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Friday, April 13, 2012

SPX and RUT Update: Warnings that the Market Outlook May Be Changing

Yesterday the market reached the 1384 upside target  -- and it also ruled out some possibilities, which is actually quite helpful.  In fact, yesterday's charts are chock-full of new information I didn't have before -- so this has changed my outlook somewhat. 

I believe it's very important to assimilate new information from the market, and to allow yourself to be influenced by that information.  You have to be ready to turn on a dime, and the market rewards traders who are nimble and punishes those who aren't.

Prior to yesterday, RUT had an appearance that could be interpretted a number of different ways.  It has now clarified itself as an extended fifth wave.  Prior to yesterday, there was simply no way of knowing this with any certainty.

There are a number of possible outlook changes as a result of yesterday's action, and I'll try to cover those changes, along with some signals to watch for.

Readers will recall that my alternate short-term count for SPX was an extended fifth wave.  As a result of the RUT's action yesterday (and some other things), I've made this extended fifth the preferred count.  Readers would be wise to take heed of this possibility, because it does alter the expectations of what would usually happen next.

Let's start with RUT, and from there I'll cover the changes in more detail.  We'll also look at more bullish outcomes, because the market has declared that we should.

Note the blue lines on the chart, which is a rough representation of how things might go if the bear count is still in play -- more on that later.  It is exceptionally difficult to anticipate all the ins-and-outs of this kind of retracement with high accuracy from this position, so this is a best-guess rough guideline of what could happen.  This guideline will get more accurate over the coming sessions.



One of the other things I want to discuss regarding the above chart is this:  it bothers me more than a little (for the bear count) that, if not for the extended fifth wave, there would have been an almost-perfect c = a relationship between the two waves of the decline.  This might be an early-warning clue to the market's intentions, and until the market confirms an impulse in the downward direction (by making a new low), bears might consider being quick to take profits -- or at the very least: cautious in protecting them.  I know that I will be.

Anyone who went short near yesterday's target high of 1384 SPX should, at worst, be able to make a quick, small profit, or at least limit their risk substantially.  This illustrates the importance of having the patience to make proper entries, and of not jumping into the market at random.

Readers will recall the big picture alternate count that this decline was a larger wave (iv).  Closer to the top, I was somewhat fond of that count -- but after the strength of the decline, I became less fond of it. 

I think we have to go back to giving that count some very heavy weight for the time being, until the market more clearly reveals its intentions.  I'll discuss why in a moment, along with what I'll be watching -- but first, here's the refresher chart for that count:




There are several warning signs which have cropped up with yesterday's action -- enough signs that, at this exact moment, I am giving a lot of consideration to making the more bullish count into the preferred count.  The next session or two should give us some early indications to decide which outcome is more probable.

Let's take a look at the short-term SPX chart, which highlights the bear count(s), and then discuss what to watch for.  This is currently the preferred count.




Here are two things to watch:

1.  If the current wave declines a little bit, say to 1381-83 (which would be the first target for a bullish correction) or lower, then makes a new high before it overlaps 1374.71, then that will make the rally a 5-wave impulse.  This will be a strong warning that the bullish count could be in effect, and new highs become more likely.

2.  The inverse is true: if the SPX overlaps 1374.71 first, then it virtually "locks in" an a-b-c rally, which would suggest new lows are more likely.

So we'll watch and wait right here to see what happens next.  Neither of these things guarantees a bullish or bearish resolution, but they do make each resolution signifcantly more, or less, likely.

I'm going to wait for the market to give its answer, but it won't take much here for me to make the bullish count the preferred count.  There are a number of reasons for this, including this NDX chart (below).  Note that all the targets published on 4/2 were reached.




And then there's this NYA chart.  The NYA chart is labeled with the bullish count... because that's what fits best.



Readers will also recall that my target for a bottom in the more bullish count was SPX 1350-1356, as shown on the chart discussed in this article, published on April 8.  SPX's low was 1357 -- close enough.  While you're there, take a look at the RUT chart in that article and its targets for the bull count, which were also reached perfectly. 

Same goes for the Wilshire 5000 (WLSH).  In fact, let me bring that chart forward, completely unchanged except for the new price action.  Back on April 8, I drew in a "hypothetical channel" based on the shape of the rally -- look how well that "guess-timate" channel held up.




Other factors bears should consider: yesterday had strong breadth and market internals; and was also a strong accumulation day, which rarely happens at the exact high of a move.

For an example of what the bull count might look like over the short term, here's a look at how things could play out in the RUT for that count.  Expectations would be similar for SPX.




In conclusion, after examing all this new information (and trying to be as objective as possible), I've practically talked myself into making the bullish count the preferred count.  As I said earlier, though, let's give the market another session or two to give us just a little more to work from before we completely throw out the short term bear view.  There are several key signals to watch right here.

Even if the bear view is correct -- based on the expectations of an extended fifth wave retracement, a new high is the likely outcome before new lows. 

With the new info received from the market yesterday, I think bears need to stay very cautious and alert at this juncture.  Trade safe.

599 comments:

  1. Morning, all.  I am literally struggling to keep my eyes open.  I'm going to try to get a little rest and come back for the open. 

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  2. Good morning PL. Thanks for your work. 

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  3. Very conflicting signals, balanced oscillators & low PTI [bullish to unclear], perfect doji on the 120 [possibly bearish cap to EW4]. Think today we will know. Remember, in an EW4 to 5 move it just happens swiftly, little indication, it just falls dramatically. But I am leaning on this not happening, maybe extended sideways crap

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  4. Bank borrowing in Spain pops. Spanish banks' borrowings from the ECB jumped nearly 50% in March to €227.6B, as they took up 29% of the central bank's late-February LTRO. "A consequence of the (LTRO) is that the correlation between sovereign risk and banking risk increased all over Europe." That's not some EMU permabear speaking; that's Spain's Economy Minister Luis de Guindos. (Source: Bloomberg BusinessWeek)

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  5. Thanks for another excellent post....I can see why you would be tired out. I hope you're getting some rest :)

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  6. Thanks much Katzo. Your guidance is greatly appreciated. :)
    I keep on seeing a super right shoulder forming in the future on the ES (with the peak on 3/1 being the left), but maybe that's just a bit of wishful conjecture. I hope you have an enjoyable day of hiring festivities.

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  7.  I was gunna mention that the scenario mentioned just below, that of a drop into an EW5 sudden down from the 4, might be affected by some news-related article.

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  8. Good morning PL, another good thoughtful post. Thank you. The more one looks at the shape of these structures from a distance the more they shout 4th wave, esp NDX. FWIW the strong INDU up move was 213 points. There are only 3 bigger in this 3m surge, 231 - 13 mar, 251 - 3 jan and 321 - 20 dec so plenty of life left in the upside, no sign of any distress or panic around, vix down from 21 to 17.5 so complacency rules and up we go. On the other hand, BP is my proxy for FTSE and looks in a good down trend along with it, and FTSE/INDU is pretty much a solid pairing, so there is some eveidence that things may just be fracturing, 1 or 2 up, 1 or 2 down. I guess sit and watch, enjoy a Starbucks and read the WSJ is the best strategy at the moment. Pineapple juice would do! Market is flat as I write, but spikes of energy on the upside, may be predictive, we'll see. The other one which to me anyway scrreams 'flat' is Gold. Chart posted with reasons on there. Interesting day ahead. Kind regards..

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  9. Spain may make Greece look like a walk in the park.  Kasting wrote an interesting albeit anecdotal article: http://www.zerohedge.com/contributed/2012-15-12/three-conversations

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  10. Good thinking. Europe is definitely not out of the default woods.

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  11. Cash is definitely comforting right now... :)

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  12. Good morning A...ROCKS, Ichimoku is for daily charts really, too slow otherwise, BUT I occasionally look at 1/2 day (4 hours) and 1/4 day (2 hours) for some hints of where we are headed so I've posted AAPL here to see how you might use it. Basically it is bouncing off the 2 hourly cloud and straying over the St Dev line but staying within the lower RAFF channel line. If you do trade it successfully, please give me a lesson! Enjoy.

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  13. thanks for the update.  I took some profits pre-open due to the uncertainty in this range and will wait to see what happens.  One comment, if you could clarify wave levels (which fifth, etc) in the update it would be helpful.  E.g. it wasn't clear on the first reading which level the extended fifth was referring to.  I think I got it on the second time through (the w5 in the preferred count that just ended wave (i), right?)  
    There are a lot of fifth waves in the various counts, so a quick statement to specify which count and the level would have been awesome.  All in all I thought the update was great.  It laid out the options and what to watch for.  Thanks!!

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  14. Hi Bob_E, nope, IM doesn't pay any attention to the candle structure just its direction. It's a slow indicator so needs several days to draw the data, not a lot of good for less than day trading, but ARocks is going to give us a tutorial 'Real Soon Now'. I think ;) 

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  15. I agree that a right shoulder could be forming, but if it is, it needs a bit more upside first.  Maybe up to the 1396 or 1398 level.

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  16. Dito,  was stopped out on my ES short now no loss. As PL mentioned it the entry point was not choosen wisely.

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  17. The current down move in the ES looks like a perfect bull flag on the 120 chart.

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  18. I hate when guys brag.....lol

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  19. PL, Amazon sent my Elliott Wave Principle book yesterday, I was thrilled to see the box sitting on my porch.  Already have started digging into it and can't wait to get to the rest and look forward to when it 'clicks' and I can see it all makes sense.  Thanks for the recommendation and I did get it through your affiliate link. 
    By the way, great post, I love that you show preferred and alternate counts, very helpful.

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  20. I used to be able to stuff a mattress...now, just a comforting pillow for my fat head. :)

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  21. Good morning Jason.  Get some sleep please.

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  22.  actually thinking about 1395 to 1400 (just a TL with a throw over -- very unscientific)

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  23. One last thought PL on FTSE, BP and INDU. If BP is to take another step down and takes FTSE with it (as per your analysis earlier FTSE crossed wv 1)  I cannot see INDU going anywhere up really, except if it did then FTSE could make a strong wv2 bounce, but it looks too bearish in the very near future, looks ready to drop another wave, or more. 'Markets always travel further than you think possible'  as they say. IMHO

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  24. A good friend of mine, pretty well off, always answered "it's tough out there, hard to make a buck, I don't have any money"......whenever anyone'd ask him how things were going. I know he was banking it, just wasn't announcing it. What's that old biblical comment "he who humbles himself" I'll bet you have a swiss account.

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  25. Good doctor.....pray tell what does Itchy "your best guess" say about Golds future? No...."not sures"...best guess please.

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  26. You must be a naturalist......."pineapple juice"?

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  27. Spain has some serious politicians who actually know a bit about economics, they aren't going to be pushed around by the EuroPolits, well not for much longer anyway; their econmy is being destroyed bigtime. People are killing themselves in both countries. Dreadful. And Greece? ... well... say no more.

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  28. Good doctor, I like the channel on BP. I think you can draw a very similar channel on CVX. Could you give it a look and see if so?

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  29. Good update.  I really don't understand it very much, so when I get back home I will reread! haha.  I am happy with the open.  I have to be careful with my 137 SPY puts expiring next Friday - much more aggressive position than I normally take.  If the market gets flat I can lose all that theta.  Good thing I will be back before close and will be able to watch most of the action next week.  Moved stop to just above SPX 1385.

    Off to work, short day so see you all soon.

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  30. OIL....hourly stochastics on all oil is high. Daily stochastics on all oil is low. I guess this means "nimble trading"

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  31. I am so ticked, I tried to get an order in for some puts on SPX at the end of the day and missed by mere seconds (day ended), opened this morning up 37%.  

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  32. that sucks - I had to brave using the work computer yesterday to get mine in. :-( btw I replied to your question on yesterday's comments

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  33.  I did the same thing.  Placed a limit order one penny too low and missed my fill at the close.

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  34. Nah...that would be ex-wife more likely...lol
    When dad had a well drilled on his farm the fellow drove out in his VW Rabbit with the estimate. When he collected payment for the job he was in his Mercedes...slick :)

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  35. First wave down looks impulsive, so should be at least one more down after the bounce.

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  36. Driller, must have been a car dealer as well.......Ha, I kill myself!

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  37. Bears are fine, as long as yesterday's high holds. 

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  38. Thanks for your expert guidance. Must be hard working all night and then work into the day. :-(

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  39. All the damage is being done by AAPL,in a down trend for the past 3 days, but may be now turning up as divergences form, so that should add a bit of optimism to the traders and we know what optimism does... And hey look,  a speck of green on the chart ! up we go.

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  40. my tza  soxs  faz  have some big green candles this morning on the 5min chart

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  41.  up 50%, can't bear to watch :( :( :( :(

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  42. another wave down coming, just like PL said it would, will it break 1374??

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  43. Copper needs a doctor, bleeding to death. Gold can't make up its mind. Closed out majority of ST shorts on gold and miners - holding a few in case of complete meltdown here.

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  44. Bulls could put up a fight here, near 1376.  We're approaching 1374.71 -- so if they can't turn it back up pretty quick, it will be a *big* victory for the bears.

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  45. AAPL close to the center of its BB on daily charts, around 613. It's been there before and rebounded. A close below it would be bearish.

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  46. NDX Stoch Momentum Ind bottomed at -61 on 10th and is now approaching -24.

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  47. below 1374.71, PL does it need to close below that level or just getting there is good enough??

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  48. PL, after this wave down, is there more after some bounce, or that is it? What is your crystal ball telling you??

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  49. there's Whole Islands of pineAAPLs over there in Hawaii B_E, acres an' acres of 'em....

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  50. haven't got a chart I'm afraid B_E, just the proreal one. :(

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  51. VERY preliminary spec count ... i'm thinking we saw wave 3 of an impulse at 137.52 -- with the 5th wave to come and make a lower low

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  52. A_rocks, AAPL has bust through the kumo2 line (red) so 'red alert' time all round.

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  53. Yep, overlapped 1374.71.  Keep an eye on the SPX chart, 3rd chart down.  Market's in the target zone for the presumed (x) wave... those things are pretty hard to predict, though.  Back above 1383.11, and there's probably new highs coming.

    Frankly, I'm amazed I've been able to predict anything at all in this market.  :D

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  54. Thanks for that read! -DD

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  55. spot on dude! 

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  56. I love the way your mind works....

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  57. Hi PL,

    Thank you for the beautiful analysis.  I have a couple of questions:
    1) In the sixth chart, could we count the morning gap up in blue 4 to 5 as wave 1, 2 and 3 altogether instead of just wave 3?  If this is possible, black bearish count is OK in this consideration.
    2) In the last chart, could the blue 3 be considered as wave 1 of blue 3 and the bounce as wave 2 of blue 3?

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  58. Thanks for the reply......Nenner saying Gold is at "critical juncture" trendline must hold. But also says this is a "low risk" entry. A balanced approach to recommending a position I guess!

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  59. You've been doing a helluva job...Thank you very much....ES is totally Burish...It's like watching a prize fight between two hungry, well-matched opponents between 1370-72.

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  60. That looks like 3-waves down right now.  So if this is an (x) wave, it's probably about done.  If the market can build a 4th and 5th wave lower, then the (x) wave count will be off the table and bears are in the clear.  Otherwise, that 1383.11 level is the level bulls need to retake for new highs.

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  61.  If anyone cares (anyone....Bueller?)...I covered my /NQ short from 2737.25 here at 2700.5.  Looking for a decent bounce to reload (maybe after Ben speaks, or running up into that?).  I was scared putting that short on before Google earnings, but whew (!), it worked out.

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  62. Actually, not anymore.  They're all in the Phillipines and Senegal.

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  63. Based on AAPL weekly Opex, max loss for options holders would be between 610 and 615 at the close.  Does anyone have a different read on this?

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  64. 1. Yes, that's why I have it as the alternate -- and actually that chart is a bit confusing because the alternate count is actually still the preferred count.

    2. Possible.  That would be incredibly bearish.

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  65. My read is that options Maxx Pain is fairly useless just often enough to be fairly useless.  :D

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  66. It is.  I only got about 45 minutes of sleep.  :/

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  67. AAPL has bust quickly thu' kumo1 and into the 3 hour cloud, never has in the last 3m so be aware. The cloud should kick it out pretty smartly and the stoch mom ind is minus 76, very close to declaring a bottom. Should be a nice bounce soon. IMHO. But hey, could be wrong, markets don't read :)

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  68. That's it...no more screwin' around. I'm sending in this guy. I hope that bull's a bachelor.

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  69. maybe?  all i know for sure is longs are getting absolutely monkeyhammered!

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  70. Thanks you for the comments, PL.

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  71. AAPL hs dropped 6% in the past 3 days, looks to be bouncing.

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  72. Be altert to a possible bottom forming here, near 1373/74.  This is roughly the area bulls will make a stand if they want this to be an (x) wave.  If bears can knock out 1367 before bulls can retake 1383 then bears could have the ball back.

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  73. yup, me too PL, I'm amazed you've done extremely well, but all these overlaps in NDX surely can't be down waves, they look so bizarre?

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  74. So glad to see a nice decline after so many were going short based on yesterday's target zone.  Protect those profits!  :)

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  75.  Thanks.  I wasn't trying to show off at all. I've had plenty of duds lately too!  It just feels good to finally nab one pretty well.

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  76. good book JBB, enjoy.

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  77. Spain default insurance costs hit record.....

    http://www.marketwatch.com/story/spain-default-insurance-costs-hit-record-2012-04-13?siteid=bigcharts&dist=bigcharts

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  78. Pretzel, where do you see CVX heading?

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  79. Good morning PL; amazing call, right on target.Thanks. Any vision on CVX? Thank you.

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  80. congrats:-) 
    I was in a bit early (iwm puts) & got stopped out at close :-(

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  81. Hi Bob_E, CVX ichi moku here, all indicators are for a down trend but of course trends reverse, and intraday moves are not shown.

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  82. now I am mighty glad I reloaded my UVXY yesterday, just unloaded a little bit here...Like PL said, protect your profits

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  83. PL,Greetings from Egypt. Just wanted to let you know that your articles are growing in popularity even here in the land of the Pharos. Thank you.

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  84. All those arrows...wow. Calls to mind the pioneering days of my previous life. Was married to Shirley McClain back then.

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  85. it's customary to offer drinks all round when you score BIG HJ ... lol! Enjoy the experience, more to come, just watch the EWT analysis, At It Happens, how cool is that?

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  86. PL, Greetings from Egypt. Just thought of letting you know that your articles are growing in popularity here in the land of the Pharos. Thnx for the great effort. 

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  87. CVX is a bit unclear at the moment.  I sold my CVX longs yesterday at 102.70 not because I'm necessarily head over heels immediately bearish, but because, well, look at it today.  :D

    Need to see a bit more from it before I can make another call beyond the next day or two there.  Could have put in a bottom that will last a little longer at the recent lows, but I'm not sure. 

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  88. The open interest earlier this week was giving indications of a decline to the vicinities of 600 in few days, as I posted on Tuesday (I called myself nuts when I wrote it...). I am too very skeptical about max pain theories, but I think it does have some value in cases like this, in which AAPL may be moving much more driven by expectations implicit in options pricing than in the underlying itself, in my opinion. So this move does not surprise me. Unfortunately, I did not short or buy puts.

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  89. looks like you are right again, there seems to be a fight between the bulls and bears right at 73/74 level. Who will win?? nail-biter

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  90. See above. 

    I basically have a short-term bullish count and short term bearish count, and I'm pretty equally split on the two.  I like to be a little more certain than that before I make a call in public... though I have trapped myself into having to make a call on SPX everyday no matter what.  :D

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  91. How cool is that Bob_E, nice one :) But AAPL is causing the havoc for the bulls yes, IMHO, still going lower. And lower. And lower. No hope for a bounce until it reverses... 'how low can you go AAPL' Down 6.7% in 3 days. shoosh

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  92. Whoops, fixed the typo.  Hope everyone is staying "altert," whatever that is.

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  93. herc17, many thanks for the donation!  I appreciate your consistent support.  :)

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  94. "I am serious.  And don't call me Shirley"  - who said it?

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  95. Wouldn't it be nice to have a real time chatroom here, so we don't have to keep refreshing? PL *wink* *wink* 

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  96. I'm gonna say there's probably some new lows still coming... not sure *how* low yet.  The wave from 73-76 looks corrective.

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  97. http://www.youtube.com/watch?v=B_XuPXGMpLA 

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  98. Hi EgyptianTrader, glad to hear it -- and welcome!  :)

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  99. Is that a gerbel on steroids?

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  100. So earlier in the week, things pointed to 600, now open interest points to 610 to 615 at the close.  The 20dma is at approx. 613.30  We'll see what happens at the close.  I have no position in AAPL, and I am just looking at it in terms of its impact on sentiment and the indexes.

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  101. go get some sleep... I mean thanks for guiding us through this particularly hard to predict market.

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  102. The problem with the real-time chatrooms is they don't archive well, and a *whole* lot of people like reading through the comments sections, even after the market's closed.

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  103. The great feature about this blog is the ability to reply, comment, and expand on particular subjects that are brought up.  Chat is great for real time, but it is very difficult (impossible?) to reply to specific posts, and then it is difficult to go back and read posts from much earlier in the day.  

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  104. For a long S&P position here, where do you see the best stop? Maybe below the current low at 1372.5? 

    Thank you

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  105. If Spain fails, the default contagion will not be contained. Deflation city.

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  106. Thanks for your update. Also bought &sold my calls yesterday  and got some puts  by end of the day. Going the right way so far. Also thanks for UKDNY for the IM chart on CVX. Trying to ride this trade until it run out of *gas*...

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  107. Well, legally I can't give trading advice.  But that seems fairly low risk.

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  108. And there I was considering having fish for lunch today...oh well

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  109. Agree with Authentic a d PL.

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  110. try R2K B, looks trapped for a few days, typically 2-3 more, suggests a 4th wave, in which case the others should do the same ;) ? cvx ? maybe.

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  111. I picked the wrong day to stop sniffing glue.

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  112. Agree...BTW...can see comments on my iPad...SOOOO helpful.

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  113. Geez PL, I'm seeing so much bearishness on the charts I'm almost giddy.  The wave (a) high established on Wednesday has been broken in both the Russell and the S&P (confirming that it was indeed an 'abc' correction off the Tuesday low.  Am I wrong about this?  I'm starting to feel a bit lonely now, lol.

    Also, AAPL has broken a 4 month long trend line and in the process has caused the AAPL:NDX ratio to break down badly, as I was trying to point out yesterday when my comments started disappearing, lol.

    I'm not trying to "sell" my views to anybody, but I'm getting concerned when I'm seeing something and others aren't.  It makes me start to question my own sanity.  It makes me start to question my own sanity.  It makes me start to question my own sanity.   It makes me start to question my own san......

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  114. nice welcome green candle forming on the 4hrly ichimoku after bouncing off as expected, stoch/mom/ind turning up too so here we go, 'per ardua ad astra'.

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  115. You haven't read through all my comments, apparently.  :)

    Nor the article yet, I'm guessing.  Based on the extended fifth, see the SPX chart (3rd chart) above to understand what I'm on the lookout for.

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  116. Agree. I actually like the simplicity of this blog. It's not one more thing I have to navigate while trying to look at 12 charts at one time. Thanks for everything you do - I don't know how you do it.

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  117. Bears have a shot at retaking control here -- back below 1376.15 and there *could* be new lows on deck.

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  118. One of my favorite plays in the metals market (and it could
    be others but I don’t trade much else) is the “dead cat” bounce play following
    a abnormally high volume selloff. Doesn’t come around often, but when it does,
    I find it to be quite profitable. Sometimes the bounce back up last days,
    sometimes a week or two, but the idea is to position short thru the bounce up,
    for lower lows. Here’s a chart posted last week showing triangle I was watching
    with added notations for today (can’t chart the daily copper so this one shows
    close thru yesterday) – apologize for the lack of clarity, not the best
    chartist to say the least. I could be wrong of course, but I like the odds play
    here and that is what trading is about, picking your spots.

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  119. Your articles are very intensive. Which makes it good, I guess. Not cheap to read though. Do you realize, PL, that you single-handedly burn up thousands of hours of reader time? Consider the immense cost! :-)

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  120. ur welcome RickQC. Bob_E ond one or two others seem to be trading it too. I just wish the uberbulls would start buying AAPL again, get us all going higher. And higher. And hi.....  :)

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  121. anyone know guidelines for how far c goes in a flat compared to the start. i know it can go further than A, but how much further? anyone know a good source for such guidelines? i know many of them are in prechter and frosts elliot wave book which i refer to all the time. but a listing of them would be really helpful. thanks

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  122. looks like c just went 161.8% of a and started the next wave down

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  123. Most common are 1.618, 2.618, and 4.23.

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  124. I "always" read the article.  Twice.  No, I haven't yet read "all" comments though.  But enough to scare me a little, lol.  Perhaps it's best that I just slowly back out the door, lol.

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  125. Nothing to be afraid of!  Well, except for jbg's pic of a bear w/ a gun...

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  126. AAPL gettin' hit, down 2%

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  127.  Hey now...I had bring him in all the way from Chicago...and he didn't like the canned salmon I had waitin'...fresh or nuttin'

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  128. PL...is it possible to count CVX in this way:
    112.28 = 0
    104.85 = 1
    108.79 = 2
    105.03 = i
    105.95 =ii
    102.83 = iii
    104.08 = iv
    100.51 = v & i of 3

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  129. That's my most likely read too -- but the danger with making those kinds of assumptions is that a 3rd wave would do the exact same thing.  Bears need to take back 1376.15 to confirm.  Appears probable -- but it's important to understand the where bullish and bearish patterns overlap and might present as the exact same things in the early phase of the pattern.

    Ah, 1376.15 just fell.  :)

    Even that doesn't *guarantee* new lows -- but does make them more likely.

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  130. Probably.  Can you do a chart?  As if I don't have enough work...    ;)

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  131. Thank you good doctor.....I was toying with the idea that a fourth wave, complex correction was coming up. So many options within EW.....I think I need more tin foil.

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  132. I sold my two April CVX puts that I bought yesterday for a very small profit.  It seemed like the best thing to do with only a week remaining on those options.

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  133. NDX is such a rebel though, I'm not sure how much weight to give it.

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  134. Hey...you got like a whole 45 minute sleep...ugh...bless your soul.

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  135. weird slow action. now that 1376 fell, it can't be a fourth wave because of wave overlap. but not acting impulsively down for a third wave down. any thoughts?

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  136. They're having their real estate bubble burst. Friggin sub-prime was/is the ruination of the world.

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  137. Several. 

    1)  Your a could be 1, your b could be 2, and your c could be another (1).
    2)  Your a could be a-b-c, your b could be a failed fifth, and your c could be 1.
    3)  Your a could be a, your b could be b (that's fun to say), and your c could be c.  This could be a nest of 1's and 2's, getting ready to drop lower.

    There's more, but I'll stop there.  :)

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  138. lol, i thought ew was supposed to limit the possibilities.

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  139. "
    The inverse is true: if the SPX overlaps 1374.71 first, then it virtually "locks in" an a-b-c rally, which would suggest new lows are more likely."



    so this has already occurs, right?

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  140. Mainly that's the job of the analyst.  :)

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  141. Yes. 

    I added this line above the chart, because apparently this is one of those articles I'm trying to cover too much detail on too little sleep and losing people.

    This is currently the preferred count.

    http://3.bp.blogspot.com/-n2kJqAsSxXE/T4f2inWFA1I/AAAAAAAAB2Y/ulrPJtBkPK8/s1600/spx+st.png

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  142. Sorry Pl...I shouldn't be buggin you with alt analysis. You'll let us know when you see it. My bad!

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  143. Looks like we're settling into our OPEX Friday Flatline.

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  144. And, btw, I have no strong opinion here -- so I would watch the recent highs and lows to sort out the counts. 

    I don't know what the market's going to do every minute of every day, nor do I need to -- I just need to have a pretty good idea enough times to make money.  :)

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  145. One minor typo left:

    This will be a strong warning that the bullish count count be in effect, and new highs become more likely.

    This market's slipperier than a salmon swimming upstream past a boatload of bears

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  146. Thanks, fixed it.  I swear, sometimes my fingers just type whatever the hell they want.  

    DON'T LISTEN TO HIM, WE DO NOT.

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  147. Mercy...do you walk a tightrope in your day job?

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  148.  PL, amidst this volatility and intraday fluctuations do you believe that the validity of supports and resistances need to be improved by not being very specific. I mean to say that 1376.15 could have been stretched to 1375.5 for example just to count for any "spikes".

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  149. Yes, I generally think it's always a good idea to place stops a little beyond the "obvious" places, to protect against stop runs. 

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  150. Was this a "I'm schizophrenic, and so am I!" moment?  :)

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  151. Even though the bulls retake 1376, now at 1377+, volatility is creeping up, watch out guys.

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  152. You should have your fingers examined...Some of them seem to be real knuckleheads

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  153. When things get quiet....

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  154. Alright, I need to get some rest.  45 minutes of sleep ain't cuttin' it -- and the market's not exciting enough to keep me engaged right now.  I'm already short from near yesterday's high -- covered some, stops on the rest.  Not much else to do at the moment... so GL.  :)

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  155. Yes.  I mean no!  I mean yes...

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  156. lol, . . . boatload of bears

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  157. PL, great work once again. Get some rest. A question in case you are back refreshed, before market close:

    Is it correct to say that in both the bear/bull scenarios, we are going to tag a short term high (ie: SPX ~1390's)? Or do you see anything today that says we'll head even lower before heading back up?

    thanks

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  158. The market is going nowhere that I thought my internet connection is down!!

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  159. Sleep is overrated, take it from me.

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  160. It's about to do something off that pennant in ES

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  161. Hi Katzo...been missing ya. Hope the day is going well for ya.

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  162. I noticed that too, just hope that the direction is down :)

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  163. EW can limit the possiblities but current EWT can't limit the possibilites to one (the right wave count), so PL's approach is to provide high probable wave counts that you can check with market in progress to find the suitable wave count for trading at that moment.

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  164. It looks burish to me.

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  165. Is "burish" a combination of bullish and bearish? lol if so, then you've got to be right

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  166. less than 1 point movement for the SPX in the past 30 minutes...worse than watching paint dry...

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  167. finally moving, but the direction is UP :(

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  168. very speculative but possible scenario short-term

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  169. Quote of the day: "The Fed is telling us to buy on dips." - a floor trader at NYSE.

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  170. what is the lower target, can't really see. Thanks. So quiet today

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  171. Idea.....but very risky.  CVX could count as a minor wave four unfolding right now, with the fifth wave down within the major 3rd wave down about to unfold. 0-3 = 8.28. Fourth wave high in here about $102.86. Fifth wave target then becomes 102.86 minus  (.382 of  8.26 or 3.15) or $99.71 and (.618 of  8.26 or 5.10) or $$97.76. Gonna buy 10 April 100 puts and close my eyes. Vover me...I'm going in.

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  172. Idea.....but very risky.  CVX could count as a minor wave four unfolding right now, with the fifth wave down within the major 3rd wave down about to unfold. 0-3 = 8.28. Fourth wave high in here about $102.86. Fifth wave target then becomes 102.86 minus  (.382 of  8.26 or 3.15) or $99.71 and (.618 of  8.26 or 5.10) or $$97.76. Gonna buy 10 April 100 puts and close my eyes. Cover me...I'm going in.

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  173. Lol!  Guaranteed 100% correct.

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  174. I was working on my politickin' skills...lol

    Well it looks like the bottom border was a TL....whoopsies...actually it looks like a ED/bear cub flag right up against the fib....ooh the tension.

    http://screencast.com/t/noF0JUssXN

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  175. the rise off of the lows could have been an abc that retraced 61.8%of the drop. started down as im writing this.

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  176. 137.48 ish ... it's a very spec count

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  177. Or is it Charles Barkley saying, "bearish"?  

    That's turruble.  That's hurruble.  That's burish.

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  178. Interesting post PL. Weirdly enough, yesterday afternoon I found myself staring at a weekly chart of SPX and finding myself sorely tempted to BTFD. I even went as far as to make up the attached chart in Photoshop comparing July 2010 - May 2011 to August 2011 - this week -- not exactly a scale model but I couldn't help thinking there was a strong family resemblence... Also noted that as of yesterday, this week's bar was looking like determined retest and resounding rejection of the 2011 highs.

    But of course I kinda suck at this so feel free to take any analysis of mine as a contrarian indicator. I would encourage that, actually.

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  179. Via Mish via Libre Mercado:

    Black Market in Spain: Cash Transactions Exceeding 2,500 Euros Now Banned

    The Prime Minister, Mariano Rajoy, has announced on Wednesday that the plan to combat tax evasion on Friday approved the Cabinet prohibit the payment in cash transactions of over € 2,500 and n which at least involved a businessman professional.
    First Italy. Now Spain. 

    Run on bank, anyone.

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  180. General question for you guys : am looking at ENL for its semi-annual div on 4/26/12. According to my trading platform, this ADR has a float listed as 346.4 million shares, yet the avg daily volume is only 104,234 shares, and institutions only hold about 1%. What the heck?  Who's got all the shares? Is this information screwy? If not, can someone explain this to me?
    Thanks.

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  181. looks like a bunch of nested 1-2's. even in the minute charts, it looks like a 1-2

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