Caveat Ursi

The bears have reached a new level of exasperation as their wet dream of a sharp reversal out of heavily overbought conditions have been systematically smashed one positive week after the next.

We have now completed eight consecutive up weeks on the NASDAQ-100 (NDX) which is living proof of the old aphorism that bear market rallies are more violent and intense than bull market rallies. Take note that we actually completed five of those eight weeks in overbought conditions, the result of which has been a massive short squeeze during which a majority of bears have capitulated and moved to the sidelines.

Perhaps some regular readers remember what I wrote back on March 8th – in my Sunday forecast right after the very bottom of Primary wave {1} when the SPX had reached 666.79:

Do we really care about those ‘galactic cycles’ when trading on a daily, weekly, or monthly basis? Yes we do – because in a few weeks the nature of the market will begin to change. Initial cautious bullishness will quickly lead to euphoria and calls declaring the bear market as done and dead. I doubt that Primary wave {2} will last 500 days – after all this is a consolidation wave as part of a larger degree motive wave (see graphic above or in the sidebar on your right). But at minimum it will be measured in months and the characteristics of our daily trading reality will shift back to a climate resembling 2007. The pundits and politicians will exploit a market recovery as a sign that ‘the stimulus plan is working’ and that we are on the road to recovery. Do not be seduced and plan your trades accordingly, no matter at which degree of the wave cycle. The old buy and hold paradigm will only serve you well if your investment window is measured in months or weeks – not in years.

It’s fair to say that I was not exaggerating the intensity of the counter rally that was about to occur. Of course it’s one thing to write or read about it and it’s quite another to actually trade a bear market rally on a day to day basis. Many of you look at the combined economic data in conjunction with what’s currently happening in the credit markets and are stunned to see equities melt higher and higher without a meaningful retracement.

But that is exactly what we should come to expect from the initial stages of a 2nd Primary in a Cycle c wave of a secular bear market – it is a counter response to the initial destructive Primary leg and as such it is fueled by a unhealthy combination of hope, government interference, blatant manipulation, and a fervent belief that the ‘worst is behind us’. Although financial markets have grown considerably and have become vastly more sophisticated and a lot more fast paced in the past 200 years, the very essence of human nature and associated herd behavior has remained a highly reliable constant, which in turn continues to give us important clues as to the stage of the unfolding bear market wave cycle.

However, although we are about two months in this Primary {2} consolidation wave now various market sentiment indicators tell me that we probably are only half way through – if we are lucky. As you know by now – when counting all possible corrective wave types in EWT there are 11 possible kinds consolidations, ranging from simple zigzags to triangles, flats, threes, and a combination of all those. At this point it remains extremely difficult to accurately predict which shape this consolidation will take and how long it will last. However by carefully monitoring market sentiment in combination with our wave count we should be able to hit the target close enough once we are nearing the peak.

At this very point it is doubtful that we have arrived at the outer extreme of this Primary degree consolidation as the average investor is still weary of this sudden snapback and as bullish sentiment is still roughly around the 60% mark. Although that is quite a step up from the 2% bulls/bears ratio at the bottom of Primary {1} I expect to see bullish sentiment to approach the 90 percentile before this retracement has peaked and the third leg of this c wave is ready to unfold.

We cannot be impatient and need to give this retracement sufficient time – again, Primary wave {1} took us 500 days – and although I don’t expect Primary {2} to take that long a mere 60 days would be very short by comparison. As a matter of fact, it is possible that this Primary wave might take us well into August or even September. In that context it is however important to remember that the finale of [2} might not constitute its price extreme (e.g. in the case of a triangle) and it’s possible that we go sideways for several weeks before a break to the downside occurs which we can label 1 of {3}.

If you look at the very first chart above you will notice that we actually touched and surpassed the 200-day moving average on the NDX, which I deem to be significant. Although the NDX is way ahead of the SPX in terms of price advance it is therefore reasonable to expect some kind of meaningful retracement in the weeks ahead. This bull market rally is getting a bit long in the tooth and in particular after Goldman Sucks’ SLP program terminated on April 30th, we might see a disturbance in the force rather sooner than later.

However, there is a reason why I titled this post ‘caveat ursi’ – as in ‘bears beware’! IF we manage to breach the current high of 888.70 in the SPX (there is something about those triple series numbers) tomorrow or on Tuesday then I’m fairly certain that we will be visiting the 900 level in a very short order. At this stage the bears have been severely injured and will be very slow to jump into short positions – thus we could easily melt higher and as this rally has fed on bad news it might take a healthy dose of good news to put an end to it – at least temporarily. So, whatever camp you are in right now (and I know many of you are in the bearish department) – do yourself a favor and play it small. The odds at this stage are not as clear as you might want to believe – and there is an emphasis again on the psychological aspect of this. The market can stay irrational a lot longer than you can remain solvent – and that holds true in particular for bear market rallies.

At this point I see three different flavors for the coming week – two of them are almost identical:

Soilent Orange: We completed Minor 2 of either Intermediate (X) or (B) and are now pushing higher – much higher. The psychological 900 line should only be a hurdle on the way to what eventually might get us towards 1000. If we breach 847 the jig is however up and we’re talking Soilent Green.

Soilent Blue: Almost identical to Soilent Orange, the only difference being that we are still completing Minor 2. Turning points are either the 38.2% (SPX 860) or 50% (SPX 850) fib lines.

Soilent Green: We completed Intermediate (A) of {2} and are now at the onset of Minor A of Intermediate (B). If we breach 847 we probably dip a bit below that and then spike back up into Minor B, just to shake out a few more bears. This might be actually the best spot to get positioned for a drop towards 800 or even lower.

The NYSE McClellan – a medium term market oscillator – has traced out an almost perfect triangle which actually depicts the recent Minor degree consolidation better than either the SPX or NDX cash averages. This is another reason why I caution the bears at this stage – we are only in slightly overbought territory here and there is plenty of potential for more upside.

This might be of interest to you P&F fans out there. The more long term NYSE Bullish Percent Index just switched to a Bull Confirmed status and we are definitely in overbought territory.

This is how it looks like to the rest of us mortals. Yes, we overbought but frankly – it’s very possible we ride this thing higher. If you have doubts about the potential of this happening take a look at the inverse spike down at the bottom of 3 of {1} in equities. This game goes both ways and it’s not impossible that we might see new extremes here for another week or two.

Gold has done more than its part to test our resolve and might do so for a few more days. If I am forced to cut my GLD puts then it will be due to theta burn as they are May options. So, if I announce that I cut those do not take this as a signal that I have switched my outlook on Gold to the bullish camp – nothing could be further from the truth and only a breach of 968 would accomplish that.

In conclusion I would like to point you rats once more toward the fifth installment of Fujisan’s series on option spread strategies – if you haven’t had a chance this weekend (i.e. you have a life) then please hop over and read it top to bottom. Not only is it a first class tutorial on how to play those notorious butterflies you always wanted to know about but never dared to ask – but even more so as it will become the basis for a little experiment I am planning for the next few weeks.

First I have granted Fujisan some coveted EvilSpeculator powers which means she will now be able to compile her posts directly without me as the meddling (and most recently fumbling) intermediary. Second – the plan is to actually guide a number of intrepid rats through the motions of trading a small number of spread strategies (calendars, butterflies, verticals, etc.) over the coming two weeks all through the end of OPEX. This will allow us all to go through the motions and observe the behavior (and hopefully the pay off) of various promising spread strategies in real time. The added advantage is that – if the market goes against us – that we will modify our spreads in an effort to either retain profits or at least break even.

Again, more details on this will probably come directly from our venerable Fujisan – but feel free to throw out symbols of potential victims we might sink our teeth in. The previous thread already yielded a few good candidates if I remember it correctly.

That’s all I have in me tonight – believe it or not – this forecast has taken me 5 hours to put together (while I was concurrently backtesting various trading strategies) and I need some rest. See you rats on the other side.

Cheers,

Mole

UPDATE 11:15pm EDT: I just updated the evil.rat page – so go take a look. Admittedly the new graphs are a bit inaccurate as this is not what we’ve been trading in the past 10 days. However, as indicated, I don’t plan on changing the system around every week now and this should remain as is going forward.

The new settings on evil.rat/ES will take effect tomorrow morning as the majority clearly favors 2.0 according to the poll.

UPDATE 12:20am EDT: A preliminary version of the new resident.evil page has been posted – please note that it’s a work in progress. In that regard you rats might also be happy to hear that I labored all weekend to finalize a prime candidate for resident.evil/NQ.  The results of both the ES and NQ versions have been posted to the resident.evil page.

Finally, I managed to implement the notification module into resident.evil which means that it will be available to evil.rat subscribers starting tomorrow morning :-) Please note that you will only receive resident.evil email alerts – no SMS alerts will be issued as they are expensive (you damn freeloaders!).

And before I go let me dangle one last carrot: Something really exciting has been in the works for Zero subscribers and a select few will be allowed to test it starting tomorrow :-)

UPDATE 1:00am EDT: I just realized that the resident.evil charts are slightly off – the shown statistics are about $1k too low – I will fix them sometimes tomorrow evening.

G’night!

This entry was posted on Sunday, May 3rd, 2009 at 7:17 pm. Both comments and pings are currently closed.



  • Anonymous

    Great work, as usual, Mole. Your Sunday afternoon posts help a lot in stepping back and seeing the big picture.

    Let me rekindle some old memories here.. have you completely dismissed the possibility of a running flat wave 4 on the SPX (an expanded flat on the Nasdaq COMP) ? You had it on your list, but it disappeared gradually. Could you explain ?

    Thanks,
    T-dub

  • http://www.slopeofhope.com Tim Knight

    First!!!!

    Oh, wait only idiots do that.

    Just like only idiots don't go long the /ES at 670 and stick with it.

    Ummm. I don't like the way this conversation is going.

  • StainlessSteelChicken

    I EFFING LOVE THIS BLOG! Thanks for the roadmap Mole!

    Just to add to your point about possibly seeing a “disturbance in the force sooner rather than later” — note how the Cubes are right at the intersection of 3 important trend lines. Something has to give way very soon, and it seems to me this will be a good clue as to which of your three paths is playing out.

    http://tinyurl.com/dldmhy

  • BigHouse(Aka Mr Vix)

    Good stuff Mole..

  • BalaB

    “Second – the plan is to actually guide a number of intrepid rats through the motions of trading a small number of spread strategies” – Now that's what I'm talking about! An excellent opportunity for many of us. Kick Ass

    I'm not gonna stick my proverbial tongue up your proverbial ass tonight with the usual compliments but instead say; I understand why you (being Mole) and Fuji don't trade WAVE 1. At first I was thinking, “we'll wouldn't you just wait for a meaningful pull-back in what appears to be an uptrend, take a bit of pain but eventually be ITM?”. But now, I can see how wrong that thinking was. Once again, you have taught me something important. Good Night.

  • wex

    Perhaps I can impose on someone to clue me in. The top candlestick chart has hollow white candles(or are they hollow black) as well as filled red and hollow red. Additionally, there are some filled black candles. My question is : what determines whether or not a candle is hollow or filled and do the rare filled black candles have any special significance? I've been unable to find a suitable explanation online. Thanks for any help.

  • Douala

    What could unfold in May by John Murphy of StockCharts.

    Pic 1 http://tinyurl.com/coczlx

    Pic 2 http://tinyurl.com/cwuael

    Pic 3 http://tinyurl.com/cf5fkk

    Pic 4 http://tinyurl.com/cmzrog

    [Anyone find this useful send me some love as mole would say so I know this is not posted in vain.]

  • LostIllini

    Mole so your telling me there's a chance it will go down?

    http://www.youtube.com/watch?v=KX5jNnDMfxA

    (move along, nothing to see here just me quietly protesting)

  • katzo7

    Funny.

  • Blankfiend

    Mole,
    Followed you here from ZeroHedge. Glad to have discovered what looks like a fantastic site!

  • Gary_L

    The black/filled candles signify that price closed lower than the open for whatever time period the candle measures. If that is a daily chart above, then the black candles signify down days. The hollow/white candles signify up days.

    I'll confess to being a tad color blind, but I don't see any red candles on the top chart

  • http://tradingsigns.blogspot.com/ T. Waffle

    Amazing work sir!

    Very nice charts and great information.

  • molecool

    Unfortunately I can't keep up with the volume of high quality postings Tyler is cranking out on a daily basis.

  • molecool

    Yeah, that would NEVER happen to me – ahem ;-)

  • katzo7

    There is a rumor going around that mole and katzo are one and the same because both exhibit an acerbic and wry sense of humor. I can categorically and unequivocatively deny this rumor. I am not him, I am me.

  • molecool

    Those are some dang good charts, SSC – love it. You rats should check it out.

  • fuzzygreysocks

    SPY MON & TUE Econ Events (& Predictions!) http://spysight.blogspot.com/2009/05/spy-mon-tu

  • fuzzygreysocks
  • katzo7

    This I think is a Fed meet.
    file:///C:/DOCUME~1/PRIMAR~1/LOCALS~1/Temp/ATT00141.jpg

  • annamall

    Great work Mole, I remember the exact day in March you made that incredible call. As my best girl from Heidelberg tells me “this is BS” but it could go on for some time

    I am very light in my book until we see what happens next!

  • katzo7
  • katzo7
  • wex

    Thanks

  • annamall

    And the darn futures are still up! BTW I love the article (it seems since everyone is looking for a pullback it won't happen for a while) :-)

  • http://tradingsigns.blogspot.com/ T. Waffle

    Same here I am just holding 1 contract of ES short from 875

  • katzo7

    And if anyone knows Boston, this is prime territory.
    http://globaleconomicanalysis.blogspot.com/

  • anotherone

    5 hours! Thanks, Mole.

  • katzo7

    Forwarded to me from Blind Squirrel, Hope posting this is ok BS.
    http://seekingalpha.com/article/134482-why-this
    SOME POIGNANT EXCERPTS:
    SOME HEAVILY SHORTED QUANT STOCKS “showed massive rallies since March lows, leading the market and far outpacing stronger, more fundamentally-strong stocks, even ones with high beta. Even Crocs (CROX) enjoyed a 50DMA breakout. This is highly indicative of a “short squeeze” bear bounce, rather than a sustainable bottoming rally, which is characterized by new market leaders and sectors showing relative strength”
    “So where is the breaking point? A look into the why instead of how of this rally can offer some insight. This whole rally is essentially a scam to pass off asset depreciation in struggling financials to the taxpayer.” THIS MAKES PERFECT SENSE!
    “So who loses in this rally? The taxpayer of course.”

    “Quants, who make market-neutral high-frequency scalp trades on leverage to produce returns, were caught short in a strong rally.” FROM THE 666 BOTTOM.

  • Blind_Squirrel

    Heidelberg Castle Beautiful, especially at night. Lights off
    for the night now. Rihgt along the Neckar River, historic bridge

    http://www.heidelberg-marketing.de/content/e566

  • katzo7

    You are going to get mole all hot and bothered. He will be homesick.

  • mikevadon

    I posted some new charts. Thank you for your patience this weekend. Im still experimenting with different software to improve the appearance of the blog.

    http://www.mikevadon.blogspot.com

  • thunda72

    UN-BELIEVE-ABLE….. Hang Seng futures are currently up over 4% right now.

  • Blind_Squirrel

    Yeah, he missed the riots in Berlin on Friday. 268 police injured, and the
    way they
    prepare for riots, that's saying something!! I saw a University protest in
    Frankfurt, and the
    Polizei had APC's and were outfitted like they were in Iraq.

    Here's a fresh shot of Franfurt.

    http://www.helifliegen.de/Skycam/SkylineMega.php

  • jacksoo

    yeah but the rioters get to practice at football matches each weekend…

  • guitarlover

    Fujisan did a beautiful job with her butterfly presentation.
    I do think it’s a good idea to have reasonable expectations with these positions. It’s good to mention that the max profit we talk about with these trades is not going to happen, probably ever. If you hit 50% or so of the max gain, you should feel like it’s been a very successful trade. As has been mentioned, the positions gain value quicker the closer they are to expiration of the options contract, if you are within the breakevens. If you are a few days out and you’re “in the pocket” (close to the center strike), you should take profit at that point and close out the position. There is a high probability that your position will slide out of your profit range if you wait — the value will very quickly drop at that point if there is movement, which there usually is. The position will be very sensitive those last 3-5 days.
    If you are outside of the breakevens and in the week of expiration, you will want to hold it , even until the end to see if the price may move inside the breakevens to your profit zone.
    Maybe Fujisan can finetune what I’m saying on this.

  • StainlessSteelChicken

    No worries, all that will be in LA soon enough.

  • asetrader

    Mole, have you looked at Bullish Percent Financials? It's on a sell signal but this time could always be different.

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

  • Blind_Squirrel

    I'm showing Hang Seng cash up 2.18%

  • StainlessSteelChicken

    There was a good discussion about CMTL in the previous thread (many thanks to guitarlover for pointing out this p.o.s.)– http://evilspeculator.com/?p=6802#comment-8945986

    The bearish case for CMTL is already obvious, but I thought I'd add my $.02 if for no other reason than to show how useful fib fans can be when you pick less obvious anchor points — i.e. don't always choose all-time low to all-time high; choose the ones that make the fan best fit the price action. When you get a convergence like this, it's a super easy set up with a clear exit point.

    http://tinyurl.com/cz4jx2

    I will try to get short on this thing tomorrow unless the broader market shoots to the moon.

  • molecool

    Yeah, unfortunately the new generation of yanks are mostly a bunch of pussies. I remember partaking in some of those 'demos' myself back in the 1980s. It's pretty simple guys – you ALWAYS want to make sure that your government fears its citizens. If not, then you get what we're seeing in the past 50 years in the U.S. as labor rights have been eviscerated. I was glancing at MSNBC at the gym the other day and one of the commentators called labor rights a 'controversial topic' which Congress does not want to touch – LOL :-)

    Hey, every population gets the government it deserves – enough said.

  • molecool

    I fucking hope so – I'll be first in line.

  • molecool

    You know – the financial sector has been lagging this thing lately but we kept watching the cash averages push higher. Then there's also been a healthy amount of sector rotation as of late. Be careful to not see what you WANT to see – give both sides sufficient respect. This is not where we pick a side – we should be like fucking Switzerland – neutral (and a bit corrupt).

  • thunda72

    Yeah… they've backed up a touch, but now Singapore futures are up 3.93%. It's gonna be a long week me thinks…

  • http://gemstowear.etsy.com Jan

    Thanks for the fantastic analysis, Mole!

    Forget the orange, forget the blue. You must tell everyone the truth!

    http://www.youtube.com/watch?v=8Sp-VFBbjpE

  • ZigZag

    Thanks Stainless…Four seconds, MacCubeser!! LOL!

  • Fubar1951

    Great post Mole. You, undoubtly, have the most useful trading information of any site I visit.
    Also, many thanks to Fujisan. Your posts have been very concise and useful.

  • fuzzygreysocks
  • Anonymous
  • Anonymous
  • molecool

    UPDATE 11:15pm EDT: I just updated the evil.rat page – so go take a look. Admittedly the new graphs are a bit inaccurate as this is not what we've been trading in the past 10 days. However, as indicated, I don't plan on changing the system around every week now and this should remain as is going forward.

  • MrTrader

    What does ursi mean – ive googled it but cannot determine the subliminal message in the title – which are usually hillariously delightful

  • http://spnakr007.blogspot.com/ Steve

    Got this from ZH,

    “U.S. Gold to U.S. Government Liabilities: Finally, the GAO (Government Accountability Office) calculates an income statement and balance sheet for the U.S. government. As you’d suspect, it is dominated by future liabilities for Medicare and Social Security. What if they had to be backed by the supply of gold? Official U.S. government liabilities now ring in at an incredible $55.2 trillion. To make good on that would require a $192,401 gold price.”

    We are in a deep hole, assuming the calculation is correct. We need to dig deeper into the ground and in hope find more gold nuggets..

  • asetrader

    I updated the chart to show $SPX performance and green vertical lines show what happens when $SPX makes a new high and XLF doesn't confirm. Like I said this time could be different and I am in no way disagreeing with your analysis. If we break higher it is extremely bullish.

    http://www.screencast.com/t/2AmxzI7P

  • jacksoo

    The American news media has successfully painted every dissenting voice in the country anti American, unpatriotic – until people cast this nonsense aside they will remain confused. Questioning Presidents, questioning Gov, questioning everything is a citizens right, in fact responsibility unless you become subservient to a system controlled by a few.

  • ropey

    Yep liking those charts, very puzzled about the close ~3 mins towards the end on friday, cubes went from the low to almost the high on a large vol spike….what was that all about?

  • callie

    Let's hope they're only playing catch-up, having been closed on friday. Very low volume on the es too, with Japan closed (mon-wed).

  • ropey

    Mole another chart to use in conjunction with the ones you use above is the $SPXA50R ( from stock charts ) – it's % of stocks above their 50ma, it's rammed practically into the roof, it'll be interesting to see how long they prop this for..

  • Blankfiend

    It's not the size that matters, it's how you use it! Looks to me like your site is pretty great.

  • callie

    Many thanks to Mole and Fujisan for their great work.

  • standard_and_poor

    IMHO 70% chance rally is for most part over and wave 5 of A won't subdivide further.
    I'm looking at 885.01 in SPX, 10.99 to 11.05 in XLF and 1732 as possible highs to be reached in Monday morning to early noon. I'm using 889.00 SPX as a stop to exit all
    shorts.

    It is too late to go long unless you're a swing or day trader, risk is high otherwise. I don't plan to add to shorts either unless uptrend line in chart is breached.

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

  • standard_and_poor

    Thanks.

  • standard_and_poor

    Thanks.

  • mikevadon

    Just updated the site.

    http://www.mikevadon.blogspot.com

  • bostonwealth

    1.Re: Bank stress test. Ok here do your own due diligence. All regulated financial institutions are required to file quarterly financial information
    2.For banks this report is formally known as the Report of Condition and Income but is generally referred to as the Call Report
    3.So to find info about call report go here https://cdr.ffiec.gov/public/Default.aspx
    4.So instead of waiting for stress test results and to be ahead of everyone else by Friday, do this
    5.Make a list of the 19 banks, research latest report thru “Call report”
    6.Rank the banks on a key ratio: (capital+reserves-nonperforming assets) / total assets.
    7.This is tangible capital ratio after taking account reserves and writing off all nonperforming assets (past due 90+ day, nonaccrual & OREO).
    8.Or total equity plus loan loss reserves minus nonperforming assets (past due 90+ days, nonaccrual and OREO) all divided by total asset
    9.Here let me sum it up like this. Somone already ran the scenario thru. C came in at 6% & we know they need 10 billion. So let’s compare
    10.There are 882 banks worse off than Citi, of which 137 have negative ratios and are, for all practical purposes, book-value insolvent.
    11.What does that say about these other 882 banks? Oh sorry I forgot. How could I be so stupid. Of course! Bull market back! Banks safe!

    http://www.bostonwealth.net

  • Douala

    Just something to keep in the back of your mind [assuming you know of Dr McHugh's $NYMO calls] from his weekend report:

    “There was another small change in the McClellan Oscillator Friday, suggesting we could see a large price move either Monday or Tuesday. “

  • GMunni
  • annamall

    I have also been there and yes, it just breath taking! :-)

  • yazzer

    great charts again, mole!

  • callie

    “The number of short-sales of financial shares is climbing rapidly as the release of the stress test moves closer (7th of May). The market is positioning itself to more preferred-to-common conversion.” A quote from my broker.

  • Earl of Subway

    Forbidden Access

    You are not allowed to access this site.

  • Paleface

    Full red: Down day closed below the previous close
    Full black: Down day closed above the previous close
    White in black: Up day closed above the previous close
    White in red: Up day closed below the previous close

  • http://www.genxantihero.blogspot.com LostIllini

    I was being sarcastic, I’m short and taking it up the cooter right now…. I will laugh my ass off if the gap fills today.

    (still protesting…..the man is keeping me down)

  • GMunni

    The article can be accessed through marketwatch.com entitled “N.Y. Fed head's GS ties raise questions”.

    Here's a related video but not as good as the article in full. http://tinyurl.com/cputye

  • http://spnakr007.blogspot.com/ Steve

    mole, just a minor question regarding your market trend, why the Long Term keeps changing?

  • BalaB

    Nice Asetrader.

  • BigHouse(Aka Mr Vix)

    Getting very long in XLF. I feel a breakout coming soon…

  • GDII

    not totally agree with what he says, but i definitely want to show my love to you. :)
    tkx a lot

  • Blind_Squirrel

    Added to ES short 884.75

  • newbear

    Haven't seen these readings in the Zero in a while, comments?

  • http://spnakr007.blogspot.com/ Steve

    Evade what is strong, attack what is weak.

    on sideline for now.

  • annamall

    Morning everyone!
    I added to my NQ 1410. Good luck trading today. Wow is this market on a tear or what. (sickening ride) :-)
    I also see on a daily chart, H&S and we may get a small correction, but then up up and away if it breaks the neckline.

  • mikevadon

    Looks like we are grinding upwards…

    http://www.mikevadon.blogspot.com

  • BigHouse(Aka Mr Vix)

    Thanks sun tzu

  • salvadorveiga

    900 pts coming ? :D

  • Squidman

    Me too–wohoo!

  • Squidman

    Me too–wohoo!

  • Douala

    looks like this is the large price move that Dr McHugh taked about in his weekend newsletter.

    my earlier post on this http://evilspeculator.com/?p=6821&success#comme

  • Autopsias

    Houston we have a lift off…

    I don't care, I'm a soldier now, I just follow orders… From the German syzzztemzzzz

  • katzo7

    This sucks big time. I am seeing BB breakouts on the 10 and 60 min. It is also right at an important trend line now.

  • http://tradingsigns.blogspot.com/ T. Waffle

    900 coming soon.

    Short ES @ 900 limit order set

  • LostIllini

    On the plus side 900 should offer pretty decent resistance before it goes to 2000.

  • standard_and_poor

    All shorts closed at 889 SPX.

  • Blind_Squirrel

    Added to Short ES and NQ @ 892.00 and 1415.75

  • annamall

    That's when I will load up on longs. :-)

  • lester

    you mean 1000 dont you?

  • faafa

    Art Cashin's Comments 5/4/09:

    The Week Ahead – Based upon published data, the watercooler wizards are
    guessing that this week’s calendar may look something like this:
    Monday: Tokyo Closed
    London Closed
    (10:00) Construction Spending -1.8%
    Pending Home Sales N.A.
    Tuesday: Tokyo Closed
    South Korea & Thailand Closed
    Australia CB Opines
    Chain Store Surveys
    (10:00) ISM Service Index 41.5
    Bernanke Speaks
    (11:30) One Year Treasury Auction
    (1:00) Three Year Treasury Auction
    (5:00) ABC/Washington Post Confidence Index
    (7:30) San Francisco Fed’s Yellen
    Wednesday: Tokyo closed
    Norway’s CB Opines
    FDIC’s Bair
    President Meets Pakistan & Afghan Leaders
    (1:00) Ten Year Treasury Auction
    (7:00) Mortgage Data
    (8:15) ADP Payroll Est.
    (10:35) Crude Inventories N.A.
    Thursday: ECB Opines
    BOE Opines
    Fed Stress Tests Results
    (8:30) Initial Claims +14K
    Non-Farm Productivity 0.0%
    Unit Labor Costs 3.2%
    (10:35) Natural Gas Invent. N.A.
    (1:00) Thirty Year Treasury Auction
    (3:00) Consumer Credit -$5.4B
    (4:30) All The M’s
    Friday: (8:30) Non-Farm Payrolls -635K
    Unemployment Rate 8.9%
    Average Work Week 33.2 hrs.
    Hourly Wages 0.2%

    Cocktail Napkin Charting – As noted above, the bulls finally managed to close the S&P above 875. If the bulls want to
    build on that, their next challenge should be the area around 888/893 which had contained them in recent breakout
    attempts. Should they be able to punch through there, the ultimate challenge may be the early January high which was around 950.
    In the near-term, traders will look to resistance at that 888/893 level. The support on the napkins looks like 857/862 with a
    default to 846/851. Another thing traders will note is that on May 7th, the rally will have been two months old (bottom
    March 6). That’s a folkloric cycle span.
    Away from the napkins, Mark Hulbert researched “bullish levels” in the early stages of bull market bounces from the
    “bottom.” He used 52 days as the timing marker. He chose four measures of sentiment. Two were in line with levels at
    bull turns. The other two showed this has move prompted far more bullishness. That suggests the caution light is still on.
    Don’t Bank On It – In his comments this morning, the sharp-eyed T.J. Marta points to the failure of Silverton Bank over
    the weekend. Here's what he wrote:

    Silverton Bank Fails – Yet Another Black Swan? Federal Regulators shut down Atlanta-based Silverton Bank this past weekend. With $4.1bn in assets, Silverton was the 5th largest bank to have been closed by regulators since 2008. More important than its sheer size, however, is the bank's place in the financial system. Rather than being a retail bank, which would have put it on the outer fringes of the financial system network, Silverton represented a “correspondence bank”, or a bankers bank. Its clients included roughly 1,500 other banks, or 1/5 of the US banks. Consequently, its failure will reverberate throughout the US banking system and economy. Some who argued against letting Silverton fail warned that its collapse could take down 8 to 12 other banks. Regulators downplayed the potential impact of Silverton's failure on the system, although these are the same regulators who failed to adequately assess the risk to the system from either sub-prime mortgage derivatives or the collapse of Lehman Brothers. The failure of Silverton has much smaller immediate market ramifications than did the demise of Lehman Brothers, which caused capital markets to lock up. However, the impact will certainly be a negative one for financial intermediation to the “real” economy going forward.

    We'll be watching for fallout.

  • lester

    I assume you are still short? based on your sucks comment….I am short also …

  • BalaB

    Strange Morning….Looks like its opposite day.
    Usually its the NQs leading the charge but instead the ES took the bull by its horns.

    Anyhow, grabbed 9.75pts per ES contract and I'm done.
    Besides, we have a good amount of participation which can potentially mean a re-invigoration of Retracement Levels..If so, I don't want to be long much further

  • Matador11235

    lol. Germans have the best syzzztemzzzz. Staying nimble here, long a little /nq

  • newbear

    I assume the ladies here were on a shopping spree this past weekend for some more Coach bags?

  • http://www.aggressivelyuninformed.com nepharis

    Glad to see resident.evil is live now… I'll be trading it over evil.rat, as my drawdown tolerance is quite low (though that said, evil.rat is ahead this morning -_-).

  • newbear

    Got blown out of all my shorts. Geez

  • LostIllini

    Probably a good short but way the 892 entry point and not 899?

  • katzo7

    Yup.

  • Douala

    $Comp getting close to the 200MA of 1753. This could be the line in the sand for this rally since it has been led by the Nasd.

  • standard_and_poor

    Time to day trade ES, waiting for short set up.

  • Fujisan

    This market is so predictable……

  • molecool

    Somebody learned something it seems :-)

  • mrclam

    did you girls buy enough coach bags to drag up the entire stock market?!?!

  • BalaB

    btw, since March 9th, when we have opening rips that continually crash through the upper boundaries of the BBands, all but 1 time did the trend not continue until 10:00 to 10:30'ish….fwiw

    *This is in reference to the ES and NQs only

  • salvadorveiga

    working like a charm today :)

  • Squidman

    Ah shit. I forgot to record the Art of War show that ran Sunday.

  • maya

    are you going short now? thanks

  • BigHouse(Aka Mr Vix)

    If XLF breakout dont short it.Go with the flow. I feel XLF is going to catch up to the general market. Its been lagging it for a while now….

  • rhae

    SPY today's R-3 (pivot) 89.96 this can very depending on which formula used… but R-3 extreme

  • BigHouse(Aka Mr Vix)

    I'm glad i covered my short in COH on Friday..That fucker is at 25.66 now…

  • BigHouse(Aka Mr Vix)

    They will have it on again.It was a good show..

  • Squidman

    I think I'll wait till tomorrow to consider butterflys, but, watching.

  • Squidman

    Thanks Big, I'll track it down.

  • mrclam

    i bought 1 put back when it was at 21. I think its worth .025 now, letting it ride!

  • annamall

    glad you did too! :-)

  • annamall

    :-)

  • rhae

    SPY 10 does look toppy… the Pivot Points do no change thru out timeframes for the day…

    miracles are always possible in this market…

    http://screencast.com/t/VwhcxTyx

  • standard_and_poor

    All plans must include reasonable exits.

  • mrclam

    whats your outlook on wynn now? it went up 11% to 43 or so….does that make our butterfly cheaper to enter?

  • Fubar1951

    I did some research this weekend. Re: the ES and YM, Found if you take the trade in the direction of the first break of the .8 BB, with a big candle, on a 5 min chart, as close to the opening as possible, it was successful 16 of 20 times. I have not had the opportunity to go back further than 20 days yet.
    FWIW

  • newbear

    I feel sorry for the xtrends clan, they seem to take stops very lightly.

  • EDC

    great point… buy on pull back is probably the best idea… (can't believe I just typed that)

  • Osso

    got that same info…. 89.967…..R3

  • annamall

    I would still put it on, but need to reevaluate the strikes @ this point. I will let you know. It's up over 300% in 6 weeks (come on??)

  • annamall

    A 1 in a gazillion lotto ticket. :-)

  • lester

    Is SPY just resting here or is this the chance I have been waiting for to go short (actually add to the shorts that are fucking me)? It is down 0.1 while I type this….

  • http://spnakr007.blogspot.com/ Steve

    I watched a little bit of the special, need to finish it.

    Missed the alerts…great call..

  • CandleStickEmUpper

    my order is in for May 33 Puts at .26

  • annamall

    I am trying to fill a May put BWB 41/36/33 debit of .95 max reward @ opx is 4.05 Its losing some momentum now.

  • mrclam

    k, following you in, thanks :)

  • Fujisan

    Good idea.

  • Blind_Squirrel

    One trading desk is pushing this mkt.!!!!

  • mrclam

    I would think you should sit on your hands, but that's just me.

  • lester

    what do these pivot numbers mean that you showed in the graph. Does that mean go long if 89.96 is broker or go short if turned back at 98.96?

  • TomOfTheNorth

    hey LostIllini -

    we really need to stick-it to The Man……

  • Fujisan

    No, I'm still watching. We don't need to capture the exact top.

  • annamall

    Goldman SUCK! LOL

  • annamall

    Good thought Clamman ;-)

  • salvadorveiga

    wave 5 on the way on intraday charts… we may have a little correction or a inversion – I don't know where does this motive wave fits in the higher degree… looks like we could go up to 898

  • molecool

    MOVING ON!

  • katzo7

    Must be the top, boy do I feel like capitulating now.

  • rhae

    It just means market is very strong and extended, so watch it closely… nobody knows for sure… I am watching momentum … it needs to slow, and reverse… just like a basketball, how high will it bounce… seems to be very full of hot air… however, I get fooled all the time.

    Remeber that old song ” Only Fools Rush in”… I suppose it depends on your trading timeframe… sure scalpers are having a grand time…

  • Blind_Squirrel

    Equity p/c very low last 1/2 hour

  • http://www.aggressivelyuninformed.com nepharis

    Hey folks,

    Just throwing this out there, as an alternative to the butterfly lottery play that Fujisan suggested. This is a condor, and is slightly more complex in that it has four legs instead of three, but it's basically the same principle. You get a lower maximum risk/reward, but a wide range of prices which result in actually pulling down the maximum reward.

    Here it is: http://screencast.com/t/zqFAuKhXFEi

  • Fujisan

    Thanks, Neparis. I like this position with higher probability. Good risk/reward.

  • lester

    Won't get fooled again…

  • wex

    Thanks for your help

  • lester

    Won't get fooled again…

  • wex

    Thanks for your help

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