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Sunday, April 15, 2012

SPX, RUT, Apple, and Beard Updates: Why I'm Not in the Same Camp as Most Wavers Right Now

Beard Update

Ever since this article, where I discussed my ground-breaking decision to venture into the beard-bearing biosphere of Ben Bernanke (by not shaving), I have received e-mails from anxious readers demanding beard updates on an almost-hourly basis.  For example, this recent letter comes to me from Little Bobby of Arizona, TX:

Dear Mr. Logic,

Or should I call you Pretzel?  Whatever -- just please don't refer to me as "little" Bobby if you publish my letter.  I saw you did that to that other guy.  I am 6'8", a linebacker, and I have a really bad temper. 

Anyway, I'm currently working on my economics degree at Texas Arizona University in Arizona, TX, and I aspire to one day be Fed Chairman.  While I appreciate your market updates, I'm really more interested in updates on your beard.  I'm wondering if you think I should grow my beard immediately, or wait until after graduation?  Is there any downside? 

I'm thinking I should grow a beard now, and study the Great Depression.

Thanks for your help,

"Little" Bobby Spankle, Starting Linebacker, TAU

Well, Little Bobby, I'm glad you asked, because I've just been "itching" to provide an update on the beard.  Ha!  Itching!  Get it?  That's just a warm-up into some of the first-class humor I'll be providing throughout this entire paragraph.

I'm sorry to make light of your serious question.  I know I'm the envy of every man right now, sharing a beard with Bernanke... but, not surprisingly, there is a dark side to this beard.  For example, many days I wake up with an almost-uncontrollable urge to print money.  Barely a week ago, I awakened from a fugue state to discover I'd printed almost 20 million dollars using only my inkjet. 

Luckily, I've been able to control these urges by plastering Ford-era W.I.N. buttons ("Whip Inflation Now!") all across my workspace.

But there are other side effects.  Yesterday, I tried to call my wife "Cutie-pie," but it kept coming out "QE-pie."  Try as I might, I couldn't say anything else, and I found myself repeating it uncontrollably: "Hi QE-pie. Hi QE-pie!"  I felt like Leonardo DeCaprio at the end of the movie The Aviator

I'm telling you this as a warning, because today I realized what the problem was.  Initially, I had kept the beard close-cropped and above the neckline -- but over the past couple weeks, I'd gotten lazy.  When I looked in the mirror today, I saw that the beard had expanded completely unchecked and grown to an alarming thickness, not unlike Michael Moore.  It was now reaching down across my neck, threatening to overtake my throat and choke the sense out of me.  I also discovered about eight gray hairs. 

Its tranformation was nearly complete.  The beard was trying to take over my face, and if I didn't act quickly, it would soon claim my soul.

I sprung, or possibly "sprang," into action.  After subduing the beard with a hot towel and a hammer, I was able to gain the upper hand long enough to use my electric razor to trim off half an inch "across the beard."  After that, its control was weakened enough that I was able to use my Gillette to shave off the entire portion beneath my jawline. Enough beard remained that I still ran out of the bathroom and handed each of my kids a hundred dollar bill... but the urge to print money was gone!

Later, as I rinsed out the sink, I heard what sounded like hundreds of tiny, high-pitched voices chanting.  They were progressively fading in volume as they washed down the drain -- but as I shut off the faucet, I was just barely able to make out their faint words as the last whiskers spiralled down: "Crush the dollar!"

Actually, Little Bobby, I just remembered: you want to be Fed Chairman!  Forget everything I wrote... the beard is perfect for you.

Market Update

Moving onto the charts, the market has left a lot of potentials open, and I hope it doesn't get too confusing for readers.  I've spent literally the entire weekend trying to sort out one from the next, and I'm reasonably confident in both my short-term and longer term preferred counts. 

I have outlined the alternates because, despite all the time invested, there's never a guarantee that the preferred count's right.  And this is a game of inches right now -- so it's easy to see one or more alternate coming to town.

The possibility of an (x) wave, while purely speculative, gives me a bit of pause in simply declaring the correction over without further consideration.  I could go the straight line route and pretend it's not a possibility, but I've seen these things happen too many times after extended fifth waves to blissfully ignore the potential.  Nevertheless, I do consider the (x) wave to be the underdog here.

The correction did form a complete a-b-c, and that's all it was required to do.  Trying to predict an (x) wave is akin to trying to prove the existence of dark matter -- there's little evidence for it before hand (except possibly in real-time, which no longer fits the dark matter metaphor... quit being so literal!).

At this point, I'm favoring the view that the (x) wave will probably not materialize, but I think it pays to be aware of the potential, because then bears get double credit, income-wise -- and at the same time lower their risk profile.

Of course, no one wants to leave money on the table if this is now the fifth wave decline.

So, the best odds at this stage will probably come from watching the red downtrend line shown on the charts below.  If the market sustains trade above that trendline, then it becomes more likely that the (x) wave is in play, and will go on to make new highs for the correction.  Luckily, this means that even the most passive swing trader who went short at the 1384 rally target presented last week should be able to guarantee a profit.  More aggressive traders can find other ways to lock-in profit.

Long-time readers know that I try to assimilate as many factors as possible into my analysis, to help sort one count from another.  To this end, the timing of a fifth wave (instead of an (x) wave) seems to fit well into the seasonality. 

Below is an excerpt from my friend Lee Adler.  In his Wall Street Examiner Professional Edition, he analyzes -- among other things -- tax data and the moves of the Treasury:

The markets get a gift in the coming week. Depending on how strong tax receipts are, the Treasury will pay down as much as $48 billion in expiring short term bills on Thursday. That’s cash that will come back to holders of the paper. They’ll have to put it somewhere. This is a normal feature of tax week, and some of that cash usually flows toward stocks. Tax receipts are looking a little stronger than last year, so that the paydown is likely to be substantial even if it isn’t quite $48 billion. That should be enough to put a bid under stocks by Thursday if not before as the dealers and other holders begin to anticipate this cash hitting their accounts on Thursday.

Last year the S&P gained about 56 points in the 7 days following tax day.

This would fit the fifth wave count extremely well, as it is likely to bottom this week -- and from there the market seems likely to embark on the larger 2nd wave retracement rally to match the seasonality.

Of note, this seasonality does also fit the bigger picture alternate count of the larger wave (iv) bottom, so this is yet another reason for bears to be cautious.

After studying the charts this weekend, and giving consideration to as much additional data as I could, I am favoring the fifth wave decline over the (x) wave and wave (iv)   Do remain alert to those potentials, though -- because the market often does the unexpected despite our best efforts. 

The chart below shows the preferred count as represented by the blue lines.  The pink count is the short term alternate.  The gray count is the 2nd alternate. 

Also be aware that if the b-wave low isn't broken by this wave down, bulls could launch an even stronger counter-attack... in other words, something even more bullish than anything shown below -- such as the larger wave (v) rally discussed later.



If the market continues down strongly at Monday's open, then the pink count above may actually be the correct short-term interpretation.  The chart below shows why I'm favoring the blue count, but I'm almost equally split on the two.  I'm favoring the blue count by maybe a 5-10% margin.

If the blue count is correct, it's difficult to gauge how much, if any, downside is left to that wave.  It would look better with some kind of correction and a slight new low -- but if one counts all the little squiggles, then there's already enough for it to be complete.

I'm not sure exactly where to place the assumed wave (2) target, because I'm not certain if (1) has bottomed.  Expect (2) to retrace between 40-60% of (1).  If a snap-back rally materially exceeds the 62% retrace, then we may be facing one of the alternate counts.



Now let's back off a little, and examine the larger time frame, to see how the market could find support soon, to match my expectaton that this is the fifth and final wave of the decline before a larger correction.




Next are the RUT charts, both short and long-term.  The 5-minute RUT chart contains critical data I want to discuss in more detail. 

Many Elliotticians whose work I respect are labeling the decline as ALL OF wave (i) down.  But based on the RUT, that count doesn't work.  This chart reveals exactly why I do a lot of market cross-studies before deciding on a count (I don't mind revealing my "secret" -- because my secret is simply hours and hours of additional hard work each day.  Anybody can do it!  Though to be fair, I imagine it's more difficult for people who have day jobs.).

This is also why I've prepared the battery of longer-term charts to help illustrate why the markets could find support very soon (if they haven't already).

The preferred count is shown in blue on the chart below.  The short-term alternate is shown in pink -- and again I'm only marginally favoring the blue short-term count over this count.  The intermediate term alternate (of either (iv) or (x)) is shown in black.



Long-term support is also nearby on RUT.




NYA likewise demonstrates why it could find support soon.  We looked at this pattern a few articles ago.



Same goes for the Nasdaq Composite.



Of course, the market's not entirely predictable at all times, and the more bearish potential that most wavers are favoring can't be completely eliminated.  Based on the patterns in RUT and others, I view the super-bearish potential as significantly less likely, but not impossible.

There are pretty good-looking head and shoulders patterns forming in many markets... I suspect, however, that another bounce is needed before that pattern is fully complete.  The INDU chart below shows why -- as it sits right now, the right shoulder would be very narrow relative to the left shoulder.  And, as discussed, the more immediately bearish count doesn't fit the wave structures across markets nearly as well.

Still something to be aware of, though I would assign low probability to it.  The more bearish alternate count is in black.



And of course, the more bullish side of that coin looks like the alternate in the chart below.  I don't think I've missed a short-term call in a couple weeks, and I always get a little worried for my readers after a long winning streak, because it tends to breed complacency.  The market isn't "supposed" to be perfectly predictable, and eventually I'll miss some calls -- that's just how it goes, so please make sure you take precautions in order to be protected whenever the misses come.

There are two big picture alternates shown below.  The first is that wave (i) bottomed already (low probability, for reasons discussed), and the second is that wave (iv) bottomed.  The wave (iv) count is still quite high risk to bears.

As I said earlier, this is a game of inches right now -- in other words, it wouldn't even take a big miss to see an alternate potential play out.



Finally, since Apple is "the Economy" these days, it does appear that Apple may have finally put in a top of some significance.



I've also added a quick and dirty US Dollar chart.  A triangle breakout in the dollar might suggest some hope in the more bearish equities counts -- if it occurs with conviction.  If the dollar can put together a strong rally, then that's likely to cap any equities rallies.  Of course, it has not broken out yet, and can always form another leg down before a breakout.  Or not breakout at all.  We'll factor this into the equities analysis if and when it occurs.

I've labeled the chart with a potential wave count, but my confidence in this count is marginal.


In conclusion, it does appear reasonably likely that there's one more decline to at least marginal new lows below 1357 still coming.  Again, the first SPX chart, and the first RUT chart show the preferred count in blue. 

With the short-term counts, I'm trying to sort fly droppings from pepper here, so it's probably more important to focus on the bigger picture than the 1-minute "is this (3) of 5, or (1) of 5?" charts I've presented alongside it.  I'm simply trying to help readers maximize their awareness and earnings. 

Looking at the big picture, one can see I'm not currently part of the mega-bearish camp that believes we're entering a larger third wave down.  I think this wave is close to a bottom, assuming of course that it didn't bottom at 1357.  Depending on the structure laid out by the market in the next few sessions, of course, my outlook may change.

As of this moment, however, I believe bears should exercise caution, because the assumption is that this will be the final decline before a larger snap-back rally.  The (x) wave adds confusion to the potentials, and should definitely be watched carefully.  The key levels to watch are the red trendlines, and the recent highs on SPX and RUT.  If the market makes it back above those levels, shorts should probably get out of the way for the time being -- especially with the possibility of the big picture alternate count taking us up to new highs in a larger wave (v).

But if the overall view is correct, there should be another 20-40 points of downside left on the SPX first.   Trade safe.

255 comments:

  1. The Beard Update part was fun.   I wrote that Friday night.  I've been working straight through since, and so now I'm going to run, screaming, from my computer.  I'll be back later tonight (for me), early tomorrow morning for you.  :)

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  2. Still on a quest for a usable volume-based indicator.

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  3. great post!  Thanks for all the cross-market analysis.  Would love an update on the dollar and/or gold some time this week, but only if you have the time.  Thanks!

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  4. Is it me or does ES seem to be showing signs of basing?

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  5. Thanks for the beardnet update PL.

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  6. The only thing I have ever found volume useful for is identifying support and resistance levels.  I think it's interesting to look at volume at times of moves, and at the end of moves too, to see how strong the move began and how much resistance/support there is at the end of the move, but I don't really know how to turn that into a useful projection.

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  7. rally time, a break over 1368 ES will stall the immediate down.

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  8. Now that I've had a little break, I get to reread it all and see if it makes any sense whatsoever... 

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  9. Don't bother.  I already read it for you, and it makes perfectly good sense.  I have to admit though that I didn't get the part about why it's better to use whole wheat flour instead of white all-purpose flour for making 'white' bread.  That part kinda went over my head.  Other than that, it's very easy to follow.  Thanks again Mr. P.

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  10. El posto excellente. Eyem not sure if it was a typo, but "choak" got stuck in meye throte. Maybe cuz my taxes have been so taxing....I hate writing checks that might be used to prop Snaapl....going to bed before I get woken up in an hour by a bright eyed, 38" tall redhead who wants his Cheerios.

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  11. Thanks to J.A. for the donation.  :)

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  12. Thanks, tc -- will try to get to those this week.  All I can do to keep up with predicting the indices right now...

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  13.  68 broken tgt 71 to 75, very slow trading, not worth it imo

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  14. Anyone else having trouble with Disqus not updating via email?  I haven't gotten a single email from this thread yet...

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  15. Starting to look like the blue preferred count shown in the 2nd chart might be correct, and the wave may have bottomed in the overnight session.

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  16. ES has done a pretty clean backtest of the old downtrend line (pink).  There's a bit of a potential channel down between the recent highs and the old downtrend line.  Some ST overhead resistance in the 1370-74 zone.

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  17. I added a "quick and dirty" dollar chart to the update.

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  18. I added a simple dollar chart to the update.

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  19.  US/EUR has touched the trendline, now correctin US/EUR short with tigth SL.

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  20. Now I know how you feel...How the hell do ya do it.....Oh, and Disqus is a few timezones slow for the email notifications.

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  21.  ES/15

    http://screencast.com/t/RkW8Rbkrg

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  22. I'll be right back, gonna call an attorney.......laughing so hard I spilled my "hot" coffee into my lap. Wondering if I can sue myself?

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  23.  Consider
    Katzo Attorneys and Associates ~ The Best and Most Sensitive Around
    Associates ~ Katzo Kazialinsky (Russian Mob), Vinnie Piella (collection agent), Bubbles Phelan (secretary. she cannot type but she sure can dance. . . )
    While we may not win your case, we will make you feel the best about screwing you out of your money !
    free coffee

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  24. Missed your note...thanks for the suggestion but I've already retained the well known legal firm of:

    LAYUM, F***UM, CHEATUM & HOWE

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  25. PL do you use after-hours trading in your charts?

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  26. katzo, es is blasting off t o1374 at the moment. Where do you see as upside resistance before it turns down? and downside target if it turns down? Thanks

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  27. Unless you can do a contortionists act and count all of yesterday's action as an impulse, this open pretty much means the X-wave or a recount is in order?

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  28. sold TNA and bought UVXY, let the fun begins!!

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  29. Good bye Apple 1000, nice knowin' ya!

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  30. @PL, thanks for that AAPL chart. Curious minds have to know. There's no way I can construct counts like that. -DD

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  31. On spy 133t, divergance on TSI (but not on MACD) might indicate b of this correction complete

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  32. Wicked divergence on both indicators now

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  33. Can I call this market, or what?  ;)

    Not certain yet if that was b of 2 or 1 of 3... need a little more info from Mr. Market.

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  34. Got in with a baby put position right on open - wishin' now it wasn't so baby.  I feel real bad for my friend with his Apple calls. I warned him he was playing with fire.

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  35. I really shouldn't feel bad nor call him a friend... he called me a f'ing retard when I told him Apple topped at 621 and rubbed it in when Apple went on to 644.  I just smiled...

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  36. nah, ...we know your son wrote the article .. we know he writes it ALL  ... :O

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  37. I bought some puts at ~630 when my co-workers started talking about the AAPL shares they just bought. They're my technical indicator. They're about an 75% success rate!

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  38. Wave 2 of 3 a flat, forming right now 1366 - 1368?  or maybe 4 of 1 of 3?

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  39. Tweet of the day: "OMG, AAPL crashed."

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  40. about to put a bullet in my brain. missed my uvxy entry by 0.10 SPX. oh well, next time. good call PL!

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  41. HaHa - please allow myself....to pat myself on the back.  If the liquidity well is dry, it's going to be tough to get the market up with economic numbers wilting

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  42. I'm a little surprised actually.  Especially with how many iPads they apparently sold in March.  I figured the funds would wait until closer to earnings to start to dump.

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  43. so if it's wave 1 of 3, then should retrace to about 1374? If b of 2 then obviously new high.

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  44. Makes sense to me.  I am thinking if b of 2, unlikely to have broken yesterday's lows though.

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  45. You have no idea how much I agonize over these charts.  It feels good to get it right when I invest as much time as I did this weekend. 

    Good to see ya again, btw.  :)

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  46. didnt follow the futures. so today's low did break yesterday's low on the futures? thanks man

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  47. Calling 2 of PL's red (3) right here (first chart).  I'd put money on it.  GET IT?! *PUT* money!!

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  48. ES struggling, trying to put in a top EW4 at 68-7, careful, it could just collapse too.

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  49. INDU chart shows a bounce off a trend line, it may not be over just yet. 3 - 3- 5 ?

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  50. Bam!  Look at that.  Blind squirrel, meet nut!

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  51. Me also. Unable to any email update even though I unsubscribed and subscribed again several times. -DD

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  52. NDX and SPX bouncing off a trend line too, see below.

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  53. Hi Dust Devil, thank you for the chart, so they are calling this AAPL drop a 4th, looks ok.  

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  54. PL...is that an ending diagonal on the CVX minute chart?

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  55. Boy am i confused today!!    cant get myself to add to my short etf positions  got 400 tza   200 soxs   400 bgz   200 faz

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  56. Looks like PL's preferred count on first chart to me.  Wave red (2) possible double zig-zag?  I think I missed calling wave (2) top by 22 cents and 20 minutes below.

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  57. Just got done with third read of article. Closed Friday's put position in SPY, now left with longs to see if we hit the blue box count and I have great confidence that it will go there. AAPL April 600/585/560 put butterfly trade paid 4 to 1. I do not know how you do what you do day and out but I sincerely appreciate it. The article was a great read and following your analysis has helped my trading confidence levels tremendously. Gotta get back to work and get busy with the duct tape.....

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  58. It does fit my notion of this 4 month explosion as a 3rd wave. I can see new highs for Apple at all this, maybe at the end of the year, maybe at 680? How do you feel this count compares to PL's where the last 4 months was a 5th wave? -DD

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  59. to be fair... i can't see that any of your counts suggested we would open higher like we did THEN trade down ... just trying to find the 'right' count.

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  60. Well my last part just got invalidated

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  61. Pretzel - to clarify ... which of the counts do you suspect is the correct count?

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  62. they r trying to support es 1362.50       ive got 4    5min closes at that level........if she dosnt hold then may see the 1352.50 low

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  63. In the article, twice:

    The chart below shows the preferred count as represented by the blue lines. The pink count is the short term alternate. The gray count is the 2nd alternate. 

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  64. VIX report
     http://www.youtube.com/watch?v=7QfmM1kp224&feature=plcp&context=C4558477VDvjVQa1PpcFP8gF6YbVbpVy4YB9mvfz9U3bbEUuLtU7s%3D

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  65. I wasn't sure it was the preferred count you were referring to - thanks

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  66. This head and shoulders-ish thing might be worth keeping an eye on.

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  67. Is anyone else having a deja vu feeling the past hour? the market has been stuck in this narrow range, kind of reminds me of Friday, until 3:45 of course. Is the same thing going to happen again? Calling PL and Katzo, is a redux of Friday coming? Roger!

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  68. Max, "PL's (2)" happened at the gap open.  Pretty easy to see on this chart which has been updated only with a few arrows.  The open surprised me a little, because futures were actually down when I published the article -- but as I said in the article, there were already enough squiggles to count wave (1) as possibly complete.

    The alternate (x) wave is still alive and kicking.  And the alternate count for (2) would be that the morning was wave-a, this is wave-b, and we'll rally back up in wave-c to form (2).  That seems somewhat less likely, though.

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  69. Max, "PL's (2)" happened at the gap open.  Pretty easy to see on this chart which has been updated only with a few arrows.  The open surprised me a little, because futures were actually down when I published the article -- but as I said in the article, there were already enough squiggles to count wave (1) as possibly complete.

    The alternate (x) wave is still alive and kicking.  And the alternate count for (2) would be that the morning was wave-a, this is wave-b, and we'll rally back up in wave-c to form (2).  That seems somewhat less likely, though.

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  70. Possibly.  Keep an eye on the trendline in the chart below.

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  71. if that trendline breaks, what is the first downside target? 

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  72. You have to read the text too.

    If the blue count is correct, it's difficult to gauge how much, if any, downside is left to that wave. It would look better with some kind of correction and a slight new low -- but if one counts all the little squiggles, then there's already enough for it to be complete.

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  73. Looks classic-ish

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  74. Hrm mmmm... ok back to the drawing board.  Thanks

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  75. at what level will KO the HS pattern?

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  76. the SPX count seems tough to me... here is my CAT projection which 'worked' like a charm regarding this morning -- question is if it will continue to lead the market with this projected count??

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  77. Basically, if I "celebrate" victory, it's because the preferred count nailed it.  If one of the alternates hits, well, I'm always happy to have seen the possibility, but it's not the same as sorting through them all and picking the "right" one as the preferred count. 

    I'm sorry if you found the sheer number of alternates confusing, but I did state at least twice in the article that the blue lines represented the preferred count.

    Anyway, I don't see how I could have hit it any closer today, especially given the ambiguity of the charts.  There's at least 18 hours in those charts this weekend, and I'm pleased when that time investment pays off.  Hopefully it paid off for you guys, too. 

    (2) topped dead-on where I suggested it would.  The main thing I was unsure on was whether (1) had bottomed or not -- but I did realize, and note in the article, that it may have bottomed on Friday.  Turns out it had.  I don't think it's humanly possible to get any closer than than that, with the market closed... *and* call the 2nd turn that close when the first turn hadn't even happened yet, and futures were down when I published.

    It's friggin' stressful trying to sort "fly droppings from pepper," as I put it in the article. It's a big relief when it works anyway.

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  78. wow aapl down 3.4 %

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  79. EUR/USD been making a run - i took a look for the Spanish bond auction but nothing - I thought it was this morning?

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  80. Being in Hawaii, you should switch over to Cock-a-roach droppings as they are larger and more plentiful!

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  81. I think its Thursday morning Max

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  82. hey PL, thanks for the mid-day update

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  83. On a head and shoulders, the height of the pattern, subtracted from the breakdown, is the target.

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  84. Definitely easier to sort from pepper...

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  85. tues morn is spanish bills and notes or bonds thursday

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  86. yeah, that's cool -- sometimes i probably seem like i'm being a pain in the ass...but i focus on the smallest subwaves and try to reconcile them before feeling too good about a count.  Today's open didn't really mesh for me with your preferred count.  Of course, i could be totally wrong (and will pay the price if i am).  but yeah, i wasn't sure you were referring to your preferred count...probably a function of my being new to this blog.  Good Luck!!

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  87. CVX....at $102.58 C will equal A and will close the gap.

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  88. oh no...  what is the RUT doing...  right on that trendline

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  89. Question: EW's rule of alternation. Wave 2 within the $RUT is a simple correction a-b-c and wave 4 within the $RUT is a simple correction a-b-c. Any reason for concern.....allowable under EW guidelines?

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  90. That "rule" is more of a guideline.

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  91. Happy to hear/read that...thank you PL.

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  92. Oh, cool. Like the Pirate Code. How do we know which are rules and which are guidelines? Experience?

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  93. Just rec'd my first message via DISQUS today.

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  94. My eyes are nearly bloodshot - trading every turn on the 133t chart.  I'm trying to get this for myself by for Christmas:

    http://www.bloomberg.com/video/90711939/ 

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  95. Nenner:
    Markets continue on a sell signal. Would need a close above 1378, 2735 and 13,000 to cancel sell.
    No buy signal yet on Gold or Silver. Buy above 1690 & 32.80.
    Nat Gas....low expected at $1.70
    Bonds...probable low in, buy above 142.05 (30 yr)
    Euro...projected low near May 5
    Aussie...looks like a fake buy...stand aside.

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  96. Despite figuring out that the first wave down looked roughly complete and was due to bounce, I'm not thrilled with the pattern since then.  Not sure exactly what to make of it, so stay on your guard here.

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  97. hope folks got in my apple short said yesterday. think it will see 560 area.

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  98. Looks like a 50% retracement of the third wave within C on CVX. Rounding over top in three seems to be a precursor to a higher high. Remarkable how similar the $RUT and CVX are right now.

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  99. i called the short right off the top 55 points ago

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  100. this is going higher, my ES 68-9 broke

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  101. if we get another rally from here, would it validate the grey alt count?

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  102. its starting to look like blue wave 4 is still goings ince the wave 3 bottom on the 11th. the first abc could have just been the a ending on the 13th. then down for abc which was just the b ending this am. and back up for another abc to end blue wave 4 this week. seems awefully big, but have heard that wave 4;s often break the channel, which this is def doing. also, many noted that wave 4 didn't even retrace 50% and they were expecting 61.8. maybe will do so, but that would bring us back to low 1390ish. also a=c in that scenario also measures to there.  any thoughts?

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  103. dojis appeared on short time frames right when I posed previous, may be like Friday's action.

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  104. break 67 and could head down

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  105. Breakdown target: http://screencast.com/t/2xJlecNAvs -DD

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  106. need to break 67 first before I do anything

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  107. take a look at the 20/50 MA on 120 ES

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  108. Possible -- basically jives w/ the (x) count. Timing for that count seems off, though, based on tax season.

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  109. PL et al,

    For educational purposes, have you noticed that EW 2 to 3 transitions are abrupt like this morning's action (assuming that was the count)?
    Great call on the levels; doesn't get much closer than that.

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  110. Well, the rally looks corrective, after that overlap.  Should be good for new lows ultimately.

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  111. More like lions vs ROUSes.

    "Wesley, what about the ROUSes?"
    "I don't think they exist"

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  112. http://www.youtube.com/watch?v=OG_6CopW9GQ

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  113. OH SHIT - SADDLE UP SOLDIERS, THE MUSIC IS CRANKING

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  114. big if ... IF we close strong - proposed 'E' wave -- then this count has a Leading Diagonal up -- and i would expect a sharp B wave down tomorrow

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  115. KAT....did you take the short on MA?

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  116. CVX turning down......

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  117. timing is running out for this drop, I like it when it starts about 2:30 to 3 pm. When sideways extends this long into the close it means potential tgt is limited, maybe we go back to where we started (DJIA up zero) if lucky.

    Woman to May West "my goodness, those diamond earnings are beautiful, you must be very lucky."
    May West replies "darlin,' goodness had nothing to do with it."

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  118. Hi Dust Dev, re AAPL, still dropping as I write. I expect it to stop at 577 which is Kumo2, the bottom of the Cloud on a 1/2 day chart. Stochastic Mom Indic is minus 79 consisitent with a bounce 'real soon now'. Looks like a 4th to me at the moment but if the facts change, I'll change my mind ;)

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  119. Completely arbitrary prediction - SPX closes at 1373.36.  I'd bet my Christmas money for that cell phone on it!

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  120. One day, I hope to not only understand all of the comments, but perhaps I'll even beable to add a few of my own.  As of now, I'm probably running at 60%. 

    So if wave (2) completed this morning, then we are in wave (3) now, yes???  With the possibility of it actually being a (y)??  That (y) is a heckuva a move!

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  121. Excellent...I was thinking you'd wait for the trend line break...but I guess you feel real good about it.

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  122. unless it's a LD - not sure but i'm on the lookout for it

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  123. Good evening DM. If it is a diagonal it probably ought to be labeled '1' (up) 2345. A triangle is usually labeled 'a ' (down) bcde with a 5wv (12345) thrust up from 'e'. There is some overlap in counting these but F&P's book defines them well. Good luck ;)
     

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  124. Ask......somebody will help.

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  125. let's see if this works, 3:45 pm.

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  126. Doesn't seem very wave 3 impulsish to me.  But what do I know?  The market seems hell-bent on going no where on no volume, even into the close here.  Fits with a bear picture maybe... Big players unwound some of their big positions Friday into the closer (bigger transactions, more volume), and are still unwinding them, albeit more slowly, now at some support levels.

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  127. no, sorry -- look up leading diagonals -- or ending diagonals

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  128. Thanks Max, Bob.  I'll start asking more questions when i feel like I have a little better handle on things.  Don't want to be a pest.

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  129. LOL at the guy trying to hold it by the tail

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  130. PL....on your $RUT chart, you meant the 810 to be 801...correct? Did I miss a post on this from earlier?

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  131. No pests here, only learners. Trolls disappear quietly. . .

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  132. What symbol for ES are you using?

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  133. http://www.youtube.com/watch?v=KBUcCEvISz0&feature=related

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  134. There is a guy by the name of Ramki.....he's like PL in that he has over 25 years experience and he wrote a small book $9 I believe. Covers all the important parts of EW. He's not as active as PL on a daily basis, more long term strategies....but his ebook is worth it. 
    http://www.wavetimes.com/buy-five-waves-to-financial-freedom-book/

    Read it and then come back here.....I've seen no one that can hold a candle to PL.

    Perhaps PL will do an ebook when he retires.

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  135. That doji was the tell imo

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  136. yep, must be... I do have a problem with these very colourful charts.. can't see 'em too well.

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  137. That was awesome.  It's nice that the bull gets a revenge once in a while...no market analogies intended...

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  138. Hi DD. Actual precise target of Kumo2 was 577.56. Intraday low AAPL was 578.13, not too bad a miss ;)
    Stochastic made minus 80 so I would expect a bounce soon, maybe tomorrow.

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  139. Top one here? 
    http://www.cmegroup.com/trading/equity-index/us-index/sandp-500.html

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  140. At this point looks like a down day tomorrow. Here is why I said to mark 3:45 pm, that is when it broke thru my bull bear level.

    http://www.screencast.com/users/katzo7/folders/Jing/media/30cf207d-f9fd-4160-8559-0662adf4d0aa

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  141.  Looks like 810 is the wave 4 peak.

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  142. Right Bob. Months back, I recommended this ebook to people here also. Very practical and simple kind of application of waves. Months back, he predicted the highs that we arrived at now just based on simple wave calculation. Sometimes seeming naivete works best. -DD

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  143. I will be reading that later. 'preciate the link. How's the option trading going?

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  144. Hope your right.  Took on a baby put position on open.  When I miscalled the top at 1372 I added on pretty heavily.  Stops are going to be today's high - but I'm hoping for a big gain.

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  145. Got calls and puts and made profits in both. Market is uncertain, wants to go up but AAPL and Europe keep raining on the parade. If tomorrow goes like today, will break down on Wed

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  146. For what it is worth from someone whose EW skills are limited, I was suitably impressed and went short at the failure to get through 1376.

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  147. Today is kind of weird, big whipsaw for both bulls and bears. That close sure looks weak. The last 4 Tuesdays were all down days, with last Tuesday the biggest down. Let 's if tomorrow will beat it.

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  148. I was primed to take profits here today after seeing the futures down late last night. Expected some kind of weakness this morning. Then, Murphy stepped in and it looks like I'll have to wait a day or so. Todays action looks like Wave 2 of the fifth wave in wave 3 down. If I don't get some downside action tomorrow, I'll head for the exit. 

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  149. Didn't see that one DD....I've chatted (electronically) with Ramki and he's like PL. Helpful, ethical and very experienced. I like him alot.

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  150. Pretty interesting. Here is the 15 minute ES chart from Friday.

    http://screencast.com/t/RkW8Rbkrg

    I was looking at it and looking at today's chart and saw this. This is today's 15 minute chart, when I started posting bearish thoughts.

    http://screencast.com/t/b3hcoxakk

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  151. Hey PL.  I saw your comments this morning that wave (1) could be complete and then the gap up certainly could have been wave (2).  Just wondering, in this specific instance, at what point did you get comfortable enough to know that it was in fact wave (2) and it had completed.  My trouble as a newbie, is recognzing this real time with enough confidence to pull the trigger.  Thanks.

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  152. Trading this market is like dating someone high maintenance, prone to outbursts and mood swings, but great in the sack if you score. 

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  153. added 200 more faz at 22.22 for total of 400 now.....sorry late post

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  154. Shorted some VIX April 18 25 calls this morning at $.10.  Not a lot of money, but a little bit here and there adds up.  

    It would take a pretty intense market drop to bring these calls into the money by Wednesday's expiration.  

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  155. High maintenance is right!  She's been giving me heart attack all weekend.  Finally broke up with her this morning (closed out the VIX contracts held over the weekend); but then we ended the day hooking up again when I sold some more VIX contracts.  It's a love/hate relationship.

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  156. Great call katzo.  It really heartened me to see it.

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  157. I think you should call Webster....register "impulsish".....I think you've coined a new technical term here.

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  158. Thanks DD! That goes well with PL's target for spx at 1332-1340. So Tuesday end of day, will be exciting to watch.

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  159. There is no debate about the best TV show from the 80's, everyone know its the "Fall Guy" - Heather Thomas anyone! MacGyver of course running a very close second, with Dukes of Hazard next up.

    http://www.youtube.com/watch?v=KRy-JjPShbE 

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  160. The market is prepared for an ugly Spain bond auction in morning it seems.. can easily reverse but seems everything is all hedged up.. Vix closing near high of just under 20.  10 yr treasury under 2%.  could flash down if bad or flash up if good..  Are you feeling lucky??  :)  

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  161. Re: 80's and how they rock; thought you guys may get a kick out this...

    http://www.youtube.com/watch?v=K38xNqZvBJI

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  162. PL, great job on hitting the red wave (2) target!

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  163. I'm going to go out on a limb with my preferred count.  The futures give a better view of some of the subwaves that are hard to read.  It doesn't count real clean in the cash market.

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  164. supporting evidence ... CAT and RUT both projected well - from where i had made projections last week.

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  165. Many thanks to M.A. for his donation earlier!  Appreciate your support.  :)

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  166. i was working on a similar count, but there is wave overlap on the first wave up of C. any thoughts would be appreciated.

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  167. DM, we're of the same approach I think, in trying to reconcile all the subwaves.  I think that's where a lot of Elliotticians drop the ball. 

    In any case, check out this chart of the decline waves -- just starting from blue 4 on the chart in the article.

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  168. Gutsy play.  Hope it works for ya!  I don't think I'd be willing to take on that level of risk the reward.  :)

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  169. katzo, you're calls have been great. just getting used to your wave markings on your charts. if i read your chart right, it looks like the next move is another abc up for C. my target for that would be around 1386.  you mentioned a down day tomorrow, am i reading your chart right?

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  170. lol.  It's a cross between "impulsive" and "impish."  Describes this move pretty well, actually.

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  171. Thanks PL.  The market has tomorrow and Tuesday evening to take the VIX up to 25 strike price.  I don't think that would happen unless there were a Black Swan event (more than a solid 250 drop on the Dow in my opinion).

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  172. Thanks. 

    There really seems to be no set pattern.  I've seen 3rd waves wind up real slow, and I've seen 'em go real fast.  It's pretty common to see a 3rd wave build a nest of 1's and 2's that looks like a correction/consolidation before the big down (or up) hits.

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  173. lol.  I have a hard time bringing myself to pay $400 for a phone.

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  174. If VIX shoots up, I would sell April strike calls that are greater than strike of 30.  Wednesday is expiration.  As I mentioned in my response to PL, I do not think VIX would be higher than 25 (knock on wood) by Wednesday morning unless there is a significantly extreme drop in the market.  I took a greater risk by selling April strike 25s, but April strike 30s were just not worth anything at today's close.

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  175. Yeah, dunno what's going on with Disqus not updating via email.  Disqus is glitchier than than the prototype Xbox 360's (sorry, obscure reference -- I was channeling Dennis Miller just then).

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