Hey, because ES is my favorite bear blog I want to get in the fashion of calling tops and say the top was in around 2:30 EST on the currencies and metals, they just completed their minute wave As and will be grinding through their wave Bs all day, the perfect opportunity to strike. If I'm wrong you have a clearly defined stop above the recent highs.

You know, I posted links to this back in February or March, when MktMike was posting it over on stocktock, and I remember it was dismissed. There was something to the effect of "you cannot correlate that ancient market to this one, there are way too many different variables now".

Actually, I can't believe myself how well it's held up so far, I would have thought it would have diverged more by now too.

Nice stuff, how's that vacation going Mole?

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I do agree on the comment about this beginning in 2000...the markets have been sideways for almost a decade! Sometime you just have to step outside the short term charts and look at the big picture. On the other side, 10 years is also quite a long time as well so its hard to say. Either way 1050 is pretty significant on the S&P and their are a number of bearish technical divergences popping up as we make new highs http://bit.ly/UHYkK

http://www.youtube.com/watch?v=I8ANCD-Ykk4 go ricky goooooooooooo

Holy sh*t, I'm shaking after seeing that, way to go for posting that. Rick Santelli, thank you! Should be interesting to see what happens to him!

What comes first? The chicken or the egg?

$BDI/$SPX
http://tinyurl.com/p689u9

Babak at Traders Narrative did a study looking back even further, into 2007, covering the pre-meltdown period. The roughly 3-month lead time on the BDI vs. SPX shows up even then:

http://www.tradersnarrative.com/wp-content/uplo...

Thank you, TME- but I can't get the link to show anything? When you get a chance, please re-post, I'd love to see their study. Clearly, $BDI is working on a trend change here, the question is: are we looking at a ST pullback or something different. Taking a look at Mole's Sunday post regarding the empty flotilla in Singapore makes me consider something more than a ST pullback going on. $COPPER is another interesting chart currently.

It looks like he uses a server side script so you have to link to his whole post including the chart (though I'm not in 100% agreement with all of the text, hehe): http://www.tradersnarrative.com/baltic-dry-inde...

Actually the Baltic Dry Index is driven by raw materials imports such as copper. China has been the biggest raw materials importer for the past few years, so BDI correlates even better with Chinese markets. It's like the Dow Transports to the Industrials for them.

And yes I think its more than a short term pullback - and interesting that 3 months out from that June BDI peak seems to be just around this week. ;)

Couldn´t agree more. That was then and now is now.

Another post just that can't be beat, and yes the bears are suffering more pain. Can't say you didn't warn us. I am itching to load up but the pain has prevented me so I am waiting patiently.

I have nothing remotely useful to add but I'm trying to boost the comment count to make Mole happy... jeez it's the least we rats can do.

I am playing "Voodoo Child" and sticking pins in a little Bull stuffed animal...

Sure and Ill add another comment on yours and give you a like

OK smart guys (and girls) out there. please help with understanding futures.

ES U9 still "exists" and still trades, but the price is about 4 points higher than the new
ES Z9

Is there some easy explanation on how this works and how this fits together?

Speaking as someone who used to watch people get caught in positions in futures by forgetting to roll, I'd say somsone has a big short and the spreads have widened and they are being squeezed. There were times that someone forgot at the end of the day that they were short 5 contracts of sugar and it was trading at, for example, 9 cents. Well you don't have the sugar and you don't want to be in default, which you will be. So you would have to start calling the trade houses after the close and for a sale to cover at 9.5 cents they'd let you off the hook. So you'd lose $2800 (1/2 a cent on 5 contracts) for something you could have lost nothing for had you not miscounted. And if the first call to a trade houese found that they had nothing to deliver for you, then you'd be damm happy to pay up 50 cents to get out of it. So I suspect this is bad bookkeeping only.

Steve

ES[U9] will no longer be traded and will be automatically settled at 8:30 AM Central Time on September 18, 2009.

http://www.cmegroup.com/trading/equity-index/us-index/e-mini-sandp500_contract_specifications.html

Eris, thanks. So on this Friday, there will be a SOQ special opening quotation that will set the cash settled price. My thoughts are that someone way smarter and connected than me will have some significant arbitrage opportunities that probably wouldn't benefit me, and thus would be better to just close these positions on an advantageous intraday move (or intra night).

purportedly they are trying to converge the cash and futures market, but the SOQ price varies from cash open price quite a bit, I saw one instance of SOQ being 13 points less than cash open, but mostly the SOQ is right around 4 points higher than cash open.

And further words of wisdom from the crowd.

CME says that they are trying to "compel convergence of cash and futures markets" by computing the SOQ on a stock by stock basis, for all the stocks in an index. But really they are trying to take the pressure off of market makers for individual stocks in the index. This because SOQ is based on actual opening trades in those stocks.

For more on this see: http://www.cmegroup.com/trading/equity-index/fi...

Notice from the table there that not only can the SOQ diverge by up to 15 points from the SPX open, the SOQ can even fall completely outside the SPX trading range for the entire day.

To avoid these funnies, close September positions or roll them to December contracts before Friday's NYSE opening.

Big thanks, confirming my suspicion that some hijinks and shenanigans would be part of the process.

Seems like they are already priced 4 to 5 points above the new futures, so price is baked in the cake, but could change rapidly at the last minute. So will close out and probably set a sell order around 1060 and see what happens.

How did you like that heat map chart. It is way too manual to update, but I may be able to automate it....when I have the time....ouch.

Yes I like that heat map. :)

Right now the markets assume that most ES participants will roll September contracts to Decemeber. The December contract currently trades at a 4 to 5 point discount to the SPX. The discount equals the dividends due on the SPX less the interest that could be earned on the value of the contract.

Current value of the premium / discount for the popular index contracts is always at: www.indexarb.com

Future contracts have time value. See the equations in http://en.wikipedia.org/wiki/Futures_contract .

"The forward price represents the expected future value of the underlying discounted at the risk free rate."

We do the same when we price option contracts, where the underlying is treated as a stochastic process whose mean is assumed to grow at the risk-free interest rate. For example, the (ensemble) average price of a stock is assumed to grow with time at the risk-free interest rate; if this is not true, no one, or everyone, will be putting their money in a savings account in a bank.

>>Good night all, just got home from a date..<<

He ran out of money by 10 PM? Dump him...LOL

>>Good luck to Lawrence Beaman <<

My wife had it on an I heard the guy trying to do a Barry White song. Uness you can sing, "We got it together, baby" lower than a bull frog, you shouldn't try it. I've played at open mic night for a number of years. I have never heard anyone do an Eagles song. Having seen them last year there's a reason. Unless you can sing like Vince Gill, no matter how good you do it you will sound mediocre at best. I'm big on playing some Dylan (saw him twice), a good number of Neil Young (saw him about 7 times), and and a lot of Tom Petty (8 times) because none of them can sing...LOL. Years ago you had to see Dylan because he was Dylan. He sucked live. NY and TP live have been just tremendous shows, but I'm glad I missed Young's "Glendale" and "Living with War" as people screamed at him and many walked out. But seeing CSNY in a show in a small room in Atlantic City around 2001 was as good a rock show as one can see. David Crosby's voice got better with that liver transplant.

Steve

It's nice to know that Bills fans remember what it means to be Bills fans... I was concerned for a little while there...

GO PATS

This is an incredible post, Mole. You never cease to amaze me. I'm gonna be hiding out in the back shed until triple witch is over.

Jan

Good night all, just got home from a date and still don't see us turning just yet, I hate it but it's true!
Love you all! America's Got Talent rocks!

Good luck to Lawrence Beaman
http://blogs.mercurynews.com/aei/2009/09/09/americas-got-talent-lawrence-beamen-reaches-finals/

Market was very clear today, it wants to go higher and SPX 1060 is within sight. Some day, the market is going to get hit big time, but until then, jumping in front of the train will get you killed... There is nothing wrong with making money on the long side, as long as you know that's just a temporary party before the expletives hit the fan
http://tinyurl.com/qbja2j

Great Interview with David Tice who started the Prudent Bear Fund. The dollar, gold, consumer debt, next leg down, civil unrest, commodities are all touched on. It can be found at:



http://www.kingworldnews.com/kingworldnews/Broa...

Sorry, bad link. Try http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2009/9/11_David_Tice.html

Always liked Tice, one of the few straight shooters... he ran BEARX during the tech bubble crash... I liked BEARX then too........

I find it some what disconcerting that the popular press and financial commentators from the land of the free are touting China as the saviour of the World. The acceleration of this view point into the mainstream shows the desperation that exists. When the country that has one of the poorest human rights record is touted as the shining beacon that will lead us away from the financial abyss then where does that leave us all!

The more Obama talks about "the storm ending" the more vested his Presidency is with the "market" - and the less likely that we have a significant drop in the S&P - and by significant I mean enough of a drop so that people could point and say "you have failed Mr. President". This really concerns me, because underneath our bullshit market is a deep cancer that has to be rooted out and it won't be if our President aligns himself with a "positive" market.
The Fed is essentially allowed to do whatever it takes to keep markets afloat. It doesn't matter what the medium or long term costs are, it doesn't matter if what they do isn't even lawful - they will do whatever it takes to make the market look good.....even if everything around us is collapsing. This is a "fundamental" problem - as in even though we are using TA to trade and see paterns - we have a giant fundamental that can (and is) overruling the natural force of the market.

The Fed has learned alot more about public and congressional manipulation in the last 18 months - and given that they can essentially do pretty much ANYTHING they want to do under the cover of key phrases like "systematic failure" and "unique times" look for them to find some way to conceal - at least in real terms - that the market is quietly dying as we speak.

Look for a an "adjusted" dollar to hide the real value of the market.
As an uber bear this really concerns me (and I wrote about this on another blog). I am 50% short from 1017, 1027, 1037. The economy is falling all around us yet the market (numbers) continue to rise.

And the average sheeple just think that "the economy is soft", except for those 1 million people marched on Washington.

Sorry to disappoint, but even the organizers put it at maybe 75 thousand. http://www.telegraph.co.uk/news/worldnews/northamerica/usa/barackobama/6184800/Thousands-of-tea-party-protesters-march-against-Barack-Obama-in-Washington.html

I wasn't there, but this sure look like alot of people in these pictures....

http://www.wnd.com/index.php?fa=PAGE.view&pageId=109628

Breaking news (not really)
Vicram said today:
"C is well capitalized"

They are....didn't we give them like $500 billion? And what % is owned by the federal gov't?

I know...just sounded exactly like Dick Fuld and every other asshole in charge

Just got stopped out on silver. That count just died. I'm now neutral until the waves unfold.

Either silver has finished a 3 wave retrace and is now going into the $17s or
We get a double correction lower before a big rally into the $17s or
Silver is tracing out a series of 1 2s to the downside. Critical level for this. Silver can't go above $16.80 spot.

I hate getting stopped out, but I hate being naked and going backwards even more.

counts stand as before
http://screencast.com/t/DB9j7ENBnPrW

Hi David,

Does that mean you already thought silver was going to another new high?

not to sound like a wise ass (and not trying to beat Mole's timing :) - my system just sees further and more precisely:), but I saw it on August 14th
http://trading-to-win.blogspot.com/2009/08/silver-smells-fishy.html

Did you read my Sunday update? I don't see it above 17 right now unless I'm looking at the wrong symbol ;-)

Hi Mole,

Yes I did read your Sunday post and I also counted 5 waves up Friday to finish off wave B in silver. But the count since then has just gotten messy. Wave 1 was just overlapped by about 4 cents. It was very brief so maybe we can overlook it. But it gets the blood pressure up.

The next bearish alternatives are for a series of 1 2s unfolding. If that's the case wave c of the second two is not complete yet. Silver would need another push higher in the next hour or so. But for this count to stay alive price can't go above $16.80ish.

been browsing ewi. ok ewi seems to have had a grand/supercyle/cycle fit till now. but maybe this is the first time we are testing the a-b-c at grand/supercycle/cycle degree and maybe it doesnt work to that level. I.e elliott waves works at primary degree only, which means the march low is the current 'era' low, and now market will be just up for 10 years (with usual minor pullbacks) - we can still use elliott waves to navigate the way up to dow 12000? just a thought

I'd say this is a SECOND time we testing abc of supercycle - first time it was back in 2000 when A started, B from 2002 printed and then was canceled due to new high in 2007

P.S> "second time recently" - because if has completed during pre 1929 bull marekt and after 1929 abc bear

It seems highly unlikely on the face of it though if only because prices are so high by any historical valuation.

P/E ratios for all periods before the late 90s were on reported earnings only. They switched to using operating earnings then, and these earnings exclude one-off losses & various other things most notably interest on loans.

That makes a huge difference as the P/E ratio on the SPX is currently just under 120 using reported earnings. Source is the Standard & Poors website.

Great bear market lows bottom on a P/E ratio of 7 to 12, with a historical average of 15 or so, and bull market tops in the 20 to 30 range.

Since the historical comparison period, the trend rate of growth has slowed, and if anything average P/Es should have declined.

That's where Prechter gets his target of 400 on the Dow from. Why not?

Springheel, what did EWI say about silver, do they believe it finally topped? thanks

[Silver] remains in the late stages of wave C of (Y), which, when complete, should mark the top of Primary wave B (circle). As noted Friday, the minimum conditions have been met to consider the rally complete, but there is also a very strong cluster of resistance surrounding the $18.00 level. We will still afford the upward push some leeway to see if it can reach the higher resistance, but with optimism still in the low 90s (DSI), a meaningful decline under $15.00 would be too large a selloff to suggest that silver held any more bullish potential. At that point, assuming the decline sports impulsive qualities, odds would shift over to the view that Primary wave C (circle) down had started.

thanks so much!

Silver update.

So far silver has fallen in 3 waves and I think wave 4 up completed around 1pm NY time at $16.62 spot. For this count to stay alive next we need a wave 3 of 5 down of at least 25 or 30 cents. I will call then end of that move wave 4 and cover my short position a few cents below that level as wave 5 falls into a bottom for wave 1. Also for this count to stay alive the are two critical points not far above the current market to watch out for.
1. If the market moves above $16.62 spot wave 1 of 5 will be breached. Not fatal, but would set off alarm bells.
2. A more critical level is about $16.65 or 16.66 spot. This is the bottom of my wave 1. If this is breached by two or 3 cents then we have 3 waves down and I'd call that a correction. If that happens, I'll turn neutral. If the market continues to move higher, I will go long expecting another push higher in 5 waves. Wave 1 up was about a dollar, so I would look for a completed wave count around that level first. Then 1.618X wave 1. That would be somewhere between $17.32 to $17.94.

There are a few nagging concerns that I have and there are several alternate counts that I won't go in to. Here are my concerns.
1. What I count as wave 3 is hard to count. It could also be counted as 3 waves. (not good). Wave 1 and wave 5 of 3 count as perfect 5 wave moves. Also wave 4 counts as a nice ABC with wave C unfolding cleanly in 5 waves.
2. I would have expected the first wave down in silver to be a bigger sell off than this. But it is also possible that we will get a wave two bounce to say $16.75 and then silver will fall $3 in a couple of weeks. It's done it before.

Either way, I am on high alert that this count is wrong and if so I will stop out not far above the current level.

Does anyone have an alternate count or view? I'm keen to swap ideas with other silver traders.

I'm hoping for 17.

Another day, another bottom in the US$ ... ba da da dum...

just put obama's face on it, he deserves it

The thing is, Bernanke/Obama/Geithner won't stop, folks. Did you guys read what Yellen said today? Yes - disinflation.

In dollar term if you look back in yr 2000, US$ index = 120. Dow Jones = 11,500. Now the US$ index = 77. Dow Jones = 9626. Both the currencies and the indices will keep making lower low... unless Ben Bernanke cranks up the printing press even more to make it appear going higher and higher ... while losing values in other currencies.

How much has the currency lost value against the basket? People's investment are really worthless if you think about it. I can simply put my money in other currencies, not having to worry about looking at the indices everyday, and still get lots of $$$ and receive higher interest. Or even better, trade in other stock exchanges, and the % of increase in dollar is even higher because US Dollar is losing value.

Even if the dollar rallies further it cannot and will not see 81 for a long time, just imho. Yes, I've seen the chart from Prechter, this and that. Just way too many US Dollar permabulls right now. I'm sticking to my gun that it won't bounce that much. It's going to make a new low soon.

Remember how much Deutsche Mark was ? From 4 to 2 (before Euro). Anyone knows what's USD/JPY in the 60s? You guessed it right - from 360 to 90 today. The US Dollar is losing value everytime and it's simply going to be much more worthless with Obama, Bernanke, and Geithner as the Economic Dream Team.

Dow Jones or S&P, when calculated in other currencies have been losing values since yr 2000. It's just money printing and HFT, it will never be the same value as it was in yr 2000 anywhere in our lifetime.

Then we wont be able to buy foreign products and we will be forced to produce and work, might be good the vast majority who think entitlement to a 42" screen and 2 Harleys in the garage is their birthright.

I'll say it again: You are wrong on the dollar (and If I am wrong - I will lose a lot of money)
dollar is about to turn up and stock market will dive - everything is lining up like during perfect storm now, may be small storm, but still it will catch a lot of trend traders off guard.
Longer term I agree that $ is doomed, just like any other currency of any other country which is "NO MORE"
I even go further and agree on "losing value from 2000" - I have inflation adjusted wave structure on my site and if we'll go with that - we have started A down of super cycle in 2000, completed B at 2007 high and will complete C down at SLIGHTLY lower lows for SPX.
No BS SPX200 or 50 target, but target is 584.

Anyone who will attempt to open NEW shorts once SPX will be lower than 666 will be on suicide mission and this is when final demise of the dollar you talking about will start(I don't know WHEN it will happen - but WHEN and IF lower low will be set)

Hi all,
I have read numerous times that market is pushing up because it is option expiration weeks, for last several months... But thing I don't get is, why does it have to go up.. Option expiration can't make it go down ? WHat's the theory.. Just short covering, but because we have already gone up more than 50% from the lows, and given that they have swept away 99.9999999% of shorts (excluding me - who is on the edge of bankruptcy), what can make them drive the market up...?
just a thought to keep the stimulus going in our nerves..!!!! come on...

fujistan was doing this comparison months ago.

And she was wrong.

Phacking Cramer just pushed ARG (which I was about to buy puts on) through resistance
http://screencast.com/t/P1pBiE2N

Maybe it just creates a better entry point tomorrow or next on those puts! :)

Don't you just love Cramer?? LOL He is such a dunce....:)

I'll give him this he's been dead on since March, better than me.

yeah, he is the greatest trader I ever knew,
he's been right Since exactly March 6th till now...yeah...
thou he was dead wrong from 2000 to 2002
and from 2007 to March 6th...
but...shit happens to people who can only drive on one way street...

I just read tonight's EWI financial forecast short term update which was unexpectedly interesting.

FWIW, based on their wave count, they appear to be forecasting the likely end of the current fifth wave of the C wave up from July in the next two days, most likely tomorrow and lower than 1060. Technically I think the fifth wave may have ended at the high today.

Not very Delphic but very encouraging.

It could be an interesting day tomorrow and there is an important turn date then.

"end of the current fifth wave...most likely tomorrow" (or Wednesday)

unless it goes higher.

so in translation... the market will top Tuesday or Wednesday unless it goes higher, then the market will top on a later day perhaps at a higher or much higher level at a later day

thanks Springheel (i canceled my subscription last week, but was curious what they thought).

i came to the same conclusion you did. like i posted earlier, a distinct 5 wave count from the bottom and possibly ending diagonals. QQQQs seems finished (possible throwover still to come) and dow has another little leg to go, but for the most part i think it's done. there are just too many companies whose stocks have definitely topped and are about in wave 3 of 1 of C already for this thing to continue. so i continue to hold and add to shorts; damn i hope i'm right!

http://alphahorn.blogspot.com/

We're very close now. Like you I'm wondering whether we can see much of a drop in opex week, but then again a first wave is often subdued. If we continue rising tomorrow I could see a slow decline for the rest of the week speeding up next week.

I too hope you're right alpha. We'll know soon.

Still bearish...however, be on guard for the "thin zone" between 1050 and 1120. During the crash, this zone was just raced through, so their is very little resistance in theory, which could make for a rocket ride upward. It would actually be a fitting end to the biggest rally of centuries on a grand super cycle scale....

My account will suffer but I would actually like it if we tested 1065, rejected hard and printed a doji for triple witching.

Yeah, here is my point of view. Are they handing out money to short with? If not, I will continue to trade the way that makes money. I have overhead and our capital is not play money. Increases are pleasurable and decreases are painful. My business is attracted to pleasure and repelled by pain.

That being said, I shorted the RUT today at 600, lets see how long I can stand the pain on that.

As I write this, the Euro is pushing up and the Dollar is clucked up and looking for a bottom.

On the top of the market.....We may be close but I think we'll know when a top is near....its been my observation that they are almost as volatile as the bottom.
And we keep forgetting something.....Taxpayer subsidies trumps numerology.
Back to the comment at the top...Is EW handing out money to short with? Because our Gov't is handing out money to go long with.....who do you think will win. They can keep it up for a long time.

Ready but not convinced.

The government hasn't got any money, only credit, and they don't have enough of that to buy the whole market.

They have too much credit. Very true, but you give them too much credit as well. There's no need to run away from paper tigers.

I mean no disrespect to EW or any of the short traders here on this site. I
have learned a lot from yourself and other folks here. And from Econ 201, I
know that artificial support of a market can only sustain it on a temporary
basis.

When the subsidies end, so will begin the end of the run. I have read that
the liquidity support will begin to wind down in Oct, which somewhat
correlates to the end of low volatility in the VIX. I wish I could see the
drain so I could forecast more accurately.

And where does EW factor in Government Intervention? That is the missing
component. Fibonacci developed his numerical theory based on patterns he
observed in nature. When the government intervenes in the market, there is
nothing natural about it.

Try not to let theory deny you opportunity.

I won't gredfner. This bear is distinctly skittish nowadays & I am not at all ruling out the possibility that after a correction we will rise further.

Having said that, the government has limited resources, and can't maintain these lofty valuations for long.

The government is the real wild card here. Dow Theory states that the trend can be influenced but never stopped for long. I think that's right, but this government is definitely putting that rule to the test.

The reason for the content....is as I look back at the longs I have from
March.....AAPL, GS (which Mole recommended at $74), Baidu, WFC, BAC, RIG,
NOV, QLD, TNA etc, .....I think I should have spent more time optimizing my
long positions and less time "Looking for the next technical Short".

My accounts are up like 150% in 5 months and the only time I lose money is
when I try to hedge or just short.

And I read someone say today they are going long AAPL....that trade is so
over (80-180?, go Long?). So much was missed looking for the short that has
yet to come.

Anyway...

MikeVadon is looking for AAPL 1000. Good luck to him.

As long as the Dollar keeps making new lows....I'm staying long. That's my
math.
I thought it might have put in a bottom on Friday.....but it made a new low
today.

Try watching DX. On nice rallies that weaken,,,,,buy ES and 6E on the low.
The 2 year low on the DX is 76.23 so I think we're getting close. Maybe SPX
1060-1070, unless it breaks that low, then higher.

Remember how the stock market bottomed? It just kept going lower and lower
until it found a bottom.....The dollar will do the same. Also remember the
dollar will be weak for years to come.

As long as the Dollar keeps making new lows....I'm staying long. That's my
math.
I thought it might have put in a bottom on Friday.....but it made a new low
today.

Try watching DX. On nice rallies that weaken,,,,,buy ES and 6E on the low.
The 2 year low on the DX is 76.23 so I think we're getting close. Maybe SPX
1060-1070, unless it breaks that low, then higher.

Remember how the stock market bottomed? It just kept going lower and lower
until it found a bottom.....The dollar will do the same. Also remember the
dollar will be weak for years to come.

that 1060 fits well with my 1049-1062 concurrent targets
may we all be right and "they all" buy villas in South America of South Park

I agree. One of the best reversal signals is when the market hits the high of the day on close at the top of the move (or low as in AAPL Jan 20). Today was perfect!

Cramar do you have any examples thanks

Hi Jack, took a much needed break after todays tape thrashing! :))

Interesting, if true I will be glad I held onto my SPY oct 104 puts and GS put spread, but at this point I am suspect of any sell off holding. Dollar isn't doing much AH's so I am glad I hedged with Apple spread (yummy)

Dollar getting destroyed and gold on the move .....out of triangle to the upside

Hey folks...

Been just scalping around playing both sides... I'm planning to enter a short position near the 16th-18th with a possible low on 9/21.. We'll see how it plays out. Here's a few interesting charts:

/es w/ EMA's on a 4hr chart:
http://img6.imageshack.us/img6/3735/emae.png

I plan to be 100% short on the next cross.

SPX w/ Fib fans/ Arcs updated - 2 views:
http://img338.imageshack.us/img338/2123/spxfan.png

Closer:
http://img143.imageshack.us/img143/3918/spxfanclose.png

why are you assuming a low on 9/21 and not a high? The fib dates have been alternating turns since March, if that continued we'd have a 9/21 HIGH @ 1090-1120ish

I'm not attacking, I am genuinely interested in why 9/21 is a low not a high.

Good points. I'm open to it being a top, and will leave it up to the action in the next few days to determine when I decide to short or go long (if we print a new IT low around 9/21). We'll see in the next few days.

I just can't see how 9/21 is going to make a new LOW to turn from. :-\ but the marketz have been chumping a lot of peeps lately, so what do I know.....

By new low I don't mean we'll be tanking to 900 or anything like that. I'd say anywhere from 985 - 1000 could be considered a swing low.

Really like that new short-term short term count from EWI.... I want to short IYR

IYR is right up there on my list, mainly waiting for a proper entry point to ride this one down.

BTW the aggressive play would be to short URE - the Ultra 2x Bull. That way you'd pick up twice the daily moves plus all of the money-losing characteristics of the Ultra's. Interestingly URE trades about the same daily volume as IYR of late, so no liquidity issue.

You just need to be real precise on entries and exits with the Ultra's (and Direxion's). ;)

So, we are either in wave 5 of C or today was an irregular flat wave B. Perversely, the most bullish thing now is a sharp drop and the most bearish thing is a sharp rise.

Are they saying new highs?

Going partly hedged into the weekend proved to be a good idea for me.

The one day reversal noted on the Hang Seng chart paid off: http://tinyurl.com/lfxn2q and the FXP did well, as well as SRS. So I dumped them both and stepped out for several hours, (as I've been feeling very nervous/depleted lately...like many other bears, I'm sure. ;) and just let UYG do its thing.

Sold that and bought some SRS/FXP at the market close.

Good work Jane. What's your timeframe for holding SRS and FXP? I'm expecting the market to go up this week :-)

Yes historically this is an up week.

Then again historically Monday is a down day and we closed up, so past performance is no guarantee. ;)

wow!
disqus takes
--br HTML, ( that's new) --I wonder what else it takes, now

Does anyone else see an Ending Diagonal (ED = 3-3-3-3-3) when they look at the Nasdaq (QQQQ). It just misssed the overlap of 1 and 4 on SPY. The March 9th bottom ended on one with a higher low. I have long held that when this move ends it will do so in this fashion, and then collapse. That is if that is metaphysically possible, or if the Fed's "brain wave machine' (CNBC) can stop it. Steve

check out my blog i posted 3 of them

alphahorn.blogspot.com

On a scale of 0 to 10—with 0 representing zero possibility and 10 representing metaphysical certitude—what would you rate the formation chances here?

"IF" this is the right count we are looking at a floodgate being pressurized. While the best I can do as a former floor trader is to place myself in Jeff Bridges' place in "TRON" since it's most computerized now (which I think harmed the market like credit cards removed delayed gratification, when the orders to sell come in he would be looking down this endless abyss with a bid for a few shares here, a bid for a few more there, and little levers representing sell stops that like in "The Land of the Pharohs" break away and instread of the grains of sand, sell orders start dropping into a bottomless pit.

We turned up violently, as expected, from the same styled formation on March 9th. If this is right and an ED finishes the move, it lacked the strength for proper structure and any sale by even noon time when the 2-4 line is broken will be profitable as the selling from this should do nothing but increase as the day progresses.

Okay...dream time over. I can only hope that guys like Pisani on CNBC get hit with rotten fruit by the time this is over. There is not a person I have spoken to at a party who is not "glad that's over" and fully expects to open his 401K with more money than it had in it at the highs.

That which gets rewarded gets repeated. A good deal of this buying will disappear after bulls give back profits and the buying of dips becomes averaging.

Thanks,
Steve

if it were 7 days from now i'd say a 7, but because it's opex, i'd say a 4. Although I no longer take EWI, Springheel reported that they are calling for the top tomorrow or Wednesday

If rumors of a trade war, the impending socialization of health care and horrendous economic fundamentals won't bring this market down, I'm not sure I can imagine a scenario that will.

I capitulated today on half my shorts; the other half is a hedge against longs and commodities, so I don't expect I'll be closing those any time soon. No more trading until I see convincing signs off a change in direction. The 1040 area was a good area to short, but once they get through this, 1200 is looking probable.

My thesis has been that, longer term, this rally is a self-limiting phenomenon. A shift to risk assets will cause interest rates and commodities (gasoline!) to rise, both of which will put pressure on the consumer. Defending bond prices requires massive expenditures by the feds, thus weakening the dollar and thus further hurting the consumer. But my thesis is wrong, evidently. Perhaps they've managed to convince the Chinese that they have more to gain by subsidizing our recovery than they would from our demise.

I clicked on the Polycom free ad--I saw the word FREE, there I go again!
_
Here's an investor with 14,000 twitter followers--not that anyone would care about that sort of stuff!
http://fractalbox.wordpress.com/2009/09/10/a-fa...

Mole, I am amazed that the Vega responds so massively to short term changes in the Vix.

Is there any equivalent as Gamma is to Delta, for the Vega? If MM's are dialing down the cost of future options so much....it just makes sense to load up on more of them.

I spoke with a guy at CBOE who's a friend of a friend about this very topic last week.

What happens is that the put OIs on SPX and SPY are so massive, the option MMs (who are delta neutral by nature) generally have to hedge in bulk and in advance of actual option orders.

If they find they've over-hedged (say), one thing they can do to compensate is to offer below market prices on far-OTM puts. It's likely that that no writers are there to out-ask the MMs on those given the much lower volume compared to near-the-money.

The effect shows up as either a bump in vega, or a bump in delta that moves greater than gamma says it should. Mole caught the MMs with their pants down on this very thing leading into Labor Day. ;)

EDIT: The equivalent of gamma to delta for vega is something called vanna. It's the rate of change of vega vs. the underlying, or alternately the rate of change of delta vs. volatility. Vanna is not usually shown explicity by analysis platforms and this makes it easy to mess with.

Sell short term puts - especially after a big down day and use them to fund longer term puts - essentially beat them at the game.

Duh, why didn't I think of that....maybe selling puts is so against traditional market will go down theory...seriously, thanks for the no-brainer idea. Not much premium on Sept....your thoughts on month to sell.

I don't see anything attractive right now. After a big down day (VIX spiking) like Sept 1st is a great time to sell puts (assuming you believe the market will snap back and/or the VIX is overbought).

I haven't fully come up with an organized plan but looking at my trading I've fairly recently realized that I've made more money selling puts than any other option play. First started noticing this on my synthetic longs where the put was making much more money than the call.

I think there may be a nice little profit play here based upon VIX OB/OS levels but it's on my to-do list to investigate.

Effin bulls have been killing me recently (I like to trade swing mean reversion plays which usually works great except when mean reversion stops working) so I need to find something to beat the bulls at their game :<)

Stochastics show that SPX everything from weekly down to 15-min is overbought (some with divergence), so this market is right at or near a peak. This is the 7th day the NASDAQ futures have closed higher.

So either we peaked at close today or a slight gap open tomorrow and that is it, I figure.

I counted the waves on SPX 1-minute intraday chart and it looks like SPX completed the minute wave 1 today and tomorrow should be a minute wave 2. Any thoughts on this, Mole?

Are you loading up on long term puts?

I have an initial position from Friday on SDS, but that is all at this present time. As soon as it looks like a break, the plan is to go heavily in.

don't short the FED ie JPM ie the FED, JPM is a black box that nobody is going to peer into.
Why not look at WFC instead.

"Why not look at WFC instead."

I'd love to...but I am already short WFC via Dec puts

JPM short http://screencast.com/t/0BaEeq467V

i like it too. David, if you have time run your system on BAC, it too is toast

BAC
weekly http://screencast.com/t/w5YbmPTU
daily http://screencast.com/t/3G3lMOqjDuX
60 min http://screencast.com/t/LakEUaL7g

Thanks David, there are sooooo many excellent shorts, damn i wish i could short them all!

And then there were four. You, DDT, Mole and me. They're going to lock us up and throw away the key one of these days.

why do you think I had that "silence of the Sheeple" avatar??

HAHAHAHAHA! I must have missed that one. I see 105.53 as the horizontal resistance. One year + one month ago on this very day.

if this f'n thing doesn't turn soon, i won't be able to post bail!

That's okay. I've already briefed my children to come visit us at the camp.. with file filled cake in hand.

Mole,,, you see how on your 1937-1938 chart, the Bear Market Ended,,,With 3 clear Swing Pivot Lows....

In 2000 Bear Market , We had again a clear ....3 Swing Pivot Lows,,,Witch brought an end to the Bear,,,,

Well in 2007 Bear Market,,,I only count 2 swing Pivots Lows....the 3rd is on her way,,,,,,!

http://www.screencast.com/users/chartwiz/folders/Jing/media/3e9c4306-0612-4a21-a171-ed30a172af40

Great observation! It starts tomorrow rite?

Mid September is a important date to me,,,so we will see what will happen,,,but it's coming soon,,!!

very interesting. Anyone think S&P will see 1200 before another downturn?

I don't think the S&P will trader higher, PERIOD, than today's high based on what I'm staring at. But maybe I'm crazy....like the rest of you...LOL

Steve

as a matter of fact - I am right in the process of creating "everything is fine" SHORT portfolio now similar to "doom and gloom" LONG portfolio I created on March 3rd 2009
http://trading-to-win.com/ExamplePort.aspx

I love the "everything is fine" list. The name makes me chuckle.

funnily - that list was created back in March just as "proof of concept" using darts (for my personal portfolio I select stocks even less carefully :)

Done

May it be twice as profitable!

Steve

SPX 1200 can be reached in 15 days with 10 points up per day.
WTF!

Seriously, once we get a true bull market to trade in I will feel the biggest sigh of relief ever. This is the most difficult and depressing market to trade, and its all I know. I've never traded in a true bull market so that will be interesting on its own. This market does not forgive bad entries and you haev to bust your ass for every dollar you make. Its tough but I guess it builds character and discipline.

>>Its tough but I guess it builds character and discipline.<<

I already have both. I would appreciate some reality.

Steve

V8, couldn't agree with you more. Trades for me used to be anywhere from a day to several weeks. Now they generally run less than an hour. But scalping profitably is better than not trading or losses.

therefore it is a bear market :)

Yes, a bear market rally, a very long one.

Thanks, Mole, for putting that thing through the EW analysis test perspective. I keep hearing about the 1937 comparison when really the fundamentals were utterly different then and so therefore should be the wave count.

As I hoped we would in my post this morning, we made a new high and, as planned following spike, sold my Oct 108 calls (.90 av, sold for 1.22 for 35% return), and my Oct 104 calls (2.73 av for 3.15; 15%) 5 mins b4 the close.

Now 100% short on positions held, but have 20% cash if we spike to 1100.

Into close, bought Nov QQQQ 40 puts, Nov SPY 95/97 puts, and still have my LT Mar puts on SPY and UUP (despite the beating the USD has taken, only down 10% on these - love these long-term puts).

Now I'm done for the next few weeks unless I receive an alert over the next couple of weeks telling me we have reached 1080 - I will then add more Nov puts!

Please hang in there bears, any spike, if it comes, to 1080 or whatever will not last, there will be at least a 10% drop at some point over the next couple of months so a chance to profit!

I will also be setting an alert to at 980 on the SnP and 38 on the QQQQ's and will check back in then to sell a chunk of my Nov puts.

This way I don't overtrade.

We have climbed this mountain far enough and bears are capitulating, last Friday showed 90% bullish sentiment reading.

Good trading!!

Good call Mac, it must read 99.99% now LOL

I am net neutral pretty much at this point. As the Dolllar goes lower the equites keep rising. :(

Remember, last year 71 was the low on the DXY. I don't believe the Fed will allow the USD to go below that.

Markman says DOW will be at 14,000 three years from now. http://articles.moneycentral.msn.com/Investing/...

Quote: "Someone should buy those guys subscriptions to The Wall Street Journal, because company after company these days is announcing upside to its revenue and earnings forecast. Intel and Dell (DELL, news, msgs) shocked pessimists last week. And on the same day as the Aquavit meeting, Texas Instruments (TXN, news, msgs) raised its third-quarter earnings outlook to as much as 41 cents per share on revenue of as much as $2.87 billion, versus its previous forecasts of 39 cents and $2.5 billion. Then on Thursday, ASML (ASML, news, msgs), a big Dutch semiconductor equipment maker, lifted its sales forecast for the third and fourth quarters by more than 50 million euros because its second-half outlook for consumer goods has shot higher. "Expectations are turning positive," said a spokesman."

WTF???

If revs truely pick up, the market is headed higher for SURE.

How the hell can they still stomp on the VIX? You can only defy the laws of nature for so long..

OPX week.

Ya it already OPX'ed my ass!

if we can get VXX under 50...i'm a buyer...

If there are any market historians here, was the rally after the 1929 crash also one where the volume was pathetic and the Fed was accused of manipulating it up?

Thanks in advance,
Steve

P.S. For a $250,000 donation I will stop trading for a year and write a book that a successful author I know says I should write. It would involve the likely assumption of room temperature of many "players" whose names you've come to love in the past year. Anonymous receipt and 25% of profits can be worked out. First come first serve on this offer so don't wait....LOL

P.P.S. You just have to know that any bear who decides not to trade for a year is going to pick the wrong year, but I find it impossible to detach from whichever side of the brain is analytical and flip over to the creative side.