Little Point Of Recognition

Strangely, just because I am expecting a little bounce here (or a big one - if we bears are wrong again) many of you mouthbreathing rats seem to assume that I’ve turned into a bull now. Nothing could be further from the truth. Let’s look at the evidence:

This looks like a textbook third wave to me - please note the ‘point of recognition’ which is often a tell tale sign of a third wave in development. I expected a continued drop yesterday already and as evidence I have not moved my scenario lines (or just go back and read my old post - LOL). Yes, this thing could easily continue downwards into 1040 but we are now running into support and 1040 would most likely be where the bulltards make a strong stand.

The DXY is at 76.43 right now - about one point above the RL I have been pointing towards for the last few days (76.35). I’m counting nine waves there which is motive - thus we should expect a bit of a retracement here and that soon. Right now the Dollar drives everything and should it fall and make new yearly lows then we’re probably talking Soylent Blue - if not the party might just have begun.

If I was a trader or played one on television I would most likely enjoy a little bounce in equities when it finally happens, as a Minuette (4) leg up is expected to be on the menu. Great opportunity to load up on short term puts or short positions. Remember - we should then get a fifth wave down followed by a larger retracement up - so, if you’re waiting to load up on long term puts you might want to hold your horses and remain patient. Let the trade come to you - never ever chase a market.

If this thing keeps dropping without a bounce I might just have to intercede - which means buying puts - works every time

3:28pm EDT: Here are a few short squeeze candidates courtesy of the Berk-Meister who’s curiously absent today:

ATPG - 20% float short, 2.6 days to cover
GMCR - 26% float short, 8.7 DTC
LAMR - 14% FS, 11.9 DTC (I am a little iffy on this on. Maybe has broken down too far)
LULU - 13% FS, 19.7 DTC (We need to jump on board quick at this has already hit new highs)
PAG - 30% FS, 4.8 DTC (Options are a little shitty)
CSTR - 27%, 9.6
DBRN - 23%, 11.7
MYL - 24%, 8.9 (I’d short this shit 23% short float on a pharma before earnings)
AMSC - 28%, 11.7 (I’d be tempted to short this too per h/s top)
NFLX - 29%, 12.2

BTW, these are HIS comments - I would never use such colorful language - hehehee

This entry was posted on Wednesday, October 28th, 2009 at 3:18 pm and is filed under Elliott Wave Theory, Intraday Update. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Bart7

Tron, re: Copper top, is there a way to play other than futures? JJC is a copper ETN but fairly thinly traded, DBB is base metals, 38% copper, with much better liquidity, but not a pure play on copper obviously. I assume all base metals are topping with copper...

Tronacate

Thanks for the tip.......I'll look at that........

Tronacate

DBB looks like the same chart in essence. How about some Jan putz instead of a straight short play......thinking I might do that tomorrow especially if we get a little bounce from GDP.

Tronacate

Copper looks like it has put in a blowoff top and could be a nice short play

elliott_surfs

To whoever posted about the SOX put interest yesterday - supposedly there's been an 88% correlation between it and the NQ since '06...and apparently the 305 line is some major pivot point? (The volume was a single 10,000 contract buy, totaling 1.5mil)

Onorio

All indicators daily are oversold, NQ is on its daily lower BB...if we dont have at least a bounce here my only conclusion is that P3 is here.

Mole how`s your stochastic?

molecool

http://screencast.com/t/r9sNgdPHy

Onorio

Just like i was thinking....last time they we`re that way we, rally 90pts!

I would expect some kind of bounce at this point but lets wait to see.

Tks Mole!

Bart7

agree, crashes come from oversold conditions so we are at some risk here...
I'm starting to despise these economic reports, how do you trade in front of them, might as well flip a coin...

SkiingBear

1975/2009 comparison:

http://www.screencast.com/users/SkiingBear/fold...

Tronacate

Gotta love the volume today......

Tronacate

Russell should be the Nostradamus index

dreadwin

Mole, I love the big picture charts. Like you say, this exact scenario was laid out earlier in the week. I added another long, ERX, expecting a bounce tomorrow. If GDP doesn't completely suck, oil will go up on the expectation of increased demand. Decent GDP plus POMO could cause a really big squeeze. I hope that's obvious to all of the eager bears.

Columbia1

WOW, what an exciting day for the bears!! I agree with a small bounce for a 4th, but believe we still have a little further downside left, it will be interesting to see if the Russell breaks through support. It seems to be the leading index right now as everyone bails out of small caps looking for safety in the blue chips. I updated after the bell, seems pretty much in line with your views!!
http://ewtrendsandcharts.blogspot.com/

innatedc

Nice charts +1

ds2

Great charts!! Thanks!!

Blind_Squirrel

Home tax credit to be extended
CNBC

Tronacate

Yeah.....real smart....let's try to get more unqualified people in a depreciating asset class

vision_invisible

MOT - looks like this one is being given a reprieve because of the new phone. I think it is going to be a huge fail.
Current projected earnings for 2010 give this a F2010 PE of 80.

It's just a matter of time before the bears come knocking...

YTD price change
Nokia Corporation (ADR) (NOK) $48.3 B -16.54%
Research In Motion Limited (USA) (RIMM) $36.3 B 57.10%
Motorola, Inc. (MOT) $18.1 B 78.33%

StainlessSteelChicken

Also, while I'm here, just wanted to say that I'm going to continue to be MIA for awhile but will pop in as much as time allows. Hope you guys are killing it!

Stainless_Steel_Hamster

busy or worries? Hope it's the busy option, we miss you but know sometimes there are priorities

best of luck

StainlessSteelChicken

Yep, no worries, just busy with real work (which I love, so it's cool)

Stainless_Steel_Hamster

If you love it its an hobby ;-)

StainlessSteelChicken

That would certainly explain the size of the paycheck.

Stainless_Steel_Hamster

and what do you think of the chart? MA13 and MA50 are not a coincidence on BPSPX, already proposed Berk take a look at them because I saw something in late august

StainlessSteelChicken

Not sure what to make of it -- I don't really follow $BPSPX so I'm not sure how it behaves. I agree though that there is plenty of reason to be paranoid right now, bull and bear alike.

Stainless_Steel_Hamster

there's 3 years of data in there add aditional lines through ma13 highs and througs

Tronacate

If the dollar gets hot, the commodity/goldtards ain't gonna be happy campers.

StainlessSteelChicken

No surprise - the Great Bull channel line marked the LOD on Transports. Keep an eye on this one in the coming days folks.
http://tinyurl.com/yh39e6z

Stainless_Steel_Hamster

wellcome back chicken.

nice work, given that 3 looks incomplete ou might have your channel breached

ultra

Watching natural history show about black bears just now - and they are currently making out - maybe they just saw the closing prices lol

Cypherd

Picked up some TBT and wrote Nov 47s for $1 against the position. I like the relative strength it has shown given the sell off in equities as of late.

nepharis

Beautiful trend day -- small gap down, filled but did not stay in positive territory, steady decline throughout the day, and close at/near LOD. Perfect. I'm loaded to the gills with MAR10 and DEC10 puts, but may tack on a few more (on the longer side, probably DEC10) and/or roll some MAR10s to DEC10s on a wave (iv) bounce.

...and Mole -- don't pay attention to any assclowns who accuse you of going bullish or whateverthefuck. This has been a crazy rally, and you've kept your cool remarkably well. If people get snippy, it's probably because they just lost a bunch of money and don't know how to handle it.

BigHouse(Aka Mr Vix)

Are those the spy 70's DEc 2010?

nepharis

For DEC10, I have some 50's and some 70's.

Vardoger

Still an open gap at spx 1040.4 or so. Like that chart Mole, need to work on upside targets for this iv if that's the case.

centerline

If we are going to reverse tomorrow, I would not be surprised to see an initial dip early in the day to close the gap (and trap some bears) before turning. Just pisses me off to no end that we continue to close in no-man's land so many times lately. It is so painfully clear that the market is rigged.

Stainless_Steel_Hamster

it's rigged, but it's the only game in town

p.s. so right, I expect a gap down to 1030 to close the gap and then rocket time

anotherone

Mole, I remember back when you first bought those Mar puts that you said when the train left the station, it was going to happen too fast for anyone to get on board if they weren't on ahead of time. And that a lot of bears were going to be looking for one last push higher but weren't going to get it.

molecool

We're still in the beginning phase of this thing - we won't descend to 600 in three days now (I hope - LOL). Trust me - many are still considering this a dip buying opportunity, there will be another chance to hop on board.

Tronacate

True true.......have you done a batsuit?.....pilot?

thunda72

Yup... lots of people are saying "just one more push"....

Cypherd

another big purchase of UUP calls today, this time the March $24s, a block of 115,000 contracts was purchased @ $0.45 today against OI of only 19,000. Volume for the day ended up being 137,856. December 23s had another active day, although not quite as active as the last few, trading 20,716 against a now quite high 162,184 OI.

centerline

Interesting movement on that. Supports a USD breaking the downward trendline today and looking to reverse from here. Could be a hedge, too early to tell - but nonetheless, looks very encouraging.

Tronacate

Innatedc.......watch this........you gotta love this guys story.......even you you like Steve Perry....this kid can sing.

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

BigHouse(Aka Mr Vix)

VIX just closed

http://screencast.com/t/tMaBlWWG

http://screencast.com/t/8sR7BSxdlP

anotherone

How's teddy feeling?

BigHouse(Aka Mr Vix)

Will be happy when we get to the low 1000 in SPX

anotherone

The closing bell woke me up from my nap to see that SPY closed at the LOD. It also broke the rising trend line from the Mar. bottom (which was the bottom of rising wedge) and broke through the 50-day SMA. If the GDP numbers spook the bulls tomorrow ...

ClutchShorter

Should we wait for the bounce to load up on puts? GDP numbers are coming out and I think those might be good. Or should we just go head on and load up immediately

ClutchShorter

Yup, FSLR -20 AH

Tronacate

wow

innatedc

Geez my long term IWM puts are up 40% already.....

Tronacate

Nice.......even if you don't know a good singer when you hear one.....lol

innatedc

<snort>

Bart7

what's the exp date?

innatedc

May 2010

Scoops

The problem with being a contrarian is that sometimes it gets in the way of making money. Those expecting a bounce all morning instead of waiting for a confirmation of one missed out on making a pile of money. You could pretty much short blindfolded today and take it to the bank. MTW, DTG, AMB, TSS, TSO, DECK list goes on and on.

goldpackers

DJT DJU taking out early Oct lows.

Tronacate

Very good sign of things to come.......

roncofooddehydrator

Getting very close to the 200 EMA on the 2hr chart for FAZ. Not sure if we'll touch it (we're about 1% away), but I see it providing resistance. I can't remember but I'm pretty sure we haven't touched that line during this entire move up since March.

Rightside_ot_trade

ES under 1040, guess it could pop over 1044 in AH
Thanks for the chart as usual Mole (cool),
Here er'day...

goldpackers

Been posting for some time that spx was in a diagonal ending at 1101 that started at 987. Diagonals typically retrace the whole move ie back to 987. Could be there by 11-3 for sure by 11-16/17, big Gann days.

goldpackers

Meant 978 not 987

AS2009

Sold X 39 put - bought 2.10 sold 4.20 - sheesh - wish I had bought more ... still holding my 35 Puts

LostIllini

to quote Borat "Niiiice"

bshah

team, is AMZN ripe enough to take a dive...? Osscillator is downward & way high, STO is about to cross...? I am holding 110 DEC PUTs, ... Should I get rid of them if bounce up comes...
I want to go long on SPY, but scared to be burned...

jbrennan

I was holdinh AMZN puts too but sold them. The stock has shown somw nice strenght into this market and should get a boucen towards the 52 week high if the market bounces in the next day or two.

amokta

what happens when you buy a pink sheet (UK equiv-aim) stock
http://www.youtube.com/watch?v=GGsSBv1Cq90

LostIllini

Time to find out what the big boys are doing.....

BigHouse(Aka Mr Vix)

Well gang, we can see that there is no buying into the close. Its going to keep dripping down. Fine by me.

Eva S

Who thinks this is the end of the US dollar pop here? I think it may start heading south tomorrow again....

BigHouse(Aka Mr Vix)

http://screencast.com/t/4u6p7DpWK07

LostIllini

might be a logjam at the exit today....

Jan

I'm here too, Mole. Just been saving the little bit of powder I have left for the 666 plunge into hell. I do stray, but my heart belongs to you.
Thanks for all the great posts and espcially for Zero.

Jan

Unfadable

I'm with you, this is a 3rd wave and it's running out of room, though it's already gone farther than I expected it to.

http://img338.yfrog.com/img338/7504/spx15.png
http://img300.yfrog.com/img300/7749/80796796.png

I think we're due for a 4th here too. My projection for this leg is 1020. Assuming that's true, and that the 5th can't be longer than the 3rd, we can work backwards to estimate a maximum correction of the 4th.

3rd = 1095 - 1045 = 50 points. 1020 + 50 = 1070, and there's a Fib line there too. Looking at how sharp wave 2 was, this should be a long boring sideways move.

p.s.: Regular reader, but just registered to disqus to make my first comment here. Now I understand why everyone complains about it.

ACJ

Loyal Hairy Ass crack here too.

BigHouse(Aka Mr Vix)

Vix up 10% now

goldpackers

HD broke H&S. target 23.25

Tronacate

DOllar short squeeze coming

Tronacate

??

goldpackers

Looks to me still in 3rd down into tomorrow,bounce Friday and finish initial 5 down into Mon/Tue. Bounce into~11-10 then slammed into 11-16 to 11-20

AS2009

BB squeeze on X - another big move coming ....

Mole if you could reply to my q on retracements - whenever you have a moment ...

MikeT

moved

WTFed

Agreed

CorporalCarrot

Could someone confirm for me......the dow has officially violated the "man with ruler" trendline from the march low that touches the July and early October bottoms?

BigHouse(Aka Mr Vix)

I hope we drip down straight into the close..

anthem

Good commentary Mole. I think we were all a bit gunshy the last few days. Always better safe than sorry and you should never rue possible profits. But I think at the same time we need to look at what the ticker is telling us vs what we want to see. The key is always to balance the two. I think because we've been so blindsided with being jerked around that we might have leaned too far to what we want to see vs what we are actually seeing. . .

Other than that - I agree that now would not be a good time to chase anything. Until the bigger action happens, definitely safer to scalp or just let the trades come to you.

SpeedSkt1

Mole--

Nice post. I especially love the last line...you are such an altruist....

WTFed

This is what sets you apart Mole. Cheers.

AS2009

Great post Mole .... one question for you on the retracements ...

Wave 4 usually retraces 50-61.8% of Wave 3 - that is the short term bounce expected ...

But how much would wave 2 be expected to retrace of this whole move down i.e. wave 1 ?

LostIllini

Mole your friend LQD went cliff diving today...

TheMacroEconomist

The shape and speed looks scary, but LQD is only down 0.6% on the day. Meanwhile UUP is up 0.44%.

If the past 2 months are a guide, look for Treasuries to put in an intermediate term top within the next week and then follow in the path of LQD.

Right now TLT (the 20-year T-bond) is up 0.55% and IEF (7-10 year T-Note) is up 0.40%. Both happily thumbing noses at the dollar's strength. Perhaps a little more upside to them but one bad auction could trip up both.

molecool

Wingsuit flying?

Tronacate

I would LOVE to try a batsuit.......you done that?

Blind_Squirrel

Mole:

On 60m DOW chart it looks like max downside is 9736 if it gets there.

Think your caution is warranted

molecool

Not so much just caution - but a basic expectation of the wave pattern. But yes - these third waves can extend quite a bit - and there's no telling how far they can go. But the odds right now point towards a swing higher soon - let's be patient and let the market come to us. We all know that any downside can be reversed by some long ass Bernanke candles in a matter of minutes - so, if you're watching the tape all day and are tempted to chase this tape - don't! Today is the setup day and tomorrow most likely we get the resolution. If it's down - then well - fuck it - I was wrong. If I'm right then we'll get a great opportunity to start getting exposed.

Vladz

Me thinks time for a pause at around these levels: http://tweetphoto.com/apm3aazn

if we gap down bellow all that on bad GDP tomo, bullturds might get more of a dip than they wanted

molecool

Comment count dead now that Anna's got her own blog - but I just keep dishing it out - no matter if anyone's reading it.

Stainless_Steel_Hamster

Sick but present sir. And a pleasure. BTW comments can run both ways so I'll be asking your opinion.

Yesterday after the morning drop I got a fib that said 3 would end close to 1030-1035.

4 can abort to up impulse (we know the drill) otherwise we'd be looking at 5 either at 1020 or 990 or (bear dream) 940

any thoughts?

BTW with the final number it looks a lot like the june 2007 drop, i.e. real drop continues but one last nominal 5 up. Hamsters do have brains... sometimes

p.s. of course it's my call, just wanted to know your opinion

rruscio

I'm glad the comment count is down. Too much chat before.

molecool

Actually, you know what - me too!

Bart7

yeah, that can kill the value of this if too much noise...

TheBHBgroup

I am here....this is the best place to be and soon many more will swarm here again!

Woolly Llama

Damn, didn't even list ES on her blogroll. Women these days just aint got no respect for the man.

molecool

She actually notified me today via chat - and when I didn't respond immediately (was busy trading) she bitched at me and called me names. I mean WTF - I only have two hands for crying out loud. And Keirsten is MIA and so is Berk - and on top I have to support my subs, write code, find trades, etc.. - I'm a megalomaniac but I'm only human.

Sick of the drama, which is why you guys see less and less of me in the comment section.

Guest

Tronacate

Well.....are you a mutherphucker or cocksucker???

Stainless_Steel_Hamster

a bit out of order, shall you edit?

p.s. forget the story your mommy told you about that german guy and yes, mole goes to KFC once in awhile

Tronacate

????......context.

fuw

yes, that's bit strange.

I don't have time to go to a bunch of blogs, and don't get why so many here are starting their own. Isn't it better to have a strong community than to dilute/split? I've always felt that Evil + Slope was a good combination, one heavier in analysis and one leaning more towards chitchat.

Stainless_Steel_Hamster

depends, stainless steel chicken has a blog that basicaly keeps his main reasonings and provides an history an easy access. And he posts here and discusses the updates here.

a blog is for our views and allows organization.

COMUNITY SITES is something else. And ES is one, SOH another, Kenny's as well (funny, daneric who has some mean EW hardly makes a blip on the comments radar but I'm sure most of us drop by often enough)

p.s. you have lots of time to read blogs, participation isanother thing

fuw

I mostly agree, and your point on organization is valid. However, there is a difference between having a blog that you point to for deeper analysis (as I've seen stainless steel chicken do) and starting up a new competing blog while decreasing participation elsewhere (e.g. here).

But who am I to say really, especially since I'm not contributing much myself. To each their own. It's just a shame when good contributors disappear from ES, and I don't want to hunt down people on 10 different blogs.

Stainless_Steel_Hamster

what did I say about comunity blogs being something else?

MikeT

Mole, you dont need anyone.....we come here for your analysis. If this means the comment count is going to be down...hallelujah...there was way too much "noise" in my opinion. I may start actually reading the comments now!

elliott_surfs

FWIW Mole - you update (for free) much, MUCH more frequently than many of my subscription services, and provide better insight. Trying to understand the comment count is like keeping up with this market =p

Thank you for everything, everyday

jbrennan

with respect to Anna that blog is like being on a teeny bopper chat sight. Lot's he, he , he and sweetie pie, blah, blah, blah. Folks, you are not actually in the room with her and 99% of you will never meet her. PLease get a grip on yourselves.

WTFed

Not me my man.

gregn

A lot of the chit chat has been cut out now that she's been working on her blog. I have seen a lot of charts being posted over the past couple days. I agree with you that we will see a bounce, I don't know if you saw that buy signal trigger chart that I posted earlier or not.. time will tell.

AS2009

Hey - there are people reading .... sorry last couple days been crazy at work .... and was having to login to disqus for each post again - thankfully fixed now ....

Woolly Llama

How did you fix it? I'm getting the same thing, everytime I reload the webpage!

AS2009

Tools > Internet options - privacy & click sites - add evilspec and disqus to the allow list and it should work ... insite had mentioned this earlier = thank god I remembered it !!

This was driving me crazy for the last 2 days ...