Mole - you could ignore this post - I've had a snark or two, several in fact - so your disdain is expected. But I'm hoping you suspend the usual bear/bull bullshit and find it in your evil little heart to engage sensibly with the following question on fundamentals.

2007 was a debt fuelled over leveraged orgy heading for the equity fall of a lifetime BUT (and here's the question) just how much of that bubble in asset prices was due to excessive lending and leverage? The reason I ask is simply this, take that out of the mix (which should be where we are now) and you get a handle on upper valuation and hence upper market price.

Obviously given the avatar I think the markets are going higher and as mentioned in the blog (and a previous snark) I also count this as a III to the upside; and with a higher high and a higher low it also looks to me that the trend has turned.....up. I'm now counting us in 3.I of a brand new supercycle but only new all time highs will confirm this beyond doubt - hence the question. Thanks. (oxoxo!!)

ES lines, fwiw

http://www.flickr.com/photos/mo_chi_chu

A Bad Sign
So now will you take me and my new string to Greece? Those beaches look so tempting and I promise to dance with you in Mykonos.
http://www.guardian.co.uk/world/2010/aug/01/greece-war-zone-revolutionaries-tourists
Let's go camping.

Wish me good luck I will be in greece (on vacation) from Aug. 15 to Aug. 22, Ouch!

My crystal ball predicts plenty of double tops. Yummy!

Chart: ES
Waitress: Morning kids! So...how was your celebration?
Schoolgirl: It was heavenly...I saw stars!
Waitress: Lucky you; I was born under a bad sign.
http://www.screencast.com/t/MGFjMjgyYmIt
http://www.youtube.com/watch?v=PSqB_yOR690&feature=related

So here we are, 1st of augustus, the planets are forming infamous Cardinal Grand Cross, I can hear the nuke bombs passing over my head, there is earthquakes everywhere and a little green guy with a mayan knife is staring at me, saying "we come in peace"...

http://funkastrology.co.uk/cardinal-grand-cross-august-2010/

Now that's a chart!

Is it just me? It seems Nouriel Roubini has had a much reduced presence in the American media for quite sometime now.

reduced? i hear a statement from him on CNBS at least once a week, unless that is less than usual...

... well, that's why I had to ask if it was just me. I watch precious little television. When I see Roubini it's a Bloomberg interview on the net or a newspaper when I'm at newsstand. I guess their is enough market fear to motivate the media to still interview him.

Chart: ES Weekly
Hey! What are you doing in there? Looking at naughty pictures while playing with yourself?
No...just playing with my crayons while looking at charts.
http://www.screencast.com/t/M2E0NDVmN2Ut
So when do we head for the beach?

doubleYou everywhere...

Just cruising the neighborhood checking for black cats and other omens.

I have 1150s and 1220s as the short zones. The rumours of QE2 noise at the Aug 10th FOMC are too much to expect market to follow soylent blue (i know i know , "news" doesnt matter) 1130s will be a speed bump to 1 of those final destinations. Dont see the market collapsing and staying down pre Mid Terms.
Middle of Aug looks best time to start thinking about backing up the truck.

haha honestly wouldn't surprised if we see S&P much higher to be honest. if anything I would be buyers on dips. not that it's about news, but with all the bad news (sovereign debt crisis, weak data etc) we're still here, which means to be the weak side is to the top. looks more like a soylent green to me! plus we're still in summer doldrums - carry, carry and carry!

Quite surprising economic data out of Germany has been pretty good:

http://www.proptradingindicators.com/

Is there a way to determine or get a reasonably confident sense of whether there are GTC buy orders beneath the market? Can one tell from the way the tape spikes up? I'd appreciate any responses from Mole, Bob, MLMT, et al.

The recovery from this mornings lows surprised many. I am not willing to buy PPT arguments. I feel about the mythical PPT the way Mole and most (all?) EW practitioners feel about the news having an effect on the markets.

However, algorithmic trading and well thought out pre-planned GTC buy orders at (perceived) bargain prices make sense to me. No one on this board is a bull including me. But there's no need to assume bulls are thoughtless twits who don't plan how they wish to buy in. They plan for low entry and we plan for high entry. But both camps certainly think and plan.

Well OK guys, my language was too dismissive. I did read some time ago about Reagan's Working Group on Financial Markets. I know he set the thing up and of course the '87 crash was a historic event. It's just that the best traders in the world (see Market Wizards) claim that any intervention in a market (a well developed,sophisticated, large market) has a very finite effect on the ultimate direction that a market really intends to go. Also, I always thought (and still do) that Reagan was a pretty clueless man on many things. And if a clueless man is President, the sycophants around him might still set up a body at his request despite the fact they privately realize said body will be powerless over a "long" time horizon.

Putting all that together, it just seems to me that when the market makes a "disappointing" or bizarre move although a PPT might be in the background it may be better to search for another explanation first. I'm thinking out loud here; I don't know that my view is right, but for the time being it is my operational view.

"mythical PPT" ?

PPT is not mythical it is simple historical FACT . . . Google it

What their current activities are is up to debate but the Presidents Working Group on Financial Markets AKA the PPT was created during Reagan's term in Response to the 1987 Crash. Such a corporate socialist maneuver . . .

and yes, SW6, you can read about the PPT on the .gov's own website. the reason it sounds ridiculous is probably because you're intelligent enough to realize that government intervention in the market isn't "fair", and would be illegal if they weren't the ones making the rules

you can certainly make money from both long and short sides. yes planning is the key! it's all about timing and risk management.

http://www.proptradingindicators.com/blog/

Newbie Lesson: Look At The Big Picture
Novice technical analysts spend too much time trying to master the art of wave counting. What helps you to learn I think is trying to put the count within the context of the bigger picture. You know, the forest for the trees thing.... Remember the letter "W" which, in the context of the Gartley Pattern, is the set-up to go short; when the last leg up pops up (bareing its teeth so to speak) it is time to pull the trigger. The SPX, since the top, has been in one giant Gartley Bear and what we witnessed today was the fractal. See this: http://www.screencast.com/t/MGQ5ZDI0Mj Enjoy the weekend.

Edit: And check out this overlay with 2000 (from Clusterstock): http://www.businessinsider.com/july-30-sp-overly

I was just casually thinking about the timing of waves.
October seems to be the most popular month for big crashes.
How many people, including me, (and I think) Mole, Yelnick, and many other good minds were / are thinking of the big tease or the long summer burn and then for the market to finally start wave 3 down in the September and October time frame. My mind says that fits and is most likely to happen too.

With my understanding of blue though wave 3 of 1 started on Tuesday or Wednesday.
If wave 1 (of 1) was 1 month and wave 2 was 2 months, then an interesting thing could happen.
Let's say that wave 3 is a month and a half or a bit more..

We would be in the middle of October, the famous month to have big crashes turn from a simple down market into an actual bona fide crash. It is middle October, it has been moving down for a month and a half and it has been accelerating for the last month. Your heart and your mind is screaming that it is October and this wave down is gonna accelerate down into a real crash! With so much mental within you as well as other people screaming that the market has to turn October into another October crash.

Will you have the ability to move out of your short positions before wave 4 starts violently ramming you and whipsawing you hard? In the middle of October just as wave 3 seems to be getting warmed up.

I think that scenario fits a lot of different things as well destroying the minds and money of both bull and bear a like.

Personally, I think the bus is more empty right now than it would be if we move up for another month: the oversold condition of the market will be more obvious.

Or maybe the Green Summer Burn / Big Tease that we are all expecting will happen right on schedule.

/shrug

Short term, just because the market practically has to show us where it is going, I can't help but think that in order create maximum misery and confusion, it will desperately hold on to the 1120 - 1088 for as long as it possibly can!

Regardless of what happens, I hope I remember this post at the end of October, because it would just be interesting comparing what actually happens to various thoughts here.

Bah! my calendar math was off.
If wave 3 of 1 started a couple of days ago and lasted 1.5 months, that would put it in the middle of September. Doh!

So, then in order to do the October fake out, let's say wave 3 was 2 months and a week long, that would put it in the first week of October and we would thinking that, well crashes happen when the market is oversold and since this is wave 3 and since we are starting October, things are totally on schedule for this October to also change the move down from a moderate sized correction into an actual crash.

I guess if that happens, we will want to watch the Daily Zero and some other indicators real close to see if strength is still building or if there are divergences.

If we get green and have wave 2 lasting 2.5 to 3 months, then we would be on schedule for October to act like an October (aka if there is real weakness, October is when the market likes to turn from a strong correction into an actual crash).

So, what are the chances that Monday will either move strongly above 1120 or strongly below 1085?

Sweated out the bounce back today with TNA.
Doesn't feel right to a bear.

Ready for decline to begin again with a big break
below trend lines on Mole's Daily Zero.

Of course, trend line is just as likely to keep working as support.

Opening the kimono?

Er, yes, perhaps that is a violation of of the evil lair.

No decoder ring here so I'm not worried. Open kimonos in an evil lair...now that's a different story.

how many traps in the above chart can you identify. geez bull and bear traps everywhere IMO

Well "its been a while as the lyrics" go; but i have been busy, thats my excuse and I am sticking to it.
A few weeks away sometimes gets you out of the groove and sometimes gives you perspective.
I went away short Euro but had some options covering me. If i was to take a new position now I would sell Euro. Big picture still the same. This 1.31/1.3250 area still good candidate for top.
Here is a favorite chart of mine the US Long Bond
http://screencast.com/t/OTFiZTk4Zj

We had nice divergence on daily price - red lines but have come down to lower Keltner channel and bounced hard back to the top one. It will pay to keep an eye on price action next week.

On the SPX looks to me that it currently counts best as an Ending Diagonal Triangle for minor Two. Which would still blow enough Bears away but not quiet get to the more bullish Green count of Mole,s scenario - that is unless it starts down immediately from here and we end up with Soylent Blue :-)

This week we had 2 Gap Ups that Sold off and 1 Gap Down and that Rallied back . . . . . Theta Burn City

Nice calls Mole. Interestingly, the current Hurst projection is to 1179-the new target of Soylent green. All I see here is a lot of consolidation with no harm to the internals, which are in a bullish configuration. I'm not a fundamental trader at all-but there are SO many bears that will cover above 1130 that's it's very hard for me to believe it won't be seen. The bus travels fastes with the least passengers-there are still too many bears on the bus. Watching the tape, they pull the market out of these nosedives with great ease. You probably get a small point change on the MCO'ss today, indicating a large move Monday.

Spooky,

I learned from you when you when you where a moderator in JL's chat room. I well aware of your mad skills and am glad to have the ability to get your market insight from time to time.

Hey Buddy-Thanks so much. This is a great site, and I hope to contribute what I can. It seems like Mole and I see a lot of things the same way-he does a nice job here. My work has been pretty strong lately, hope I can help.

"Watching the tape, they pull the market out of these nosedives with great ease."

Exactly - the powers at work condone these nose dives in order to clear out short term overbought conditions. This is a systematic melt up and I don't think it ends here.

"The capital markets, which are celebrating accelerating deflation and inflation at the same time, are now officially insane, as the Dow has diverged from its credit implied fair value by about 170 points!"
www.zerohedge.com

Yeah yeah yeah - we know. Tyler has been bitching like a wench for months now. But reading those articles doesn't help you in your trading - you are wise to keep this stuff for after hours. Don't get me wrong - I love ZH - but sarcastic pieces like that are counter productive for one's frame of mind when trying to navigate this market. One needs to keep cool and remain nimble.

But reading ZH puts me in a naughty mood. As does this site...the foreign exchange student, the schoolgirl and my favorite so far--the nurse for the naughty bear. Gotta love it!

Mole, you repeatedly impress the hell out of me with your conservative approach to trading, and spotting traps, support, resistance etc. Today was a great example; you completely nailed the bear trap at 1088. I fell for it in reverse. I could have added a bit to short-term long positions at 1089 for a nice trade, but didn't (my finger was right on the trigger, but I'm so bearish I kept seeing that cliff ahead of me). Now I've got to persuade my wife that I need to subscribe to your site so I can get that advice before the open!

More paranoid than conservative - hehehe...

Had you been a Zero sub you would have gotten a warning right on the chart when it looked like we're about to fall off the cliff ;-)

Well that's it then. The Box Score for Today is: No Hits, No Runs, No Errors and No Score.

And as Popeye The Sailor Man say's "That's all I can stands, I can stands no more". At least for today. LOL

Be back at em Monday, Have a great weekend.

You too!!!
I have a lot on my plate this week-end to keep up with you! ;-)

Bond futures are up *big* today. +1.38% on the 30-year! You figure out what it means, but I'm staying short.

Question - Is this the end-of-month window dressing - up Friday, drop monday? or do they only do this for the quarter? Thanks.

Think I'll head home and have a bowl of alphabet soup.........

If this is a W2 of a leading diagonal from 1121 to 1088 we should start reverse soon, if we go above 1112, well more pain ahead...

Now or never...abc from LOD finished.

Prophetic.

So far so good, lets wait for Monday...

Well, anyone gonna play neg divergence on ZL?

I really sincerely hope that today and yesterday are just summer doldrums crazyness of thin markets leading to nearly flat close.

As mentioned before, I am looking to see how weekly expirys on options will be affecting market behavior, and I am strongly suspecting it will become important to determine whether or not weeklys (as options expiry weeks) affect trading behavior.

This is still anecdotical and unscientific, but since market is not closed, let's see the MAX PAIN number based on bigcharts data, 15 delay @15h10:

For weeklys of:
SPY: between 110 & 111, current 110 (high volume OI)
QQQQ: between 46 & 47, currently 45.71 (low volume OI)
IWM: between 65 & 66, currently 65 (low volume OI)
DIA: between 101& 102, currently 104 (low volume OI)

Interesting...

Hi Brishort

I'm looking at this as well.

I have a friend who has been buying AAPL every Friday and selling on Monday has worked over 90% of the time this year.

I love these weekly options for several reasons 1) I love the Uber Leverage they present 2) I love the Fact that I'm not battling the entire Option Selling market (and their Fed Support System see link below) on these like a I am for the Monthly Option Expiration 3) I love the Fact that if I see an high percentage set up there are likely some options that I crank up the Risk Reward. This enables me to have more opportunities to hit a grand slam. Miss 4 or 5 times at $1000 each then make $10,000 on 1 and the Risk Reward works out but it is no fun if you have to wait a few months for each data point in that scenario.

I always loved Gaming Options expiration Day. My best day was $5000 to $100,000 in one day in GS Options. Not likely to ever happen again lol. But on this at least during the Summer I'm thinking better to game the week as the Friday Volume is so low you're playing into the option Seller's hands



http://www.zerohedge.com/article/i-thought-quantitative-easing-ended (Fed Support for option sellers)

http://www.cboe.com/micro/weeklys/introduction.aspx ( weekly Options )

[methodology] For max pain, I looked at Bigcharts.com Open Interest listed to see where most call and puts would expire worthless. I am unsure if OI is adjusted throughout the day, or only at the end of the day with the daily traded volume. But I will find out and keep monitoring for next week. For now on this unscientific approach, early indications are: Drumroll please:

SPY close: 110.43 --> max pain achieved to perfection.
IWM close: 65.05 --> max pain achieved to perfection.
QQQQ close: 45.88 --> nearly perfect max pain. Volume traded today exceeded OI from previous day, difficult to tell exactly but looks like on max pain target.
DIA: close 104.82 --> max pain looked to be at 102... looks missed.

The real volume however was in SPY, and that one wasn't missed!

See you next week for the same!

Man, do they have this shit down or what?

You can almost set your clock by these Algo's.

It's in the hands of select fews that they decide to flip switch positive or negative. Timing they have it down.. This is utterly non-sense and frustrating... Eventually I think what shall happen is all folks like us should step out of the market and just let those fuckers & HFT's trade themselves... Sort of electronic boycott.. Then only this thing will come to normancy.. We are just puppets of those morons...

I think it's probably that way now. With more and more money coming out of the market via fund redemptions, I don't think what we trade collectively is enough to make a difference.

Perhaps the real problem comes when it's down to just a handful of players owning all the stock, and who is the first one that's going to blink? I don't think all the Algo's in the world are going to prevent Greed and Fear from initiating the mad rush to see who is the Last One Standing and Super Bagholder.

And maybe then is when the Shit Really Hits The Fan.

Sorry I couldn't write to you.. I will reply your email this weekend. Did you close a part of your VMW puts this morning?

Hey..oh thanks.. Yes I got out VMW puts 3 days ago with 300 profit on 15 PUTS Not good but not bad also.. Actually, right after I got out it went down another.. but no worries.. It surely came back.. I am currently only holding CAT puts. Out of everything.. Thanks.. again... and will surely wait for your response.

Be careful with puts out there.. we have had a major reversal today IMO.. And we may now be targeting 1130-35 area now..

On 5min chart, Q's breakup in the last 1/2 hr has relatively low vol.

Chart: SPX
Waitress: So what are you two doing this weekend?
Schoolgirl: We're going to the beach! I got a new string!
Waitress: Oh...so what are you celebrating?
Geek: I finally understand the Gartley Bear!
http://www.screencast.com/t/MTMxMDM5
Have a great one, folks.

Last 2 days this tape has been an electro party. Ibiza. I wonder if anything with a heartbeat is trading this.

Not me - for sure...

Chart: SPX
Waitress: Well, hello hon'...back with some company eh?
Geek: Yeah...my niece.
Schoolgirl: Hi!
Waitress: So what's it going to be today?
Schoolgirl: I'd like your Blue Plate Special!
Waitress: You're a lucky girl...I think the chef is catching a fresh bull out back.
http://www.screencast.com/t/OWQ4NmIy

Yum yum, quick please, I'm hungry!

Sloth Bear,

I wouldn't mind seeing an update of your "Would like to see this breached" chart from this morning. If I'm seeing it right, it looks like we broke through the "line in the sand" to the up side, bounced off the "bullish above this" line and back tested the "line in the sand" by the close today. Is that right?

Thanks.

Gibbs

Hi, thanks to have a look at my charts :-)
Here is the raw updated one:
http://screencast.com/t/ZWI2Mjk5M

And here is a second look with other channels:
http://screencast.com/t/NjQ4Mzhm

Yes I'm still in the bear bus!

This is a dumb question: how do you write things on your chart?

I use Jing:
http://www.jingproject.com/

You may also need a screencast account (free).

Can't recommend it enough.

Edit: Looks like you have jing already?!
Your question may be "how to put text directly on the chart?"
Here is how I do:
http://screencast.com/t/ODJhNjVkOTYt

Thanks so much. So now, in addition to his crayons, the kid's got chalk!

Thanks for keeping up your work during this period Mole. The summer doldrums are brutal. The problem for me is it becomes easy to get sucked into trading (bored) when setup isn't right and they're whipping the tape around like a wounded animal. While the ZL has helped keep me out of serious trouble, only TOS commissions has seen any real benefit this summer.

Honestly - I think next year I'll go away in May and just keep the Zero running.

some fuckers are seriously banging futures on no volume.

My account took a big hit monday in forex (account down +25%). Damn, did not manage the account good enough (too big position, too big stop loss - extremely bad trading).

Went a few days on holiday with a small short (1/3 of normal position). Closing half of it now for a 20 point win. Gonna use the next weeks to slowly grind points in swing trades with small positions.

I am putting the closed half position back on the table.

Ouch! Never go on vacation without being hedged mate - trust me on this.

http://www.aaii.com/sentimentsurvey/sent_results

40% bulls and 33% bears? That settles it.

I got 38.2% bulls: http://www.schaeffersresearch.com/streetools/market_tools/investors_intelligence.aspx

If you prefer, in the future I can post their data instead.

Honestly - I don't know which one is the better one.

Well the good news is that we are in the early stages of a W3 :-)

If this were Blue wouldn't we be expecting a much more powerful move down by now?

Yes, you'd think that we should see things fall off the plate rather sooner than later.

it ain't over til the fat lady sings... we haven't had a nice last-30min-of-day selloff in a while... I think we're overdue*

*this is my gut speaking... not taking any additional positions on this (-:

Besides yesterday?

I guess I should have clarified a bit more... like LOD set @ close kind of selloff

Not unsurprisingly this months EWI FinForecast remain bearish - they are waiting for the 'promised land' of broad-based selling, but how many more years in the wilderness?

As I recall, it was 40...

It would be interesting if Soylent Blue actually transpired - the board is so dead that it's clear to me that 90% of you guys have walked away. As the old saying goes: The bus moves fastest when it's empty...

You talking to those that aren't here? :-)

I haven't walked away - but this is not a market for excessive trading. I have just been keeping things very tight, next month might be the same.

I wonder if the bus is empty enough... This market is such a teaser/flirt, some gave up and went hunt elsewhere.

I am really baffled by the volume, price and money flow. The wsj money flow registered very large inflow (>80% $2B) yesterday at the close, and this morning, after the sharp rise with huge vol, MF is negative (~ -800M), and dropping steadily. Go figure.

i am here.. but not as active trader on futures, forex or commodities.. i just trade few names and when i posted for it, .............. weeping.... .... no one responded.. to my CAT.. I guess everyone loves RATs or DOGs..

Missed your post, just checked it, from a quick look on CAT, it can be a good short opportunity as it would be easy to manage stops, if a new high is made it could be a strong break out so it may be right to have your stop not too far from the current high.

Btw, I love rats :-)

(I read almost all the posts on this forum even if I don't answer to a lot, but I usually skip setups explained without charts. Those with chart are much easier to have a quick look).

Hey thanks...
Yes.. CAT has been very good as you said... I currently have Sep 70 PUTS with about 600 down.. Thinking if it comes near 69, I will unload few and then wait for another chance higher up... Or I may have to cut it loose if it goes over 70 with @ 1000 loss. It's interesting to know that insiders are selling on this opportunity and it's having tough time getting past 70 yet, somehow it's not allowed to go past 68 either..
Does it seem fishy ? May be Mole's supercomputers can help me..?

Still here mole, just don't know what to say! Watching slight bullish divergence on ZL.

That's fine - I'm just taking a pulse here. Can't blame you guys for being worn out and having better things to do than to comment on this Groundhog Day tape.

Just blew that divergence out of the water

No kidding!

Yes, there are quite a few Traders who are MIA.

And you are absolutely correct about when and how the Bus will leave. I think when the bus leaves for real, it will be because of something that is the equivalent of a broken shoe lace but this small event will be enough to push all the accumulative bull shit over the edge.

But more importantly, the Bus will eventually leave because it is time to leave.

05/06/2010. Or for the Europeans here: 06/05/2010.

guilty as charged, swiiming pool @29 celsius, position is set, and (forgot the term, the lower ham of the pig that germans also love roasting?) in wine, waiting for the oven... good wines waiting, caipirinha ready for mrs. hamster arrival.

BTW methinks we're inches from voiding the bull scenario for now...

That's great - have fun - anything is better than watching the summer meat grinder.

Haven't walked away. Trading this is really rough, so it's easier to just sit back and watch. But that is quite another thing. I've been accumulating puts, personally.

Either you are scalping or swing trading - or you are trading very long term. Anything in between - ouch!

A little bit of both. I accumulated some puts a few days ago around SPX 1110 that I sold today for profit and rebought in the afternoon at a 20~25% discount. Apart from that I've been accumulating December and September puts.

still here..watching and learning...

I know you are - but almost everyone else has walked away - I can tell. Fine by me - the uglier this gets the more it'll pay off in fall. Feels like early April all over again - suddenly, when the market started dropping again the number of subs tripled. Then when we ran up I saw the comment count fall apart.

May be just slow summer participation but I see exhaustion in the bears - and I can't blame them. After all 2009 was hell and 2010 hasn't been a picnic either. People can take only so much and folks were psychologically exhausted months ago. The market can be extremely cruel, which is why it will probably drop out of nowhere with 95% of the bears waiting on the sidelines. I tried to make that point clear but even I would have taken the summer off had it not been for me running this blog.

Sometimes the best market indicator is your own level of frustration. Just being annoyed or frustrated is not good enough - jumping to the other side or walking away for extended periods is probably when the time is ripe. Of course as long as you hope deep inside that it'll still happen it won't - the ultimate mind fuck - LOL :-)

I think you guys are probably doing the right thing. It's best to not watch this shit and to instead recharge your mental batteries. If I didn't have to be here I would probably take a few weeks off myself.

1120.95 is not that far off for a stop. Preparing now would seem prudent if one is not positioned yet.

This way you will be on board if the bottom falls out over the weekend. On another note, the S&P registered a High-Pole warning (Bearish) on a reversal down this morning on the Point & Figure chart. Berry interesting.

i prefer soylent green to be honest with you...

Chart: ES
The geek is working on his charts; promises made to our school girl. She's anxious and wants to try French for lunch.
http://www.screencast.com/t/MjU5MGI3M2Yt