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Wednesday, April 4, 2012

SPX and SLV Update: We Were Ending Diagonal When Ending Diagonal Wasn't Cool...

Okay, so that's a stretch of a title.  I'm trying to echo the famous Barbara Mandell song.  The original song was of course titled I Was Ending Diagonal When Ending Diagonal Wasn't Cool -- my change to "we" definitely stretches it. 

Anyway, that's not the point.  I'm going to have to consult my notes now to figure out exactly what the point was... oh yes, the point was that we started watching this potential back on March 27, based on my read of one extra little wave -- and now everyone's looking for it.  The market's sure doing it's best to "make it so," and the description on the chart of a frustrating whipsaw market describes the last week perfectly.  My only concern is that too many people have caught onto it now, so the market may need to throw another curve ball.

Yesterday's SPX preferred short-term count was a whiff.  Based on the most probable read of the pattern, it clearly looked like it needed another slightly higher high -- but it never came.  This is one reason that chasing the last couple bucks of a move can be dangerous.  On the other hand, yesterday's NDX expectation was a hit, so that's some consolation.

Yesterday, I warned that trade beneath 1409.61 would be dangerous for the bullish outlook, and after studying the charts tonight, I hope that readers heeded that warning.

Yesterday's overlap, while not perfectly conclusive, pretty well locked-in the three-wave form of the most recent rally leg.  So now the question is if there's another leg up left to complete the diagonal, or if we need to shift all the labels over to the left, which would make the recent high "it."  Either is possible, and there's little in the way of crystal-clarity. 

To try and uncover some clues, I spent literally two hours breaking down about a day's worth of movement on the SPX one-minute chart, and it does appear that there are new lows coming either way.  The decline counts best as an impulse, albeit an ugly one.  So either the market formed a first wave down and ended the day in a second wave (which is likely complete at a 2.618 extension of wave-a in an expanded flat (see chart)), or it's an a-wave down, with the market ending the day in a b-wave.  Either 3 or C down still to come. 

Alternately, the market bottomed wave iv at yesterday's low -- but as I said, if two hours of short-term chart work mean anything, then that's unlikely.



The larger structure would look slightly better with another wave up, so it's possible that yesterday was waves a and b of wave iv of the diagonal -- but I like the idea of the recent high being "it" because it would make a great curveball and send the market plunging while all those johnny-come-lately ending diagonal watchers kept waiting for a new high.

As discussed over the past couple days, the risk level for longs definitely remains elevated.  There's a couple key levels marked on the chart.



I've prepared a more zoomed-in chart to help readers have an idea of what to look for -- assuming my two hours was well-spent and new lows are actually coming tomorrow.



I want to also update the silver chart, because it's possible that silver may have formed an a-b-c and fallen short of the target for c.  Personally, I'm moving my stops up to the most recent swing low at 30.72.  I feel that risk below that level is high.



In conclusion, the market remains at a potentially dangerous tipping point.  As I've mentioned several times, diagonals can be extremely tricky patterns, and that has certainly been the case over the last week.  It remains so. 

The larger pattern would "look" better with another new high, but I wouldn't bet the ranch on it.  It sure feels like the trend has changed.  And if we have seen a trend change with the recent high, then it is highly likely that the market is about to embark upon a decline of intermediate proportions. 

I can't state often enough that diagonals are very tricky patterns, so it is simply not possible to know for sure one way or another whether this is still part of wave iv, or whether the diagonal has already completed -- but the market should answer this question over the next session or three.  Trade safe.

222 comments:

  1. Good morning.  For some reason, the last chart refuses to center itself on the page.  Oh well.  :)

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  2. Here's a quick and dirty Chevron update.

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  3. Morning PL - it appears that we will definitely take a run at the lower targets today, this is going to be a weird ending to a short trading week.  Going to have to see what the charts tell us a little later in the day.  Really good post and appreciate the time taken to put together the detail on the intraday charts - lets see if it helps trading today

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  4. btw, if that whole thing turns into a descending triangle, then it will target 97.50.  TBD

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  5. off to work - all you have a great day and trade well

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  6. Futures not budging on the "good" payroll data.  We may have turned the corner on sentiment, where good news is bad now -- since good news means no QE3.

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  7. Good morning PL, great post, and thx for the SLV update! Appreciated!

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  8. thanks for all the work you do PL.......as my father used to say......"you are a gentleman and a scholar"

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  9. Thanks for a yet another great article PL...It seems the market did have a case of ED after all (rimshot/rotten tomatoes optional).  You saved me a WHOLE LOT of aggravation. TY3 for that alone.

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  10. Thanks Tim.  btw, I received your donation yesterday, many thanks!  :)

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  11. I've been having some fun with your CVX trade. I've devoted most of my time to analyzing the wave structures and with your guidance I see my areas of mistake and success. A great way to learn. Thanks for the updates and the original find on CVX. To coin a phrase...."it's been a gas"

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  12. Good morning PL.
    Thanks for waking me up & bringing back flash images of the "Mandrell" Sisters from my early adolescence!!  I grew up in KY/TN & used to salivate waiting for their show on TV & have even seen them live... LMAO...  wow. what a sad & pathetic story.  Nice work on the charts.

    RAV

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  13. I think I've seen this movie before. CVX is going open up "gap down" and as PL has pointed out, there is the possibility of a H&S pattern developing right at $104.80 price range. I'd be in the camp to take profits in the options at the opening today. Out on a limb here...but like I said: "I think I've seen this movie before" IMHO

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  14. Good morning PL; Thank you for the update. Very much appreciated.

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  15. Good morning friends.  I just gotta show this to you.  The Aussie:Yen pair has broken the neckline we've been following for the past week or so... with gusto.  Since that particular currency pair is a stellar gauge of the appetite for risk, the message it's sending today is clear.  It's "risk off" in a big way.  For those interested, you can click my name and be taken to the latest post where I have a bit of dialogue about this pair, the pattern and what it all means.  There are a couple of links below the chart to different variations of the same chart as well.  It's a good thing I don't write up a new post every day or the "click on my name" trick wouldn't necessarily take you to this chart.

    Have a great and green day :-)

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  16. Feels like too many bears are ready to pounce on this breakdown.  I think they need to get stopped out before the market really turns.  Not saying new high though.

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  17. Any chance the diagonal breaks to the upside again? That would be a surprise.

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  18. Since Japan, German and French drop over 2% but the US only drops less than 1%, the good news remains good news.

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  19. Good morning to all. First, thanks for the comments on eating crows and snake jokes in yesterday's post. I had a lot of fun this morning with such good quality humor - a nice start to a promising day? As I mentioned yesterday I am looking for a print lower than ES 1386.65 (i.e. a lower low) and a failed retest back in the area of 1403-1405 to favor a turn downwards. I still keep an eye on the indices, another on AAPL, very resilient in the 600's. If/when it comes down we may have a more consistent move, otherwise we may be seeing right now another dip that will be ferociously bought through the EOD.

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  20. We've been conditioned very well haven't we Max.  What you just described has happened for the past 37 months.  Why would this time be any different? lol

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  21.  great article Pl.. 

    break all these in one day?? I've heard of a hat trick ,, but, geeez, what do you call that?

    Dow 13,000

    SPX 1,400

    Nasdq 3000

    Oil 100

    Dollar 80

    Vix 17

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  22. Good post, Albertarocks.  Thank you.

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  23. I just discovered your site; great find.  I posted three of your charts, provided proper credit and links suggesting a visit.

    If this is a problem.  Please let me know and I will take it down.

    Link: http://notionalvalue.blogspot.com/2012/04/stock-market-pretzel-logic.html

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  24. Never do anything in options in the first hour. If you can sit on your hands you will make lots more money. I promise......lol

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  25. I liked ED a lot better before he got so cool...long es 1392 hoping for a bounce off of Ed's lower blue trend-line.   sl 90.75

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  26. You're welcome Ray.  I consider my contributions here as the price of admission to Pretzel's great site.  If I hadn't lost $300k by getting greedy in the real estate market a couple of years back, I'd have sent it to Pretzel.  But today my biggest concern is where I'm going to find the money to buy a new battery for my car.  Oh well, I'm pretty confident that I can "trade my way out" of the mess I got myself into.  All I need to have happen is that the stock markets start obeying my damned rules, lol.

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  27. Thanks for the advice....but my reasoning here had nothing to do with the market or the meltup or even buying the dips. In a post yesterday I mentioned that I'd sell out of the CVX puts if I saw a trade below $105.50. With a $105.75 trade within the first five minutes...I'm out. Happy as a clam.

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  28. Spain and Italy bond yield surges.  The reality for Europe is sitting in.....

    http://www.marketwatch.com/story/europe-stocks-drop-ahead-of-ecb-rate-decision-2012-04-04?siteid=bigcharts&dist=bigcharts

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  29. If gold rips thru and closes below 300 MA @ $1610, for its second test of this level since Dec. 2011 - look out below

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  30. Italian and Spanish 2 year, 5 year, and 10 year bond yields are on the move... up big today... triggered by awful Spanish bond auction.  PM Mariano Rajoy could not calm fears.

    Spend more than you have. Default. Rinse. Repeat.

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  31. T3 of 91 hit. TVIX up 11 %

    prolly headed sideways or slightly up for ROD, tgt may be about 1400 es

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  32. PL- Do you see evidence that 1395 will act as support?  Seems like we bounced off that level, but I can't tell if we'll get another leg down?

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  33. Multi-month head and shoulder showing up on the Euro.

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  34. truerangeballisticApril 4, 2012 at 6:04 AM

    AR I want to thank you for that post and the information I took from it. I noticed your false break comment and applied it the the RUT for the same setup. I wanted to give you credit for that. Much appreciated.

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  35. CVX has made a clear five wave move down from the high at $108.79. Low so far $105.03...a difference of $3.76. 50% retracement equals $106.91, 62% retracement equals $107.35 (remember the gap down started/ended at $107.14) This next a-b-c wave up will then be wave 2  and sets the stage for wave 3 of 3.....which should end up around $100.00

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  36. That's really important stuff.  Thanks.

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  37. Out of silver - finito - don't like action one bit. "Oh Katie Dear" done stove the dagger!
    http://www.youtube.com/watch?v=GqOw99N3ODk 

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  38. FWIW I keep thinking I would like to see silver close below the BB before expecting it to go up. It seems to do that often before a bigger run. Could be totally wrong though.

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  39. VIX option report

    http://www.youtube.com/watch?v=5ZXdB-oraxY&feature=plcp&context=C4da7932VDvjVQa1PpcFP8gF6YbVbpVw_VEhX6xFVhT6Syqq7K2Ow%3D

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  40. Thank you Bob. If you have time what do you think the approximate timeline would be for the wave 3 to begin? Of course assuming  it ever does? I read you already jump off the CVX bus?

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  41. Is an extention of operation twist possible? Is GS playing muppets again.....

    http://www.zerohedge.com/news/jon-hilsenrath-wrong-here-why-operation-twist-will-not-be-extended

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  42. It always makes me happy to know that someone benefited somewhere along the way.  Thanks.

    By the way, I was thinking about you last night when I started doing some Google Earthing.  I love the interior of B.C. very much.  And I also love Montana, Idaho and Washington.  If I didn't find the 'law enforcement types' in the USA to be such arseholes I'd spend a great deal more time down there.  But as it is, I haven't been to the USA for over 20 years, even though I only live 150 miles from the border.  The last time I was down there I nearly got into a fistfight with a park warden who though he was some kind of god who was going to bully me around.  I just don't back off from tyrant pricks like that and he found that out in a hurry.  I never did like bullies.  And with the recent law having been passed that allows the gov't to assassinate any one of the 330 million people down there just because they want to, I won't be going any time soon either.

    But I took another, much closer, look at Sandpoint and man, that place looks awesome.  I didn't appreciate it enough when I was down there last.  I was only 18... man, decades ago.  I didn't even  realize Lake Pend Oreille is that big and nice.  If you could arrange to get all the cops outta there, I'd consider buying a little cabin there some day, lol.

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  43. Not at all encouraged for the bull case here.  I think this move has further to run, and I do believe the top is in -- unless the bulls can pull out a last minute skin of their pants stick save here, I think this market is probably toast.

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  44. Bus driver asked if I was going up town? Told him no, I'll get off here then! 

    Once this correction rallies back to the 50% retracement of this first leg down....(50% = $106.91) I'll be back in the June 100 puts. I'm curious to know why you're saying "assuming it ever does" you know something I don't? 

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  45. Or pull it out by the seat of their teeth...  one of the two.  ;)

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  46. Feels the opposite to me... everyone waiting for the "inevitable" big bounce.

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  47. That strategy will likely serve you very well SB, and I would completely agree - don't like the PM action though and the 2008 PM correction is burned in my brain and can't get it out.

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  48. Just remember.... don't battle the beard!

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  49. I'll have to check that one out. Thanks for the info KB.

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  50. RickQC.....I give heavy weighting to Nenners cycle forecasting. His target date is April 19 for an important top in the markets. That gives us two weeks to rally back up to 1449 according to his projection, so I think the wave 3 of 3 could start right after 4/19....we need to be in position by the middle of next week I think. I was really tempted to buy the calls on CVX as I sold the puts, but with 3 of 3 looming...I chose to rest easy, smell the roses.

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  51. Copper as well PL - did a fake out move above resistance earlier this week and plummets to the lower resistance today. dunno.

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  52. I think so Pretzel.  Just based on moving averages, it appears to me that the top is in.  We need a bit more confirmation of course, but the 12 day MA has turned lower and it has only done that twice since the Dec. high.  Both occasions were just a simple little pullback.  But this is the 3rd time... meaning 5 waves are complete (in the simplest of forms).  Of course it would sure be comforting once that major uptrend line is broken too.  Here's a chart from a piece I wrote back in January that asked the question "But What If?".
    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=3&g=0&id=p48667348975&a=253773446

    At the time I thought I was being a maverick for even suggesting such a thing like this was possible (price going as high as it did and that this pattern could still emerge).  But now I'm really suspicious that the pattern shown on that chart might still happen.  So I'll be watching the shape of this pullback with that in mind.

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  53. Just remember about bond markt recently while Fed keeps saying "Don't fight the Fed."

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  54. Doubt the market has 'til the 19th.  Possible, but a lot hinges on today and it's looking mighty weak right now.  Recall how over-extended this move is... if it breaks, the exit doors will likely get jammed pretty fast.

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  55. Asumption was based on UKDNY comments from Yeaterday's 'blog.
    Good morning Bob_EYou asked me about CVX and IMoku...Here's the chart. On the cusp I would say, no strong evidence either way.51/49% in favour of a bounce up today if pushed, could be the 2nd arm of a ZZ.There is evidence of a trend change in that the 1/12 linear regression line is down whereas the 3/12 is up, and Chiku touched the candles on 15 feb and the top came 14 mar. The gap is usually in the 4-6 week range so this is more evidence, but it is not yet confirmed.Hope that helps... (And I hope it's right!!!)Good decision to unload, I also lighten up myself.

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  56. Thank you, sandyone.

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  57. PL! great, short, sweet and concise post. To the point and no-nonsense (except for the title and intro... LMFO... dude where do you get all that from!??? you crack me up). I am sooooo glad I read your story and chart yesterday and kept in mind that below 1409.61 was a big read flag, thus putting in tighter stops that kicked me out nicely above that.  I am sure, given that this is more a bear than a bull blog, that many are banking now! Killer. 

    I am watching on the side line for the rest of the week. Kinda trade fatigue from all "BTFD", need a few days to change my mind (and count "me monnies" [say it like Mr Krabs from Spongebob!"] If we get a close below 1393ish than the downside is really kicking in IMHO.  As you said yesterday; going from 1401 to new highs would be a real stretch and it sure is/was!

    Thanks for you hard work and "never give up" mentality. 

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  58. Watch AAPL, if it slides below 620 decisively; more downside will open IMHO (filling gap between monday close and yday's open), and since AAPL is the market... no need to explain further

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  59. DJIA down 180/220/180 may be ahead

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  60. Now we have 2 complete 5-wave declines.  ABC still possible.  1394 critical to the bull case now.

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  61. you are welcome dude! I so appreciate your hard work. Now that I am reading up a bit on EWT (will buy the prechter book through your amazon link), I realize how difficult EWT is, it sounds all super easy in the beginning: wave 1 up, 2 down, 3 up, 4 down, 5 up and VOILA. hell no, not really. So: respect!

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  62. Thanks PL....how the hell do you stay awake as much as you do????  I value your perspective more than anyone or any service I have been exposed to. I have listened and watched Nenner and between your daily analysis and his cycle forecast it's pretty hard to make mistakes (don't know if I should  have said that). I'm focused on CVX and maybe one or two others.....and I'll wait for the 50% retrace. If it blows down hard...I can jump in pretty easily. Thanks again for the "eye in the sky" guidance....much appreciated.

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  63. RQC...I don't understand. Did UKDNY post this yesterday or today. I can't find it...something wrong with my connection maybe. Gonna reboot here.

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  64. 94 ES or $SPX? we had a double bottom at 89-90 ES area, prolly go up now

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  65. it is just a matter of counting from one to five, or is it....

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  66. SPX.  Yes, we should rally here - positive divergences as well.  i.e. -- bulls need to hold 1394 to keep the decline as 3 waves and not 5.

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  67. lol, I wish.  Even my 2 year old can count from one to five in less than 2 hours...

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  68. ty, Bob, appreciate that.  Actually, my wife just yelled at me to go to bed, lmao!

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  69. and you gotta know your ABC's as well. So my 5-yr old is already a certified Elliotician!?

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  70. Thanks again RickQC...I totally missed the post (started drinking too early maybe) but am grateful for you noticing and copying. I sent a note off to the good doctor thanking him for the repsonse. Yhat last comment "Good decision...." yours?

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  71. PL, if I want to order Elliott Wave Principle: Key To Market Behavior by Frost and Prechter through your link; does it matter what price? New or used? for you to get your "incentive"?

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  72. Was posted today but on yesterday's blog. Hummm got to get used to HI, time stamp! He also posted.a chart on CVX. Let me know if you cant get it I'll posted for you?

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  73. 1397.44 is 20d-SMA, so would be perfect "bounce" level.

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  74. They mean well.....but they just don't understand us neanderthals...do they?

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  75. I have some info from Nenner and will post some of the comments in a few minutes

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  76. Buy whichever one is the best deal for you.  I'm just happy when people shop through my link.  :)

    Many thanks!

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  77. Many thanks to a donor who wishes to remain anonymous for his ongoing support.  :)

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  78. Nenner:

    No new positions, but buy signal continues.
    Stops on the markets are SPX 1390,NASDAQ 2750, Dow 13,100
    Gold & Silver still on a sell signal..bottom by mid april
    Crude...looking for a bounce to start by the end of the week.
    Bonds...very close to low waiting on buy signal
    Euro gave a sell signal....no downside targets at this time
    Aussie..continues down no reason to buy

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  79. definitely a 3 on the 15 with my strength oscillators

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  80. more down ahead, mrkt whipsaw, LOL, think 180/220/180 now very possible, up moves very limited, Bernanke went short at the top LOL

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  81. Thanks Rick....I was able to view the post and chart after a reset. I guess I have to start following the good doctor due to time warp.

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  82. done! can't wait to read it!

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  83. Definitely a bweird strategy. Lol

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  84. Thanks for that Bob

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  85. Those two waves you refer to are also approximately the same length.  So if it were to break lower (into an air pocket) it wouldn't be unreasonable to expect an extended fifth, right?

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  86. Glad to snowbeast. From the sound of your handle I'd guess Alaska or Switzerland/Alps?

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  87. I wish. It's actually my cats name and she's enough of a character that we use her name as an expletive around here. I was raised in Wyoming though and love the snow.

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  88. PL,

    Great call on the rally.

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  89. Would you say the bounce off 1394 at 10:30 EDT was an impulse wave ending at 11 EDT?  If so, then we would now be in the 3 of some 5 wave up move, right?  Still learning the EW stuff.... Thanks!

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  90. Exact comment from Nenner:

    Crude closed below 105 our important level.
    We are still looking for a bounce starting by the end of the week
    since our more important high is only projected for mid-May

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  91. Thank you, Bob_E.

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  92. Glad to...hope it helps.

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  93. Thanks.  I just had a rather scary thought.  The Russell is putting in almost no bounce here that would coincide with what we're seeing on the S&P and the NDX.  And with that air pocket just beneath, combined with the H&S necklines... if the Russell doesn't move any higher into the close I can see some seriously bloody action overnight.  Into the abyss sort of deal.  Pure speculation but the Russell is sending all kinds of bearish signals I think.

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  94. Timeline from Nenner & UKDNY's gap filling  are very simular give or take a couple of days. Very interesting and helpful. Thanks.

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  95. "Bernanke went short at the top" is great, lol. If he also loaded his boat up with all the puts he could find we can expect SPX at 1200 shortly" :-)  Behavior of ES and NDX100 retests at 1403-05 and 2760-64, respectively, probably tomorrow at the open, and if they happen (!), will help determine where we are headed to. If crossed, the ED is playing just perfectly and another thrust up should be in. A continued move down overnight or sideways (no retest as above), with maybe a gap down by open tomorrow, will reinforce the view of a turn. A lower low printed by NDX100 futures today is a hope for bears. I guess (guess!) few people will want to bet on the Friday jobs report staying long over the weekend, but this is just a guess... Final 30 minutes today are critical for bulls. APPL is the wild card, it must go down to enable a larger market move down, imo.

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  96. K7, Are you still holding TVIX? Thinking of jumping into UVXY.

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  97. SPX setting up for a possible gap down tomorrow

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  98. If I may ask, what things are you looking at that help you arrive to the opinion which makes that a possibility? Trying to learn all I can!  Thanks

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  99. Note to Bob: the comment about you being on the roof on the other thread was in relation to the ladder picture you posted.  ;)

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  100. Just counting the waves.  Looks like an a-b-c expanded flat with 5 of c finishing up as an ending diagonal right at the close.

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  101. must be an exciting market if you're still up. Looks like you picked the wrong week to quit amphetamines.

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  102. Well, that big drop just confirmed my count of the micro waves.  Hopefully I got the next higher degree right too.  :)

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  103. yes, My research said it might double, about 6 to 10 to 12.

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  104. Thanks PL....was wondering. 

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  105. Alright, must sleep.  Ugh, gonna be hurting later...

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  106. Calvin head on the ES 500 tick chart.

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  107. Today, RUT bounced off a trendline drawn on the daily. The expected continuation: a bounce up. The much less expected: continued breakdown. The alternative expected: another short push down and then a bounce up. The market likes to do the unexpected sometimes. We'll see tomorrow.

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  108. LOL!  I thought I saw that too!

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  109. Good call. Same as EUR/USD pair.

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  110. Every day I'm thankful for this site and this group of people. I love that everyone is helpful and willing to share what they know (which explains why I don't post much) while not getting base and ugly about things. Thanks everyone for keeping it fun and educational each day.

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  111. Hi snowbeast,
    I share your same opinions too!!  Depend much on PL and has magic interpretations.

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  112. Top must be in...
    JPMorgan Awards CEO Jamie Dimon $23 Million Pay Package 

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  113. PL, I wouldn't be surprised on more down side tomorrow. Why? Now this is not based on any TA, EWT, etc etc, Instead, recall  the Goldman Sachs's talk about emerging tech markets I attended last week? The guy kept on emphasizing -between the lines- to the audience to buy stocks (market was at multi year highs blablabla), I told my colleague that was a great sell signal. He disagreed, since "da expert" said the market was doing so good. Well, here we have it... And he kept stressing at how well GMS' IPOs have fared, but he clearly showed those were all issued at market lows... and so far they'd only issued 2 for that particular sector this year...

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  114. "enough of a character that we use her name as an expletive around here."
    I feel the same way about Bernanke some days...

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  115. explaining my earlier comment to PL that this was a 3 and not a 5 based on strength oscillators. The wave was initially labeled a 5 but I know it would recount.

    ES/15 with tgts

    http://screencast.com/t/ThEb73Pm

    A bigger view

    http://screencast.com/t/lnWhzuPmCE

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  116. Hmmm... When he was making the rounds on news shows last week he was saying that gold and silver should be bottoming in the first week in April. Also that 157.50 -- which just about got tagged today -- was important support for GLD. I wrote it down because I wanted to check it against the charts and other opinions.

    Everything else is pretty well in line with my notes. He was tossing out April 19th and/or 1449 for possible cycle tops for SPX (13,400 for DJI) and said Oil should hit a cycle bottom on 4/4 with a top in mid-May. I also noted 107.50 as important support level for TLT with cycles bottoming in mid-April (which would kind of make sense if equities topped there) and then looking for a top in September.

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  117. Something like "son of a Bernanke!" maybe?

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  118. Speaking of news shows, is all this info that from sources in the public domain, BTW?

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  119. imo stay away from trying to short AAPL, it looks to me that it will go up tommorrow while I think mrkt will go down.

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  120. Agreed....whole-heartedly !

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  121. Multiple sources......but all verified as accurate.

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  122. Thanks. Am waiting a bit to try SLV. 

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  123. We are in a reversal zone for PMs between today and early next week according to proprietary astro indicators. Most of the time this indicator works for a nice rally - 20% of the time the PMs go much lower.

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  124. Snowbeast,I'm new to this site and you took the words right out of my mouth! 
    wish one day I could give back... to PL & this wonderful community.
    & btw, thanks Bob_E for all that you have shared!

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  125. Good thinking, Davezarling.  I agree.

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  126. Good read, Soulsurferusa.

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  127. IMHO, TVIX/VXX are great in bear market but not to be held in bull or sideway market or you'd get burned fast. And in long run, they are all going down to 0 (of course there will always be reverse splits to make them above certain level). 

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  128. That seems to apply to all the ETF/ETNs. Play them only in the direction of the trend, stay away when they oppose the trend.

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  129. The GS is trying to unload its risky assets to the muppets, which also getting help from beard boy's QE3 hint.

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  130. Do you happen to know what the theoretical rate of decay is for each of these?

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  131. Glad to do it....hope we can take some of our coins back from the big boys.

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  132. I have been patiently waiting for the day when AAPL will spike up like a rocket on huge volume and then collapse... I am not an options expert (actually, I am not an expert at all...), but it seems that the underlying AAPL (the stock price itself) has been severely influenced by the highly speculative options trading, weekly options in particular. This has been an insane trading - if you're good with options and market timing you make fortunes overnight; if you're not, you get totally burned as easily.

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  133. TVIX had 150,000 shares sold to a MM. saw it go buy on time n sales at  7.02. looks like that's the NAV. a little premium going on.
    UVXY had 350,000 shares sold to a MM at same time for 15.99.  bid ask was 15.70/15.75.  its now trading at NAV 15.99.

    interesting day.  How we looking for tomorrow? Katzo, PL :)  is the jobs number gonna be sell the news for once this year without the Fed's lifesaver?  

    http://www.youtube.com/watch?v=2bjcsfjkMes

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  134. ithin it ends up being about 14% a month, but not positive

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  135.  any technical damage on your favorite charts guys?  i got lucky w TZA and UVXY past few days.. I'm not good , so by default that means i got lucky..haha..  I bought some UVXY back at close for 15.88.  front running jobs and everything else thats been painted over with one coat of feel good paint.  wish me luck again. will buy TZA tomorrow for sure at some point.

    SPY got a confirmed sell signal
    http://www.americanbulls.com/StockPage.asp?CompanyTicker=SP500&MarketTicker=NYSE&Typ=I
    TZA got a buy signal confirmed
    http://www.americanbulls.com/StockPage.asp?CompanyTicker=SP500&MarketTicker=NYSE&Typ=I
    UVXY got a buy -if..  will see
    http://www.americanbulls.com/StockPage.asp?CompanyTicker=SP500&MarketTicker=NYSE&Typ=I

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  136. Now, the beard boy is really worry about Europe debt crisis.....

    http://www.marketwatch.com/story/bernanke-met-with-bank-execs-last-week-report-2012-04-04?siteid=bigcharts&dist=bigcharts

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  137. FYI...if you listen to Nenner long enough you'll find that he changes his thinking on time and price...nothing is for sure. He monitors several cycles, weekly, monthly, yearly and he gauges his buy and sells based on either time or price...often both. His service, which is $100/mo for individual investors, lists several investment classes like currencies, stocks, bonds, prec metals, and often targets dates and prices as buy or sells. A good example of a recent buy was two stocks. AKS and BHP...his recommendation on AKS was buy if it closes above $8.23 and buy BHP if it closes above $78. Both did and both are below his purchase price and he has not spoken of them since the buy. One must be careful listening to Nenner....like most advisors, he has some very good trades and some he never talks about again. Use him as guidance for the general direction of markets.....use PL for specific day or week trades. PL is one of the best resources I have ever come across and I've been doing this since 1978.

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  138. Not sure where you have the $157.50 price for gold from.....but Gold closed at $1614 near the low today.
    http://futures.tradingcharts.com/chart/DG/ 

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  139. Compare this analog to the current pricing in Gold and Silver....GLD & SLV

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  140.  LOL!

    I'm with you buddy.  I have been working on a new strategy for the past couple of months by paper trading.  I felt confident enough with my plan that I began trading for real yesterday by shorting gold mining stocks (DUST).  In at $40.57, out at $50.46 in less than two days.

    The challenge now is to duplicate my entry/exit on a regular basis.  Like they say:  It's better to be lucky than smart.

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  141. Interesting how the premiums have expanded on the OTM puts.

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  142. es on the move again, lower

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  143. FYI, it does in fact have to be new for Jason to get his 10 cent cut of the profits.

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  144. I was going to mention I was surprised at how strongly the market reacted to the Spanish bond auction, given it's reaction to the Greece default - then I realized the market is just doing what it's doing, and it's the commentators looking to assign reason such as "Fed minutes" and "Spanish auction" to the price action.  Maybe the market waits for an excuse to sell, but it was always going to sell.

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  145. Personally I'm of a divided mind right now.  I'm absolutely bearish over the summer, but in the next week or two I'm not so sure.  I'm going to use the trend line ~1395 to tell me what to do.  If the market bounces, go long with trailing stop.  If the market breaks, drop in some puts and look for an exit.

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  146.  Hong Kong down 1.75%. 

    does your ES show a little Head n shoulder?

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  147. not sure if there is any theoretical rate of decay but perhaps we'd find some statistic data. The VXX ETN holds near term VIX futures contracts & I suppose the decay rate is determined by how steep the contango is at any given time. The ETN rolls out a few front month contracts to further month on daily basis, since historically most of the time the near month contacts are cheaper than further month (contango) it produces rolling decay from selling cheap & buying expensive which drives VXX down in long term. However when VIX spiked last Aug-Oct the VIX furtures were in backwardation resulting in a positive roll yield for VXX (& the VIX spike helped it fly even more). On the contrary, last month VIX dropped to historical low level plus the futures contango was very steep causing the rapid decline of VXX. 
    UVXY/TVIX are simply 2x VXX and lost 80% in Q1 while VXX lost 53%.For those who are interested in the VIX ETN/ETF family, this is a good place to visit: http://vixandmore.blogspot.ca/ 

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  148. Whiskas is worried? I'm sure Jamie Dimon is all ears...

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  149. "I am not an options expert (actually, I am not an expert at all...)"

    FYI:  There are no experts in this business.  Those who claim to be experts are, by definition, the fools.

    Paradoxically, your admission to not being an expert, in fact, makes you smarter than most.

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  150. Like all truly great organizations, the culture on this site trickles down from the leadership. Primarily PL, but also the veterans who willingly pass on their experience  (you know who you are).

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  151.  yeah...

    What he said.

    lol!

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  152. It's a catch up reaction, since the Heng Seng market closed the day before due to a Chinese holiday.

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  153. Fair enough. One of the things that made me perk up my ears when someone (you?) posted that video of him -- which was the first I ever heard of him -- was that his biz cycle projection for SPX seemed to line up pretty nicely with one of PL's blue boxes. Another was that 157.50 for GLD seemed to line up nicely with the 1580 that I've had in my head for a while now.

    Yet another is that I've been experimenting with Ehler's Hilbert sinewave, looking for clues on how to tell a ranging market from a trending one for day trading purposes, since I'm apparently too dense to figure it out by looking at a chart. And after hearing Nenner say he had sent out buy recommendations for SPX in October and November I happened to pull up the daily chart for ES with a Hilbert sine wave on it an saw this... (see screen shot).

    That's just a fairly straightforward cyclical indicator from a book written probably 25 years ago. Think about where one might take that given an army of QBA's (aka "Quant's") and Wall Street money for R&D. Woo lawdy that gets me hot.

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  154. IMO, Friday's jobs number will meet or beat expectations, based on the employment readings out of the ISM manufacturing and ISM non-manufacturing reports that came out Monday and today, respectively.  Additionally, we have had good/better than expected weekly jobless claims numbers and an in-line ADP jobs report.
    However, the reaction to this news is anyone's guess. They will spin the news to justify whatever the market decides to do.  i.e. Up because the numbers are good?  Down because the numbers are good and this confirms NO QE3?  Are the employment numbers (backward looking) even relevant in comparison to what is happening in Europe and China (forward looking)?

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  155. Sounds like that will be more bad news for the market.  No QE3 on good numbers!

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  156. A very reasonable stance, I think.

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  157. If ya can't trust GS, who can ya trust?  ;)

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  158. correct, news is noise 9 out of 10 times. why would the market sell off at exactly 2pm, when the fed minutes have J U S T been released? Nobody can read that fast and bernanke hasn't even had a change to say to QE3 or to not QE3. It's often just journalists trying to put a story to a technical event (for example trendline suport/bounce, wave retrace levels etc). just ignore.

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  159. Fun?  There's no FUN allowed around here!  Strictly seriousness only!  If there's one thing I can't stand, it's humor and light-heartedness!  If the title of this very article doesn't convey the level of seriousness I'm expecting around here, then I don't know what will!

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  160. Seems like if people are in the mood to dance in the streets or freak the hell out, they'll seize on pretty much any excuse to do it. Otherwise the most portentous news imaginable, be it  mad non-farm numbers, QE 649 or aliens landing on the White House lawn causes at most a spike or a notch that gets retraced in an hour's time.

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  161. Yessir -- that's somewhat the basis of EWT... sentiment moves in cycles.

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  162. EUR/USD since market close.  Futures edging higher... maybe support a bounce on upon.  Could change easily while I'm asleep.

    Headlines on Bloomberg look panic-inducing.  Market plowed through the close of 2011, with the exception of a little post turkey action, through 7% 10yr yields on some of the world's largest economies, but now another tick up close to 6% will blow the support lines out of the market.  Nothing to do with market valuation either, in my estimation.  Market is no more overvalued relative to this reignition than last year's height of the crisis - I am modestly surprised the Euro Zone still exists.  It is all about investor pysche.  Sometimes I wonder why I read any deeper than the headlines (other than Jason's articles, of course!).

    Night.  See you all on the update.

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  163. I always find myself coming back to that Tommy Lee Jones line in Men in Black, "A person is smart. People are dumb, panicky animals and you know it as well as I do." They have some pretty effective medications for mood swings now.

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  164. Another thing keep thinking of when I thing of EWT is a kitten, standing in a doorway contemplating venturing into the great outdoors for the first time. One step forward, one step back. Two steps forward... holy shit what was that?!?! Everybody back under the couch, STAT!

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  165. It's been pretty quiet these last few days for some reason.

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  166. ES dumping, Dollar looking ready to run again...

    We'll see if my gap down open prediction comes true...

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  167.  Hi PL, has been following your blog religiously everyday for the past few weeks, superb analysis indeed! Would you initiate a short position on es now or wait till if break yesterday low at 1388? Thanks.

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  168. Here is es 480 with a h& s or EW5. Tgt if neckline breaks is 1363 es

    http://screencast.com/t/7UguhRED8

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  169. Hi HK, it would depend on what time frame I was trading, my risk tolerance, etc..  Look at katzo's chart above -- one could use that as a pivot for an entry.  If one is talking swing trade, then I might wait for more confirmation.  Personally, I think the top is probably in -- but that's just my reasoned opinion, there's no confirmation yet. 

    It's hard to answer these types of questions without knowing one's personal account goals -- and legally I cannot offer you trading advice.  So, the above is for theoretical purposes only.  :)

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  170. tgt is neckline breaks 1383 ES

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  171. TVIX

    http://screencast.com/t/PtgksJut

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  172. changing T1 to 1380-83

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  173. Yep -- my gap-down call at the close yesterday is looking golden; guess I was reading the pattern right.  Should be a good day, assuming it sticks, since I positioned into certain puts (even some weekly expiration puts that are good for all of one day).  High risk trade, I know, but that's what the spec account is for, after all -- and sometimes you have to take the play.  :)

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  174.  yeah good gap down call, you nailed it

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  175. LESSON #1.....elliott waves do NOT work in a central bank intervention fueled inflated market

    LESSON#2 .... elliott waves r created by trader sentiment and r DISTORTED by HFT robotic trading (HFT now 70% of market)

    LESSON#3...selloff from 13226 was triggerd by FEDERAL RESERVE pulling away stimulus and seasonality end of Q1

    EWTheorists will be counting those final waves in the rally as ...... ________ ?

    u fill in the blanks .....ha

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  176. LESSON #1:  Technical analysis isn't an exact deterministic science.  It's not like the law of gravity, it's the study of probabilities.

    Regarding your final question, try this chart, which we've been watching since last week, before the Fed minutes were even released.  ;)

    Pattern was already there, but as I stated ad infinitum, it was a difficult pattern to nail the end of.  Think it worked pretty damn well, actually. 

    http://1.bp.blogspot.com/-mDh-0tYlmUU/T3wqcaYcc1I/AAAAAAAABwA/ypCjK5v9Aug/s1600/diag+op+1.png

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  177.  i hear ya PL....my post is not a critique of ur counts....u certainly do the best u can do given the situation

    i think ur due diligence is far superior to most EWT counters on the blogosphere

    please dont get me wrong....EWT has its merits and does work in a free and fair market....all i am saying is that imho distortions have been introduced into the market that have rendered EWT less effective

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  178. Well, your post is a bit inflammatory.  ;)

    I will agree that the Fed has distorted things and made the less probable counts come to the fore -- but that's really all I see has happened.  It still works -- but the intervention screws with the probabilities and makes things much more difficult.  The intervention takes a count that would normally have maybe a 10% shot and suddenly *that's* what unfolds.  It makes things much harder to anticipate, but it doesn't mean the theory is broken.

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  179.  EWaves have, will, and always will evolve in their counts to fit the mrkt, not the other way around. Anyone who thinks the mrkt conforms to EWaves is going about it the wrong way. EWaves predict where the wave should go (T1, T2, T3)  and by watching minor counts one can determine if the move is valid. Every tgt of mine hit yesterday, T1, T2, & T3.

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  180.  Not quite sure why someone would come to an EW site and bash EWs, not too civil.

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  181. Yes.  

    In addition to the evolving aspect, I view it as a series of probabilities.  i.e.- based on X happening, there is now a much higher probality of Y happening.  But as I've said before, it's not deterministic.  X happening doesn't *guarantee* Y happening, it simply makes it more or less likely.

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