Is The H&S Really Over??

Fujisan here.

What a week!  This has been totally amazing and I really enjoyed it although I could have done it much better.

My July 1st H&S Posting

Not that I want to get a credit for this, but here is what I posted as of July 1st predicting SPY to hit 94.52 for the right shoulder formation.  SPY actually hit 94.51 on Thursday – off by $0.01 from my prediction.  I screwed up with highs and lows of the cycle, so my OPX projection was wrong, but overall, I think my pattern recognition was pretty good.

[Mole here: Off by 1 cent - that's unacceptable - please try harder for next month, Fujisan - okay?]

I also discussed the right side -left side match – therefore, we should expect the 2nd shoulder formation on the right side to match the left side – not only for the price point but from the time dimensions and it would be taking this whole week to form the 2nd right shoulder.

Is H&S pattern really over?

Now, this is what it looks like now.  As you can see, H&S pattern is still in tact and RS peaked at an exact price point that I predicted on July 1st.

I was one of the few bulls (together with alpha, davidK, and GMgrant) going into last weekend holding longs when everybody else was expecting the market to drop off the cliff, and now I am expecting a big drop on Monday based on the above H&S pattern formation together with my bull/bear cycle work that I have posted previously.  Statistically, Monday after OPX is a big red candle day and I just don’t see another big up day coming up on Monday, especially on OPX Monday.  Of course I may be totally off, and it could still keep going up, but I see divergences everywhere (yeah, we have gone through this scenario before – the market could go much higher with divergences) and it seems to me that the upside is more limited than the downside.

I’m not as a good Elliottitian as Mole or Alpha, so I would love to hear from them if it’s possible to drop from here [this will actually be confirmed by my Sunday post - so, yes you are spot on, Fujisan - this is why I was still short as a midget in a limbo contest going into the weekend]. On Friday, I thought that the market was forming W4 wave waiting for another spike up, but now I’m not so sure.  I am exploring the possibility of an alternative count.  Here are 3 different scenarios:

  1. Go down to fill the gap, then go back up,
  2. Go down to retest the neckline, then go back up,
  3. Go all the way down to 85.4 to complete H&S pattern.

Comments and suggestions are welcome.

August Option Open Interests

As an option trader, I always pay a close attention to the front month option open interests, and that saved me from picking the wrong direction in the past.

If you take a look at July SPY open interests from last week, I did not see that much negativity going into OPX week.  I saw a big open interests in 90 and 95, but no big open interest in anything lower than 90, and that was one of my reasons that the market was not going to drop.

Now, if you look at August SPY open interests, you will notice a huge amount of open interest at the 80 strike price  – as many as 400k.

Once again, I could be totally off on this one, but it’s worth mentioning that there is a huge open interest at 80 in August.  Remember, the market does its best to screw up just as many people as possible.  The moment you think that the market is going up, that’s when its taking a dive.

My ATM calendar results

As the market was so exciting this week, I guess not many people would be interested in my ATM calendar results, but here it is.  As I suspected last week, IV skew was not big enough to make this position work.  I had 1 winner and 2 break/even.

Have a good weekend, everyone.

Fujisan

This entry was posted on Saturday, July 18th, 2009 at 1:31 am and is filed under Option Strategies. 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.

  • vidosole
    Hi Fuji,

    congrats about the excellent pick over SPX.
    I did follow your double calendar play 400/430 with Google and it played out not bad - average gain of 27,9%. My wide Iron condor on Google also played nice, so generally I could not complain of GOOG this time.
    Thanks for your idea about the calendar play.
    With many high flyers (offering fat premium) going to post earnings this week, do you have in mind some earnings play? I think about AAPL, BJS, CAT, FCX, UTX, MO, ISRG, SNDK, AMZN, NUE, SPWRA (and next week FSLR), BIDU.
  • ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨
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  • lilme
    Baltic Dry Index up +18.66 % on the week - shipping
  • lilme
    Fuji-san, your posts are incredible and your 'accuracy' astonishing - we are all gasping!! One penny off?

    Thank you for all your efforts.

    And thanks to Mr. Mole for being such a gracious host to us all.
  • ABV , looks ready to crack--short it---next week, VIX 10% move?, and IWM will it overtake 54.36 last june high?
  • lilme
    For the EEM traders out there: "The Chinese Equity Bubble: Ready to Burst" and they suggest dates: July 17 - 28

    http://arxiv.org/ftp/arxiv/papers/0907/0907.1827.pdf
  • dumbpainter
    didn't that beast pop before the American equities?
  • lilme
  • Douala
    Woooow...read every comment and looked at every graph. With so many different takes someone will be looking like an expert here by the end of the week. Here is another way of looking at things from Cara Trading Advisors.

    "What went right?
    • The S&P held support at 880, complete with a false breakdown, and a V bottom.
    • The index held the 89- and 200-day moving averages, while recapturing the 50-day MA.
    • Earnings reports have generally been positive.
    • Strong leadership, with consumer (retail), finance, and tech sectors leading the charge.
    • Takes out previous swing high, re-takes Jan and May highs, taking aim at the yearly high of 956.
    • Under-invested money managers were forced to chase rising prices, with plenty of cash on the sidelines ready to be deployed if equities continue rising.

    What to look for next week:
    • Can the S&P at 940.38 make a new high for the year?
    • How do stocks react to earnings reports; remember it is not the actual number or guidance; stocks selling off on good news are destined to move lower, while equities gapping lower on a negative report and finishing up on the day are ready to run.
    • Are all or most stocks in the sector participating in the move?
    • If Bulls press the upside, keep an eye on 1007, which is the November S&P high, and 1013 the .382 retracement of the entire Bear market. Watch how key stocks react at that level; it may take a day before you know the answer.
    • Last week’s low is now the line in the sand; any subsequent violation could precipitate a market debacle in the coming months.
    • The trend is your friend until it is broken. Simple enough. Use trend lines to stay in the trade.

    Should be an interesting few weeks coming up; keep an open mind, letting the market speak to you."
  • rhae
    all good, Learning to read the earning reports handy... But must say I usually do not take the time.
    I like watching year over year revenues, I want to know if a company is making or losing money... and Revs. are harder to fudge.

  • ropey
    Ok some mac techies please....right i was messing around some new dev enviro and it said it required java 1.6 or later ( only avaialble for 64bit intel macs ) which i have so was scratching me head why it thought i didn't have it. Anyway i booted up the java preferences and lo and behold the preference for the machine was to use 32bit over 64bit..i switched it over and things ( maybe it's just me ) seem to be noticeably faster...this is especially helpful given TOS desktop is all java. Note: i've got an intel based 64bit imac hence the odd stuff, anyway worth a shot if you're on leopard and finding things a little sluggish on TOS.

  • Boatload O' Bear Charts....Even for Bulls ought to check out the bearish case. 5 of these companies report this week.

    http://oahutrading.blogspot.com/2009/07/boatload-o-charts-compare-to.html

    These mesh with the downloadable Excel and txt watchlist files I posted earlier.
  • rhae
    Market so far into nose bleed territory it is hard to see any other way but down... The problem as I see it... It has not slid off the cliff yet... It really should... and until it does, the other two choices are flat or up... But I am getting that itchy feeling in my trigger finger.
  • Keirsten
    Another interesting chart $NYA200R

    http://tinyurl.com/o2gbqa
  • Well, I finally sobered up enough (that what I think, but I was not told so )and produced yet another mambo-jumbo video which is a complementary to Rosetta Stoned Educanment.

    Part1 http://www.youtube.com/watch?v=ALtcgfJojSQ
    Part2 http://www.youtube.com/watch?v=360dP7HbRRs
  • rhae
    very good presentaion... and helps to know which way the wind is blowing in daily/weekly charts
  • Daily eur/usd chart.... Looks like we're going to get another run up. Dont be a premature bear yet guys, keep buying dips. Its setting up VERY nicely for a selloff in the early Fall though, just like 2008

    http://screencast.com/t/L2RpVXU1P
  • Very nice chart
    Don't you thnk that there are some neg divergences starting mid March.
    I think first chance for decline might be as soon as middle of next week 1.4147 is still a resistance
    http://screencast.com/t/QjksoUeFj5P
  • yeah I agree that point is strong resistance. However it does appear that we might already be breaking out of the bull flag we've been forming, so that could easily push us past 4150. Anything above 4180 and we're going to see serious fireworks to the upside though, I will say that.
  • Hi V8, I am firmly in your camp now, I have too many indicators telling me we are definitely in a bullish trend. my daddy always says "don't be stubborn, trade what you see, not what you hope!"

    Good to see you! :-)
  • rhae
    Dollar over head supply looks tough... DX.F futures 79.69 my line to watch for now... needs to get thru 81.25 for blue sky
  • KidDisco
    "SPY actually hit 94.51 on Thursday – off by $0.01 from my prediction."

    Epic call....
  • I wanted to post this Excel spreadsheet and txt file that can be imported into Prophet charts watchlist directly (and probably others), because, well, I think it is a cool format to collaborate with.

    OK--All you "Leechier than thou" peeps, here it is, without further ado.
    List of tickers that TK gave me permission to re-use in a beefed up format. Tim posted these today as trade ideas. Not only do you get the list with more information, you can download it in Excel format and also in Txt format. The txt file can be imported directed into a Prophet charts watchlist.

    The files are available on link below.

    http://oahutrading.blogspot.com/2009/07/boatload-o-tk-tickers-leechfest.html
  • Very nice Steve thank you for doing this, what is Tim looking to do with these bearish or bullish?

    :-) or does he know?
  • These are all shorts in typical TK style.

    When you see me posting longs, you can rest assured that will be the end of modern civilization as we know it (just kidding), I have a few triggerable longs I am going to rechart tonight.

    I have the feeling I won't be initiating any new positions on Monday.
  • ROTFLMAO!!! I should have known better! :-P thanks again for the list, how do you copy it and paste it in prohet? I did try.
  • First off, it's the txt file that you want to download to import the watchlist. Save it to your computer.

    Using TOS, I go to prophet charts, then Watchlists, then import and point it to where you saved the file.

    It will create a watchlist with the file name as the Watchlist name....now peruse the charts.

    I personally like the Grid charts, with a 5 Minute, 30 minute, daily, and weekly 10 year view, but I leaning more towards a 20 year view since this shows the pre-1999 lead up to the meltdown.

  • Very nice Steve Mahalo! much appreciated! :) Got it in there!
  • Keirsten
    Here's my take on the H&S. According to McGee the right shoulder can be "nearly to the level of the head," and still be valid. Had to call a friend, as I loaned my copy out. I already know that Murphy and Swenlin disagree. If we bust up through 955-ish, we're cooked on that, so time to move on and look to get heavily long with a stop at support. Apparently some of the more popular technicians out in blog-la-land never considered this to be a complex pattern, but merely a left and right shoulder, and due to the upswing last week the right shoulder was voided. I still find it interesting that 1. we never retraced to the .382 Fib support (if in fact this is a build of a right shoulder for the inverse H&S pattern) and 2. they had to gap it up to get over that trend line (and in my opinion that was to avoid any sell orders at resistance.) They skipped a whole chapter there with pathetic volume and took the puts and shorts out handily. That's life. But because I always look for their crooked greasy little thinking, how evil of them would it be to go ahead and take it down and blow out the neckline after all have given up on it? Right on par with them pumping last week for the headfake.....

    That said, any retracement below has plenty of key levels of support to keep an eye on. The SPY broke down out of a rising wedge on Friday, and on Thursday backtested a previously broken TL. We have gap support, MA support, you name it on any retracement, so I'll personally just keep scalping and ST swing trading around this thing until we're either safely past resistance or have clearly blown out support. How's that for politically correct? LOL G/L Rats! :-)
  • katzo7
    I am blown away by your research and ability to assemble it all together K. Nice!
  • Keirsten
    I'll stick a fork in it Katzo when the last cowboy leaves town, but something round about last Wednesday just didn't pass the smell test for me. Friday also fired off some bells and whistles on that tape. They could have put it all to rest on Friday once and for all, but they didn't. 33 measley points on INDU was all it would have taken to scare the bears yet again. I should probably move to Missouri? LOL

    The biggest joke of all so far is we're still stuck basically in a sideways range. Snort.
  • I like you Warrior thinking option of "now the market drops through the neckline", but what would be even more precious would be a "Slope of Hope" with the bulls buying all the pullbacks, and then crash the neckline.

    Bulkowski, who is an extremely analytical pattern and candlestick guy, would side with "H&S is still in play".

    And although I might be departing from a purist view of the H&S...I think you have to cut the pattern some slack because of the week of options expiry.

    And agree with Fujisan, the collaboration effect can be very beneficial. I stay away from any Blog where people are just posting Bought Faz, without any explanation or chart.
  • Fujisan
    Great post, Keirsten! This is what a public forum is supposed to be doing - to put our heads together to find a better path. I think this turned out to be a great discussion session and I thank you for that.

    Yes, I'm also watching this inverse H&S pattern and it should still come down to complete the right shoulder before the final run up.
  • Keirsten
    I agree Fuji- we need both sides of the coin so that we can all navigate well and make money. Most of us here could care less about labels of bear or bull- it's just about playing the game well and staying on the lookout for possibilities and probabilities. It would actually be easier to trade this to the upside IMO, but I don't trust these monkeys as far as I can throw them. ;-)
  • Exactly K, I call myself a chameleon, whatever color the tape I can adapt!

    How was your weekend @ the spa girlfriend? :-)
  • Keirsten
    Exactly- we have to just trade that stinkin' tape regardless- the object of the game is not to be right, it's to make the moo-la. LOL

    T'was a lot of fun- could have stayed there all day long, but I'm too A-type to relax for anything longer than 6 hours. ;-)
  • Touche'

    Glad to hear it and I am also a A type (big surprise right?) so I completely get it!

    Have a good Sunday night and see you tomorrow!
  • Teich50
    LOL your link shows the 2007 tops in the markets, before the big plunge :)
  • Keirsten
    ... and what a sweet plunge it was. :-D
  • ausdude
    FWIW, thechartpatterntrader agrees 100% with you (and Fujisan). Check this video out from last night...

  • Keirsten
    Here's another interesting observation about the pattern (full text link below)

    “There is something about Multiple Head-and-Shoulders patterns especially pleasing to technical chart followers. Because of their symmetrical tendencies, it is fascinating to watch them evolve to completion. Once completed, however they may try your patience (!!) by their seeming reluctance to “get going” with a new trend. On that account, it becomes easy at times to jump to the conclusion that they have “blown out’, i.e., produced a false signal. Actually, except in the matter of extent of move (see below), which we have already discussed, they are fully as reliable as the plain Head-and-Shoulders. False moves are relatively rare with both.

    And in those extraordinary cases when a Complex Formation does go wrong, it still stands, like the plain Head-and-Shoulders, as a warning that the final Reversal is near.”

    http://tinyurl.com/mz2zvu
  • isaiah64v4
    Hello Sunshine! Here is your Sunday FWIW.

    "right shoulder can be"... another view. Drop down and see Identification Guidelines.

    http://thepatternsite.com/chst.html

  • Keirsten
    Hiya Isaiah! Yep- there it is! :-)
  • Guest
    Test
  • Guest
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  • Teich50
    Hi Fujisan.

    Would you consider the complex H&S pattern really over if SPX closes above 950 convincingly? That would be my mental stop.

    I fell in love with Tokyo when I went there for a business trip. I liked how one could walk for a mile or two in an extended underground mall without having to cross the busy streets above.

    Thanks.
  • Fujisan
    That's nice. I feel like visiting a foreign country when I go to visit Japan now. I'm always impressed how people are very nice and polite.

    Yes, if it goes above Thursday's high, this pattern is over, and then I will be looking into a possible M pattern formation (i.e., double top). If it closes above the top of the Head, then I am convinced that it is heading much higher. I guess we all have to play it one day at a time.
  • Teich50
    If SPX closes above the top of the head (~955), I too think it will go much higher. It reminded me of the Dow breaking 12k in 2006 to rally to 14k, barely a year before the recession would start (in ~Oct 2007).
  • What I enjoy even more is to be able to walk for a kilometer and not see a single piece of trash on the street. As a born (anal retentive) German I can never get use to all the trash here in Los Angeles - it's disgusting. In my mind this is a reflection of the mind set of a populace - mainly a focus on instant gratification and a lack of attention towards long term sustainability.
  • Fujisan
    Oh, don't compare it to LA! Come to Seattle. The city is much cleaner.
  • Seattle is gorgeous! One of my favorite cities! I LOVE LOVE Pike Place Market, I enjoy it there more than San Francisco and I love that city too. such gorgeous landscape! :)
  • So true Mole, when I was in Germany, I was struck at the difference in the landscape!

    WHAT!!! No trash anywhere.. so clean and then I thought: god why can Americans be so conscious of their own countries beauty.

    One of my biggest pet peeves is people who throw trash out destroy the landscape!
  • It is a deadly combination of
    1. Propaganda inflicted mentality when every beggar on the street is so proud of his chance to be El Presidente
    AND
    2. A la Marquise Pompadour "After us let it flood" low quality education inflicted ignorance
  • And of course we have to pay taxes so the city can sweep the street every week - literally wiping our asses for us b/c we're too stupid to learn how to throw trash in a trash can. And if you don't move your car that day, you get a $50 ticket. Oh wait, they just raised it to $60 since the government is insolvent.
  • Well, if we wouldn't spend half our GDP on the military and the other half on bailing out corrupt banksters we might actually have some money left for street cleaning.
  • disrespekt
    You need to visit cities with different demographics; they tend to be trash-free. Like in Europe. If you know what I am getting at.
  • standard_and_poor
    Gandhi knows exactly what you mean. You need to visit those cities and make it an extended vacation if you know what I'm getting at demographicaly challenged little dot.
  • Keirsten
    Don't forget entitlements and handouts. ;-)
  • Hard_Rain
    RE: "if we wouldn't spend half our GDP on the military..."

    Agreed, but that will require major changes to our petroleum-based economy, which is coming due to Peak Oil. See Fuel film:

    http://thefuelfilm.com/
  • disrespekt
    M King Hubbert theorized Peak Oil in the 1950s and called the US peak in 1970. We've known from scientists that this was coming worldwide at some point for over 50 years now. And, we got conclusive confirmation of the theory in 1970...which is when the US economy came unhinged, Bretton Woods collapsed and we entered a decade of stagflation that was ended by the Raygunomics miracle of borrowing using the reserve currency as collateral. The USSR was not so lucky; they achieved their peak in 1989 and collapsed very shortly thereafter. All economic growth systems require growth in inputs, the most significant of which is energy.

    All the technological advancement of the past 39 years has not in any way reversed the US's peak. Production declines relentlessly, even including the coming online of the N Slope in Alaska in the 1970s. Technology cannot reverse production declines. In fact, it may speed them.

    Technological advancement in extraction methods have made field production curves no longer resemble smooth bell curves, but rather trapezoidal shapes. By employing 2ndary and tertiary extraction techniques from the outset, production can be brought up more rapidly at the cost of a steeper falloff after peak is achieved. This maximizes the NPV of the well trading it for lifespan.

    Cantarell is a good example of this, as is the N Slope. The BPT trust 10k forecast 7-9% YoY production declines...reality was 15+%. Cantarell production crashed last year by 34%, vastly in excess of the optimistic models' predictions of single-digit decline rates.

    In fact, what technology did was get more oil out quicker and hasten the appearance of Peak. Now, when production declines, the field is basically "empty."

    We've known these facts for nearly 40 years, yet nothing was done. This may suggest that nothing can be done; there simply is no replacement for oil.
  • blahblah2
    I think it just suggests that humans aren't prone to change things until it becomes urgent in some manner. Hitting the pocketbook hard is one of the more gentle ways of becoming urgent.
  • EDC
    Peak oil... sounds almost like global warming. Not saying it isn't possible but over the weekend I read a really great writing by EWI Theorist about Peak Oil.
    Summary...
    In five years time for a cool $25 Mil, a community of 10,000 homes can purchase a shed size nuclear plant buried in the ground that gets no hotter than a barbecue and has no moving parts. This would cost each household $250 and would provide electricity at 10 cents a watt.
    innovation will always continue, new technologies will come around and as all bubbles burst. They don't come back. Oil was a bubble and the price increase had nothing to do with demand.
    Even if production goes down in petroleum, something else will fill it's place. Lets just hope it is not ethanol at 1700 gallons of fresh water per gallon of energy.
  • disrespekt
    Uranium is a finite resource...it too will peak. Good luck disposing of the waste from the PBMR buried in the backyard. And, praytell, where does the cooling come from? There's a reason why France cannot build more nuclear plants despite the need for them.

    Listen, anyone who tells you that a real-world system can continue growing forever is a fool. Oil, too, is a finite resource, and at some point, production peaks and then declines. It's happened already in 54/65 oil producing nations. It happened in the US in 1970, in the USSR in 1989, in Mexico in 2004, in the UK in 2000...the list goes on. Whether it is a well, a field, a nation, or the world, all resource extraction rates eventually peak and then decline.

    Lots of people may want to believe in the "miracle" of technology, but once a well peaks, nothing can reverse that. This is a matter of geology and physics. We have transitioned from the Age of Growth into an Age of Increasing Scarcity. Betcha didn't know Helium production peaked in 2002? Gold peaked around 2000...we are at a major inflection point here. Oil is free energy, we need another type of that. Not wind and solar which have immense manufacturing, infrastructure, construction, deployment, etc., costs attached to them. Not lightwater nuclear whose plants take as much as 10 years to reach breakeven energy positivity.

    These other technologies may suffice to keep us at a steady point, a "sustainable" future...but that represents an epochal departure from the last 400 years of growth.
  • BrassMonkyBalls
    All good disrespeckt and very thoughtful post, except that wind is as free as oil is. Oil needed infrastructure too that was built out in the form of pipelines, shipping, drilling in new and creative ways to depths and angles needed to continue extracting, and not to forget refining and moving it across the country(s). Every cost you mentioned for Wind was needed for oil, probably significantly more for oil though.

    Building out the infrastructure for wind will in fact improve our very aged and fragile electricity grid here in the USA, (for the most part anyway, if the software used to control it is actually purchased by nickle-n-diming utilities). Unlike the communications infrastracture, if Thomas Edison came back today he would completely recognize our current electricity grid...so little has changed in the past 100 years.

    Agree with your opening arguments.
  • disrespekt
    Wind? I wish. Wind is not growable; it does not get windier as our demand for it grows.

    At this point, as the energy we get from oil decreases, we have a two-fold problem. We must replace lost oil BTUs AND we must provide for the additional growth in BTUs that the growth economy demands, IF we are to have the same type of economic reality that we've had for the past 300 years.

    To anyone that is interested in this topic, I suggest theoildrum.com. The EROI on wind, solar, nuclear, etc, all PALES in comparison to oil. I mean, it's not even remotely CLOSE. Wind is not even remotely a substitute for oil.
  • BrassMonkyBalls
    if you're talking BTU's yes I agree. If you're talking offsetting fossil fuel generation then its legit. If we're not worried about the environment then we have plenty of coal. We can grow wind by putting up more turbines. Its not about more wind, it about putting up the turbines and accurately predicting the generation, and being able to dispatch the power, which is what we're working on and getting better at doing. Enough of this though and I'll check out theoildrum.com
  • EDC
    you bring valid points but there is a problem about Peak oil... It's called
    peak credit.
    cycles have a funny way about them. all cycles shall pass but we won't
    have true peak oil unless we can have secular credit expansion again.
    That is very doubtful since we went from high rates with an unsaturated
    credit system to low rates with a saturated credit system.
    Credit is money and it wont matter how finite that resource is if there is
    not money to chase it. This is how wars will start.
  • disrespekt
    There is no "problem" about Peak Oil, dude.

    It already happened. In wells, fields, nations, the world. It's not a theory, and it's not open for debate. It is part of the physical world.

    Won't have "true" peak oil? What? We already achieved peak. C&C peaked in 2005, with a subsequent liquids peak in 2008.

    Those who think that interest rates and imaginary shit like credit somehow have "control" over the real world are in for a rude awakening. NO amount of money can make Cantarell come back. Oil is a REAL thing; it exists with or without "money." Nations can trade in barter and they already are, with or without debt-money.

    The problem is that the bankers and economists (parasite idiots) got the mistaken impression that their silly theories and interest rates were what caused growth. It was always energy. We rode an energy supply growth curve that has hit a maxima.
  • EDC
    uhm... without a medium of exchange which derives value such as "money"
    there is no means to pay for supply which emotion pays for demand.

    It does not matter when, what, if, or however peaked?!>?
    It's the money... and an effecient medium of exchange.
  • Hard_Rain
    As a PhD geologist, I agree with many of the point brought up by disrespekt. I suggest you read the book, Geodestinies by Walter Youngquist or many other excellent books about Peak Oil. Another great way to learn more is through the Fuel film I list above.

    http://www.amazon.com/Geodestinies-Inevitable-Control-Resources-Individuals/dp/0894202995/ref=sr_1_1?ie=UTF8&s=books&qid=1248042828&sr=1-1
  • EDC
    I'll watch the film without question, thanks for share the info we
    just are on opposite sides of the coin. The trick is to skip along
    the round edge until the true side determines it's weight.

    Remember MBAs from harvard contributed to get us in this mess...
    Which is why I don't give them credit or any other MBA...
    Unfortunately that means I do not give my MBA from a private
    university any credit either....

    wawa-waaaaaa...
  • Hard_Rain
    I agree that derivatives that got us into this mess were designed by MBAs who should have know better. But that doesn't invalidate the whole pool of MBAs or experts in other fields. By that analogy, I should have seen a witch doctor to fix the torn cartilage in my knee rather than an orthopedic surgeon.
  • disrespekt
    I can't agree that derivatives were a "problem."

    They were merely a late-stage attempt to drive needed credit growth that could not be supported by the real economy. CDSs represented a backbone for synthetic debt instruments.
  • zenith191
    Not pointing any fingers but it seems various bloggers, commentators and analysts that we so bearish last week are now so bullish. I know being nimble and not being married to your position is a good thing but I don't feel so comfortable with this flip-flopping. Has anything fundamentally changed since last week? I love TA but relying on it in the face of GS painting the tape may be hazardous.
  • rhae
    Japan, great place, and people, spent about 3 years there . Atsugi, wonderful view of Mt. Fugi every day.
  • Great post Fujisan!
    I expect a shallow pullback to the 910 area at the very least, a meager 38.2% retracement. Will be looking at whether we see stabilization in the area for an assault on 960 or further weakness http://tinyurl.com/l62rdk
  • Peasant
    For those that trade OIH, there are some very important ERs this week. HAL releases theirs BMO tomorrow. Also due out: WFT on Mon; BJS on Tues; CLB on Wed; DO, ESV on Thurs; SLB on Fri.

    Some of them are running skeleton crews in survival mode right now so it doesn't make sense to buy them, but...
    http://content.screencast.com/users/peasant/folders/Default/media/7fb637a8-2f13-4d40-aff0-5f099d5532ca/OIH2.png

    Note that the 200 day was tested and held. It also gapped thru the 50 day and there looks to be a 13/34 crossover in next day or so. MACD is also showing nice divergence.
  • Hey guys, my two cents for tomorrow, is we are way overbought on dailys, MACD and STOCHS, but as far as the weekly not as much, but overbought, the monthly is not and all other indicators together make me feel that we will see some retracement, maybe to 928-930 area this week, maybe tomorrow, but that will be an opportunity to load up on the long side.

    We may even gap up to touch that upper BB @ the 953 level before retracing
    http://www.screencast.com/users/Annamall/folders/Jing/media/0223f33c-671d-45fc-a0c4-a9fc711b1c9f




    As I have mentioned before I am a much happier bear, than bovine, (MOOO) but I am a chameleon when it comes to making money! :-)
  • Blind_Squirrel
    That far down, 928-930, there will be blood in the streets!!!!!!LOL
    Could be a mkt. closure with a decline that steep!!!!

    Before I auto switched your avatars to rotate between Jethrine
    and Eunsuh, I thought of you more as a high strung filly!!!!
  • LOL GS< Yes, I know, i really am not looking for a huge retracment. On any nice pullbacks I am adding (arrgghhh) to my longs!
  • EDC
    annamall,

    great chart by the way... how did you get Stochastic/RSI in the same pane on TOS?
  • Hi EDC
    Thank you, I just added to my study set and I don't have ) base subgraph checked. Hope this helps! :)
  • Peasant
    I'm thinking the same Anna.
  • Great minds Peasant, here is the upcoming events this week, looks like Concord Ben B. is speaking on monetary policy for 2 days :)

    http://www.bloomberg.com/markets/ecalendar/index.html
  • bruno
    Wow she recognized the upcoming H & S pattern - nobody else saw that one coming;-)
    How wonderfully delusional to post that chart and claim foresight while the EXACT OPPOSITE happened.
  • Fujisan
    As you are not a regular here and you may not know, and I really don't need to defend myself here but I recognized this pattern over a month ago on June 19 when it was merely forming a head and here is my comment from June 19.

    "SPY possibly forming a H&S pattern with a shoulder at 93 and a neckline at 88. This traslates into:

    1. SPY goes down to 88 toward OPX Monday (Monday after OPX tends to mark the low).

    2. Then goes back up to 93 toward the end of June for Q2 window dressing

    3. Presume to the downside to complete a small abc correction down to 85 toward July OPX, which coincides 38.2 % fib corrections."

    Why don't you post your own analysis and see how well you can do before you be a judge of someone else.
  • Lordted
    Hi Fujisan I am a bit puzzled by this becuase the comment by bruno has been removed. But (at risk of having my comment removed) I am looking at the road map for S&P 500 you posted dated 19 June on the chart showing the opposite of what actually happened.... (or have I got something totally wrong here?)

    I only say this because I am puzzeled by your current comments?? But I still like your stuff 1. because you post so freely and 2. for the wonderful pictures we get with it.

    Right or wrong you're a Treasure
  • Fujisan
    Ah, I know what you are talking about. You mean I screwed up with highs and lows of the cycle. I was expecting a peak and it dropped and it dropped when it's supposed to be peaked, and this could be happening once again; i.e., it could be another peak on solar eclipse instead of a drop. Yeah, I acknowledge that and said so in my posting.
  • Yea she did, and was 1 penny off, jeez she was spot on! I took him off! :-P

    Yoku dekimashita Fujisan! +1 :-)
  • Fujisan
    Hey, Anna, I didn't know you speak Japanese. Where did you pick this up?
  • Studying up a bit, love the language and culture! BTW I removed that loser! :)
  • Fujisan
    Not only you are smart and pretty, but also speak foreign languages!
  • Arigato Fuji, coming from you that is truly a compliment!
  • divergence
    Girls, it's hard to be smart AND talented, but somebody's gotta do it!
  • Nice! Big :-) for you divergence!
  • katzo7
    New words annamall is not allowed to say:
    Nice
    Big
    Mooo
  • Moooooo-ahhhh to you too! LOL
  • Peasant
    Ban the douchebag. He's probably that idiot in Cali
  • Done! :)
  • Smart, pretty, foreign language speaker, AND powerful....what a combo! :-) have a nice Sunday.

    Very limited charting today, maybe some FX later on.
  • Hi Steve! extra big :-D for you sweetie! you have a great sunday too and TTUL, look forward to your charts as usual!
  • C.C. Rider
  • pcfaraday
    I further my case that the date is now 2002-03-1x
    http://www.flickr.com/photos/40089479@N07/3735201470/

  • Peasant
    I think Jurrien Timmer is one of the better market strategists out there. He seems to weigh both sides before making any forecasts unlike some of the perma-bears and perma-bulls. Just another datapoint but something to pay attention to given the size of fido's mutual funds:
    http://publications.fidelity.com/investorsWeekly/application/loadArticle?pagename=VP0907recap
  • zenith191
    Why would I want to listen to a guy whose fund is down -19.74% YoY when my portfolio is up over the same period? :)
  • Great article Peasant, thank you!
  • amity
    Yes Fujisan, the H&S it is over. The liquidity pumped by Fed in the markets so far did not achieved its purpose of attracting the money on the sidelines so the Jun-Jul drop and last week 7% up represents one of the last attempts in this sense. IMHO there will be a higher high on MON-WEN then a slightly down zigzag till the end of the month. I was in and long for the last week and Friday I got out and I will stay out till beginning of August. Hit and run seems to work.
  • pcfaraday
    Whats missing (from my March 11, 2002 scenario: http://www.flickr.com/photos/40089479@N07/3731902236/) is, an ENRON scandal. Perhaps the bank-accounting rules will suffice, but it needs to surface soon.

  • disrespekt
    As volume continues to fall, program trading is occupying an increasing share of overall market activity. This means that the market can pretty much be pushed in any direction so long as the "mass" of ownership stays put.

    Given the rise in unemployment and continued deterioration of "main street" economic indicators, along with the insolvency of major states such as CA, it's in the administration's vested interest to keep the stock market, the sort of headline economy indicator, up for as long as possible.

    I am looking to short individual names, weak banks such as ZION, STI, BAC, and GE, with an eye toward increasing deterioration in CRE portfolios.

    Medicare is operating this year at a $330B+ deficit, which has not been considered in the headline deficit number; it will in reality perhaps cross $2.5T. This is a bond market dislocation waiting to happen. Also the political will has been lost for additional deficit spending and bailouts, so it's unclear how the IOU situation in CA and certain cities like PHI, as well as very close in other states, will be dealt with absent massive cuts in payrolls and expenditures. AIG is also again near bankruptcy as reinsurance deals they cut have impaired the ability to even sell AIG's "profitable" divisions, which are on the hook for perhaps another $200B in losses. The SP PE is now roughly 116. A climb to 1050 or higher would mark the absolute pinnacle of insanity, but I suppose that is fitting.

    FASB M2M suspension generated some $42B in phantom bank "earnings" while systemic insolvency looms. Sweden is even at negative central bank interest rates. IOW, shit be on TILT. I cannot recall seeing a broad market index achieve an RSI of basically 90 on a longer term (30 or 60m) timeframe; this is just spectacular to behold.
  • rhae
    I make a special attempt to see how lazy I can get.... I set up this chart with a paint bar , only for alerts. One can do about anything they want. Just simple ma cross on the daily. The screen flashes, posts the alert and sets off bells and whistles. ( If I want, while outside, or might find a submarine diving .wav file).. I like visual aids. If the square at the top is green, just scalp long and visa vera. If someone mentions a turn number, watch for a color turn, etc.
    I would not take everything. It is important to know where critical lines, trendlines, fibs. channels etc. so watch for confimation... One never knows if a color will flip through out the day, except maybe Annamall. So just use alerts for what they are... alerts.
    Chart is just a sample and I have no idea what the posted alert is, after hours maybe just a spike?

    http://screencast.com/t/Y8BHYVk9Utg
  • Osso
    Irrespective of the nuances of the retracements very ST, and the immense resistance at the 960 level, from where we may retrace sustantially, the final destinationof the Bear Mkt. rally.... is the 20 month ma. on SPX. This should coincide with a 50% retracement of the 1576-667 move. It may try the 62% retracement.
    It will take just one good earnings report from a major player next week, to take the mkt. to close at/above 950.
  • barebull
    fujisan.......... respect your intelligence and your clarity in your presentations ............thank you
  • few friends called me today and they all said that I sound like madman and in a way I am, I am going through the charts over and over same stocks hundreds of them and they all conflicting and I think I am beginning to get it. I think there is a disconnect brewing between nasdaq and snp, not sure yet, but snp might at least stall for a while and nasdaq will take charge, that feels like 1999 all over again. even if it is not so, I suspect we will see yet another upside week. overall it feels liek money flowing from sector to sector gradually pushing they all up. I am as much a very confused individual as Kramer (not to be confused with pimp Cramer)
  • Peasant
    I agree with your tech call. Many market participants, big and small, are expecting a weaker dollar in the intermediate future. If that happens the tech companies with good international exposure will benefit nicely. I think the tech sector has the best risk/reward right now.
  • Teich50
    I was looking at some of the lower-quality tech companies in the S&P 500 (e.g., YHOO & NVDA). Yahoo ran up from ~$14 to ~$17 in a matter of seven sessions, forming a double top. NVDA, who has not been, and will not be for a while, profitable, just made a triple top.

    I will watch the reactions to these companies when they report earnings later in the week.

    Other kinda-sucky tech companies making double/trips tops include MOT and MU.
  • double top is never a double top until it has been a double top for a while
    It looks like earnings don't matter, especially for techs
    looked at nvda - I think it will move to 17+ in no time
    http://screencast.com/t/xUZtV2UDJ2

    I see possibility of 44 on cubes and 1120 spiders with some insignificant pullback if any.
    I was really thrown off by multitude of corrective down waves on daily charts and denied to see the most obvious outcome - which is "new craze" for now.
    here is MOT - same picture
    http://screencast.com/t/mnWeMBjUozL
    I think I am trying to talk myself into being a bull :(
  • Teich50
    I agree that what you said about double tops. If not-so-great techs like YHOO, MOT, NVDA break out of their "double tops", I'd cover and go long NQ too.

    Late last week, when GOOG reported good earnings, the stock sold off. GE sold off too when they reported bad earnings. The market no longer has the rally-on-bad-news reactions.
  • rhae
    A great question, Is it over? Nothing would please me more than for the SPY to roll over and tank Monday...
    However, at this instant the daily line chart is showing no confirmation that it is or even will.

    Is earning season finished with fun and games?
    http://screencast.com/t/Kt9FZguDFT
  • denali92
    I have all three downside scenarios as well - We just need to tick off each level if / when we head down and see where the market is with respect to being oversold and where the vix stands. We should not discount the 4th scenario a move up to 968 - 972 in the next few days. No one is calling for this, which worries me. Most bloggers are bearish and fading this rally. The internals do suggest a move lower and I am short right now..... BUT, I do not discount the market having one higher squeeze in to Wednesday - It is my unexpected 10% probability scenario -

    The big question are people just talking bearishly or are they positioned for a move down.
  • katzo7
    I spent all day researching OPEX days and hope it can be applied to your trading. I found some interesting and surprising conclusions.
    http://www.bostonwealth.net/2009/07/18/sp-500-o...
  • standard_and_poor
    Next time stay dead longer, at least wait until the 7th day to be reincarnated - it was good enough for JESUS....... JONES!
    http://www.youtube.com/watch?v=nuelZAQqbso
  • katzo7
    Is that avatar pic of Mohandas Karamchand Gandhi S&P? Isn't that incongruous, saying to stay dead for longer and using his pic? Bad karhma guy, I am trying to protect you here. Your battery on the Harley will die VERY VERY SOON.
  • standard_and_poor
    I believe in after-life, to you re-in(carnation) is nothing more than a fresh flower in your lapel. It's guys like you who give re-incarnation a bad name you top calling bottom fishing capitalist swine!
    Leave the after-life to the true believers or I will levitate your butt back to the backwaters of fla.

    May peace be with you!  
     http://www.youtube.com/watch?v=pFnyg3YhuP4

    P.S. Should my battery die it will surely be reincarnated in your rectum along with my
    size 11 steel toe boot.

    PEACE TO ALL MY BROTHERS AND SISTERS EXCEPT YOU KNOW WHO._______________________________
  • katzo7
    I have never ever received such blastpheme in my life!!!!!! I let my wife
    read this and she was very disappointed in your phrasiology and
    insensitivity. Our advise to you? Get a dog and leave the katzo alone.
  • standard_and_poor
    Ahh poor lil katzo.  :  (




    ________________________________
  • standard_and_poor
    Did 90 pound vegetarian nice old man Gandhi make you cry?
    : (
  • katzo7
    Just to let everyone know how petty this is getting I'd like to post a
    message and my response. Seems like junior high school all over again.
    MOLE SAID ON SOH (after informing katzo he could not provide a link here
    anymore):
    "Oh, now you're pimping that blog over here? LOL!!"
    KATZO REPLIED:
    First BWM is not a blog but a place to publish research and is open to
    anyone for free to read and to even join and publish there own research. We
    provide articles written by Matthew Lloyd and Ashrif Laidi.
    Second if I published that kind of lengthy research on your blog it would
    occupy massive amounts of space.
    Third do you feel that you have been put in charge of the financial
    bloggisphere world? In that case, you might want to go to Moo and Atilla's
    site and police there too. Don't worry mole, you will get a nice shiny
    badge. LOLOL
  • Peasant
    Katzo - make your name a hyperlink to your website like alphahorn, forkaholic, amgrant, etc.
  • katzo7
    Hey, good idea. I am so dumb sometimes. LOL Thnx Peasant.
  • rhae
    good analysis...
  • katzo7
    Thnx Rhae.
  • Coldwarvet
    Well, here's another viewpoint. I don't see any way for next week to be an "up week," unless we are going to be heading into a new bull market. That's a lot of stakes on the table, folks, but we had a pin and close ON the 50 week SMA for the S and P 500 cash. Last one was in May 2008 - remember that month?
    In short, either this goes titsup toot sweet, or, with any follow-through - or even a few weeks of fairly flat action, we're going to risk a 20/50 week bullish cross on .spx. I laid this out in Karl's Ticker Forum, if you have access and wanna see it, along with a somewhat crude chart. Bottom line is the 20 and 50 are ACCELERATING toward a nexus, so, a bullish cross could occur within weeks. Or, we could have a pull back to near the lows of the year. There's a lot at risk, obviously, depending on how your bets are placed.
    I am still short, but not really large positions. I added all week, basically, and will start taking shorts down on a significant retrace, which many seem to expect. If this confirms bullish, it will be time to reverse course. Good luck to all.

    Link to thread: http://www.tickerforum.org/cgi-ticker/akcs-www?post=102605
  • C.C. Rider
    In short, either this goes titsup toot sweet........Or asses and elbows, hmmmmmm
  • More charts!

    SPX daily :

    http://www.screencast.com/t/COhcjYzes

    Right now this is my primary count, we are topping the first leg of P2 with 5 waves from march lows. This should be wave A of P2, after topping we should retrace to the 820 area (50%) in a wave B.

    Wave 1 of A traveled from 666 to 820, this give us 154pts for wave 1.
    If wave 5=0.6x wave 1 than wave 5 will have 92pts, wave 4 bottomed at 869, plus 92pts equals 961, pretty much in line with the 957 i`ve placed in the last post.

    IMO 957-961 will place a intermediate top in the next days, 22/jul we will have a solar eclipse, so it seem to me at this time that 22/jul could be the top.
  • tgarfield
    I was long for the ride myself and went short friday around 3:30. I figured they needed to tak ethe market up for OPEX to kill the puts, like last time the opposite of the two times before.
  • charles_smith
    Arigato gozaimasu, Fujisan, and thank you Alpha and DavidDT for the analyses. I was long to Thursday then closed and bought puts at Friday EOD based on the reversal of put/calls which showed a complete flip of sentiment from bearish to overly bullish. Resistance at 940 is to be expected as is a gap fill at 912. Good luck to all and thanks for hosting the discussion, Mole.

    Hope this doesn't fire off the auto-delete mechanisms...
  • Awesome job Fujisan. I believe excellent technical analysis is the strongest tool of anyone attempting to count waves. And your H&S pattern has been very useful to me as I try to discern the nuances of this market. It's interesting the growing divergences in EW counts. Of all the counts that I've seen, you're pattern fits most closely with EWI's, who believe a pullback or B wave is forthcoming, before the final wave C push to the finish of the bear market rally.

    Kenny, who is known by most on this blog, sees us in a wave iv of 5 of C, that when it ends will lead to one final leg up in wave v of 5 before the market rolls over. Additionally, Kemal believes that wave iv has a final impulsive move down, before wave v begins. And, he believes we'll see an extended wave v that will be quite vertical.

    EWI on the other hand, just yesterday declared this upward move all but over, with little to no possible upside without a 1/3 to 2/3 retracement of this past move up. Daneric echoes EWI, but is more positive about a final small push up before his B retracement, to be followed by his C move up.

    I think all in all right now the best barometer might be the wave count on the $. Because we can only get daily charts on it, the UUP etf serves as the best surrogate. The dollar is in its final wave 5 down before it begins a multi-month rally, that should coincide with the market's sell-off. If it begins wave ii of 5 on monday, this corrective move could take several days to play out and as the dollar retraces upward, the market could follow your progression as it pulls back this week and then makes one final push up. Check out this chart that presents an overlay of the $ in black, SPX in red:

    http://www.screencast.com/users/alphahorn/folders/Jing/media/43565bba-3225-4f1b-8456-ae193bc94a50

    i think there are two things to watch on this chart. 1) as i mentioned is the wave count of the $, which I'll update daily on my blog (alphahorn.blogspot.com), and 2) is the megaphone topping pattern on the SPX. Just like the $, the SPX appears to be on its final leg before a potential top. I would expect this to be an abc pattern, a already in (the large white candle), next we should see b pullback, then c up to the top trendline where I have the red e (note the longer this move takes the higher the potential for the SPX). (Note: There is another megaphone pattern on the 60 min SPX chart that calls for a lower top).

    In conclusion, I believe we will see a pullback on monday, and maybe tuesday, that will be followed by a violent move up as the $ enters wave iii of 5. This last push up could take anywhere from 7-15 trading days, then I believe this market will rollover.

    I'm taking the family to Chicago for a few days for my daughter's birthday, so I won't be around much until Thursday, except early morning and late night. So best of luck to all! and thanks again Fujisan, you might have just nailed it once more.
  • Fujisan
    Thanks for your feed back, Alpha. Great post. I really like your USD/SPX chart and inverted correlations. I have been trading ES and EUR/USD side by side and it's amazing that they are behaving like twin brothers.
  • Peasant
    Fujisan - out of your 3 forecasts, I think the first two have the highest probabilities. With banks and techs earnings report being "better" than expected and a pending short squeeze this market should make new short-term highs rather easily.
  • Fujisan
    Thanks, Peasant, and I have not excluded the possibility of "one more spike up before it drops" scenaio.
  • EDC
    Great post and enjoy the different ideas from others...

    always good to consider the possibilities.
  • Alphahorn
    "Because we can only get daily charts on it, the UUP ..." - please explain "only daily" part if u get a chance
    ty
  • i use stockcharts that gives daily $USD no intraday, so for minute wave counts i use UUP, powershares bullish $ index
  • got it - no dxy intraday at http://www.freestockcharts.com/ as well :(
    why don't you open TOS papermoney - you'd have at least delayed, but complete intraday on tos/prophet?
  • thx
  • Keirsten
    Alpha- you might be able to use a delayed chart intraday from this link below to help you with your EW. You won't be able to see yesterday's action on there today, but see if it will work for you on Monday. Just dial over to the frequency choices and select your time frame.

    http://tinyurl.com/np5u42
  • thanks, i'll take a look
  • ropey
    Thanks again for the update fujisan. Interesting there is a definitely a split of opinion now in the camp, CC/Anna >1000 ? and Fujisan and a few others for a drop first before the climb or am i misreading?
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