$17 back in Dec. You long term or short term?

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  88. Only if ya have the time...could you gmail  a couple of your rookie errors and how to avoid them. Gotta fund my account yet, but its coming soon.

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  89. That would be a key reversal day.  Just a plain outside reversal day only requires the days high and low exceed the prior day's high and low.

    A charting trend in which a stock price's high and low for the day exceed those of the preceding day.Read more: http://www.investopedia.com/terms/o/outsidereversal.asp#axzz1n9FCbzkL 

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  90. There's quite a bit of interest in that particular currency cross but I find that the Aussie/Yen is still the more accurate of the two.  Both are good though.  In either case the Aussie is the key.  I've got a whole raft of charts related to the currencies with the goal of identifying signals from them that indicate when a real distaste for risk is developing.  They're all collected on one ongoing post if you're interested in following that one.  More charts will be added as I find the time and I update all of 'em as necessary :-)

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  91. TRAN down .74%, RUT down .82%, SPX down only .33%. TRAN slowly leads mrkt down. H&S finalizing the 3P&DH may be finalized, a back test of the neckline then a good drop today.

    http://www.screencast.com/users/katzo7/folders/Jing/media/3a3e5736-352b-456f-9f1e-5e6251241b0d

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  92.  Wrong Way Wanda Contrarian Indicator

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  93. I really think we should pull our contrarian judgements together for the ultimate in non-technical, bias-based, fully 3x leveraged anti-contrarian trades. We'd make incredible sums. After all, 3 lefts make a right.

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  94. It's "inside an enigma" not "enema" silly - great stuff from LA today:

    http://wallstreetexaminer.com/2012/02/22/wtf-did-all-that-printed-money-go/ 

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  95. Hint!!!!!
    STrategize in advance.  Don't make a rash decision to buy/sell and enter.  Rushiung during entry is a major source of errors for me.  I try to make a plan going into my trade then execute it.  Good luck!

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  96. Best of luck Cal - "Aim small, miss small" 

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  97. LA has a way with words...worth the price of admission.

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  98. "Nice birdie"...that's what my 4-year old just commented.

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  99. Great chart and choice of market factors and technical indicators to correlate Katzo.   Does your software actually plot Elliott  Waves?

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  100. Maybe inside an enigma  in need of an enema

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  101. He can afford to be casual, he carries a big ole light saber.

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  102. yeah nice work. DJT has been lagging for the last 2 weeks and now TECH is also not leading the pack anymore. I don't think there's much upside left for now, if any. unless there are some really nasty surprises in store...???? Given that there's harldy a sole left on this blog it must be that the market is topping ;-)

    PL's work has been outstanding this whole 2 months and I am sure he'll nail the coming correction for the next 1-2 weeks on the head too!

    Btw, if not traded a single trade since the market reached 1350. I prefer to let wave (iv) and (v) go (too unpredictable). Note that IMHO we've "only" finished iii of c, iv of c is to come as well as v of c, which is what PL has on his charts too :-)

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  103. made 2 200 share alloc. to TVIX late today....400 held now at avg of 17.06..........hope this ride is as good as my previous 3!!

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  104. "remember what i taught you boys how to shoot?""

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  105. yes but it is not always right, need a critical eye.

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  106. LOL...yes he does...LOL

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  107. ty Fred, I thought so too.  But I just went to Minyanville and had to address 3 people who were confused.  Am I that confusing, lol?

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  108. nice plays. i was away from market all day. missed morning bounce.. lots of articles being written how this thing is going to zero. pros only etc. unless the creators 'Credit Suisse' have a master plan to 'win', ..  They reached the bank limit of the ETN. Has anyone done anymore research on TVIX. ?  the guys that wrote the articles are short TVIX so they are somewhat biased, ya think? 
    http://blogs.barrons.com/focusonfunds/2012/02/22/credit-suisse-curbs-hot-volatility-product/?mod=yahoobarrons

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  109. VIX options premiums declining..  i think the contango is lowering and may help front month VIX plays and maybe TVIX.  things are getting interesting again..
    http://www.youtube.com/watch?v=JxKC489BhQc&feature=plcp&context=C320ea0cUDOEgsToPDskJ5N41U4D0i_zo85AWy0h1a

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  110. this sucker is goin up and up. shorting is for chumps. Realize that NOW. or u will spend the bull market being bitter.

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  111. Hmmm. Well it would be a much shorter list if you asked me about things that I seem to consistently do well... a very short list indeed. In general, I've tried to come up with the simplest system that I'm comfortable with -- to me the ideal would be just price and volume but for the moment at least, I need training wheels -- and there's still a lot to remember amid a whole whack of distractions. But in terms of major recurring bloopers...

    My entry and exit timing needs a lot of work in general. I keep finding myself jumping the gun on entry or worse, waiting too long and jumping into the center of a channel when I should have taken a pass and waited for the next bounce. Part of the reason is that I'm finding you need to use different timeframes for both your main and birds-eye display at different times of day -- like maybe 10 minutes on the big chart and 60 on the overview in the evening, then tighten up to 5 or 10 and 30 during from the time Europe wakes up till the US markets open, then 3 and 30  or 3 and 15 for RTH. I keep screwing that up and getting whipsawed because my oscillators are out of step. And I'm repeatedly guilty of getting hypmotized by the DOM and the rightmost bar on the main price chart and forgetting to watch the trend and the wave count on the 30 (or 60) minute chart and be looking for common reversal patterns on both charts...

    Then there's just plain stupid stuff that I'm almost too embarrassed to mention, like pushing the wrong damn button. I've grown accustomed to using inverse ETFs to try and short the market so I still think of selling in terms of buying and that can be a quick 50 down the dumper in a fast break. I've also gotten into positions by accident by tripping over the trade-from-chart and trade-from-DOM functions in the platform I'm learning, or by forgetting to clear a leftover stop or limit order after exiting a trade.

    Last night I had two shorts working when I called it quits for the night. I set up an OCO stop and limit order but forgot to set the quantity to 2. Bad, bad, bad CalD! It actually worked out because the market barely tagged my stop level before reversing and I awoke this AM to find it right where my limit would have covered, with one contract still open. But obviously the thought of pulling a stunt like that with real money stood my hair on end. I seem to be moving slowly in the right direction but definitely still feeling like I some shaking out left to do.

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  112. I have made all those mistakes and more than once on some.
    Timing is EVERYTHING!  Entry and exits are the key to success.
    Katz and PL can probably help on these.  Sometimes a good "gut" feel is best, mine sucks.

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  113. Theoretically they can go to $0.00001. I think what the authors are saying is that most people don't understand the effect of volatility on any leveraged ETF. I've burnt myself in the past purely out of poor judgement. I've also done well with them. You have to on the right side of the trend (a strong trend) for the hold period. Like anything else you have to stick to the plan. Credit Suisse is just covering their bases so they don't get jammed up. Banks aren't allowed to have losses...only traders and their clients are.

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  114. Long ES at 1354.25, looking for a small counter-trend play back to 58-60.  Fairly tight stop.

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  115.  Strategery...

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

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  116. Nice short-term levels to watch tomorrow.  Should be an easy day to trade the levels, as long as one uses stops and watches out for whipsaws.

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  117. i agree completely.  It takes some pure raw risk with good timing to capture some nice wins on this one.  all my plans for the VIX and volatility related shares to bounce since late December have been void. (i do like the VIX charts though)   The  Europe debt, (so far, )  a dudd, North Korea so far is mellow with taunting South Korea, US debt ceiling past,  SPX still alive, no earthquakes.  Iran seems to be the last straw with  maybe an economic downturn in Japan/china to be a catalyst.. Did i miss a few?? :)                         History proves that whatever kicks the VIX up, may not be telegraphed until we see it live..     We wont be at 18 on $VIX for ever..  will we??  lol

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  118.  Thank you both for sharing your thoughts and tragedies...I'm pretty certain there is a lot of successes in there too. It is GREATLY appreciated. It sounds like the platform can be as challenging as the trading at first, but I guess it's like anything else...learning how to use the tools for the most efficiency.  My gut has gotten larger since I've been trading so it must be getting stronger (and hopefully a little smarter.) Thanks All.

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  119. ...watch our for whipsaws"?  Why whipsaw is my middle name....oh wait, actually it's my only name :)  kinda like madonna or sting!!  :-)

    On a serious note, Pretz you were wondering earlier in the day if I was the one that had a theory about traders and delayed gratification.  It wasn't me, I hate to take credit when it's not due.  I can't remember who it was but it was someone else.

    BTW: I just placed a big order on Amazon thru your "powered-by-Amazon" link.  Hope you get a big fat check soon.  ;-)

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  120. Pretz,
    Tonight when I went to your main site, it showed one number (140) for the comments on this post. Clicking on the Comments got me to a new advertisement for allowing the advertiser to send an email to a "friend" if I provided the email address and name. It also printed your article without the charts. I next went back to the original pretzelcharts.blogspot.com and saw this same post listed with 137 Comments. After clicking on Comments (again) I got here, with no come ons. 
    Was that first page legit with the names and email address request? 

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  121. Another thing I keep forgetting is to take profits while the taking is good. Also, be aware of when foreign markets open when trading at night and when domestic economic news is scheduled to drop in the AM. Watch what happens to ES when the employment numbers release at 8:30 tomorrow and be ready to trade the reaction in both directions, even if you're just pretending.

    I've really been having a lot of fun with it and somehow winning more than I lose. Don't get me wrong. The demo account came with a 50k in play money account and after a week of blundering around I'm sitting right at $52k. I'm just under no illusions that I'm really ready for prime time. Baby steps.

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  122. Thanks for posting this, CalD. I am in the process of funding my first futures account, and I appreciate all the lessons learned and shared by others in the process. 

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  123. Hi PL,
     
    I marked wave (iii), (iv) and (v) with orange color on your third SPX chart, see attached chart.  Do you think this wave count possible?

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  124. You are correct about that being a key reversal day, and thanks for posting the link above.

    My main point about having an outside reversal day (whether a normal outside reversal day or a key reversal day) was that we needed to have made a higher high than yesterday's high, and we did not. 

    Let's see what tomorrow brings...

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  125. Bots who know how to game the EWT and Fib charting, and have enough cash to do it...  Great comment, as that is definitely what we are dealing with right now.

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  126. Doug Kass: Next S&P Move Likely 4-5% Lower.  He's putting his money where his mouth is too, now holding his largest net short position of the year.

    http://www.cnbc.com/id/46481644

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  127. Thanks for the link, TW!

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  128. I don't think we'll stay in this range too much longer...there are too many monkeys running around with wrenches at this point. I bought into TVIX only because it's in an area where I can afford to hold it and really not worry too much about it. The risk/reward is pretty favorable due to the aforementioned wrench wielding primates. But as always, that could change...whirled peas could overcome us all, and Ahmadinejad will partake in a drum circle with Obama, Bernanke, Mittens, and the latest incarnation of the Great Leader of the DPRK..............hmmm............nah :)

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  129. Question....Do any of us get any sleep, or are we all that depraved and deprived...LOL

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  130. Hey JBG, I kinda agree with you on the risk/reward but say you got TVIX at 17.00. It can easily drop to 14.00. Then what? It doesn't seem to be a contract that you can bail out of.

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  131. Sleep is a luxury for the rich. So yes, depraved, deprived, and poor. Lol

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  132. This is just too much fun...It is currently 3 minutes til midnight, the wife is snoozing, the baby is snoozing, and I've got to be up at the European open (like ya said) to see what's happening in the world.....We're all cursed LOL

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  133. We're neurotic gamblers.

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  134. I find I tend to be early a lot more often than late. Off the top of my head, I'd guess I could up my average return a good 10% if I just learn to trust my instruments and try keeping my pecker in my pants about 5 minutes longer per entry.

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  135.  Sage advice. Baby steps.

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  136. It depends on the time frame you anticipate holding. I limited myself to only 300 shares because of that possibility. TVIX really is a daytrade, but I got in at 17.60 knowing that it is entirely possible to visit 14 briefly, but it would likely be briefly and I don't mind taking that risk. I actually have a pretty high tolerance for risk depending on the allocation. But that's just today.

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  137. which levels?  I got the shirt whipsawed out of me today.

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  138. Ray, of course i am not PL, and I wouldn't even dare stand in his (EWT) shadow, but i'd say that's correct though the (iii) and (iv) you labeled are smaller waves within the entire iii wave IMHO. For example, one can clearly see wave (i) topped at 1270, then (ii) bottomed at 1250. From 1250 to 1335 was indeed (iii), then (iv) back to 1300 and now we've witnessed wave (iv) in recent days. (yes I am of the opinion that the iii peak is in and we're heading south to low 1300s for a healthy correction so the upward move can continue from there till say 1450+.) 

    anyway, within wave (iv) one can clearly see 5 smaller waves (i am gonna label them a, b, c, d, e) to make it less confusing:
    a went from 1300 to 1330, b from 1330 to 1320, c from 1320 to 1355, d from 1355 to somewhere mid 1340 (it's that mess of up-down-up-down days from last week, which if I understand PL correctly is often how a 4th wave is: sideways and sloppy correction) and now thus the final act, wave e to 1367. Note that in this 4th wave "e" is a clear a-b-c structure, as is in the wave (iv) you labeled.

    That said, IMHO this wasn't entire wave C yet. we may have just finished iii, are going into (iv) and then comes (v) to higher highs. As shown on PL's graph. Why do I think that C is not finished yet? More ECB LTRO is around the corner, just in time to make wave (v). This entire wave (iii) was LTRO and FED money, so it's not hard to imagine what the next round of printed euro's will do to our markets. However, this 2nd installment is -if i recall correctly- not as large as the 1st.

    I hope this helps, and PL forgive me for "pissing in your territory" ;-) Hopefully I got the counts right!?

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  139. The first page w/ names and emails I know nothing about.  I've had this link hijacked a couple times -- maybe that's what happened.

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  140. It's entirely possible, but I think it would take a black swan event to make it reality.

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  141. I'll cover them in detail in tomorrow's update.

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  142. antonym: pretzellogic

    lol

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  143. Thanks for the tip.  Followed your lead and made a quick profit.  looking to go short soon.

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  144. You're welcome.  :)

    Just sold at 57.  Trade was a little slow, but no drawdown trades are always the best ones.  :)

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  145. Good morning PL,
    there was a thoughtful post yesterday which suggested that it wasn't necessarily the case that a top was in, which got me thinking.
    If I assume he's right (and right now the European markets are almost back to yesterday's highs) then this last wave could be re-worked to show an SPX top at 1372 - 1380 (depending where you place the 50% line) and an INDU top 13,057 - 13,085.
    I'm willing to be torn to pieces for a nonsense chart but hey, it looks good. :)
    Kind regards,
    UKDNY

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  146. Yeah, this count is quite plausible, though I have it labeled slightly differently.  It's one that's going in the update I'm working on.

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  147. ES/60

    Mrkt loves testing the 59-61 area. That provided the best short entry.

    http://www.screencast.com/users/katzo7/folders/Jing/media/c2ab4e4b-9c5f-49e7-b249-228020af05ba

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  148. Update's posted, so let's continue da discussion over there. 

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  149. katzo7, do you typically leave limit orders open overnight to try and catch entries like the one today around 4:00 AM in ES?

    Or do you rather place trades only as you see them developing (i.e.- no trades or orders if you are unable to keep an eye on it)?

    Under what conditions is it a good idea to leave some orders out there when you step away? 

    Thanks in advance.

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  150. i never put on an ES trade unattended, too much can go wrong, i do real time trading and conditions may affect my decisions.

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