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Friday, April 20, 2012

SPX Update: Shortest Update Ever

Today's update is going to be very short and sweet, due to time constraints I ran into with some family issues.

There are two reasonable ways to view the most recent action, as shown on the chart below.  The good news for bears is that the rally is almost certainly corrective, and should ultimately resolve with lower prices.

The question is more whether it will do so more directly, or if there's another run-up still left.

Here are the two most fitting ways to count the rally so far:

1.  It is a complete w-x-y double zigzag, and the next wave down has begun.
2.  It is an incomplete double zigzag, and yesterday's action completed the b-wave of said zigzag.

I've marked a few levels to watch on the chart. 

(Editor's note:  There's a typo on this chart -- red "3/c" should read "i/c.")




In any case, it is thus far extremely challenging to count the rally as an impulsive form.  If it's a motive wave, it would have to be counted as either a leading or ending diagonal.  It's very challenging to see it as anything overly constructive to the bull case.

In conclusion, the next wave down may be underway, and that's the interpretation I'm leaning toward -- although just barely.  Part of the reason I'm leaning that way is because the Euro has been rallying all night, and just tagged 1.32075... and I think it's now on the verge of a steep decline.  So I'm factoring that in as the final straw.  It's possible my Euro analysis is wrong, since I lack the market confirmation I need regarding a decline in Euro (no key overlaps yet), and so I may be factoring in something that isn't going to happen!  The equities decline could have been a b-wave, with c-up to come.  The key level for that argument would be 1390.46.  Trade safe.


ADDENDUM:

At the request of a reader, here's a quick breakdown of the correction that came on April 18 and 19.  This is why it can sometimes be challenging to figure out exactly what the market's planning -- it's virtually impossible to predict a wave like this in advance.


426 comments:

  1. Good morning!  Sorry for the short update, everyone, I simply ran out of time tonight.  Family does have to come first.  :)

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  2. Good morning Jason. Hope all is well.

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  3.  Thank you for the update.  Glad to see family is first.

    Joe

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  4. Best wishes to you and the family!

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  5.  Priorities straight, good for you

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  6. thank you PL   ...........that is the shortest ever

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  7. short is good - you still gave us several things/alts to watch

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  8. should be a drop coming up soon. . . . 

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  9. I just added an addendum chart at Whip_sawed's request, showing how to break down the move of the last 2 days.

    Euro just started breaking down, btw.  ;)

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  10. Good choice PL and I am sure that today's update is not the third wave.

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  11. Euro bears need to push through here for it to stick.

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  12. Euro *might* have another push up still in the tank...

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  13. The Aussie dollar looks like it's gonna bounce today to finish a 4th wave.  As a result, the Aussie:Yen cross is doing the same thing.  Since their correlations with equities are remarkable, I'd say we rally all day long and tank on Monday.  Might even start to tank late today.   I don't pretend to know for sure, but I 'do' know that that particular currency pair is more accurate at forecasting the equities markets than the equities markets themselves, lol.

    Hey bud, I made up a joke this morning.  You know that troll who shall remain unnamed?  You know what he and a BAC $10 call have in common?  Thay're both gonna expire worthless.  ;-)

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  14. lol. worthles. . . 

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  15. Anthony SwiderskiApril 20, 2012 at 3:43 AM

    QQQs acting a bit crazy out of the gate

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  16. LOL...that too damned funny...options humor...whodathunk. I think you should hire yourself out to the BSDs for their get togethers.

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  17. You chose wisely :)

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  18. Oh man you wouldn't believe some of the stuff I come up with.  I've cracked up some of the people I've worked with so bad that they've peed their pants.  One lady actually peed herself I made her laugh so hard.  I don't even know where that stuff comes from.  My brother (God rest his soul) was the same.

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  19. shorting ES art 79 & 80

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  20. An interesting chart someone posted a while back on Daneric's blog that historically maps market behavior around OPEX. *Usually*, the decline starts after OPEX.

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  21. really big price ranges on the 5 min bars........slapping n whipping

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  22. Good morning to all.

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  23. You have full support from your crew captain.   Family is far more precious than most of the scurvy dogs who swab these here decks.

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  24. This morning at least looks completely untradable.

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  25. so far today...

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  26. If anyone was hoping for a down day you can blame me b/c I took on an S&P put position yesterday :(

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  27. Great chart.  I wish I would have seen this yesterday.

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  28. Howdy.....appears as though I just made it for the next wave down. Shall we do a three wave down from here to break below 1370?

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  29. As always, if you don't take care of yourself  and your family you can't be effective at anything else.  Good Job   Katwitch

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  30. Thanks for telling us today.

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  31. I like that idea.  So far PL's 1390 invalidation is holding

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  32. may be about completing the first impulse up from yesterday (3 of 5 of 11)

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  33. wave 2 should end around 1386.5, then wave 3 down hard

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  34. 80 to 120 rule ($INDU)

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  35. SG I hope you are right.

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  36. FWIW (and forgive me for harping on this but...) I'm so confident in the corruption at JPM that I'm totally convinced they're going to run IWM all day long and pin it just below the max pain number which is at 82.  If you're trading ES or anything else for that matter, you might consider taking your cues from the Russell.  I would expect today's action to be a clean 3 wave sequence.  But if not... if it's straight up, then we're probably looking at something more bullish.  I don't think that happens though.  Potentially setting up for a blood bath on Monday.  I'd say that if we get a clear 3 wave sequence today and finish on the high, short the hell out of it.

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  37. RUT is just below yesterday's HOD

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  38. 100 hour sma right at 1388 and regression also. this will be third time it's bumpin it's head 

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  39. Rhe move up so far is extremely impulsive.  I think we see a clear 3 waves up today which would set up the 'down hard' that you're expecting to happen on Monday. 

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  40. Question: If the invalidation for the ST SPX bear count was identified as yesterday's HOD, would the same be true for RUT?

    it just broke though so is it reasonable that SPX would follow suit?

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  41. i will call it ....W5 of 1 of 5 UP UP and AWAY!

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  42. reasonable, sure ... but different markets often move on different counts

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  43. No comments for like 30 mins...something wrong with disqus??

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  44. Consolidation (correction) for last 45 mins...chart tells me it breaks up (but i'm a newbie), gut tells me down. Let's see if there's a head fake to REALLY screw me up.

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  45. Take a short break and find some humor in it all.....

    http://www.ftense.com/2012/04/finding-some-humor-in-it-all.html

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  46. Take a short break and find some humor in it all.....

    http://www.ftense.com/2012/04/finding-some-humor-in-it-all.html

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  47. Take a short break and find some humor in them.....

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  48. Nenner:

    Markets are in a correction. A close above 1394 and 2725 would be short term buy signal
    Still no buy signals on Gold or Silver
    Crude...need a close above $104.50 for a buy signal
    Nat Gas....still looking for $1.70
    Bonds....10 year continues on a buy, still not long the 30 year
    Euro...short term cycle bottoms in May. Close above 133.60 for a buy signal
    Aussie...no position

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  49. no movement in market in 30 min :)

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  50. dang...a solid hour of nothing

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  51. About to run?

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  52. Any nat gas EW charts? Would love to see one.

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  53.  That 2nd one is actually pretty saddening because it is so very true

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  54. My confidence in any short-term counts right now is low.  Very impulsive looking rally so far -- not surprising because this range has been traded often enough recently that there's little resistance (or support) thoughout. 

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  55. yes, looking for $INDU to be up plus 120 area

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  56. eur/$$ took off, I had the same read as you did pre-bell, then watched it turn around

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  57. Yup, these pictures are telling the truth with humor.

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  58. prolly putting in a ST high right here

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  59. Kinda like the Nancy Grace show.

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  60. Pretzel, no need to apologize about the post: family does come first; I second all the like-wise sentiment here.

    Thanks so much for the RUT chart.  It is way over my head though.  Correctives seem to be the bane of my EW skills.  I have F&P and Neely (still struggling to get through).  Are there other EWT resources you'd recommend?  Is it the amount of overlap that leads you to conclude those waves were corrective? 

    I'm keeping a close eye on the RUT and your invalidation level.  So far RUT is hugging the underside of a major trend-line.  My hope is that the trendline provides enough resistance to keep a break-out from occuring and then the iii wave of the bearish ST count kicks in.

    G'luck everyone.

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  61. got a full meas move to 84.75 on my 5min....its also yesterday high value volume area

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  62. I stick with spx only. Sometimes look at rut. Looks like could not break thru HOD. Might short soon. Still non-committal.

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  63. best i can tell - the 1st impulse up from yesterday's low is about to wrap up

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  64. short off of recent HOD

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  65. Is that a mini cup an handle forming  forming on the 5 minute ES/SPX chart?

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  66. PL, im kinda lost in your blue count. you have yesterdays low labeled as i, but with an abc blue down to it. how can a first wave be an abc? thought its supposed to be a 5? think i must be missing something.

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  67. Yep, looks that way to me too. Almost too straightforward.

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  68. Overlap invalidates certain potentials, so you're able to determine corrections that way to some degree.

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  69. I'm short E7 just off the recent high.  Not sure exactly what to make of it, but I think it's at least due a correction here.

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  70. Way to ruin it for everyone!  :D

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  71. uggh... she appeals to the lowest of human's nature... gossip, salaciousness, voyeurism -- just nasty qualities

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  72. Whoops, it should say "i/c" not "3/c".

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  73. flattened at break even, could be one more move higher, looking for $INDU to be up plus 120

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  74. I committed...now a little move to give me a buffer zone would be nice.

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  75. Oh, and the blue a-b is a-b to 2.  The c isn't labeled because it's assumed.

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  76. these are those little EW5 suckers that are really hard to read. . . 

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  77. Looking at a long term P&F chart of SPX, it has formed a wedge and now it is decision time.  It can keep going sideways but this chart won't change anymore if it does that.  1360 signals a reversal and 1350 is a double bottom sell signal.   It would have to reach 1430 to create a new buy signal.

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  78. if we get some overlap of A -- down into the D area...then a new high for the day... that would be an ED in the 5th position... and i would be more aggressive taking on a short position there if we do get the ED rather than if we don't.

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  79. Yeah, I can hardly think of any other human being who turns me off as much as that scowling negative windbag.

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  80. "Circle gets the square!"  I've never learned to read these things.  I just want to draw lines through them whenever there's three x's or o's in a row...

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  81. I'm thinking along the exact same lines except that this bounce today is so impulsive that I think it would only the 'a' wave of a 3 wave sequence.  I was hoping to see all of it today but that seems quite unlikely now.

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  82. TLT continues to rally from the low on 3/20 at $109.69 to a high so far of $117.60. Bonds are suppose to be the "smart money" players. 

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  83. yeah, i doubt we see the ultimate topping levels today...unless we got a monster squeeze into the close

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  84. a good sized down candle should appear within 15 min. or i am out

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  85. I think I'm going to try to get some sleep -- almost 7 a.m. here.  You guys can thank me later, because usually when I do that on these boring days, then all hell breaks loose about 15 minutes later.  :)

    GL

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  86. btw, just a fun little fact -- if SPX fails to make a new high somewhere in here, then one could conceivable count the rally off yesterday's low as a completed a-b-c.  Alright, I'm off...

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  87. no one wants to buy AAPL any more? At 581

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  88. i thot when she went below 581 that decline would speed up...not yet so far........i added to my tza and qid instead of stepping into es again

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  89. Rest easy and dream of extended fifth's..........

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  90. es just hasnt quite pulled even 2.50 points from high yet.........there r 3163 cars at high of 83.25 and my experience is they usually go thru that marginally then sell off if no buyers show up

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  91. Just drifting down...I'm still in my original short from near the top. Rooting for your candle.

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  92. lookin' for es 75-8

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  93. red 1 min bars getting going. is this it?

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  94. finally   at least a 2.50 pullback.....lol

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  95. What's the current spread between es & spx? Looks like we are about the break 84....then a beak below 84.71 (the low since 10:30)

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  96. es 83 and 78 are two big 5min ledges from 4-17...........as she was powering up........my vwap on globex is 79.40

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  97. i am considering holdin' my 5 cars short, gettin' a real strong sell signal, signaling a failed EW5 attempt to move higher

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  98. The flux is in alignment with that notion of yours.

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  99. 78.25 is 5 off the high and my ledge.........i hav volume point of control for today at 76.25

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  100. Took 30 mins...but there's your candle.

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  101. aapl now 577.75      some acceleration down......567.50 is my 50day mov avg

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  102. Bonds rallying since 1:15 PM

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  103.  katzo, why are your ES shorts referred to as 'cars'?  I don't know much about the futures game

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  104. go man go!!!!!!!!        got to get thru 78 with force

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  105. this is pure speculation. ES seems to be running about 4 to 6 points above and below my tgts. I mentioned that I felt we were in an oscillating mrkt and ES is trying to make up its mind. I am thinking bearishly, think at some point it will snap into a longer term down channel. This is not trading advise and we can only confirm this if/when it creates the aforementioned channel.

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  106. $INDU run to plus 115, now back to 82. Decision time. . . . 

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  107. out, could not resist that profit

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  108. Don't take time to thank us....you could miss somethin!

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  109. dang 78 ledge has held decline so far..........if cant get below it with force may just bounce back to 83 ledge

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  110. It's stuck around 577. 

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  111. Bank it when you can.....mama need a new pair of shoes?

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  112. cars means contracts

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  113. I fcuked up (time wise) lol

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  114. NEW NORMAL ala Ian Copsey .... first chart is the way Ian counts B waves and second chart is the way Ian counts Impulsive waves

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  115. next push down coming, it bounced of of ES 78, or $INDU being down 82 (my 80) and now it shod penetrate Tim's shelf

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  116.  I do understand that part, just trying to figure out why they are called 'cars' since that is an interesting term.  Thanks!

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  117. Wish I had read this a few mins ago...I got out +1200, and then looked back at market and it dropped to the recent low...now moving through...damn those seconds...probably cost me 1000. But...Im out and I'm up.

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  118. stick and stay and make it pay....

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  119. nice, nice, nice !!!!! I went short again at the top of that bounce off of 78.

    For noobies, the tgt levels I post are support levels down below (or resistance levels up above), a potential pivot, it comes down, hits that, then bounces to usually about 50% of the distance it traveled down. I reentered my short position there. A bounce off the tgt does not mean it will rise 50% then test that level again, it could continue going back up, you do not know. but I saw the breakin of many EWs on lower time frames so i am staying to the short side now.

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  120. just about got to my volume point of control from yesterday of 76.25...............volume value low from yest is 74...........almost 10 points from the high............2bits....4bits....6bits.....and a dollar

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  121. if it breaks 1375 ES think all over for upside potential, IT

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  122. Couldn't happen to a nicer bank.

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  123. DO YOUR OWN RESEARCH. . . . . 

    my posts are just guideposts so you look at your charts to see what has changed, I am paying it forward. . . 

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  124. got chart of count?

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  125. from high close on 5min......got fib to 76 then 73.75 on full measured move......................dont want to jinx this drop by what i want to say....so i wont say it  

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  126. out second traunch

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  127. 138.18 -- 38% retracement (so far) of the proposed impulse up from yesterday's lows

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  128. While Pretzel's away.....the equities play!

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  129. AAPL new low.. stop loss trigger watch... again...

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  130. Daneric just posted he expects a new high over 1422 ... IDK about that

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  131. big P on my trade station matrix!!!!!  usually bullish............we are now moving into the light volume stem on my profile from 76.25 to globex low of 71 25............ive seen them run thru a stem if things are really that negative. but will prolly bounce in here

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  132. if it breaks 1375 ES think all over for upside potential, IT notice it bounced right off if there?

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  133. And I am grateful to you for everything you do, cuz you don't find so much generosity around every turn in life. You're a gem Katzo. And, a helluva a great teacher. :)

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  134. Nice guys....Let it get back to $4.96 again.

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  135. Will do more research over the weekend....but does anyone have an opinion about Bradley turn dates? One coming up on 4/23

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  136. I think that was B of the final ABC in the pennant/flag/diagonal 4 that started from the 4/10 lows.  This last C should get us to the upside target of 1397 SPX.  

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  137. i've got it as a 3 wave correction down to SPY 138.05 ... new low below there it becomes a 5 waver.

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  138. short again


    tgt by EOD, now, don't f-ing come out of the woodwork and say I got this wrong ! lol .. . .  and don't trade off of this.
    tgt ES 69-72

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  139. Katzo, a stupid question - ESignal charts everything automatically under certain parameters, which you choose? Is it as simple to use as just choose EW and BB etc. - click and its ready? Thanks

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  140. First, eSignal is very expensive, 3 to 5,000 to buy in, $140 a month for ES feed.

    The EW plotting is auto but it is not that simple; if it was everyone would buy the program and make a trillion dollars in the first year. I teach eSignal EW to ppl for free; I do not represent the company and do this in the summer out of the goodness of my heart.

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  141. common ledge / shelf.......resist!!!

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  142. I only trade my own ideas, but it is always nice to get some confirmation or challenge from someone more knowledgeable. I appreciate the notes to newbies. All info is much appreciated. I am flat for the weekend.

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  143. personally i prefer yest low of........65.50

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  144. more likely Monday.  I don't know about timeframe yet.  just think we are headed up sideways until 1397 SPX

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  145. NDX and COMP leading this down.........really need RUT to POOP!!!!!!!!

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  146. which will it be ?!  C or 3 

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  147. I have some time now, nothing is happening, go look at my posted 120 ES chart. See the fib. retracement level? I think the first down was a minor EW1 off of the EW4, the rise up to where my arrow is the EW2 retrace. I think we are now moving into an EW3 down move. I could be wrong on this and will reevaluate it in a split second if need be.

    Second, the last two hours of OPEX are usually flat. From what I see today could be the exception to that rule.

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  148. VIX wants to climb up.

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  149. Pardon my ignorance if this has already been taken into consideration, but would adding in overnight trading of the S&P 500 futures add value to the count.....or detract?

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  150. depends..sometimes it gives really good clues

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  151. watch this now. . . .  [i should go get the OHHH YEAH}

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  152. "personally i prefer stupidity"......."no,no....pride will do".......what great movie???

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  153. look at the ghost spike candle of ES/15 and where we are now

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  154. common.....take a trip down the stem please mr es

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  155. some soothing music to put mrkt to sleep

    http://www.youtube.com/watch?v=8RXJc199zFk

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  156. There it goes down

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  157. just touched my volume value low area of 74

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  158. Man K7 great call

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  159. out of shorts, down may be over 

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  160. You really should...helluva nice couple of trades to day. I am wincing that I got out too soon. Well done!

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  161. that is it, sideways ROD

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  162. This is what I do when trading, don't watch news, don't really care but understand I can get wacked by some notable event at any time.

    http://www.youtube.com/watch?v=VT-SFgkVlno&feature=related

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  163. giarc is here? plz post more guy !

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  164. any one BTD aapl here? or wait till 550?

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  165. looks like a potentially complete impulse down...could be more downside - i'm not betting on it

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  166. ES/15

    http://screencast.com/t/AsRCs6hAKkQr

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  167.  I'll definitely try to Katzo.

    Quick question for you. What are the black bars on your stoch charts? I think you said once that they indicate whether we are in a buy the dip or sell the rally mode. Is there a name for the indicator?

    Also want to say that all of your posts are helpful and appreciated.

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  168. how about an EOD covering pop so i can put a few easy shorts on ?!

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  169. correct you are........one of the best ever!!

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  170. they are False Bar Stochastic bars, not the best term for them, proprietary calc in eSignal. They say to buy or sell the mrkt when the stochs hit the opposite side. Remember, the FBS under an EW5 or a C wave is void.

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  171. Doom Merchant made a great call yesterday, I did not see it in the charts, I was packing up to leave my office.

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  172. Hi Katzo, no I wasn't watch the real time changes. Busy, so just catching the emails. -DD

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  173. you've made a few good intra-day calls that i've noticed

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  174. down to my tgt now

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  175. i had a tiny bet that this last wave wasn't going to get the 5th wave... you were right though...although i could see it as part of this ... we'll  have to see - it's the A there on the RUT

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  176. nice, I still think down tho but I cannot get hurt with my stops

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  177. the 'please' doesn't work I have tried that before. lol

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  178. have a great weekend everyone......sorry i ate up so much thread here today......L 8 Ter

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  179. as silly as it seems ... it may come down to AAPL w/earnings next week....if we get new highs - it could come if AAPL corrects before then gets a pop after earnings -- or it just implodes, but it seems more unlikely the more it corrects here

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