Amazon

Tuesday, March 27, 2012

SPX, RUT, Silver Updates: The Ongoing Power of the Bernanke Put

On Monday, Bernanke emerged from his lair and jawboned QE3 into virtual existance, again sending the market skyrocketing.  Before I go much further, I want to put up a chart I stole from Zero Hedge, who stole it from Strategas Research.  I don't know if they stole it from someone else.


 
As we can see, the government has managed to forestall systemic collapse with massive amounts of debt and spending.  If this doesn't drive home the point about what sad fundamental shape things are in, then I don't know what will.  Uncle Sam and Uncle Ben (not to mention Uncle ECB) are spending and printing like there's no tomorrow, and the SPX is still below its '07 high, and the economy still sucks.  What does that tell us?

It tells us that, effectively, all the government has accomplished with several years of record spending is to keep the market and economy treading water.  It's akin to being on a sinking ship where the captain is throwing everything of value overboard in an attempt to make the boat lighter and slow the sinking.  The question is whether equilibrium can be reached in time.  Can enough stuff be thrown overboard to keep the ship afloat long enough to make it back to port and live happily ever after?  Or is the ship doomed anyway?

And at what point do we have to start tossing the passengers?

In any case: clearly, we still haven't reached equilibrium, or they wouldn't be talking about QE3 at all. 

Everyone with two-thirds of a brain realizes that the QE program does little except promote inflation.  Oil is already over $100 a barrel, and the market is rallying like crazy anyway -- so why jawbone more QE at this point?

Well, if you're in the mood for a Tin Foil Hat theory, here comes mine.

Retail investors left this market in droves after the '08 crash, and many of them still haven't returned.  Usually they return after a big rally like we've had -- which prolongs the rally while the pros sell off all their inventory to the retailers.  This goes on until the retailers are all chock full of stock and there's no one left to buy any more, except an estimated 26 pimple-faced Burger King employees who just entered the workforce... so the market goes back into bear mode.  Late in that cycle, the pros can buy back their inventory again near bear market lows to sell to the retailers again... and thus the great circle of life is complete. 

But the retailers haven't come back in this case.  I believe some of this is due to the demographics factor -- Baby Boomers are in the retirement phase, and, quite prudently, many are unwilling to take on the same level of portfolio risk they did when they were younger.

How do you complete the cycle without the retail investors? 

Obviously, somebody's buying this market; that's the only way it can keep rising.  That "somebody" has been the Fed's printing press, using the pros as its surrogate.  And more recently, it has been the ECB's printing press.  Ultimately, the pros need the retail investors to come back, to allow them to sell all this inventory they've been accumulating. So how to get the retailers back into the market?

Enter Bernanke.  Jawbone the market higher, make stocks irresistable, make all other investments unattractive, get the retailers back in the game, then pass the bag to them -- and everyone's in the clear.  Except the retailers, of course -- but Bernanke doesn't really care about them.  What have retail investors ever done for Bernanke?  Nothing!  That's what.  And to make things worse, when Bernanke was in elementary school, the other kids (young future retail investors) used to make fun of his beard.  So there's probably a bit of resentment still brewing there.

Anyway, I don't know if that's the plan, or if I simply ate one too many paint chips in grade school while daydreaming of new nicknames for young Master Bernanke's beard -- but sometimes one can't help but look at this stuff with a cynical eye toward the sinister.

Not to say this potential wasn't shown in the charts ahead of time -- clearly it was.  And speaking of, let me step down off my soapbox and on to the charts.  Well, I'm not literally going to step on the charts... nevermind.

At this point, I think 1435-1440 is all but guaranteed.  I don't see much in the market's way until that level -- but there is an interesting confluence of theoretical resistance clustered in that zone, as shown below. 

If the market can break through there, then there really isn't much else to stop it until the 1500's.


There are some indications in the wave structure that the 1500's could be on their way.  If this wave takes a traditional five wave impulsive form and breaks through the resistance mentioned above, then the targets range from the high 1400's to the 1500's (see below).


The chart above references a "false wedge" and mentions 1995.  Below is a chart of (a portion) of the massive wedge that formed from the 1987 crash until 1995.  This wedge was discussed in Prechter's 1995 doom-and-gloom book At the Crest of the Tidal Wave: A Forecast for the Great Bear Market

We all know what happened to the market from 1995 to 2000, and it wasn't doom and gloom.  It was all flowers and fluffy bunnies.


Not to bash Prechter, he's a smart guy, and as I've said before, I "owe" him for introducting me to Elliott Wave.  And you can't blame him for missing a call -- heck, I've missed calls too; everyone has.  But you have to adapt to the market. 

It's one thing to miss a call -- it's entirely another to miss a decade

Prechter's been looking for the world to end for as long as I can remember -- and finally, after 13 years of looking for it, he finally got close in 2008... but even then, the market never retraced into the price zone where he originally turned bearish, back in 1995.

The point is: don't get married to your convictions.  Nobody's smarter than the market, so let the price action dictate. 

"Demanding" stocks go down because the world is a mess (or because it's all Funny Fed Monopoly Money) is akin to demanding Sears sell you a washing machine for $29 because you don't think it's "worth" $299.  And maybe it isn't -- but that doesn't matter.  Everything is "worth" what the next guy will pay for it. 

If prices have to drop because not enough people are willing to pay current prices, then there will be warnings -- it won't happen overnight.  If the "Great Bear" shows up in either stocks or washing machines, the market isn't going to drop to zero in 3 days.  There will be signs as prices start to fall.

Returning to the charts, it now appears that the bears only short-term hope for a stop near 1440 would be if this wave takes the form of an ending diagonal or similar.  Given the current price structure, there's no way to know today if that will happen or not -- the only thing that's caused me to consider this possibility is the confluence of potential resistance in that 1435-1440 zone.  The wave structure should give indications down the line, if it's going to unfold like this.


Looking at the total market picture, it does appear that the market has now successfully backtested the recent key breakout levels, which means "no long-term bearishness" unless and until those zones fail.  (Right click the chart, select "Open in New Window" for the full-size chart.)


RUT is also very suggestive of higher prices.  The RUT has closed back above its bullish trade trigger.  As long as the market maintains closes above the breakout levels in the charts above, and the trade trigger shown below, there is nothing to be bearish about in these charts.


Next we have silver, which I discussed yesterday, and which is also suggestive of higher prices.  I have provided some preliminary targets for the preferred count, and I'll try to narrow these down as the move matures.


Next, just a simple chart of the SPX showing the trendchannel and the closest support zones.


And finally, an edumacashunal chart.  I didn't publish this chart in the weekend article, because after I looked at some other markets, I felt too much doubt had been cast on my original read of it.  But we discussed some of the potentials of this chart over the weekend, so I wanted to update it now that the move has clarified. 

It does show how tricky market prediction can be at times.  Even now, after the move clarified, it's still hard to figure out exactly what happened within the red circle.  It also reveals that Friday's structure, which looked like an ending diagonal was, in fact, a leading diagonal.


In conclusion, Monday's rally could count as a completed small 5-wave structure, so there may or may not be a small consolidation/correction due over the very short term -- but it's currently expected that this correction will only be part of a larger impulsive rally.

Since early February, while I've been largely expecting higher prices, I have also been quite skeptical of this rally.  I suppose, because of everything going on around it, I still am.  As of this moment, though, as long as the bulls can maintain the recent key breakouts shown on the big picture charts above, there is little in the charts to be bearish about.  Of course, all that could always change tomorrow -- but until it does, there's no reason to assume it will.  Trade safe.

277 comments:

  1. Man, you guys work me like a dog.  :)

    Good morning, btw!

    ReplyDelete
  2. Nice post J.  The 1440's was also the area my manager had been targeting for a reversal.  Regarding the FED.  I agree with everything you've said - their hope was they could keep things afloat long enough for the private economy and demand to heal and return which hasn't happened.  What growth that exists is manufactured like the rally.  You could hear some of his frustration about the lack of demand yesterday.  His real problem is, of course, there is only so much you can do with rate manipulation - you can't make people buy and quite frankly, he has proceeded to make the vast majority of people poorer by giving them no return on their money and higher inflation - the demand he sought to help he is helping to cut off

    ReplyDelete
  3. Yep, good points.  Good to see you, btw.  :)

    ReplyDelete
  4. Wow what a new picture. Thx PL. And thx for the SLV update too.
    How will fit the EUR/US into the overall game of that EUR more bullish, especially when Greece will leave the EURzone?

    ReplyDelete
  5. The market will find another way to mess up one's predictions. Funny post. Too much beard.

    ReplyDelete
  6. Wow...I have to say that this is probably your most impassioned article yet...I love it...plus the attention to SLV is greatly appreciated...I took action in the area yesterday. Excellent by all measures.

    This market may impossibly (and artificially) attempt to climb through the elections...I know it sounds ridiculous, but all Bernanke has to do is keep stuffing toilet paper in the bowl with the belief that it will all continue to flush. My four-year old tried that once....It led to a very crappy mess and damaged the floor underneath....Not a very good analogy but I'm pretty sure you get my drift.

    ReplyDelete
  7. ty jbg.  This took about 5 hours just to *write*!  Plus all the charts.  :)

    ReplyDelete
  8. let's see what 5$ gasoline and much more will do...last time it took Gm and Ford bulley up...In the force ,a disturbance ,i feel...

    ReplyDelete
  9. Good morning, PL.  Thank you for a great post (as always).

    ReplyDelete
  10. Hey PL, any guesses on likelihood of the SLV primary vs alternate counts? 

    ReplyDelete
  11. thanks for another great article PL, I wasn't trading yesterday so I missed a good chunk of the SLV move but bought in this morning at 31.89.

    I have yet to make any money (new to the market) or regain my losses from going and staying short after Christmas (ouch) but you guys have helped me to avoid losing even more!  Thanks.

    ReplyDelete
  12.  "when Bernanke was in elementary school, the other kids (young future retail investors) used to make fun of his beard"
    One of the best lines I've heard in a while!

    ReplyDelete
  13. Thanks, I love hearing feedback on whether the humor works or not, since it's not like in person where either the other person laughs or just looks at ya funny.  :)

    ReplyDelete
  14. Comedy is hard to pull off in the midst of tragedy...But for you, I bequeath the "Instant Rimshot"....

    http://instantrimshot.com/classic/?sound=rimshot

    ReplyDelete
  15. If you can figure out a way to frame this whole piece and put it up on a wall, you should.

    I thought this was especially well-written:
    "is akin to demanding Sears sell you a washing machine for $29 because you don't think it's "worth" $299.  And maybe it isn't -- but that doesn't matter.  Everything is "worth" what the next guy will pay for it."

    ReplyDelete
  16. One has to admire honesty in traders......so damn few of them! My hats off to you C-man

    ReplyDelete
  17. Appears to me that you agonize over your writings PL. The mark of a true professional.....commitment and passion. I start each day with a cup of joe and your site and I wouldn't want it any other way. Hats off to you and your work.....one of a kind!

    ReplyDelete
  18. lol, I love it!  Years ago, I made one of these that I distributed to a few friends on the internet, for communication purposes.  It's long gone now, though. 

    ReplyDelete
  19. Agreed, Bob_E.

    ReplyDelete
  20. ty, Bob.  I'm a firm believer in the old concept that anything worth doing is worth doing "right"...

    ReplyDelete
  21. yes P L  best article yet......writing much in the style of my father who is an Austrian based supply side long term interest rate forcaster........i dont do paypal so need p o box or sumthing to send donation.....thanks

    ReplyDelete
  22. BTW...that lead graphic on CofAA was great. Really drives home the point of the expense paid for excess.

    ReplyDelete
  23. I agree and that is the reality.  Thank you, PL.

    ReplyDelete
  24.  If only many others in this world held the same outlook, what a different situation we'd find ourselves in.  What would happen if that attitude caught on in government?!

    ReplyDelete
  25. EUR and negative divergences pointing to a top at the top o' the hour?

    ReplyDelete
  26. Excellent work!!! Thank you PL!

    ReplyDelete
  27. The ironic part is more technology went into the creation and distribution of that rimshot than went into putting a man on the moon...I haven't figured out whether to laugh or cry about it yet...We inhabit a surreal world.

    On a serious note (just thinking out loud)...The artificial increase in BS market price leads to increased commodity prices, which leads to increased food prices hence less-monied people don't get to eat, hence starvation or the introduction of starvation "somewhere in someones else's backyard". I get the feeling that Muppetbeard and his bosses could really not give a rat's rear that their actions have more of an effect than the tally of zeros and ones. It bugs me.

    ReplyDelete
  28. We wouldn't have to call them "Government" anymore...we could refer to them as 'FRIENDS".

    ReplyDelete
  29. Richmond FED Manuf. Index came in at 7 versus expectations of 18...

    How long can the market ignore reality?

    ReplyDelete
  30. Any updates on the direction of CVX?

    ReplyDelete
  31. Consumer confidence at 70.2 (down) versus 70.9 expectations (of up)

    ReplyDelete
  32. Thanks, TnT, much appreciated.  :)

    For some reason, your email address doesn't show up on your Disqus registration.  Happy to email you my physical address, but I don't know your email.  :)

    ReplyDelete
  33. I feel awkward saying thanks for that Bob_E just because honesty should not be a surprise when found, it should be expected

    For no lack of trying, the bearded marxists haven't yet been able to eradicate integrity!
    Semper Fi-Clayton

    ReplyDelete
  34. Very lucid post, PL. Here we are again dealing with markets on steroids, so playing the long side seems to be the way to go, as hard and worrysome as it can be, with tighter and tighter protective stops. My trading horizon is always short term, so after having seen the previous ES target of 1415-17 reached last night (which I missed), either a retest  in the vicinities of 1402 or some sideways/up move to 1428-30 over the next day or two should be expected. I am favoring the latter, seeing 1428 as a potential short entry point (stop at 1432), and 1402 as a potential long entry point (stop at 1398).

    ReplyDelete
  35. Thank you for the donation, PD!  :)

    ReplyDelete
  36. 108 retrace target reached, but a little fuzzy ST.  Hoping it'll clarify today, in which case I'll update later.

    ReplyDelete
  37. I knew there was "somethin" I liked about you....ya old war horse. Stay well, keep your head down and keep those socks dry.

    ReplyDelete
  38. Many thanks to YOU PL! Wow, PayPal is FAST!  :-)

    ReplyDelete
  39. Bearded Fascists...central planning's finest....Marxism is for amateurs.

    ReplyDelete
  40. I think the question of the day is: 

    a) to go long later today (if there is a correction around mid-day)

    or

    b) to go long early tomorrow (if there is a correction overnight)

    ReplyDelete
  41. (stolen from somewhere...) "If you stack a manure pile next to a fan.. the outcome will be as expected."

    ReplyDelete
  42. Many thanks to R.P. for the donation.  :)

    ReplyDelete
  43. peters1025@yahoo        thank you

    ReplyDelete
  44. Can consistently melt-up after bad news kill the price mechanism in the market?  It will be interesting to see the result in the future.

    ReplyDelete
  45. VXX rising as market hovers flat.

    ReplyDelete
  46. Outstanding article.  The way we show our appreciation is money, so donation to follow.  Kat

    ReplyDelete
  47. check mark next to that :)

    ReplyDelete
  48. PL, excellent work on the charts & from where I sit, spot on "speculation" regarding the macro side as well.  Like TnT, I don't do Paypal so please email me your address.  Also, I took the time to read your personal stories last night... my thought will forever be w/ you.  You have certainly 'earned' your place in the Universe.
    RAV

    ReplyDelete
  49. Bob_E, to answer your question from yesterday you can look up TVIX IV on yahoo with the symbol ^TVIX-IV. It works for any ETF/ETN.

    http://finance.yahoo.com/q?s=^tvix-iv&ql=1

    ReplyDelete
  50. Thanks, Kat -- just received it.  Very much appreciated!  :)

    ReplyDelete
  51. Thanks, RAV, on both counts.  :)

    ReplyDelete
  52. Christian GustafsonMarch 27, 2012 at 5:24 AM

    Hello, Pretzel.  

    What do you think of this analysis?

    ReplyDelete
  53. This market is so similar to mid-80's market.  It melted up then leading into 87 crash and think the same will happen here.
    I first got into options then and got my clock cleaned, didn't play options again......until now.  Sorry guys this is my fault.
    Sad our gov't is playing against us.  If we are eventually right , most of us will do well but the losers are the retired or soon to
    be who are earning next to nothing right now and will lose most of what they have later.  Very sad.
    I will look for post but read that Japan is in trouble and Yen is expected to devalue 40% and rapidly.  As well as Europe unraveling
    further.  I guess it is a race as to how high Ben can get this market before it all comes apart.

    ReplyDelete
  54. "Muppetbeard?"  lol - so, you think his beard is a Goldman Sachs puppet?

    ReplyDelete
  55. Very interesting, CG.  How did you create this chart?  What software / method did you use?

    ReplyDelete
  56. I think he's a Muppet...and his old school chum LLoyd is tickling his colon.

    Poor Muppets are getting such a bad rap.....
    http://www.youtube.com/watch?v=B-Wd-Q3F8KM

    ReplyDelete
  57. Thanks for the info giarc....much appreciated. I was going to dive into the X-pool of investment vehicles, but decided to stick with what I know. I'll leave the X-factor to those much brighter than this 50 watt bulb. Thanks again for the response...stay well.

    ReplyDelete
  58. Christian GustafsonMarch 27, 2012 at 6:03 AM

    It's a screencap from OptionsXPress charts, dumped into the venerable Windows Paint.

    The correspondence of the 2008-9 tape to the support areas ahead is incredible, IMO.  If it plays out, it will give new meaning to the idea that "A is similar to C".

    ReplyDelete
  59. truerangeballisticMarch 27, 2012 at 6:06 AM

    I did not notice the name change. What was your forcast in 1911? Just jokin. How has the RUT been treating you?

    ReplyDelete
  60. Interesting time 1987....I was there. I bought a book on the Dow Jones Historic numbers dating back to the beginning. Calculated Wells Wilder's RSI by hand (and calculator) and came to realize that in October 1987 the RSI on the Dow Jones was 97. Lucky for me I stumbled across WW's RSI and it kept me from losing everything. Market lost 300 Dow points on Friday and then 500 points on Monday. Interesting story about Peter Lynch from Fidelity. He was working with bankers over that weekend to amass cash to pay to those retail accounts that would panic and sell. He didn't want to depress the markets any further and he used the cash to satisfy the liquidators. Market turned back up slowly that week and the rest is history. I guess the old saying "if you can keep your head, while others are losing theirs" was most fitting for Mr. Lynch and the Magellan Fund.

    ReplyDelete
  61. Mrkt needs to settle out before IT drop. tgt 1400-05 ES.
    TVIX up 12.25%
    VXX up 5.31%
    UVXY up 10.43%
    They are projecting the next drop. This is a IT call, out a couple of days of so. Strength indicators are not backing off tho on long term charts, probably one more up run, at least, before this is over...

    ReplyDelete
  62. I admire you not just your EW technical strength but also your philosophy and humor.  Thank you for the beautiful article.

    ReplyDelete
  63. Standing clear of RUT until it actually picks a direction...or in the meantime I will merely do the inverse of where I think it is going ST...that'll probably work out. DT's only for now. This whole mess wants to top but Bennie won't let it...Reversion to the mean can't be avoided forever, but they're going to try....Just keep packing and passing the hopium pipe around.

    ReplyDelete
  64. Thank you Katzo for sharing your view.

    ReplyDelete
  65. truerangeballisticMarch 27, 2012 at 6:37 AM

    I hear that. These statist sure do have a plan. Take a look at this 15 min chart. Just some sma stuff but it appears we are at a msall pause with a retreat to 842 with a move to 873 possible imo. always appreciate your comments.

    ReplyDelete
  66. short covering...maybe??

    ReplyDelete
  67. Thank you, CG.  It is quite incredible how trendlines line up.  I will save this one for future reference. 

    ReplyDelete
  68. TZA   up...  TNA  down   with  Market Up   Vix's  Up    10 yr testing below 2.20..   Financials pushing Lod...   Does someone have the definition of Front Running?  nice post also PL  ..

    ReplyDelete
  69. I am sure there is a good amount of that, but it doesn't take away from the fact that "they" are unwilling to sell it off anymore.  Downside protection becoming necessary again?

    ReplyDelete
  70. After reading some comments - I was extremely bearish over the holidays and got burned pretty good.  This is actually reminding me of the 2002 market.  The market starts to rally, but real improvement in the economy doesn't show up until the election year.  Now that the economy is on pace to be a scalding luke-warm throughout the summer, I think it will fuel the rally with prospects of growth.

    I'm as nervous as a bull can be right now though - tight stops and ready for the crash.

    ReplyDelete
  71.  Quote of the day: "With such ginormous income disparity in the USA, soon there will be a revolt - the Yocto vs the Yotta!"

    Note: yocto is 10 to the power -24, yotta, 10 to the power 24

    ReplyDelete
  72. Pl , maybe you can add music to your blog,  twilight zone theme music would be fitting about now

    http://www.youtube.com/watch?v=NzlG28B-R8Y

    ReplyDelete
  73.  Katzo,

    What's that in cash? TIA

    ReplyDelete
  74. Agree.  It does feel like the market in the mid 80s, doesn't it?  The key is to keep (or grow) your cash to buy at the next major bottom. 

    PL is awesome at calling market bottom, and that can help us a great deal. 

    ReplyDelete
  75. Thank you very much for the chart.

    ReplyDelete
  76. Another quote of the day ....

    "If an American exercise his/her freedom not to buy health insurance, we all have to pay." Justice Roth Bader Ginsberg.

    ReplyDelete
  77. Descending triangle on the 5 min chart - if it breaks down look for buying opportunity at 1411-1412

    ReplyDelete
  78. If "fairness" is more important to a supreme court justice than law and constitutionality... what are your takes on how the market will react to an upheld/strikedown?

    ReplyDelete
  79.  Same lady who put down the very constitution she is sworn to uphold.  Oy vey!

    ReplyDelete
  80. Some fun comments from John Hussman:

    "When has the equity risk premium been as low as it is today?
    Prior to the late-1990's bubble period, the estimated equity risk
    premium has been below 2% only during the two-year period leading up to
    the 1929 peak, between 1968-1972 (when the equity risk premium finally
    normalized as a result of the 1973-1974 market plunge), and briefly in
    1987, before the market crash of that year. We know how each of these
    periods ended. The only real variation is in how long the preceding
    overvaluation was sustained. "

    "The Fed has focused its efforts on creating a bubble in risky
    assets, on the misguided, semi-psychotic, and empirically disprovable
    notion that this will make people feel wealthier and get them to spend
    and borrow - despite the fact that their incomes can't support it
    without massive government transfer payments. "

    http://hussmanfunds.com/wmc/wmc120326.htm

    ReplyDelete
  81.  The market had already spoken. XLV has been on fire. :)

    ReplyDelete
  82. But what does the market expect? upheld? struckdown?  I suppose the trading opportunity would be to wait until the just before the decision, trade what the market doesn't expect - if you're wrong close trade on open.

    ReplyDelete
  83. I think that would be it. :)

    ReplyDelete
  84. truerangeballisticMarch 27, 2012 at 7:40 AM

    Note the money flow on SPY. block trades vs. total money flow. http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.html?mod=topnav_2_3000

    ReplyDelete
  85. All going to buy apple I suspect :-P

    ReplyDelete
  86.  Nenner predicting 1449 as the high.

    http://finance.yahoo.com/blogs/breakout/market-rally-peak-next-month-charles-nenner-150005109.html

    He does not see this market going any higher because his indicators are so good.

    Joe

    ReplyDelete
  87. truerangeballisticMarch 27, 2012 at 7:45 AM

    Block trades are buying and total money flow is out. Does that indicate the retail investor is leaving and the big money is buying? Just curious.

    ReplyDelete
  88. You said it best.  "Nervous bulls'  are us.  True bears got burned and got out...nobody wants to short this market anymore...not yet anyway!

    ReplyDelete
  89.  add 4 to ES to get cash

    ReplyDelete
  90. Well, if anyone still cares about Tom DeMark's signals (anyone.....Bueller?), today we entered his official topping target range that he called about a week or so ago, the SPX 1419-1426 area.  He might have revised since then, but I figured I'd at least keep people posted.  Again, until he gets one horribly wrong, I'm going to pay attention, since he was so dead on last summer and fall.

    I've read that lots of hedge funds subscribe to his data and signals, so even if his work is only self-fulfilling, it's still something to keep an eye on occasionally. 

    ReplyDelete
  91. Scotty_Doesnt_KnowMarch 27, 2012 at 8:17 AM

    Thanks HappyJohn.  This coincides with the ES daily Fib target of 1423.75.  Does anyone out there have the latest on George Lindsay style forecasting?  The market top was supposed to be in by the beginning of March the last I heard.

    ReplyDelete
  92. Thank you.  A lot of what happens in the market is a result of the self-fulfilling nature of TA.

    ReplyDelete
  93. Fed's power was under questioned.....

    http://www.zerohedge.com/news/taylor-rules-fed-independence-question

    ReplyDelete
  94. TW - still waiting on entry point . May turn into a Thursday dip to Wed high all over again. No joy on AMZN entry today left the station so fast that there was no chance to get on it. Thinking it may do a pullback to 207 or 5 so may be a short term short trade ther

    ReplyDelete
  95. No Entry today on RUT. Maybe a buy the Dip on Thursday and hold to next Wed trade coming up

    ReplyDelete
  96. anybody here in the long silver trade?

    ReplyDelete
  97. looks like an algo buy support level set at 1210.25. IMO that will break today or tomorrow, then we should head for my lower tgts of 1400-05.

    ReplyDelete
  98. Good reading from Keynes himself...

    Excerpts from The Economic Consequences of the Peace by John Maynard Keynes, 1919. pp. 235-248.
    http://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_inflation.html

    ReplyDelete
  99. Actually they're taking a break...

    http://www.youtube.com/watch?v=vgEFC8Eb6i4

    ReplyDelete
  100. I'm long SLV.  Do you think LT target of 45 (off the reverse H&S) is possible?

    ReplyDelete
  101. truerangeballisticMarch 27, 2012 at 9:09 AM

    Yep. I was thinking we would get a 10 pt retrace somewhere in the next two days. It does look like an Adam & Eve double top. The performance on that foramtion is poor according to Bulkowski. So look for more upside imo. The slope of the sma off the 815 low is pretty strong so until that weakens I just think it has more to run. Just my opinion though. I don't know a darn thing anymore.

    ReplyDelete
  102.  Long SLV following blue box protocol.

    ReplyDelete
  103. Katzo, just out of curiosity, have you traded these levels over the past few days or still on the sidelines looking?

    ReplyDelete
  104. if it is in fact and inverse H&S....measured move targets 43 right now.

    ReplyDelete
  105.  What do you make of this in regards to SPY?  What is this telling us, in your opinion?  Thanks.

    ReplyDelete
  106. Hi folks. Any opinions on SLV here? Do you think support will hold around $31.25-.50?

    ReplyDelete
  107.  Considering some Calls on SLV.....

    ReplyDelete
  108. Heard that Blue Box can be profitable from time to time ; )

    ReplyDelete
  109. PL,
    Is there any possibility according to EW that we could have topped today similarly to CG's chart?
    Thnaks

    ReplyDelete
  110. I abide by it :)

    ReplyDelete
  111. truerangeballisticMarch 27, 2012 at 9:40 AM

    Not sure really. It may be big money buying. I have not done any research on the money flow to the SPY. It was just strang to see all block trades selling except for the SPY. Sorry I am not of any help. I was hoping someone else knew.

    ReplyDelete
  112.  I bought TVIX yesterday on the close, this is how you trade this crap, you do not hold for long. Remember discussion on TL break? Up 18% so far.

    http://screencast.com/t/Ivk0V2YphP

    ReplyDelete
  113. PL, great article. Thank you.  I have no idea how the market keeps going like the energizer bunny, but it will until the batteries run out.  I think this bunny runs on lithium ion, giving you no clue as to when the battery will stop providing juice.  1500+ seems plausible when you consider that if retail does get back in, then the next move up has its buyers.

    ReplyDelete
  114. I smell an spx bear market coming.  Anyone else? 

    ReplyDelete
  115. Christian GustafsonMarch 27, 2012 at 10:09 AM

    I forgot one note from the chart.  The point 4. "healthy bounce" is also a kissback to the 200DMA.

    It's a series of 3 different support levels -- the 200DMA, the rally megaphone lower bound, and the 2002-2009 lows -- that are support, are broken, and then become overhead resistance.

    I'm also speculating that in late 2013, we have a nasty monetary event of some kind, particularly with the US Dollar and its relationship to, gee, I dunno, crude oil?  The Dollar is a hard currency, backed by eons of stored sunlight, until it's not.

    ReplyDelete
  116. He's around the corner.....but I sense/cents his presence. 

    ReplyDelete
  117. I guess I should have warned everybody today that I was going to buy some shares of SSO.  I knew the market would go down after I did that.

    ReplyDelete
  118. Heckuva trade Katzo - it's easy to say "shoulda woulda coulda" in hindsight, but to have the guts to trust your work and make a play there when blood was pouring in the streets the last few days - hell just a damn good trade there and I hope it works out for you. You really are an emotionless robot bastard! ; )

    ReplyDelete
  119. I haven't had much experience in the political arena (Dad ran for Mayor once) but I'm of the opinion that barring any significant skeletons in PL's closet, I'm going to start a campaign (I think we'll have to draft him) of PL for POTUS. I know, most of you will think I'm sucking up, blowing smoke and such.......but really, could we have anyone more in tune with the markets, anyone more objective with sincere guidance? Another Prez from the great state of Hawaii to boot.

    ReplyDelete
  120. ES 1400-02, NQ100 2740-50 and R2K 827-830 (all futures) are the potential retest / bounce up levels on my screen. I am still expecting another push up from either these ST support levels or from the current ones through Friday, or sideways, for a nice quarter-end picture. Until NQ100 and AAPL give us a break a downturn does not seem likely. Next week will be interesting though. As far as I remember the next BLS employment report comes out on Good Friday, April 6th, when stock markets will be closed (!), demanding a cautious approach.

    ReplyDelete
  121. Good stuff, CG!

    ReplyDelete
  122. I think you've nailed Katzo's personality....excellent choice of words.

    ReplyDelete
  123. Cut and paste? I do not know of any market scenarios that were played out exactly in two different time frames or periods.

    ReplyDelete
  124. Bob, there's no doubt you're sucking up - President of the United States of America!?!?!? 
    I couldn't vote for PL, he consults with Furrr about planetarial orbitations and alignimitations, not to mention he pokes fun at young boys with beards - no way, I'll stick with the Mormon guy who will have the cool planet in the afterlife and has plastic hair.

    (Special note: Actually I like PL and am a rabid libertarian) 

    ReplyDelete
  125. look at the VPOC MAGNET...sweet

    this is the NQ 1min chart....i think i heard a THUD and a GROAN when that price hit the VPOC but no screams...YET !

    ReplyDelete
  126.  but, but, but if elected he would definitely put me in as Fed Chairman and I would guarantee and insure that the mrkt would strictly follow EW rules.

    ReplyDelete
  127. You'd vote for him in a nano second.....and have that rabid libertarian thing looked at. 

    ReplyDelete
  128.  rotflmao, emotionless robot bastard.  an ERB. well, at least it ia not an EMO

    ReplyDelete
  129. Pretzel. Call a spade a spade. You have called the top twice since early Feb. Your comment "
    Since early February, while I've been largely expecting higher prices, I have also been quite skeptical of this rally" undermines your well earned credibility. Keep up the good work.

    ReplyDelete
  130. target 10-12? is that IT or LT?

    thanks

    ReplyDelete
  131. I'm beginning to understand the "fifth wave extensions" and why they happen. TVIX (IMO) could easily be counted as five waves down from the peak in Oct 2011 with the third wave being extended and the fifth wave in the fifth wave being extended. Quick retracement to the second wave within the fifth @ $16.50. ?????? Elliott...you were a genius.

    ReplyDelete
  132. I tried Bob, but every time I hear Prez O open his mouth or listen to another Republican jughead debate, the damn thing grows and grows - there are no meds for my condition, although Katz recommended not reading or listening to the news and it's seems to have helped .... somewhat

    ReplyDelete
  133. Strict EW rules....OK! 
    Katzo as Fed Chair.........Switzerland here I come.

    ReplyDelete
  134. It has to hurt...if it is to heal!

    ReplyDelete
  135. Long winter hibernation with med prescribed by Uncle Ben....but spring shall come around with or without QEx

    ReplyDelete
  136. Oh, hexx no!...we can't lose two good guys to the pits (who will save us clueless in this Jungle)...without Ben who will save the Bulls (and Europe and Japan and .....)

    ReplyDelete
  137. Great trade...got burned few times by UVXY last week

    ReplyDelete
  138. 1500 is only 80 points away from here, and so very possible. However, my gut feel is that there are more retail investors getting out than those getting in...they get out only because they (retirees, unemployed, etc.)  need to use the money to supplement their reduced income.

    ReplyDelete
  139. Hell, who needs EW when a simple heads up with a phone call or email would do just fine - you provide the map and I'll find the gold!

    ReplyDelete
  140.  nice..  i bought UVXY yesterday but was embarrassed to open my mouth cause its been an ugly month for most involved..  the VIX confirmed an intraday Bull pennant?  Bring the volatility back and people will gather up some clearer trades..  Gonna try the XIV/ UVXY rebounding  trade off  short term bollinger bands tomorrow..  wish me luck. 

    ReplyDelete
  141.  me too..  got stuck a couple times.  youre not the only one

    ReplyDelete
  142. Interesting read and I learn something today.  Thank you Nostradumass.

    ReplyDelete
  143. What does VPOC stand for?

    ReplyDelete
  144. You lost me at EMO, did you mean ELO ; )

    http://www.youtube.com/watch?v=7m1UWSD-FaA 

    (Please forgive me, I'm afraid the majority of my posts will be relegated to the "Other Discussions" bin on PL's new site)

    ReplyDelete
  145. Bringing bankers to their knees...or lower!    http://rt.com/news/spain-banks-escorts-sex-198/

    ReplyDelete
  146.  VIX report.  backwardation coming ?

    http://www.youtube.com/watch?v=42fJpFtN-Os&feature=plcp&context=C4aceb62VDvjVQa1PpcFNrPXnYV1B9vCcVoL9UV_Sf6w5DZGXC9UU%3D

    ReplyDelete
  147. Good evening PL,
    great set of charts again, must be a huge amount of work, and we benefit, many thanks.
    Now hold on there pardner, about this 'boom' scenario here.
    There is an alt view which expects a 5th wave tomorrow then a retrace down to 1338 prior 4th wave then up in a final 5th to 1447.
    Another 3 weeks or so if it takes as long as the 1st wave.
    Chart is annotated with my reasoning, and as in all things on heaven and earth, it is all probabilities.
    We'll see in a couple of days yep?
    Kind regards

    ReplyDelete
  148. Volume Point of Control. You'll see them on the right margin of Katzo's charts I believe.

    ReplyDelete
  149. As long as there are blue boxes, I will be happy.

    ReplyDelete
  150. Pretzel - is there ANYTHING in your charts that might suggest to you a top right here?...I say this becuase there was quite a bit of carnage today in some of the momo stocks. Even the ones that were strong early faded late. AMZN, CRM, PCLN, FOSL, CMG. The Ags put in some nasty reversal candlesticks such as POT, MOS, DE and other cyclicals faded like FCX. The bull flag that was setting up failed miserably today and the vix soared. Either today was a top or a significant warning sign that things are about to get bad. IMHO

    ReplyDelete
  151. Bearish Ichi Moku chart of BP, gathering momentum. All indicators have reversed. Looks bad for the bulls :(

    ReplyDelete
  152. wtf?
    LOLOL.
    Could I be any worse as the present one? You have grandkids? They can forget ever retiring, buying a house, or profiting from an IRA. Want me to go on?

    A my EW teacher story. At an eSignal training session, someone asked, "what the hell would happen if everyone followed EWs?" His answer was 'it would be a very orderly mrkt, every one konwing when to buy and sell." And too many equate EWs with Prechter, untrue. My analogy is you take a race car, some will come in at top on pack, some will follow, and some will crash and burn. You take a tool and put it in good hands and that person can handle it better and offer better results than others.

    ReplyDelete
  153. IT for now. That is a double, 100% gain.

    ReplyDelete
  154. EMO, a high school movement where the kids wear all black and cry about how miserable their lives are after growing up in the burbs with large screen tv, playstations, microwaves, iPhones, etc. Emotional kids.

    ReplyDelete
  155. hey, I resemble that remark.

    ReplyDelete
  156. Thanks for these. I always watch and learn a lot.

    ReplyDelete
  157.  I just looked up the definitions for "contango" and "backwardation" on Wikipedia and I'm pretty sure I now know less than I did before.

    ReplyDelete
  158. ROFLMAO!! 
    Now that is some superduper  funny sh*it  - I know some of those EMO's.
    Great website, now I know where to go to get all of life's unanswered questions : )

    ReplyDelete
  159. Reading the waves..... ERB (see KB03 comment)
    I want to show you how to look at this stuff. If you have a system that works keep it, but if this mrkt is troublesome then this is a try to help. Here are a couple of things I said. Pre-bell ~ "Based on correctness of EW form it appears that we may have finished up
    the EW5 move o/n in Globex and are setting up for a down sometime today.
    T1 = 1405; T2 = 1400. Wave form is now pretty perfect with the EW5
    steep angle to finalize it." [go look at the EW chart with the yellow schematic arrows on it] After extended sideways move during morning "Mrkt needs to settle out before IT drop." Mid afternoon ~ "looks like an algo buy support level set at 1410.25 ES. IMO that will
    break today or tomorrow, then we should head for my lower tgts of
    1400-05."

    ReplyDelete
  160. You guys are just hysterical. Was reading this and laughing my tushie off. Will be on later after the kid is down for the night . After all she is the reason I trade at all. Someone has to make sure her future is financially secure. Therefore I am definitely all for Katz as fed chair.....

    ReplyDelete
  161.  CalD hope this helps. .. heres a 2 min. video on the VIX  Contango vs Backwardation from Jamie Tyrell.. from last October when VIX spiked...Backwardation is good for the ETN's.  The high premium and contango in the back mnths killed the VIX front month which in turn killed the ETN's also..

     The VIX is a nutty cousin you cant explain and a  tad over controlled..   Home Depot is a little more stable to leave the room betting on :)

    http://www.youtube.com/watch?v=X7xtwMjTn44

    ReplyDelete
  162.  Seriously? Would you really want to see PL have to put up with the likes of this? I wouldn't wish running for president on my worst enemy.

    ReplyDelete
  163. $RUT  chart from Abagail Doolittle..  

    ReplyDelete
  164. Basically short for emotional. It was originally a genre of punk rock meets sappy love songs but ended up being a general term for teary-eyed tantrums and adolescent self pity -- oh, god I'm so alienated.

    ReplyDelete
  165. Mmmm. One could be goth without getting all emo about it.

    ReplyDelete
  166. OK, but what does it mean? 

    ReplyDelete
  167. I think Ben found a new cache of dilithium crystals from another planet. They'll power that puppy over the time horizon.

    ReplyDelete
  168. Here's a decent link...I believe Katzo utilizes it often...
    http://tradingacademy.com/lessons/20110329/commodities_article.htm

    ReplyDelete
  169.  I added to my TZA today.  keeping a close eye on it.  anyone playing it ?  TNA has a gap at 62ish? 

    Doesn't Ben Bernanke speak one more time this week?  He usually puts his foot in his mouth at least once , right??  :)

    ReplyDelete
  170. ok chartists.....here is an update of my VPOC for 1min NQ

    look how that price migrates to that thing....volume profiling as the algos look for meat

     

    ReplyDelete
  171.  i am in TZA QID BGZ.....lets go downtown!

    ReplyDelete
  172.  These were classic.

    http://www.youtube.com/watch?v=JMvMzQ4Vu-8

    ReplyDelete
  173.  Volume Point of Control .....if u have ThinkorSwim it is a study called Volume Profile

    Volume Profile Trading is a style of trading that stresses accumulated VOLUME as a key to support and resistance

    if ur interested go here to these sites to learn more

    http://www.robspaintrading.com/glossary/

    http://www.screencast.com/users/LinnSoftware/folders/Investor%20RT/media/72544285-4665-4e33-a68e-b887fc12efa1

    ReplyDelete
  174. Rocky, trying to tempt me back to the dark side...

    Alright, it's not impossible.  NYA has thus far failed its new high, so the option of a top is still on the table -- if one takes SPX as a 4th and 5th wave, and NYA as some kind of wild expanded flat.  But it's lower odds, and so far there's nothing concrete to suggest this is anything other than a wave ii of (3) of (v) correction.  The recent swing lows are the KO for the bullish counts.

    ReplyDelete
  175. truerangeballisticMarch 27, 2012 at 2:48 PM

    Sandyone44 did she give any targets for the downside? Just measuring from the neckline to the head would be 268 x .55 (Bulkowskis retrace %)  would have a target of 453. just curious as to her thoughts. Thanks for posting the chart. Is that a 2013 time frame since it is the weekly chart?

    ReplyDelete
  176. Katz,
    We hit 1404.75 and turned, do you think this is EW 5 now or lower retest?

    ReplyDelete
  177.  I will straighten out this country but f*ckin' fast. That is, just before I abscond to a Caribbean island with 1 billion in bearer bonds.

    ReplyDelete
  178. Poking fun at you Oh, Elliott Wave sage. I don't know you personally, but from the scripts we've exchanged and your support of others here I'd say you're one fine fellow. However, I take exception to your belief in regards to retiring, owning a home, profiting from an IRA. Financial security comes from, as almost everything does, knowledge....right? How many core classes in finance are required at the undergrad level? This should be everyone's minor...everyone. We would do away with the wolves feeding on the lambs. Knowledge is the key. In regards to universities.....over paid instructors, over paid administrators, significantly misused funds and extremely poor support in selecting curriculum based on personal skills or attributes...pathetic. Both my son and daughter are graduates with small, manageable student loans. First two years we required them to attend a local university. With appropriate grades and a justifiable curriculum selection they could then go away to college. Both are in the work force, contributing human beans enjoying life. I am not rich by any stretch of anyone's imagination. My son bought a home back in July...half the value it sold for in 2006. The previous owners were lambs...which were taken advantage of. My son and daughter understand the basics of finance and with some parental direction/guidance they can retire comfortably. Leaving your retirement investment in the hands of some Merrill Lynch broker with no vested interest in it's outcome is suicide. Ignorance is not an excuse. Last point....my wife works for a company that matches her 401K contributions. 15 plus years ago, when she started there, she asked what mutual fund she should invest in. I suggested interest bearing Comm Paper, not stock mutual funds. She said everyone else was suggesting growth mutual funds and all her assoc were going that way. My question to her was: why would you gamble on the outcome of equities, when the company was already giving you 100% on your money? She has remained in CP and all her assoc are riding the rollercoaster, wondering if they can retire. Common sense is all I applied.

    ReplyDelete
  179. yuk yuk yuk.....Larry, Moe and Curly...the three wise men.

    ReplyDelete
  180. Many thanks to M.C. for his donation earlier!  :)

    ReplyDelete
  181. Never seen this before, what does it show?  Predict?

    ReplyDelete
  182.  TNA/DAY

    http://screencast.com/t/QSgZbX7RJhKP

    ReplyDelete
  183.  think this is a bear flag. more down

    ReplyDelete
  184. I humbly disagree. The office offers one the greatest possible beneficial affect on humanity. America is advanced citizenship...you gotta want it bad - (line from An American President) but so true. But you're right about "running for president" wouldn't wish that on a broke dick dog.

    ReplyDelete
  185. That is not your name.

    ReplyDelete
  186. That's the kind of take charge attitude this country needs. Are you sure a billion will be enough? I think Roy Millers, off grid  island sanctuary is available for renovation

    ReplyDelete
  187. He probably already promised you some sig benies...right? You carpet baggers are all alike...thick as thieves. Where do I sign up?

    ReplyDelete
  188.  That is not your name.

    ReplyDelete