Hell Week

UPDATE 2:00pm EDT: Yep, I wasn’t kidding when I promised you the whipsaw of hell – and it even started earlier than I thought. Are you having fun yet? Didn’t think so

Let it be heard that this shall be known as ‘hell week’ – a fitting name indeed!

During expiration weeks (and especially this one) I always expect head fakes and this time around is most likely not an exception. IF we continue to drop from here we can comfortably count this as an a-b-c correction. However, we really need to drop straight down from here – past the ‘good start’ line and then finish below the lower yellow square. Similarly, the bulls will want to see the 161.8% fib taken to the woodshed, which most likely would be followed by a breach of yesterday’s peak.

I had sold some ES contracts earlier but then reverted into cash – I just reloaded around 765 and again will head for the hills (i.e. cash) if we take out today’s highs. So far so good

BTW, that drill instructor is me on a good day…

UPDATE 2:45pm EDT: Boy, that is some fugly tape today – not much else to say frankly.

Gold is adding to the fun by diddling around with our diagonal support line. But we are converging and it’ll have to shit or get off the pot. Pardon my french – but it’s driving everyone crazy – bears or bulls alike. Officially we are still in a large scale uptrend until this line is broken – you know the drill. I’m still holding my GLD puts – if you must know.

UPDATE 3:50pm EDT: Okay, ladies and leeches – this is going to be an extremely interesting close. If we breach yesterday’s high then we are painting nine waves to the upside – which is a strong bullish signal and would point towards the green scenario. We might just get close and then turn – but I still don’t like what I see. However, once I get a bullish confirmation I guess I will like what I see

BTW, does anyone know what I mean by ‘obey’? It seems that one is getting lost while you rats are scratching your rectums all day.

UPDATE CLOSING BELL: We have nine waves – the only way for this to turn into a corrective is for us to tack on two more – which would get us to 11. Frankly, it is still a plausible scenario but green is starting to look very good right now.

This entry was posted on Tuesday, March 17th, 2009 at 1:06 pm and is filed under Market Outlook. 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.

EdblDD

Break even day for me. Took a bath on long qqqq puts but hedged Mon. with Mar qqqq calls. Sold half the calls EOD today and bought more sept qqqq puts. IMHO the qqqq's will try to fill the gap from 2/13 and that will be my line in the sand.
molecool

NEW POST!
bee01

I must be in the minority...running Firefox + AdBlock Plus...haven't seen an Internet advertisement in years.
molecool

Damn you, super leech!!! ;-)
Murph

I believe when he says OBEY, he want's you to click the Ad under the word "OBEY"...he probably gets $$ when someone clicks on it...

As I am very uneducated in EW...in your charts, does the green scenario still call for a drop to the 730 area and then a blast higher? Or was yesterday our little dip and we are continuing our blast higher now?
molecool

I would never encourage that, Murph - that would be evil. Only click on the links if you are interested in the advertised service.
Murph

Oh, sorry...that's what I thought the "OBEY " meant...

Your EW charts are laid out so well that even someone as thick as me can understand them...I am left wondering one thing about the green scenario though...does that scenario still see a pull back before a blast higher, or in your opinion, was yesterday the pull back to be bought?

Any insight is greatly appreciated!

Thanks

________________________________
solo899

FYI - the ad beneath obey again is NOT working.
WiredPirate

Okay I give up Mole what is OBEY...an ancronym for something I suppose.
MyLifeMyTrade

I think obey means click on the ads on the right hand side
Squidman

The zero was long all day, no mystery.....

And click some damn ads!
T. Waffle

666 is low on ES will 777 is top?
Skates

I do not think so, I believe we will gap up in the morning...
bee01

I felt a great disturbance in the Force, as if millions of voices suddenly cried out in terror and were suddenly silenced. I fear something terrible has happened.
molecool

SNORT!!!!
lester

Well this day was my worst ever for three reasons:
1) did not follow Zero cuz I had a mental bias to be short (what an idiot I am)
2) bought a boatload of FAZ March 50 Calls for $1.9, they are now around $0.60 - they are now a complete poker play that has three days to play out - someone bring out the bear.
3) I shorted QQQQ early and stubbornly held on for a pullback that never came
Count_de_Monee

*passes Lester his much used and abused KY*
MyLifeMyTrade

I had some coming into today... I sold them when FAZ hit 45 for the day.... We always go up before fed... and this time around it should be no different.
Squidman

Recognize--it is the first step. I was a pig, should have taken the 12% profit instead of the 2%. Time to adjust the attitude and put on the bullsuit.
lester

I wish I had a 2% profit. Buy for $1.9 and now worth $0.55 beyond sucks. Maybe I will luck out in next two days.
finalbull

do not feel bad, i bought them at 7 last thursday
jigdaddy

i wonder how much money one would make if they just went long on every tuesday for the past 6 months...
serg

OBEY!!!
wasn't that what it said on the Andre the Giant logo/shirt?
Implicit Trader

LOL......

sigh......that sucked....going to cash for the rest of the week (pending other info) its just not worth it.....can u say GAMBLING
alphahorn

SCREWED!
benji12

what whipsaw? The mkt has been going up and up. There was 1 day of profit taking. no surprise. throughout today, it's been consistently up.
Squidman

You're right--K.I.S.S.
molecool

He's right - I was thinking that actually half an hour ago - we did whip around but it was a clear bull day.
Squidman

Tip o the hat to these MM's. Same plan, pump it up to XLF 8.68 and dump. Ooo the huge manatee.....
LostIllini

In between getting your a$$ kicked and obeying, help yourself to a smile and think of what might have been.

http://www.youtube.com/watch?v=IUIcmYYtslc
DMS425

obey, ok, done
BigBrown

That zero thing is on point...
molecool

It IS helping - but it's still ugly tape.
BigBrown

I just subscribed last nite...
Yes, I made money on SPY calls ( I use power etrade) after I came back from lunch..from 2:15 to 3:45 was fantastic, when you said, "and I'm out" was a thing of beauty...I closed all my calls also. Made money so I am happy for now.
Stretch

Mole's bull line in the sand crossed? Scary.
finalbull

i am following zero (not mole's zero) my account to zero
jigdaddy

LOL...this reminds me of december - february....fucking painful....i did learn thought that if i would held my iETFs thru all the bullshit...i would have made 2.5x but instead i lost big...
molecool

LMAO.

Dude, just stay in cash this week - I only play money I can lose in this tape.
finalbull

i can still fight another day, but the way this goes............
CJ

How do you trade if the market goes in the wrong direction when you are watching the screen and the right direction when you are not watching the screen?
StainlessSteelChicken

don't watch the bloody screen then
jigdaddy

the market sure can humble one pretty quickly thats for damn sure.
de3600

Dont worry hang in there are you following the zero at all
jigdaddy

yep, problem for me is i started scaling in too early and ran out of powder in the 750 area...i figure best strategy for now is to hold unless we pass 780 then i plan on capitulating...which woulld probably be the exact point the market turns...
DMS425

Jigdaddy,

Just an idea. Go flat, and re-think it all if you are confused. That is what I always do, or throw on a huge hedge. If this market does continue to rally it will be lead by the financials. BUY FAS, to hedge!

The financials have the catalyst, FASB 157, and they are leading the move. I am sure you already know this and I apoligize if this post is out of line. It is just what I do.

No need to be hero, when this dies it will die hard, just make sure you a well capitalized when it does and not shaken up too bad. Watch out for the fakeout, I know a lot of people trying to buy the dip now.
Lordted

5 waves up on YM and ES today... does that have any significense Mole... Do you get 5 wave corrections of a fall?

My own view is you can get anything!
SRSFinance

Well, the fact that so many were looking for a reversal has had me nervous for the last few days. Nevertheless, I still expect a strong reversal. The market generally shakes out as many as it can before it makes a big move. Squeezing the lifeblood out of the shorts even when the short set up is so appealing is the best way it can do that. SPY may yet tag its trendline here. Beyond that, I don't think a good intermediate bullish case can be made until we see how the market handles the impending pullback.

Disclosure: I take wave counts with a grain of salt. I think EW can be as valuable as any strategy if it gives you discipline. I don't think it tells the future any more than any other discipline. The fact remains that the market is overbought and will pull back sharply at some point likely before it trades significantly higher.

Those in cash today are the winners. I'm short, but lightened up a bit as there may be a better entry slightly higher.
Lordted

You got to respect impulse waves and reaslise that they "Must not overlap" or your assupmtions are dead wrong!
Elliot, DOW theory whatever.. Overlap mans the price is moving and will not simply drop
SRSFinance

All I know is I can eyeball the charts for the past year and can't count one single time where the price was up 5 days in a row without a major drop. I'm big on probabilities and while this is anecdotal evidence I still think we will see a big drop before significant gains can be achieved. I guess we could debate the definition of significant. *shrug*
Osso

dont really know how that 29.18 top in Qs play with a previous 29.17......must check the charts.....but NDX and NASDAQ seem have left the bear camp.....opinion from Master Rat...????? or any other disciple........????
Osso

unless ...a non confirmation from SPX and Dow...leaves open the window of a grand negative divergence.....
@torbjornrive

hang in there ya wimps. the major trendlines above are still intact.

la-ddeee-daaa.
molecool

OBEY, leeches - not much else to do anyway.
@torbjornrive

hey MOler. Was wondering if you could add a link to DISQUS' Community Page for each post. I think TK has this link. Also, it'll take some weight off your servers I think...

Good work today, boss. And thanks.
Anna

I have a feeling that this week will get the max pain out not only the Bears (me) but also the Bulls. It is a tape of horror!
Squidman

Took a haircut on yesterdays profits but I'm done, out of FAZ and SRS--good luck all. I will never trade Opex week again, I will never trade Opex week again........
salvadorveiga

ditto.... I'm punishing my self as well... write 100 times I'll never trade opex week again....bad boy
LostIllini

As bad as I got my ass kicked today, this was not a rout for the bulls today unless they can push the high higher. They are waaaay overbought at this point. I am hoping that some late afternoon profit taking will knock this pig out of the channel.
fa_q

The similarities with the top in January are a little spooky.
WiredPirate

If they're trying to scare me out of my shorts it's getting damn close to working. The wavse on the 5min look impulsive to the upside and if they take out yesterday's highs that will give an outside day...hard to ignore that.
jigdaddy

LMAO.....im in that same fucking boat.....my gains from the fall have been wiped out....poor management on my part...fell in love w/ the short side...
BigHouse(Aka Mr Vix)

I'm holding my shorts until dow 10,000 then i will cover. lol
finalbull

it's only another 3000 point, may be get there by option exp day.
alphahorn

would someone please rub some honey on the bulls butt and call out the bear
Guano

honey? you want bears to toss the bulls' salad? ugh, kinda feels like what's happening right now anyway...
Count_de_Monee

+1

Made me laugh big time.

There's a Kmart special on KY in aisle 6.

Hurry while supplies last. I may just buy them all.
lester

am I nuts to think of buying some more XLF Calls?
lester

Sorry, meant FAZ Calls
QQQQ4

I have a FAZ call, but Apr
Fujisan

I wouldn't increase my position when the trade is against you. Think about a way to hedge your position.
poopsquad

painful doesnt descibe this mess. ErikD - is the 850 scenario in play for you now ?
Erikd

no i see new lows on the $SPX before this friday.
T_dub

Erik,
You sure don't need to prove anything to anyone, but could you share what makes you think so ?
The thing is, we have been taking out your levels on the XLF, one-by-one, on a closing basis.
If so, your system should tell you to reverse or stop-out at some point, correct ?
Believe me, I won't mind if your call is right ;-)...

T-dub
arak0

The best trade yesterday EOD and today morning was .FAYOH .... $0.7 to $6.3 for a day's work. Chit .. why did I not buy this as a lotto play going into the FOMC.
jigdaddy

Erik, did you flip to long on this bounce at EOD, or did you hold onto shorts? are your indicators still lining up? 5 of 5?
mtst

Now that we closed inside the Gap zone, let`s supoose they print 8.7 in PM or during the first minutes...do you stick to the plan waiting for a second close in a row or wait for a pullback to close the plan?
If so how far (low) do you think the pullback will play 8.5-8.4?

Thanks in advance -anyway I`m somewhat conviced you`re right but dunno exactly how you arrived to such bold statement. On the other side 850 by friday looks so impossilbe that also worries me lol

Ps not worried bout some lost money but bout learning.

Cheers a Thanks E
LeTrader

New low means below 662, Erikd?

Wow... the pain of going against the trend short-term or not hedging.

I didn't even log into my account today.

"Oblivion" is an altenative medicine for this OpEx flu...
wawaweewa

if you're right you'll be a f'in legend in my book.

Personally I see odds of 800 v. say 700 as 70/30 at this point.
mtst

+1

Now I`m puzzled how a close in the "twilight zone" will play tomorra... :)
willc

admire your confidence. how much are you betting on that?
Lonewolf7107

what is your latest target for FAZ by Friday?

holding March 60 Calls.

Thanks.
BigHouse(Aka Mr Vix)

New Highs F this
faafa

Goldman Sachs is using our money to lend to their employees? http://www.nytimes.com/2009/03/17/business/17wall.html?_r=2&partner=rss&emc=rss

How does the market stay up?
Zeusmith

Why don't they make it a daily double and screw shorts in the equities market AND gold market. There's currently record Short interest on COMEX gold at the moment.
Zeusmith

I was short gold too but got stoped out for even. Just don't like the way its acting short. It has had every opportunity to pitch with all this market strength, and it has not. I'm actually long some GLD 90.15 but not sure if I will hold overnight. Depends on whether it runs into the close.
Flat everrything else
Publius Federali

Lets see if this downswing holds and we fail on the test of today's high, which also happened to fail on the test of yesterday's high. I think i like saying the work high.
El gAto

NFLX may attract the momentum crowd. Pushing all time highs, but reversal risk is high.
Osso

XOM...higher highs than yesterday..mmm....
BigHouse(Aka Mr Vix)

Take me out of my misery and go up to 790 on spx .Good god lol
Osso

they want to push the NDX and NASDAQ to the break point.....
Osso

watching SMH...within the Tech sector....still looks lagging....
Jack

If bearish count is correct, today's high should not be taken.
jigdaddy

http://www.screencast.com/users/jigdaddy/folders/Jing/media/0a514aa9-8666-4ad4-a6c7-89c432ba9da2
MyLifeMyTrade

There she goes .. sucking in some more shorts... This baby is gonna hit close to 800 post fed announcement tomorrow OR possibly Thursday morning after which we reverse hard. I thought of going long... but instead I am gonna wait out ... Having long positions makes it difficult for me to analyze the shorts... I am gonna wait and watch... 100% cash on the sidelines..
Lordted

If it breachs yesterday's high that will make 5 big waves up form the bottom - Not a good sign.

Seems all the comments about Volum climaxes have gone away?...
molecool

If it breaches yesterday's high it will have pained 9 waves up - good sign for the bulls - bad sign for the bears. So, this little peak is actually very crucial.
Lordted

As most here seem bearish I presumed Bad... your the expert moley. I am conting 5 if it peaks higher and the up trend is solid. A breach would mean 6th March was be a bottom? - 5 down ??
ZigZag

I just kicked BKX in the face.
roncofooddehydrator

People still get up after getting kicked in the face. Kick it in the nuts and it'll stay down longer.
ZigZag

Okay, Nuts it is! :-)
BigHouse(Aka Mr Vix)

Seems that people are falling in love with the upside.How long can it last
ZigZag

I'm seeing $780 as top, but $807 is possible. Thursday is when I think we start to drop..
katzo7

I throw a shoe at this market.
moneyfarm

Anyone see HS on 1minute $SPX? Neckline was just taken out at 763.20. Target around 759.50
Duuuuuude

GE should bite the dust here.

http://screencast.com/t/RRgPZuYgMhr
LostIllini

Wow I'm just Jinging this thing up today.... This is what I see on Spy, It looks like 76 is going to be major support, then again I thought the whole damn thing was going down today. Luck of the Irish I guess.

http://www.screencast.com/users/lostillini/folders/Jing/media/675583f5-cd33-4a80-aeb4-335c6b85a60e
nepharis

Alright, payment submitted. Can't wait to get that Zero Lite on my side. =D
molecool

I activated you - have fun. Today's an ugly day though - Zero Lite is helping for sure - but I would still treat cautiously.
nepharis

Thanks, I'm watching already. Holding shorts for now, and taking it in the bum. -_-
alphahorn

Thought I'd share some of Kemal's thoughts (a very astute EW trader) who just said the following:

A very strong day, so far. Clearly, my projection of a subwave 4 consolidation is not correct. As pointed out by pima canyon, one has to look at alternative structures.

My best assumption at this moment is that wave 4 of 5 is still ongoing. Maybe a double taking place on two different days. The same happened during other corrective waves earlier this year (the top beginning of January is one example).

One other thing to note is that similar to the wave 2 of 5 peak, there is another triangle apex today or tomorrow aligning with the potential wave 4 of 5 peak. This time the wave 4 triangle apex (formed between Oct and Feb this year) aligns with wave 4 of 5. Daneric's blog has very nice charts and EW counts showing the alignment:

http://3.bp.blogspot.com/_TwUS3GyHKsQ/Sb7DLcsN2...

http://danericselliottwaves.blogspot.com/

Most indicators support the view that a top is imminent (rather than an additional rally to 800 and higher).

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&b=5&g...

Note that the ADX is perfectly aligned to support another move down.

So, pretty much as Mole has been saying, more pain before pleasure perhaps
SRSFinance

Here's an alternative view from Cobra: Today is a bearish reversal day, the daily charts of major indices look at least being topped out over the short term, which is quite bearish. However, tomorrow the market might bounce back up and close in green. Here are three reasons to support the potential rally:

1. CPC is still lower (or equal to) 0.8 today. Therefore the market has 67% chances to close in green tomorrow according to 7.0.4 Extreme CPC Readings Watch.

On the other hand, bears should not be too worried if the market does go up tomorrow as the market is still very overbought in the short term. Therefore, if tomorrow high cannot go beyond today's high, maybe the short term reversal gets possibly confirmed, and bears should feel happy about this.
alphahorn

yeah i posted from that too, it was interesting that this the 12th trading day of the month is the most bullish day in March historically
Anna

What a tape! I have vertigo, but glad Zero is in my camp!
Ed

Love the zero and zerolite but not even sure the zerolite is that relevant in this type of action. I think mole has it right that I would rather be on the sidelines for this type of tape than in the muck.
Anna

it is a horrible whipsaw! Thanks you rotten MM"s The Zero would be much more predicable in a market with a clearer trend. Good luck to all. We all need it!
SRSFinance

Well, that's a pretty muted response to the Fed. I'm not getting anything yet. What did Ben do?
cubbot

2-Day meeting...announcement tomorrow @ 2:15 Eastern
SRSFinance

Ah, I see. Thanks.
roncofooddehydrator

Fed announcement won't come until tomorrow - it's a two day meeting.
lester

stopped out of my FAZ Calls on this bounce. F___
BigHouse(Aka Mr Vix)

I think some shorts will quite and ring the bell today.
Osso

strength in USO....playing against bears....as its helping mkt go up....imo
fuzzygreysocks

Folks are getting giddier as the day progresses : http://cboe.com/data/IntraDayVol.aspx
Lettuce see how long that lasts.

Hell Week

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