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Friday, October 28, 2011

SPX and NDX Update: Key Levels Which Could End this Historic Rally

Sometimes you get the bear, sometimes the bear gets you.

Thursday saw the rally extended even further, once again blowing through my upside projections like an over-achieving marathon runner.  Thursday had the distinct feel of a "buying panic."  All the sudden, people are no longer afraid of losing money on a decline -- they are afraid of missing the rally.  Rallies often climax with these blow-off type moves.

The Fed meeting is fast approaching, and the Fed has been floating more innuendos of Quantitative Easing.  QE is now so firmly entrenched in the psyche of investors, that the Fed doesn't actually need to implement QE3; all they need to do is hint at it.  Investors have become a bit like chastened dogs... all the Fed needs to do is roll up the newspaper of QE while giving investors a menacing glare, and investors obediently cower in anticipation of being struck. 

I sincerely doubt there is more QE forthcoming, as was my opinion the last time this rumor floated, back in September.  The Fed is between a rock and a hard place here: more QE at this stage would be a good move only if the Fed's intention is to convert the dollar into a competitive brand of toilet paper.  The last Fed meeting brought us Operation Twist; I see no reason why they would suddenly decide to scrap that program for more QE... especially with the market in rally mode and the current massaged economic numbers hovering well above crisis levels.  No, if there's ever to be QE3 in 3D, they'll need to save it for after the crash.

Investor sentiment is now reaching what could be considered as decidely bullish levels, as shown in the screenshot on right.  You can see that the bullish sentiment is about 4% above the long-term average, while bearish sentiment is 5% below the average.  This is what we would expect to see near a second wave top.

On a less exciting note, a couple of my preferred counts are now piles of smoldering ash on the market floor.  Yesterday I warned:

If we are indeed approaching a major top, the market's number one priority right now is to keep everyone as confused as possible.  If the market makes its intentions clear, there will be nobody left to take the other side of the trade.  

Apparently, I didn't anticipate myself being one of the confused.  After apologizing to my blog readers for blowing the count, I sat down and wrote a letter:

Dear Abby,

The market has rallied a lot stronger than I expected.  The Dow Transportation Average has staged its most impressive rally since 1939, and the S&P is having its best month since 1974.  Am I crazy to keep insisting this is a bear market rally?

Signed,

Bearish in Hawaii

I received a reply almost immediately (probably because I wrote it):

Dear Bearish in Hawaii:

First of all, you're even crazier than you think, because I don't do this column anymore, my daughter does.  Second, this is exactly the purpose of bear market rallies.  Investors need to believe that the trend has changed.  This clears the majority of buyers out of the way, which then makes an unobstructed path to new lows when the selling kicks back in.
  
Well, that made a lot of sense to me.  The other thought I had was that if this is, indeed, the bear market rally which precedes a generational crash, it is probably appropriate to have a generational rally.  With those thoughts in mind, I re-drew the charts of the SPX and Dow. 

The main error I made in my preferred count was assuming this was all one wave off the October 4th low.  I based that on the idea that the strength of the rally argued for the interpretation that it was a C wave (note to other Elliotticians: I was actually viewing the rebound off the August low as (w) (x) (y), with (y) being an expanded flat; this wave being c of (y).  I annotated the whole correction as a simple a-b-c so as not to confuse my readers any further).  Apparently, either that interpretation was incorrect, or my placement of waves 1 and 3 was incorrect.  It's largely immaterial at this point. 

Several articles ago, I listed a few alternate counts, including the possibility that we were in an A-B-C rally off the October low, with A and B complete.  This now appears to be the more likely case. 

Interestingly, the observations I posted in the article a week ago on Wednesday were causing me to look for more upside at a point when many Elliotticians using the A-B-C count were still looking for more downside... but yesterday, the shoe was on the other hand (or whatever that saying is).  I was looking for more upside, followed by a reversal, while the A-B-C count watchers were just looking for more upside (not sure how many were expecting the amount of upside we actually got). 

The market is fickle... we all take our turns being right or wrong.

So... water under the bridge.  At this point the goal is still to try and identify the top.  We'll take a look at the changes that have to be made to the SPX count in a moment, but first I want to focus on the one index that behaved exactly as I anticipated: the NDX.

Despite the fact that the NDX performed as projected, I hate surprises.  So I went back and scrutinized the NDX chart as well, searching for other possibilities.

One very important observation I made while re-examining the counts is that there is another interpretation of the long-term NDX count.  Under this newly-discovered interpretation: it is possible that the NDX has not actually started its bear market wave yet.  It may instead be rallying off a fourth wave low, in the process of completing a fifth wave up -- meaning it could make a new high for the year, and then officially kick off its bear market from there.  I am still favoring my original interpretation of the NDX chart... however, if the NDX breaks its 2011 high, it will prove that this alternate count is probably the correct one. 

On the chart below, I have primarily annotated the alternate count, to highlight the changes and share what I'm seeing.  The preferred count is shown in green, but only the major turns are annotated. 


Interestingly, the NDX was something of a laggard yesterday, ending the day less than half a percent above its prior swing high.  It also shot up right into the hypothetical resistance indicated by the ending diagonal drawn on the chart.  The NDX has followed my projections very well almost continuously since September 18th.  That's a pretty good run, so hopefully I've got this one pegged a little better than the SPX and Dow.  We'll have to keep watching and see if the end also plays out roughly as expected (assuming of course, that we are nearing the end of the rally).  The good news is that the large-cycle alternate count allows for some wiggle room, and also allows the NDX to break its 2011 high without causing any significant technical damage to the big picture outlook. 

Another fun fact is that the ending diagonal works fine in this position for either count, because C waves and fifth waves are both five-wave motive waves, so the sub-minuette count functions the same for both.  The chart below is labeled with the preferred count, with the alternate from the last chart only noted once, by the "Alt: B" label:


Despite the lingering question of whether the NDX is in wave (5) or wave (2), my short term NDX count generates high confidence that the top is likely very near.  Nailing it down to the penny is more the question. 

There is always the potential that the black "Alt: 4" label is correct, which eliminates the ending diagonal and leads to two possibilities:

1) Thursday's high was it, and the top is in.

2) The NDX will form a larger fifth wave.  If one were to consider shorting, the safe way to play this move is to wait for a decisive break of the lower red trendline before shorting.  Trade beneath the "Alt: 4" label will almost certainly confirm the trendchange.

If the NDX is in the final two waves of an ending diagonal, be aware that the final wave up in the diagonal can end short of the prior high or overshoot it.  The behavior of the last wave in a diagonal is pretty much impossible to predict.

On to the SPX.  For simplicity of explanation, the SPX has forced me to shift to the view that this is, in fact, a three-wave a-b-c rally.  As I see it, there are two likely possibilities on the SPX:

1) The ending diagonal I was favoring was right all along, but we had an exceptionally large wave (v) overthrow.  This count would mean the top is in place. 

2) We are forming a garden-variety five wave impulse up, with a target of 1305-1330.

What I like about option 1 is that it reconciles better with the preceeding wave structure.

What I like about option 2 is that the Thursday rally looks impulsive, which doesn't fit the diagonal structure -- and this option draws the rally out roughly into the time window of the Fed meeting, so the market can sell off after Bernanke announce there will be no QE3.  Also, this option would further break the will of bears, and turn more participants bullish. 

I am very slightly favoring the view that the rally is finally over, but I'm pretty evenly split here on the two counts -- so I've marked the key levels to watch on the SPX chart: a break of Thursday's high on the upside would favor option 2;  a break of 1256 on the downside would virtually confirm option 1.  First support comes in around 1267-1270.

        
So the possibility exists that the top is now in place.  We have key levels to watch for breaks to the upside and downside -- now we just have to wait for the market to tip its hand.

The original article, and many more, can be found at http://PretzelCharts.blogspot.com

117 comments:

  1. The funny thing about having to redo the chart... I think I have wave A and B labeled correctly, but most don't. That screwy little 4th wave (of A) threw the counts.

    I could never reconcile the a of B wave until I spotted that 4th wave. Almost everybody has wave a labeled as 4, but it's a very clear impulse -- so I could never bring myself to label it 4. This count reconciles that problem.

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  2. Pretz - I think the Dow and S & P can move more to the upside with the NDX lagging. Not yesterday but Wed, the Dow was up 100+ but the QQQs were actually negative for the day. I usually watch AAPL and AMZN as an indicator and after each had terrible earnings (relative to price) each looks like a broken stock. In a huge up move in the market, neither really budged. The NDX isn't moving in lock step. ML

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  3. Vulture,

    Yeah, that was definitely the case yesterday. NDX seems to lead sometimes, so the NDX may be signaling the turn early.

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  4. Yesterday too, I should say. SPX and Dow were definitely out-performing.

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  5. Pretz - more of a technical question - can NDX still be in a bull 5 wave if SPX and Dow in Bear 2 wave? I would have thought the ywave would be more synched up given the turning points we seem to be at?

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  6. great article Pretzel...I am favoring your 'slightly' preferred count, the alternate ED concerns me for a few reasons.

    1. It implies we hold yesterday's top in the SPX and drift lower while simultaneously the NDX drifts higher to make it's new high. That's hard to see IMO.
    2. If your A wave peaks on Oct 12, and the 4 wave is as you have it listed, then the 3 wave looks quite small relative to the 1 wave.
    3. reason I favor the 1197 level as the bottom of B is the VIX spiked significantly at this bottom and cyclicals (which) actually drove a lot of this rally did make a higher low even though SPX didn't...FCX for example.

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  7. When you start seeing headlines like this on Minyanville:

    "An ETF Ready for the Rally"

    you know the rally is almost over. READY for the rally? Party's almost over! Where were these guys when the SPX was at 1074? lol, cracks me up.

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  8. 1) NDX doesn't need to make a new high. If the "alt: 4" label on the NDX is correct, it could be done. Even if the diagonal is correct, it doesn't need to make a new high.

    2) Wave 1 was the extended wave. Fairly common in bear market rallies, because the first wave is driven by panicked short-covering.

    3) Could be. I just can't reconcile that "a" wave as being 4. It's a really really clean impulse wave -- as clean as they get. Doesn't mean it couldn't be something else... I just can't see it.

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  9. I'm reading the greek haircut won't be considered a CDS event. Kinda makes you wonder what the point is of buying that protection then?

    Heard the impact of that is banks will stop buying CDS to hedge their exposure to risky areas and will subsequently lend less to them, which means credit and liquidity in the PIIGS will dry up further.

    Just more fodder for the coming crash.

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  10. POTUS -- If it's a short wave (5), I don't see why not. NDX has been in a different count for a long time. That's why it failed to make a new low in 2009 when the SPX did. NDX was bottoming wave 2 then, when the SPX was bottoming the decline. Could happen similarly here, but in reverse.

    But... that's the alternate count, and unless NDX hits a new high, we don't need to worry too much about it. :)

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  11. Thanks Pretzel. Great insights as always.
    Loving the blog, I'm learning a ton.

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  12. Rock-

    Bear market rallies never cease to amaze me. It's like everybody gets drunk on the greed of the market, and forgets about all the really bad fundamental stuff for a few weeks -- then suddenly they wake up with a bad hangover and hit the sell button.

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  13. Thanks, Rock, glad it's informative for ya... that's the whole point, after all. Not like I'm getting rich off it, but if it helps someone else make a buck or two and gives people a few laughs here or there, that's pretty rewarding in itself. :)

    Not that I wouldn't mind getting rich off it, too... lol

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  14. man, that BIDU short I had on really screwed me last night. Those earnings didn't look all that good to me. Rosey guidance is so fragile IMO.

    Tilson is shorting salesforce.com
    Anybody else onboard with that call? im considering it.

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  15. Pretzel, any count or stops for RUT?

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  16. But yeah, I've been a bear for a long time, and traded actively during the bears all decade... so I'm hoping I can pass on a few insights here and there.

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  17. Ah, RUT. Lemme go look at it. Hard to keep up with all the charts I'm running these days...

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  18. See, RUT's another one -- looks like it's finishing a 3rd, possibly a nested 3rd, just like SPX. Could be good for a run to 800 +/-. I would consider covering any shorts around 750, but that's just me.

    736 is the critical level for bulls to hold. Below that, and it's probably changing trend.

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  19. Yes, I definitely accept any and all donations, except for old sweatshirts. :)

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  20. CTP conspicuously absent this morning.

    Am I getting bad quotes on SPY? Why is it green when SPX is red?

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  21. Seasonal timers are all in for the Fall rally, while Elliotticians are looking for a top and move back down. Interesting divergence of opinion and style.

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  22. looks like spy closed down here yesterday, maybe someone fat fingered a market order on the close and ate up all the supply, posting the last trade of the cash session well below closing fair value?

    total speculation on my part

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  23. SPX should put in a ST bottom here at 1277, rally back up to 1284ish pretty quick.

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  24. makin that call on the 5 minute chart? I can see the 12345, looks like it's unfolding.
    abc back to 1284 resistance then another 12345 down?

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  25. 'MadMoney' Jim Cramer told all his followers last night to buy into ALL dips for the rest of the year, since he's sure bear shortcoverings can be milked until 2012, due to seasonality, and bearish managers playing catch-up for end of year 4thQT window dressing.

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  26. Yeah, one minute charts, but yeah. Looks like it put in a little diagonal five to end the move. Gotta be careful with those, cause they can turn the little ones into bigger ones sometimes and take it up and down a couple more times before the real breakout.

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  27. RockyTop,

    I was short BIDU too... :-(

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  28. The other thing "they" like to do is turn 'em into channels. "They" are very tricky, they are.

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  29. I like Jimmy Cramer, but that might turn out to be like his Bear Stearns call back in the spring of 08.
    "this company is fine".....not
    He has missed a lot of calls recently so I've started watching him less.

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  30. Anon-

    That's awesome. Cramer is such a great fade.

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  31. Rock-

    He's too much of a perma-bull -- because bull sells audiences, bear don't.

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  32. yeah Frank, I'm not giving up on that one just yet. If it hasn't made a new high by the time the market drop starts next week then it will print 100 again in short order. I'll probably cover if we see 151.
    Definitely watching what it does around this 150day ma around 138. Trying to apply some EWT to it, if I'm doing it right, then we're actually in wave 3 up and it's a bad short.

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  33. hopefully I'm doing it wrong and it's a good short, LOL

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  34. action so far is anti-climatic, such a narrow range bound action

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  35. bulls need to clear 1281 now to get anything going. 1281 should get 'em to 1284.

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  36. they cleared it by a little :)

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  37. This market is like watching paint dry right now.

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  38. lol, italian bonds just printed an all time yield high...guess this EU 'fix' isn't giving bond investors that much confidence after all.

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  39. RockyTop,

    I agree with you on the short on BIDU. If it clears 151 I'd get out of the way and might even go long :-) This thing looks like it wants to go higher though...

    About CRM, not sure about shorting it right now. And Tilson, wasn't he the guy who shorted NFLX on its way up? Now he's shorting GMR and GMR is bouncing now..

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  40. yeah, 2 days of violent moves followed by running in place is like a withdraw

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  41. Rocky Sorry I mean GMCR

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  42. closed my es longs for 4 pts. it might go higher, but i don't like the action here.

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  43. yeah, he was in netflix too early but ultimately he was right. Reason I like his CRM call is:
    1. shorting on fundamentals and valuation like nflx
    2. the technicals look bearish
    add those up and it's a good recipe for a short

    I think it's Einhorn shorting GMCR, I could be wrong though.

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  44. when pretzel gets nervous, i get nervous.
    seeing an impulse up forming?

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  45. Right Einhorn was in GMCR early, Tilson just got on board now :-)...

    I still think GMCR has a downside target of around 43... what do you think?

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  46. Spiker, I think seasonal timing is generally pretty limited.

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  47. if he closed his ES longs, doesn't that mean that he thinks SP500 is going down?

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  48. If the triangle breakout holds, they should take it up to 1285 here

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  49. I can see 43, but that feels a bit like a scalp considering it was well over 100. I considered it around 80 but passed. I'd be nervous stepping in this late becuase there are so many other shorts that pilled in when einhorn made that announcement.

    Potential EWT counts look like this may be the completion of an ABC correction. But I'm no pro.

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  50. anon- no, i'm just trading very short term patterns right now

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  51. scalp trades, trying to pick up a few points here and there

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  52. starting to look like they want to fill the gap at 1286. if they can hold it here, they'll prolly get it back up to 1286.

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  53. Pretzel
    what gap at 1286? I thought you mentioned 1285?

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  54. 1285 was the measured implication of the triangle breakout. 1286 was a gap from yesterday's decline.

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  55. tza looks to have a similar issue as the spx vs spy.
    it closed artifically high yesterday and today's print is down 6% while the RUT is basically flat.

    strange

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  56. It's weird, sometimes when I hit refresh, the new comments don't come up. I have to switch to t a different page, then come back and there they are. Prolly something to do w/ my browser.

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  57. and no, rock, so far it doesn't look impulsive.

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  58. maybe this is the b move up before the C down to complete wave 4? Max retracement would be yesterday's high right?
    61.8 fib would be closer to 1285?

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  59. Pretzel
    Based on your count, either way, it is supposed to be a down day today yea?

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  60. there's 1285... out again for another 2.5 points.

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  61. well, i can't tell ya where it'll close... but we should make a new low yet today, yeah. First wave down sure looked impulsive, so after we're done correcting, we should get another impulse down.

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  62. Pretzel what do you think about VIX? Is VXX a buy and when?

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  63. can't tell ya! :) i don't chart everything out there. VIX i just chart as a confirming indicator, i don't trade it.

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  64. I do.
    vix is still resting on MA support at 25. Long term average is 20-25.
    I own VXX but I'm going to sell it at today's bottom, hopefully around 1265.
    I'll pick it back up when we find the wave 5 top. Should prove to be a false breakout lower that rallies back up.
    Vix is regressive though, so if the market calms for a while before we drop, the Vix will go down.

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  65. well, I do follow vix I mean...but I don't chart everything. hehe.

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  66. flipped short at 1285, stops north of 1290. Might have to give back some of my profits if i'm stopped, but this wave looks really corrective to me. And I need to get to sleep! :)

    gl everyone, trade safe.

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  67. Pretzel,

    Just wanted to reiterate the kudos that everyone has passed onto you. As they say, it's darkest before the dawn, but we all know the sun will have to come up eventually. These are pretty extraordinary times, and I am still loving your blog. Thanks for your updates and all your hard work. It is great that you are so willing to share, and I know that many of us are deeply, deeply appreciative. Plus, I'm making sure to click through the ads on your site. Hope it makes a dent ;)

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  68. JM, thanks!

    Very much appreciated. :)

    Have a good one guys, catch up w/ ya later.

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  69. Hey guys,

    been very busy at work today and not much time for the market. So far looks like today could be an inside day to keep us all in suspense over the weekend. Not expecting any fireworks as we take a breather from yesterday's moonshot. A quiet inside day would actually be good news for the bulls at least in the short-term.

    FWIW, I don't really have a hug amount of conviction today regarding market direction. Next week will be the tell as my 10/27 +/- 1 cycle window closes as of today so assuming we stay inside of yesterday's candle today then the break of Wednesday low to Thursday high range will indicate whether the cycle was a low or a high.

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  70. Frank - between you and me...unless Bidu breaks below the moving averages on the 15 min chart (142), I'm going to cover at today's SPX bottom. I'd rather use that capital getting long for the 5th wave up to 1300. Depending on where Bidu is early next week, I might re-enter. Hoping 1285 holds as the end of corrective B right here.

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  71. 5 points down...wave 1 probably going to end soon, maybe 2 or 3 more points? Don't get faked out by the wave 2 up, the big 3 drop into the close is coming.
    ....IMO ;)

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  72. Elliott waves look easy today...I probably just jinxed it.

    We're in wave 3, a break below 1277 confirms.
    Hoping vix finds it's way to 27+ so that i can unload VXX.

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  73. Unless we get some surprise news out of Europe between now and the close it doesn't feel to me like we are going to get any downside fireworks. Plus we are getting awfully close to Fed day now and hopes for QE or some other magic tricks from Big Ben may put a persistent bid underneath things. Of course Europe remains the wild card so any hi-jinx from Euro land and all bets are off. If it turns out the Wednesday low was the 10/27 +/- 1 cycle turn then the next turn date window is 11/4 +/- 1, right in the middle of Fed fun and games. While anything is possible I kind of doubt that we could drop far and fast enough to make that an important low considering the upward momentum registered yesterday so my bet is that 11/4 +/- 1 will be THE top.

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  74. CTP - love the cycles. I'm on board with your timeline.

    Looks like my wave 3 entry call was a few minutes early. Wave 2 may have just completed at a 61.8 fib retrace again. Fib owns the day so far.

    If so, this is now the Wave 3. Alright, no more shot calling for me today.

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  75. lol, like a kid with a new toy...need to read the instructions a little more I guess peace out!

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  76. today's market is like watching the grass grow... calm before the storm?

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  77. i was thinking and HOPING the same thing.
    Looks like no sell off today...

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  78. yeah, nobody wants to get in front of the weekend.
    wondering if this sideways chop IS the 4 wave, just consolidation like the b wave we got between 1190 & 1230. If so, I might miss wave 5...if we have one.

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  79. looks like that b wave consolidation from last week to me...usually leads to a move up right? maybe wave C just started?

    http://mediacdn.disqus.com/uploads/mediaembed/images/159/8443/original.jpg

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  80. I meant wave 5 just started, not C...excuse me.

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  81. just read these triangles commonly come in the 4th wave...I'm goin with it. Covering.

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  82. Bulls in full control here, it is gonna take a miracle over the weekend to prevent make the 10/27 +/- 1 turn date a high. 99% sure now that the cycle turn was the 10/26 low. Which means now we go up into 11/4 +/- 1... God help the bears if the Bernank decides to unleash QE3 on top of this already torrid upside momentum.

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  83. Fed day is on 11/2, mark your calendars. If we get QE3 then we might see a short covering panic that would make Thursday's action look tame by comparison :-O

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  84. agreed. covered shorts 10 minutes ago...considering a jump into FCX which has a 150day ma sitting 4 points higher. I bet we tag it on this wave 5 up.

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  85. I think we'll get QE talk, but I bet Wednesday they'll disappoint and Friday's jobs will kick off the move lower.

    I'm going with this triangle today as wave 4 and wave 5 monday/tuesday.

    Goin long...crossing my fingers to do it up here. Scares me to death but sometimes just gotta take the plunge.

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  86. I am thinking maybe Pretzel needs to start working on some bull counts (just kidding... sorta) :-P

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  87. I would say it is pretty much a sure thing that NDX makes a new bull market high next week.

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  88. Pretzel - when you wake up...what do you think?
    Was today a consolidation B before a C down? just seems way too long for that. Or a completion of the wave 4 with an ABCDE triangle?...next move higher?

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  89. starting to think I made the wrong call for monday covering and going long. I'll just ride it into Wednesday's new high on the wave 5.

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  90. Don't know if this has been said yet. But the move to 1315 on the SPX may not be the result of "QE/MBS buys" but of the suggestion that it is forthcoming in the Fed's statement or press conference afterwards.

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  91. Anon - I tend to agree...run up into the announcement on wednesday, top...disappointing jobs report creates downside acceleration.

    Pretzel - pulled this from another blog, what do you think about this count? implies this last move was a wave 5?...seems strong for a 5 though, more appropriately a 3.

    http://imageshack.us/f/259/1min.png/

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  92. Pretzel,
    Gotta tell ya - really appreciate you putting your analysis for us all too see. Keep your head up buddy, I know absolutely nothing about charting and EW (if ya wanna know something about betting on horses I'd be your guy), but I think your just a little early on the Big Bear call. I think the analysis is spot on, it's just the timing that's not right - market needs to get a few more suckers on board. From what I read, and I do alot of that, the sentiment is not quite bullish in the media for the big setup. Anyway, that's my two cents and thanks to all you guys - discussions are really great. Trade safe guys

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  93. Rock-

    His count agrees w/ one of mine from the article. He's just using the Dow, not SPX. Yeah, I'm still split on the odds. It was a powerful wave 5, but you get those on blow offs sometimes.

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  94. getting there...

    http://www.marketwatch.com/story/wall-of-worry-gives-way-to-slope-of-hope-2011-10-28?siteid=rss

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  95. KB3-

    Thanks! And I'll keep you in mind if I'm heading to the track. ;)

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  96. In my experience there is one thing that can even over power excessively bullish sentiment and that thing is the Bernank's printing press... If by some chance he turns it on next week then it bull full steam ahead.

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  97. CTP-

    I think QE3 is a huge smokescreen. Won't happen. Read the article to find out why. ;)

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  98. "I received a reply almost immediately (probably because I wrote it):" -- did anyone else find that hilarious? Or was it just me? :o

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  99. Rock -

    Today could have been a B wave. Today was what I call a "masking move" -- they could honestly turn it into just about anything on Monday. Could gap it up and turn it into (b) of B of 4 -- could gap it down and turn it into a second or 4th wave. I hate days like today.

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  100. Imma try to write a longer commentary article about QE3 this weekend maybe -- if I can find a way to get close enough to a singularity to warp time and add an extra 5 or 6 days to the weekend...

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  101. See how scared bears are of QE3? That's why they don't need to implement it. I thought my analogy in the article to "chastened dogs" was pretty appropriate.

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  102. Or metaphor, or simile, or whatever TF you call it. :P

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  103. Rocky, Re: triangles

    Triangles in Elliott terms (note: not all chart triangles are actually Elliott triangles) are always the penultimate wave -- in other words, they are always the second last wave. So triangles only form in B waves, and in 4th waves.

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  104. CTP-

    Why so (sorta) bullish today? Your cycle work was indicating today should have been a stronger move to the downside?

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  105. yep...market going lower on monday. Hope I get a chance to sell. Would suck if it gapped down on the open...suck for me atleast.

    read about the 65% rule, when a triangle like this forms and prices trace to and break above at about the 65% completion level, the break out is a false one and it drives the opposite direction.

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  106. Buddy of mine is on a 2 month assignment in HI. He just sent me a postcard of 2 beach babes wearing dental floss. MF'er

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  107. Spiker, LOL... yeah.


    Doing a bunch of research on the treasury market now.

    There are so many things at play here right now, it's mind boggling... of course there's the situation in Europe -- Europe looking to borrow from Asia, but borrowing costs are high... now you have foreign central banks severely slowing their buying of US paper, which could lead to a big rise in yeilds, which will eventually lead to stocks tanking as investors flock to the "safe haven" of treasuries... yields rising will slow the economy... etc., etc., etc.

    It's such an amazing friggin clusterf**k out there right now. Really makes 2008 look like a walk in the park.

    The key to it all, which I've been saying for years, is that the GOVERNMENTS are finally reaching the point of powerlessness to stop all this -- because the governments are the ones in trouble here. It's going to be devastating and absolutely terrifying when this all comes crashing down.

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  108. To quote F.A. Hayek:

    "The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."

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  109. This is hilarious
    http://blogs.wsj.com/marketbeat/2011/10/28/euro-style-dinner-planning-details-to-follow/

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  110. FWIW, I don't think we'll see QE3 right now; there's too much dissent among FOMC members. Perhaps after the first of the year when FOMC membership changes, but not until then.

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  111. Just posted a US Dollar update with new charts.

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