Stay The Course

I know what’s going on in your rodent brains right now. It’s perfectly natural. You finally made a few bucks – and you like it. You don’t want to lose it or your wife may rip your balls off. You are afraid that a rally from hell will once more deprive you of your ill gotten gains. The reptilian part of your brain is telling you to take profits. It’s perfectly natural but it’s one of the cognitive biases that kills most traders. It’s also called the ‘disposition effect‘ and it goes both ways (i.e. lock in gains too early and ride out losses) – you need to fight this urge.

Fight it!

Yes, we may bounce tomorrow. We may bounce on Friday. We may bounce a week from now. Or we may bounce two weeks from now – after the Dow has shaved off 2000 points. What are you more afraid of – a counter trend bounce – or missing the meaty part of this first Intermediate wave down?

Stay the course – we have waited a long long time for this – and now is not the time to over think this or to give in to primeval emotions. This market has but one way to go:

Dig it – embrace it. Don’t fight it. And don’t over think it. Yes, bounces will happen – and they will be hard and fast. Focus on the long term – this is a once in a lifetime opportunity. You don’t want to miss it.

What if I’m wrong?

Then you’ll lose a good chunk of the booty you’ve made in the past few weeks. BFD.

But what if I’m right?

Exactly

Now let’s get to the updated wave count:

Well, actually not much has changed – it’s possible that we’ll get a short term bounce during the low volume water torture that awaits us tomorrow or Friday. Which would be another sub division of Minor 3 down. But I maintain that unless we breach 1130 equities are royally screwed. Period.

Hey – wanna see something ugly? I thought so

While I’m typing this the EUR/CHF is plunging to all time lows. You can see on the chart that its daily stochastic has become embedded. Ouch! Well, I do expect a bounce in the Euro at some point – but relative to the Swiss Franc it’s doing the Wiley Coyote and that IMNSHO is the only true measure of value these days (well, that and gold).

Bottom Line: Today was end of the quarter and it was also a pre-holiday Wednesday. The fact that the bulls were unable to launch any semblance of a rally let alone contain even more damage in equities across the board speaks volumes. What most likely lies direclty ahead should more than meet our expectations of what a third wave should look and feel like. But I don’t think we’ll see much of that by Friday – the remainder of this week may hold some surprises but odds are most of it will be a pre-holiday snoozer. I’ll be around in the morning but probably will head out before the close tomorrow. Unless of course something fun happens

Cheers,

Mole

This entry was posted on Thursday, July 1st, 2010 at 12:05 am and is filed under Elliott Wave Theory. 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.

Wave_Surfer

Even with this down movement today, the VIX is also down 2-3%.
We didn't even go outside the BB, let alone close outside of it.
With this lack of fear, it looks like there may still be some down moves.
molecool

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ultra

VWAP...
Tronacate

How about a catholic site.....Slope of Pope?
bshah

T,
do you want S&P to hit 0 or have any mercy..?
ultra

Old Bob obviously surfs the blogs - saw in his latest missive he was talking about the Slope of Hope (thus capitalised) and how EWI invented it *first*, okay?

roflcakes..
molecool

Bob Prechter invented that term. Whose banners T.K. removed during the end of P2. But he's known as the Überbear - what a joke...
Tronacate

This is bitchin........how long have I been hangin here?....omg
spudthorpe

Here's a possibility: 5 up off the lows (maybe an A wave?) with the 5th wave a diagonal. http://www.screencast.com/users/Spudthorpe/folders/Jing/media/779bb051-00fa-4701-9e1c-71666ee842cf
Tronacate

abcdefg.....rising bearish wedge

looking at 5min NQ.....or 1234567
ricebowl

Nice catch. I missed it. Wish I'd shorted the top. I caught ~1024.
ultra

ha ha snap

http://tinyurl.com/3xcfs2g
Tronacate

Took longer to resolve than I thought......but nice.....very nice......and nice chart guys
Tronacate

Copper getting clobbered
Croozer

Expecting a down soon to finish off this move down......then we get a mega rally tomorrow imo......I think this bounce is a wave 4 of some sort........

The mega ramp could be deferred to next week if this 4 goes on for longer and paints a wedge...
molecool

Sorry guys for being MIA in the past hour - I was busy pissing off a few Slopers. Works every time :-)
jigdaddy

is the EUR/SPX decouple today a sign of capitulation in your opinion?
WTFed

Vandal
molecool

Just a bunch of hobby bears over there - I can't resist...
amokta

Earlier it was a case of have shorts will travel
now its a case of have stops will trigger
always bank some profit - took of spxu (well stop is v.close), edz, spy puts
ricebowl

Maybe H&S targetting 1040~1045 here on the 5-min chart? (I'm just eyeballing it.) Hope not, but if we do hit 1040, then it's a better short entry.
Onorio

Loaded on more 850 puts, based on the pictures above :)
Tronacate

EURJPY looks like a sweet bearish wedge on the 10 min
ultra

abc, c slightly longer than a, nice 5-up for c - I'll take that - cheers
Tronacate

Nice read Ultra....
aussiebinlaughin

Im looking at a possible short with tight-ish stop above 50ma, thinking that if it breaks much above it may continue to rally. Appears to be a decent risk reward. Any thoughts?
http://www.screencast.com/t/MmE5MGVjM
jigdaddy

where is mole?
molecool

Watching. Why? Do I have to comment on every squiggle?
Tronacate

Yes.......every minute movement........every tic
jigdaddy

nope just miss you buddy :-)
WTFed

Could this be a 2, with the 5th already in at today's low? Hmm.
BobbyLow

I don't know if anybody has noticed but BP from (Did I Do That?) fame is up again today. This market is about as nutty as a fruitcake.

And I went to post and couldn't so I refreshed and Voila - Disqus is working again.
MyLifeMyTrade

I think BP may have put in a capitulation low... And might go up to 36.. C'mon it has come down from above 60.. At *SOME* point there will be a decent bounce to squeeze out the weak shorts or the late shorts.
BobbyLow

I think you could be right as a potential trade in the short term. But in the long term, I don't see how they remain viable.

They're running up a tab that will probably have too many of 0's on it even for a company the size of BP. And when it comes to politicians allowing limitations of liability for the clean up, I don't see that happening because they want to get re-elected.
catracho

nah it won't go belly up ..too many vested interests 40 % of shareholders in US, Pension funds in UK have major stakes, UK govt big revenues..hey if they can bail out the banks..no doubt they will find some way of solving BP problems..plus their business is global..
BobbyLow

OK Maybe so. According to the Telegraph (UK), clean up costs are now up to 33 Million per day. After awhile, this could add up to some serious money.

So I guess time will tell all.

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7721076/BP-oil-spill-clean-up-costs-spiral-to-33m-a-day.html
aussiebinlaughin

Take a look at ZH if you want to read some BP bear news.
amokta

are you bearish on it longer term?
ricebowl

My SPX target was hit over lunch. I was hoping for the upper 1020s. We can drop now.
Stainless_Steel_Hamster

we had a nice ramp job/headfake circa 12:40... now let's see if the truth prevails
Tronacate

Look at the 12:45 volume bar on the 5 min NQ......heavy distribution

sorry....wrong time zone
Tronacate

ABC up looks about over here
DudePlunger

Or explosion higher on the way. I'm buying more /nq's if we break through again.
BobbyLow

Well that must have been a coincidence that everybody decided to buy at exactly 12:30 PM cause the 15 Minute Candle shows almost a 1% increase in the price of SPY.

Yep just another coincidence. Yeah right.
MyLifeMyTrade

It is as much of a coincidence as was a ton of people dumping 2 days ago on breach of 1036es or today on the breach of 1015 and 1010
BobbyLow

This is a loaded question but I wonder how many people like us that are still left trading this market and how much power do we have to move the market as opposed to the Institutions who really move the market?
Tooncez

This reminds me of last thursday. I think this is a critical point...
shortcover

starting to scale out of QQQQ hedge....
DudePlunger

Sharp bounce back to 1023, oh man what a day.
jigdaddy

wow they crushed the VIX during this little rally
Stainless_Steel_Hamster

vix stoped @upper bb208...
bluprint

a=c @ 1022?
bluprint

er...should have been 1025.25, distracted by alton brown
BobbyLow

Well I'm able to post but it's just kind of wierd looking. Whateva. :)

Anyhow, for a Pre 4th of July weekend Thursday, we are at 75% of average SPY Volume with a little less than 1/2 the day to go.

So this is not "normal" to say the least.
amokta

HTZ was down nearly 8%, but now only down 2.75%
What does this tell us?
Tronacate

$S&P fractual update......around 1000 might be a good time to cover

http://content.screencast.com/users/trona/folders/Jing/media/495c79da-c0f4-47f5-bb6b-83e7734b4eed/2010-07-01_0906.png
sloth_bear

Thanks for the update!
Stainless_Steel_Hamster

PUBLIC ANNOUNCEMENT

Disqus problems may be due to firefox or internet cache.... change browser and/or clean temporary files

do say if it worked (i have no problem with disqus, neither did i have yesterday)
molecool

Bullshit - it's broken on my iPad as well.
BobbyLow

Thank you. I just tried IE which I hate and it is fucked up there too. I suppose I could download Chrome but I don't want to screw with that on a day like today.
ricebowl

I'm just reiterating what other people have said, but I was a hardcore IE user until IE 7 when they made the interface clunky and horribly slow. IE 8 is a little better, but something about the way it responds just doesn't feel right to me. I switched from IE 7 to Chrome when it was in beta, and the speed difference is amazing -- especially in JavaScript. I have never looked back.

Besides the difference in speed, Chrome's interface allows you to rearrange tabs, and it allows you to kill tabs that are misbehaving (using all of your CPU or lots of memory). IE 8 is similar in some respects, but Chrome has a "Task Manager" feature that lets you see which tabs are using what resources.
DudePlunger

Chrome is the best. Once I went to Chrome, I didn't look back.
WTFed

Chrome will solve your problems and it's also about 100% faster than that P.O.S. IE

I am running smoothly all morning. PC with Chrome.
BobbyLow

Actually, I've normally use Firefox which is 100 Times better that IE. I only tried IE just now because Firefox wasn't working with Disqus very well today. But IE as expected sucked too.

I might have to download chrome but Firefox works excellent with everything else that I use.
ricebowl

I love Chrome and use it exclusively, but it's usually broken for me in Chrome, too.
WTFed

Disqus sucks big time. I agree with that.
Croozer

I'm running Chrome too and have no problems......must be to do with combination of apps on PC and hardware that's letting you down.........
Stainless_Steel_Hamster

iPad... (least said...)

anayway, noticed somewhere else that it had worked for some... tried to help
CorporalCarrot

Disqus screwed me earlier, and I got called into a meeting but meant to post on ISM.

I thought the ISM was significant, in that it screams deflation & retrenchment.

Just think of recent data;

GDP growth had slowed and is pointing downwards again
Housing back to 40 year lows & still dominated by foreclosures.
Employment had barely got back to flat line and is pointing down again
etc etc etc

Then today you get ISM which shows contracting inventories & manufacturing, and prices paid falling.

All the data is rolling over and the market has moved from a positive extrapolation of a trend to a negative extrapolation of a trend.

This is not to discount the possibility that the entire move for the last 2 months has been in anticipation of these very data points, and that we are about to bounce.

It certainly feels more comfortable being a bear here than a bull.

I'll fuck off now though before Mole comes along to tell me that news does not matter :) (you see Mole, I do learn, just slowly)
ricebowl

^VIX says that the bottom is very close -- note that it is not yet confirming a bottom here. ^VIX is outside the daily bollingers. Usually it goes way out before it comes back inside and we get a relief rally.

This is close enough for me.
n2thezonez

On stockcharts, VIX hasn't yet pierced the upper BB
ricebowl

I see. I had the upper bollinger at 37.13, but I think theirs includes today's data. You're right.
DudePlunger

Got hit on my stop on 2 at 1010.50, secured some profits. Still short 2 /ES from 1018.75 and 1015, and I'm offering at 1016.
Also long 1 /NQ as a hedge.
Stainless_Steel_Hamster

i see nasdaq going to 1900 before any decision... just saying

said so 2 days ago http://evilspeculator.com/?p=16979#comment-58985294
sloth_bear

It is the time my friends to choose your favorite color:
http://screencast.com/t/NDc1NzIxNW
Tronacate

Nice work......fract is still playing as charted also
sloth_bear

I love your fractals do you have an updated chart?
Tronacate

Actually not yet.....busy with patients......will get to it eventually.....thnks
ds2

Nice find. Let's see how it plays out.
sloth_bear

EUR/USD seems to find resistance (I'm preparing a chart) maybe a U turn there would bring more oil on this mega fire...

A pic of the fire:
http://screencast.com/t/M2VmMWUy
Stainless_Steel_Hamster

did the hamster mention this is a nice place to short euro earlier in the day?

did he mention the resistences at 1.243 for weekly and 123.8 for daily?
sloth_bear

Good call!
I hope that you traded this, I was really shy doing that, would have made a killing.
I was shorting AUD/JPY and made quite a bunch today on this pair! :-)
Stainless_Steel_Hamster

i don't trade FX, but i did keep USD instead of converting to euros, BTW that call has weeks, try this one http://evilspeculator.com/?p=16793#comment-56899720, in fact 1.23 (coming down) was where i feared a bounce to 1.39, but as it broke it is nou resistence and 114.5 is likely
sloth_bear

I took some time to understand your post, but it's clear now, maybe... :-)
You see a reversal around here to 1.14 or 1.15!?

I have to chart again a lot of my currency pairs, they are getting really messy and will take some time to clean everything up...

But I remember hearing that dollar is now in a corrective ABC (C wave now), which should explain the strength of .../USD pairs
Stainless_Steel_Hamster

I do, 1.14 most likely (possibly high 1.13's), try setting up some hamster bands and centenial rat bands.

BTW a safe shot is below 1.232 with stop right at 1.232 (there is still a non null chance that it can find short term support there and try a ramp to 1.30 (but most likely 1.39))

in a nutshell, above 1.238 go long with that stop

below 1.232 go short with that stop

my reading is the second but i had to leave this warning as well
Tronacate

Little bear flag here on the NQ....
bshah

does any one of you feel that this once again is some HFT like GS trying to make more money on downside? every few seconds some blip and then quiet for hrs..? Where's the fair trader's system ?
ds2

Here comes deflation. Dollar down hard - market down hard. Scary scary.
ricebowl

If it's deflation, then the dollar should be up, which it is compared to 2007 - 2008.
centerline

Unwind is mostly global. FX correlations could be wacked out for quite some time IMO.
ricebowl

Thank you. That makes more sense.
centerline

I do agree though - correlation should be deflation results in a stonger dollar. USD does seem to be completing some sideways action, but still in long-term uptrend. Just not putting too much energy into the week-by-week stuff. Most of my positions are pretty far out. I rarely play for the day, unless just for the fun of it (in a sort of masochistic sort of way).
Tooncez

FWIW, with that last low we bounced off of the Gld vs Slv buy line... FWIW
jigdaddy

holy shit, i slept in a bit, this is great but the EUR is flying...possible decoupling?
ricebowl

Cashed out some of my options. Will rebuy later.
BobbyLow

Market is tanking and so is Disqus. This is the only way I can make post. LOL
psycho_puppies

I can't believe with all the technology available to man we can barely post.
ricebowl

Expectation is a bounce at SPX 1010.
DudePlunger

I'm not calling any bounce till 1000, but even then I don't think it'll last.
n2thezonez

On the Futures I have a trendline that hits at around 998 (the line connects the low of 5/6 and the low of 5/25
DudePlunger

I just lowered my stop on 2contracts from 1025 to 1010.50. I'd be securing 33pts, so I'd rather secure that before lunch than watch my entire position retrace back to 1015.
ricebowl

Also, I didn't sell everything; I just took down some of my position on the expectation of a bounce. It's win/win for me -- less risk near-term, and the opportunity to increase my profit, but if I'm wrong I still make money.
DudePlunger

Sounds good, we have been down over 2 weeks, we've seen these fear selloffs turn into rapid bounces before, nothing wrong with taking profits and letting a little ride, exactly what I plan to do before lunchtime.
ricebowl

Of course. I'm just looking for a small bounce to reload shorts.
DudePlunger

I'm looking for <1005 to take 2 of my ES shorts off for a profit before lunch.
Stainless_Steel_Hamster

we just had a qualified bottom, k0 on fast, <1% on lazy w%r 100... but rsi still >20 and D's are high

we could drop latter today
sloth_bear

We where waiting for this for so long, now that it happens, it's pretty freaky!
psycho_puppies

She everything we said is comming true. Take your profits and buy guns and ammo!
sloth_bear

I will not need that on my private island!
tradingmom

How far is this thing going to go before a breather? I can't find any good entry or exit points!
DudePlunger

I was short 1030 overnight (2 lots). Got hit on a stop at 1028, then sold breakdowns-- 1023.75, 1018.75, and 1015. Short 4ES here and long 1 NQ. Holding.........
psycho_puppies

This is beautiful. Now it really feels like P3.
amokta

could be a head-fake? (hey just asking!)
MyLifeMyTrade

Here comes the flush
Fearless

Retails are still buying more than 2 calls for every put as of 10:30 am ET...
MyLifeMyTrade

FAS and FAZ crossed paths
bshah

Now it seems that market doesnot want to parse any news... Ok.. News don't matter, but market only waits for the news to do something.. Few months back, market didn't care about any bad nitty grity in the news.. and now it's just reverse.. If mkt is doing what it wants, why all these drama of having 5 different news items on everyday..
centerline

I know... "fade the news, fade the news." But it is funny how equities seem to have switched from being a leading to a lagging indicator of sorts regarding macro economic events. Probably because most sane people left the building exit stage left last year. I don't claim to be sane though (LOL).
n2thezonez

Everything looks nice so far, other than the Euro. I'd feel better if the Euro would join in the downside festivities.
MyLifeMyTrade

If 30m close is above 1018, then this down move is done for a day or two. Otherwise more to go
Croozer

I'd agree....I'm going a little long if ES hits 1022
LilSpaniard

SPX or ES?
shortcover

buying QQQQs here...hedging against x2 and x3 short etfs...down how many days in a row??
BobbyLow

Dollar, Equities, Oil, Gold tanking.

No where to hide.

10 Yr @ 2.89 and Falling. Perhaps 2% yield will be looking good.
amokta

folks ive had to attend meetings, so whats the bottom line today?
DudePlunger

Trading down to 1016 right now, /es couldn't even touch 1030, let alone break it.
Croozer

Market seems to have shrugged off the bad employment and IMS data (relatively speaking)....bounce likely soon after a little more dip......imho.....
MyLifeMyTrade

When market does not go down big on bad data, it is an indication that market players want to bounce. In such an environment any piece of good news will send the market flying.. for now we must probe newer depths though
MyLifeMyTrade

Still no capitulation.. I guess we may need to go sub-1000 to get folks to dump
DudePlunger

Look at the EUR/USD fly, equities don't seem to care though.
sloth_bear

I was outside, far an hour our two, and when I came back to my charts, a movie came to my mind:
http://screencast.com/t/ZTNkZDkxZ
Watch the chart listening to this song:
http://www.youtube.com/watch?v=1hYV-JSjpyU

Next movie on schedule: A fistfull of dollars...
DudePlunger

I like that, lol.
ricebowl

EUR is up against GBP and other currencies, too. It makes no sense to me. I suppose the driving factor now is crappy US data and not Euro default.
Stainless_Steel_Hamster

euro is still contained, soon you'll ask "why didn't i short it"
catracho

it's the FIAT "merry go round"..they are all bad , just depends on which one everybody thinks is the worst ..at this moment in time...I guess it's € and £ turn to "feel the love"...
CorporalCarrot

Deflation..............
MyLifeMyTrade

Good risk reward play:

Buy AAPL 250-260 call spread that expires tomorrow for 2-3 bucks or so

Good lottery play:

Buy AAPL 260-270 call spread that expires tomorrow for 60c or so
CorporalCarrot

I can't reply TFC so am posting here.

I'm not necessarily saying it has to be down. I'm saying put yourself in the mind of a potential dip-buyer/bull. We have fallen enormously in the last 2 months, and theres a big data release at 10.00. Wouldn't you prefer to get that out of the way before committing and trying to pick the bottom?
TrustFundCowboy

ended up being a good call. wasn't even that bad a number yet we're tanking.
fisheggs

Agreed
MyLifeMyTrade

Dumping into ISM data.. If it is bad.. welcome to hell. If it is good.. we will see 1047+ today
gsavli

AAPL sure is a mood killer for Nasdaq.
MyLifeMyTrade

AAPL got another price target bump up to 390 (from 315) ..
ricebowl

5-min SPX chart rejected the advance. We turned at the 7-SMA.
Stainless_Steel_Hamster

nice headfake though
ricebowl

Yup. Yesterday I made a mistake and bought puts for July *2nd*. I originally put in a bid at $10 but didn't get filled, so I chased it and got filled at $15. I was surprised when they hit $30 yesterday (+200% from where I first saw them!). When I realized my mistake, I was rather anxious to dump them. This morning gave me a great opportunity to do so. ;-)
WTFed

Glad you escaped!
MyLifeMyTrade

The best scenario for bulls and bears alike is a spike up to 1047 triggered by ISM numbers and then a crap out to create a washout late in the day..

Bears could use a nice bounce to load up
MyLifeMyTrade

I failed to mention near yesterday's close that BUCY, CLF & FCX were good buys for a bounce play. Again if we top out near 1036 or 1047es area... then BUCY and FCX will make juicy shorts.
CorporalCarrot

I don't think the bulls are going to try to push this very far before the ISM report at 10.00am. It would be suicide if the number is bad. I suspect all hell may break loose at 10.00.

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