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Chartalanche!
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Chartalanche!

by The MoleJanuary 25, 2010

I’m very pressed for time tonight, so I won’t be able to offer much of an intro and a review of last week. So, you’ll be getting charts only with a few brief comments describing the gist of where I believe we stand. Let’s get started:

Every once in a while I let this chart out of its cage – it’s my intrepid weekly stochastics on the SPX. I’ve said it before and I’ll say it again – for such a simple and widely available indicator it’s been quite accurate in the past. Except for the past six months that is – we had several breaches of the 75 mark – all of which turned out to be fake outs. Will this time be different? Very hard to tell unless we finally punch through the 50% mark – it’s long overdue for sure.

Always remember – it ain’t over until the fat lady has sung. And she ain’t yodeling just yet.

She might be taking a deep breath however. Here again a very simple chart showing the entirety of the Nasdaq’s fall from grace (i.e. Primary 1), followed by the snapback from hell (i.e. Primary 2). A few nice tidbits need to be observed: First we have a time ratio of about 63% when counting the days in the drop (495) against the days in the rally back up (512). Secondly we have a retracement of about 65% – very close to a Fibonnaci 61.8%. Third we of course have a strongly defended diagonal trend line which kicked the bucket last week. Two and three both were taken out on the same day – I love it when things line up and my charting universe is all tuned and in sync.

For the record – I would be surprised to not see this trendline being revisited – if for nothing else but a last kiss goodbye. Again, I don’t think it’ll be that easy for the bears, but it’s really tough to make predictions right now. Even I was surprised by last week’s merciless drop – but if I listen to my own advice I really should not have been.

So, what exactly happened last week? We all were waiting for the obligatory dip buyers to swarm in and have their ways with us naive bears. Didn’t happen – we all gasped incrediously as we kept dropping – equities across the entire spectrum simply couldn’t catch a bid. Did GS and the quant boyz suddenly lose their appetite?

What happened was long overdue and a trademark of a very narrowly traded and one sided market. ZeroHedge posted an excellent article on the subject over the weekend and here’s a little quote I think you’ll appreciate:

A source of the extreme damage Wednesday and the following day was the absence of some high-frequency statistical arbitrage traders, firms that use high-powered computers to trade rapidly in and out of stocks and can act as liquidity providers for the market.

As investors tried to unload their positions, the high-frequency funds weren’t there to buy them—they were selling, too. The result was a black hole of no liquidity whatsoever. Prices collapsed. By the end of the day on Wednesday, PDT had lost nearly $300 million—just that day. PDT, it seemed, was going up in smoke. Other funds were seeing even bigger losses. Goldman’s Global Alpha was down nearly 16% for the month, a loss of about $1.5 billion. AQR had lost about $500 million that Wednesday alone, its biggest one-day loss ever. It was the fastest money meltdown Mr. Asness had ever seen. He was well aware that if it continued for much longer, AQR would be roadkill.

Personally, I think this was only the tip of the iceberg. Wait until the ‘real’ selling starts – when panic sets and everyone is running for the hills, desperately waiting for a tiny upswing to leg out of positions – which of course refuses to emerge. In a few months from now we will most likely see congressional hearings on the Fed’s SLP program as well as the HFT shops which seem to be happy to join the fray once the big selling starts. Naive congress members believe that the cats running this market have upside loyalty and will defend this market. But the naked truth is that the Fed’s IV drip will end this March, which means it’ll be a lot harder to offload your crappy worthless assets onto us tax payers and borrow at zero interest, thus driving equities higher. Nobody will want to be the last man standing once the music stops – which is why equities will deflate faster than my last souffle once important trend lines and moving averages are being breached.

The only (and important) difference this time around is that there are very few bears left with skin in the market. Oh, you think that’s a good thing for the bulltards? Think again – short sellers actually serve an important function a they provide a floor when buying back their positions in order to take profits and get repositioned again. This time around there are very few bears left and the one’s crazy enough to be short right now have a long term plan. Just go and check out the Dec 2010 SPY put option chain – interesting volume in there – especially far OTM.

There are also again calls to make it more difficult for short sellers – I think some variation of the uptick rule. I say – let them! The bulltards are about to learn a brutal lesson on the effects of ‘unintended consequences’ when meddling with the stock market’s basic underlying functions. Let it blow up in their faces – I’ll be watching the ensuing train wreck with an extra dose of Schadenfreude 😉

The title of my post – chartalanche! Get used to it – this is only the first leg down (if I have it right that is). Short term I am only counting seven waves down – we need to see nine in order to satisfy a motive wave according to EWT rules. If we turn after seven it could be counted as a corrective and that would indicate that there is a chance the bears are getting burned again. But then gain – wave counting is often subjective and this one was very rapid. So, I won’t jump to conclusions.

Otherwise everything you need to know short term is painted on the chart. Keep in mind the bounce zone which we are approaching. If you are short term delta negative, don’t get greedy and take profits at 1077 at the latest. The bulls will push back and I have highlighted a few possible scenarios.

This is the reason I added a truck load of short positions early last week – right at the very top I might add (heheheheee). First the CPCE (and the 10-day MA) kept dropping despite the fact we kept knocking on heaven’s doors three times. And then we were very close to the 0.53 mark I have had my eyes on.

Inversely it’s soon time to think about a long reversal – keep an eye out for the 0.63 mark which is now at the upper border of this 10-day MA channel.

I’m sure some of you old timers here remember this chart – and it’s worth showing again as we are now entering typical bounce territory. If we actually finish at 0.06 tomorrow then a snapback is very likely scheduled for a day or two later.

Similar picture on the NYMO – again, a few nice tidbits painted right on the chart. The 19/39-day MA crossover is actually considered a traditional long term bearish signal – which again adds validity to P3 being in the works. Of course there are never any guarantees – especially in a narrowly traded market like the one we have experienced in the last few months.

I’m not sure when we’ll get to 1,050 on the SPX, but when we do I’d look out for a bounce as well – even if it’s only for a few days. Many of the pros love their PnFs and you can bet that this level is near where a lot of stops would be triggered. 1,050 might be defended harder than 1000 actually – well, we shall see…

Last but not least – Mr. VIX in all it’s glory. I already posted this on Friday night but it needs to be shown again for posterity’s sake. Never seen a rip like it – it’s a beauty. Behold the power of the bears 😉 And yes – another reason to expect a counter push here – Rome wasn’t build in one day.

And that’s all I got for tonight –  sorry I couldn’t offer more this weekend but I’m leaving for S.F. on Monday night and I still have a lot of chores left on my plate before I skip town.

Gmak – if you see this – please don’t put up a post tomorrow morning until after 10:30am EST – it’s already 11:00pm as I’m typing this and most of my stainless steel rats won’t be seeing this until early in the morning.

Cheers!

Mole


About The Author
The Mole
Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.
  • Scoops

    Thanks for the great update Mole. Nice work.

  • BigHouse(Aka Mr Vix)

    good stuff Mole. Got my t shirt…I have Dec puts ..I Roll out of those into march 2011 when i see five waves down on a daily chart. I will be smart until the big wave 3 or the 3 happens when i load up. :)

  • Gerbil_gold

    Well done.
    The smart rats check Sunday night, always.
    I'm not a rat, and I'm not stainless steel – but then again, I'm no pussy.

  • http://www.portfoliotilt.com PortfolioTilt

    Nice update, I was also waiting for buying support but it was no where to be found. Volume was extremely heavy, and most indices sliced through their 10 week EMA's http://bit.ly/63NdY7

  • vision_invisible

    Thanks for the update. I'm trying to create your first chart on the free stockcharts and I need to use the SPX weekly, with a simple 88 moving average…to do that …but you've labelled that as the 200 day moving average? I must be missing something?

  • rosocecasita

    Glorious! Thank you mole!

  • http://evilspeculator.com molecool

    Because it's a weekly chart 😉 If you multiply 88 weeks by 5 trading days you get 200.

  • http://evilspeculator.com molecool

    Yes, A/D ratios of the past three days did not indicate a reversal. I actually jumped the gun a bit too early on my Feb calls – should have looked at that.

  • http://trading-to-win.blogspot.com/ DavidDT

    SPX have 1047 as first target
    http://screencast.com/t/ZDQ5ZGU5Yz
    and 970 as final target for this leg down (62% of 3 on daily, plus multiple TDSTs)

  • http://trading-to-win.blogspot.com/ DavidDT

    The tape tells the truth, but often there is a lie buried in the human interpretation
    Jesse Livermore

  • jacksoo

    anticipating a bounce from the open though David?

  • PRSGuitars

    Just got back to my station — EUR retesting 133 of 133 from underside.

    http://screencast.com/t/YTc0Njg4Y

    This looks like a VERY classic rising wedge to me. Will likely break lower (just my feelings) — the retest of 133 + wedge + RSI signal looking like we melt lower into tomorrow for a fifth wave (this rising wedge looks like a 4 to me but I am no EW'er … so I may be suggesting something that violates rules …).

    Just an alert so you EUR traders can get short for an overnight trade — stops probably above 1.42 or 1.425 if you're scaling, can handle a stop that size, or are trading small enough size…

  • spudthorpe

    Um, don't you get 440? :)

  • boycottnow

    thanks mole …i appreciate

  • http://evilspeculator.com molecool

    Duh – what was I smoking – let me check with you guys tomorrow 😉

  • PRSGuitars

    DX also bounced off of last week's cumulative VWAP (like, last period's 'weekly' vwap 1/18-1/22, as though you continued it horizontally so as to assume no volume change, into this week's data since it's just Sunday night we're tracking at the moment).

    Classic bull flag/falling wedge/etc. DX likely testing 78.488 pivot again within a few hours (5-6 am EST?)…

  • bobthehorse

    Now 90% long as at the close Friday. We'll see what happens.

  • tradejane

    Good luck. I've some longs too. 200 MA, couldn't resist. Might actually make a profit if the uptick in techs holds. 😛

  • gagelle

    Mole, really informative analysis. Sorry I was away for so long. I can see what I was missing.

  • bobthehorse

    Have spoken to a few brokers this morning. There was a huge amount of de-risking done by prop desks on Friday. Mainly VAR-driven. I.e, as the Vix rallies, the risk-adjusted position size limits decrease and banks are forced to trim their holdings. Stupid system as it forces you to sell on lows but that's what it is.

  • tradejane

    DAX currently down -0.60%, trading above weekly support area of 5640. Pivot is seen at 5691.

    TecDAX is being aggressively bought and could be in the green soon. Deutsche Bank up almost 1%.

  • honeyeater

    The consistency you seek is in your mind, not in the markets.

  • rikardo_kurvio

    ok i just closed most of longs from friday's close (ES).
    will reload if i see some strength above this channel

    http://www.screencast.com/t/OWM2NjgxNGU

  • sloth_bear

    Thanks mole!
    So good to start the week with this summary!

  • I_got_Prechterized

    LOL- look at those futures. glad I covered 75% of my shorts Friday. I'll be looking to fade this gap up.

  • CorporalCarrot

    Morning chaps. Been really busy the last few days so my posts have been sporadic, although with a similar theme. I was concerned that, if P3 ever did get started, people trying to trade bounces and capture every swing of the move would get burned. Because like the recent move in the dollar, a lot of technical analysis goes out the window as regards predictive value. I saw this with the dollars move from 1.51. All the way down, so many people were closing EURUSD shorts because they expected some pivot point to mean something, or they were expecting a certain degree EW or a key moving average or trendline to have some meaning. Lots of people missed out on huge portions of a move they correctly predicted, because they had been conditioned (burned) to expect the trend to continue forever, and the “inevitable” bounce.
    Thus I have observed with this move the last few days. I have perused tons of sites at the weekend. Lots of people who were bearish for months, covered after a couple of hundred points of a drop because they expected this was an ABC or a (i) of {ii} in X of y of C or something like that.
    And while sentiment still overwhelmingly remains relatively unworried about this, I am starting to see the first signs of regret in people who have covered too early and bulls who held on too long. I thought it was striking that Daneric said, “The market hasn't given anyone an obvious good short entry “. Now Daneric is actually one of the few bloggers who went out there on a limb before this happened and predicted that this was IT, so to say something like that is quite meaningful and representative of how a lot of people felt about this market. (no criticism intended, I love his site, and read it every day). Lots of sites are littered now with posts like, “I covered at 10,300, should I get back in here or do you think we will get a bounce back”.
    In fact, the market did give a great short entry. 10,700/1,150. As I posted on my previous momentum charts, there was clear demonstrable evidence that this market was seriously waning in momentum, and yet everyone was afraid to short.
    So what to do now? I personally think we are in no mans land here. Its not worth taking a position either way. That danger zone where frustrated shorts who missed the party are possibly worrying about missing a big move and are ready to chase this thing. The danger zone where bulls believe this might be the last buying opportunity of a lifetime.
    I already have short positions on with a small negative delta. I'm fortunate my longs behaved far better this week so I actually had my best week in a year (and got suitably pissed on Friday night). My dream of owning a Lamborghini just got that bit closer. I am kind of kicking myself for not being more short, but that’s life. I'm not going to chase this here, but neither am I going to cover prematurely. I need to see further breakdown here or a bounce to add to shorts. The danger for shorts who are not yet committed is that this is a colossal bear trap, and you jump in only to get hosed for the countertrend rally.
    And when we consider any moves of this nature over the last 9 months, the bounces have been fast and furious. Any pullback of any significance has been bought with fury and the ensuing rally (fuelled no doubt by short covering) has very quickly eclipsed the pullback.
    It will therefore be very interesting to observe what happens here. I was watching Dexter last night, season 2 Episode 1. Dexter, like so many bears, is suffering from a crisis of confidence, and fails in a couple of attempts to kill some targets, but ultimately comes through at the end, by trying to think like his target.
    Thus should it be here. As a bear, I need to figure out what the bulls are thinking. And based on the last 9 months, bulls should be hoping for an extremely strong week here with a couple of 100+ dow point moves, no significant pullback of any size, with at least 75% of last weeks losses recovered, poised to capture new highs the following week. Ideally, I would love to see a bounce that is inititally very strong but fails to reach the old highs and shows significantly waning momentum even as it fails in the attempt. A stall around the Dow 10,400 level would be very significant IMO, as this was a point where I think a lot of people expected this down move to stop. Confirmation like that might represent the last safe shorting opportunity in this market.
    Once I have established my position, I'm going to sit back and relax and enjoy the show. If P3 does get underway, then heed my words that this is not going to be a market to “trade” because all the methods that essentially are predicting where certain oscilating patterns begin and end will go out the window and you will end up missing most of it (and possibly losing, despite being fundamentally right).

  • skynard

    Vehicle and strike on those Dec Puts if it can be asked?

  • gmak

    Since 10:30 EST is a poor time to post a pre-market warmup, I'll go old school here and do it in a comment.

    The Empire Strikes Back
    Pre-Market warm up

    Subtitled: The Irony Fist in the Velvet Glove.
    Here is a chart posted on another blog by another blogger. It shows how SPX has breached a trend line. Those of you aware of the cease and desist game that was played out over the last two weeks will appreciate the irony in this post. I get the same sort of effect on the ES weekly. However you draw the trend line, whether touching the low of July 17, 2009, or the low of November 6, 2009, the result is the same. The trend line on the weekly chart has been broken decisively to the downside. Since ES this week has already opened higher, I would expect a re-trace back to the trend line before heading down.

    http://2.bp.blogspot.com/_eKH-tiSXFbc/S1lhXiGc7

    Here is some more irony. Notice the clear trend lines. The upper one corresponds to my “Since Aug 17” line that was breached on Friday. The lower one has no analog on my chart – but certainly looks like as good a place as any for the next line of support after the retrace, then fall back below 1086. By coincidence, I have a horizontal support line around that 1007 mark that goes back to November 2008 – and was the peak off of the first bounce after the October 2008 waterfall.

    http://www.zerohedge.com/sites/default/files/im

    When I look at my daily chart, I notice that SPX came close to, but didn't go past, the dashed green line drawn at SPX = 1086 (Remember that number?). This level has been support and the source for the week or two long pops that came after, since October 15, 2009. It was the roof for the up-wave from the end of August to the end of September. The most interesting part is that the waterfall of price from October 2008 didn't even notice this level. This means that it is NEW money, not old money, and will fold faster than a wet kleenex if breached.

    I'm thinking of changing my sobiquet to “Living Inside a Broken Faucet” with “drip drop” instead of “tick tock”, because this really is a story of liquidity. The end of the MBS program is approaching, not only in time, but in dollars spent as well. On Friday, I commented about the FED's B/S that was released Thursday night to note that it had contracted, but that Reserves had gone up. Both remove liquidity from the financial markets. Normally, I would expect more slosh to come roiling into SPX, but I am haunted by the relationship between the FED, liquidity, and the SPX – as so abley documented by Market Ticker. But, until 1086 is breached (probably after a retrace to the trend line on the weekly ES), I have to assume that the usual games apply.

    Longer term (this year), there is little doubt as to where the US is headed, liquidity-wise. It looks like there will not be enough USD to fill Treasury's needs unless the FED does a QE II (buying Treasuries, or MBS with a nudge and a wink to the IBS who then buy TBonds).

    http://www.zerohedge.com/sites/default/files/im

    Tick. Tock. Tick. Tock.

    EQUITY

    ASIA is red, both developed and emerging. Europe is mixed with the northern, smaller countries in the green – and UK, France, Germany, and all the Mediteranean coutnies in the red (except Portugal – there you go, SSH). The DAX gapped down and has since closed the gap – but is trending weaker. It looks like a retrace to Friday's close. There certainly is resistance the closer DAX gets to 5700 (It's currently at 5672ish). The only green sectors are Financials, Industrials, and Telecom.

    ES opened up on Sunday night and has tried to creep up since Europe opened. Pivots:
    R2: 1127 = This was support on Jan 20 during regular hours – but the rsulting move up was weak and died in the plunge on Thursday.
    R1: 1109 = Seems to have been an area of support for a while on Friday – before the fall into the close. Likely persistent resistance now.
    Neutral: 1097.75 = A floor right now – but it doesn't LOOK strong. Won't be able to tell until it is tested.
    S1: 1079.50 = Was below the LOD on Friday. ES hasn't been here since the middle of December.
    S2: 1068.25 = This was a support area through the middle of december after being lower at the start of the month. Also showed support into the Christmas season.

    I don't see any obvious in-and-out trades for ES right now. The data coming up is housing sales and the Dallas FED mfg activity. I think today is being set up by the IBs as one to push “buy the dip” and see if they can get enough retail and stupid money manager response to underpin distribution over the next month. Playing ES = 1097.75 (the neutral pivot) for a bounce might be one play. Or, waiting until ES goes below (if it does) could be another. But I am really lukewarm to trading ES this AM.

    FX
    The weeklyl DXY shows that the 38.2% FIB (between 91.16 and 71.19) was solid resistance last week at 78.82. TD has a technical level there as well that will probably hold. The 5 DMA (Simple) is just below at 77.82 – so without some tradeable news, I would suggest that USD will be range bound between the 5 DMA and the FIB. A move past either could provide a tradeable setup in one direction or the other.

    The EUR bounced off of the 50 DMA on th weekly chart, and there seems to be solid TD technical support at 1.37ish for those with longer horizons than 10 – 30 pips. On the daily chart, support at the 38.2% FIB (1.5144 hig – 1.2457 low) kep the EUR's head above water, and a technical bounce looks to be in the works. Next support on the daily chart is down by 1.38 at the 50% FIB, which was quite active in the May – July time frame.

    Closer to a trading time, the 30 minute DXY shows that there is support at 78.04 – which is a pivot today (and was one on Friday as well). There is overhead resistance at 78.28 at the present time.

    The 5 min EUR shows an uptrend clearly estabished with 3 major points of contact with the trend line. Next support on the trend line is around 1.414, AND there is TD technical support at the same level, more or less. This would be a good place for playing a bounce, if the EUR gets that low. It was turned back by the pivot at 1.4192 – so that looks like the overhead roof for now. There is a pivot below at 1.4129, and I would expect any breach of the trend line to get turned back up at that point.

    NEWS
    Just a lot about IB bonuses. Opinion: No one should get a bonus on accounting profits until they mark the toxic waste to market, and reflect all holdings in SPVs on their own B/S, instead of in the ether.

    DATA
    Just the housing sales at 10AM EST. Other items can be found here:

    http://www.briefing.com/Investor/Public/Calenda

    Remember, it's better to be successful than right. If you can get past the “Market SHOULD be going down” mentality, you should be a better trader. Play the market you're given, not the market you want.

    Cheers.

  • http://trading-to-win.blogspot.com/ DavidDT

    Great review as always!
    Gee …thanks you G.

  • http://trading-to-win.blogspot.com/ DavidDT

    well said -just like in any occupation … and in life – “Know thyself”

  • gmak

    On the liquidity note, there is only $38.5 bb or so left in slosh, including TAF. The last $35 or so billion matured Jan 14th and wasn't rolled over. Things are getting tight at the FED, or they just want to have the slosh be off-line. The remaining $38is bb matures Feb 11th.
    http://www.gmtfo.com/reporeader/OMOps.aspx

  • honeyeater

    The Hang Seng Index has formed a rounded top and is approaching 20,000 which is also the 200 day and weekly sma.

    A break of 20,000 will see global risk takers collapsing at their knees and drop straight into a praying mantra position, as the HSI heads to 16,000.

  • gmak

    Go ahead. I'm gmak not Blumpburn.

  • gmak

    If you don't think the market is gamed – at the small and big level, see here:

    http://jessescrossroadscafe.blogspot.com/2010/0

    and here:

    http://www.zerohedge.com/article/guest-post-nys

    That is what one has to deal with. Minor nuisances (and we've all seen an offer posted by us, only to have all existing offers shift to the same level but ahead in the queue), and infinite rip-offs.

    If you have trading software that keeps the stops “off-line” and only puts the order in when certain conditions are reached, I would advise using it.

  • jacksoo

    Love the reports gmak and obvious knoweledge/affinity with mkt.

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    1.6… I see, but my hamster bands are for .618Xperiod, not 1,6

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    you were smoking good fibs, 88=1,6X52 weeks… an extended year

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    excelent post herr mole, nice post mr gmack

    we're on a funny day, let's check

  • CorporalCarrot

    Well this is ominous for the bulls. It looked like a standard monday morning, with futures up loads, and Europe following suit (although in the FTSE's case it was really just it never went through a follow-through from the Friday's US session and was buoyed by futures action). But that has faded, FTSE/DAX now negative, and the futures have given back half of early gains. Could it be different this time?

  • gmak

    Here is another sign that maybe precious metals trading is getting overextended BullionVault now offers silver trading and storage – not paper, to go with the gold services.

    If you want a chuckle, take the 10 minutes to watch this at Slope of Hope (which is a slippery one as the bulls will find out when the liquidity runs out).

    http://slopeofhope.com/2010/01/slope-of-hope-hu

  • gmak

    My second link in the “Empire strikes back” comment doesn't seem to work. Try here:

    http://www.zerohedge.com/article/market-support

    for the article, not just the chart. It's still ironic, no?

  • http://trading-to-win.blogspot.com/ DavidDT

    Thank you
    Posted…unfortunately links do not work (of course – they are too long to be copied properly :(

  • boldventure

    gmak…….Great work! (as always)

    Will keep an eye on the 1086 level you mentioned.

    Sweet Spot numbers SPY 112.70 at or below (will support short position)
    VIX 20.75 at or above (will support)
    UUP 22.98 at or above( will support)
    If you are short and cover……you can consider re-enter if 112.70 is not breached.
    The current number gives you a lot of upside before it would be violated
    Don't get cute…if this decline is going to be big you want to catch as much as you can, you will never get all of it. Pigs get fat, hogs get slaughtered. be right sit tight.

  • Blind_Squirrel

    http://www.cnbc.com/id/35056774

    30 Billion Sq. ft. comm. re. under const.

    enough 4 25 sq. ft. 4 every man woman and child!!!!

    Spending those US$ br they become worthless!!!

  • Schwerepunkt

    I saw him a couple weeks ago talking about his bet on a Chinese implosion. Eye-opening, and if the next leg down is triggered by a market collapse in China overnight, that would be the perfect way to trap as many bulls as possible. Shanghai could easily drop 10-15-20% in a single day as bulltards peacefully sleep here.

  • FranceHasTheBomb

    Perhaps those owning investments tied to Chinese real estate should take a look at what happened in NYC:

    “The venture acquired the 56-building, 11,000-unit property for $5.4 billion in 2006 … By some accounts, Stuyvesant Town is only valued at $1.8 billion now … all the equity investors—including the California Public Employees' Retirement System, a Florida pension fund and the Church of England—and many of the debtholders, including Government of Singapore Investment Corp., or GIC, and Hartford Financial Services Group, are in danger of seeing most, if not all, of their investments wiped out.”

    http://www.calculatedriskblog.com/2010/01/stuyv

  • gmak

    It's Deja Vu all over again……

    Bill Miller said 2010 will be a good year for stocks and a “challenging” one for bonds.

    “After spending 10 years in the wilderness, high-quality US large-cap stocks are cheap compared to bonds”, he said in his 1/4ly letter to investors.

  • Shiftlemac

    Hi all, could someone please give a lurking newbie some advice? I would like to buy some out of the money SPY December 2010 puts. I know my mind, and I know how this works, but I've never actually followed through and done any purchasing. Could someone give me an idea as to whether they think a strike of 90 at a price of 4ish is good value (obviously having increased significantly last week)? I'm planning on gradually getting in over the next few weeks on any strength.
    Thanks in advance

  • http://trading-to-win.blogspot.com/ DavidDT

    In the process of making XLF video (longer term view), but I think this daily chart might be of some interest http://screencast.com/t/MDFhMjYw

  • raised_by_wolves

    Thank you, Corporal. Your point is well taken. Note to self: Do not overtrade P3.

  • thelefteyeguy

    wow…nice weekend post Mole…very much appreciated

  • BigHouse(Aka Mr Vix)

    spy dec 70 puts

  • Shiftlemac

    Bighouse, if you don't mind me asking, what do you see as a fair price for that strike?
    Thanks

  • gmak

    There is a lot more volume at a strike of 95.

    Look at the delta as well. That shows the change in the option value relative to a change in SPY price. At some point, you are overpaying for the delta. For example. if SPX moves down 1 point, the 90 gains about 15 cents in price. IF SX moves down 1 point, the 95 gains about 73 cents in price. AND, the 95 costs about 52 cents more – but you make it up in the next 1 point down move for SPX.

    Also, look at the spread between bid and ask, relative to the cost of the option.

  • raised_by_wolves

    For those of you who like straight $VIX, my light green channel line is acting as support right now.

    http://screencast.com/t/MDcwYmEw

  • BigHouse(Aka Mr Vix)

    speads are alittle wide. Try to get it in the middle. say 1.10

  • gmak

    Also, you pretty much have to take the ask price in those leaps. The concept of “fair” just doesn't enter into it.

    If by 4ish, you mean $4 per option, then I would suggest that you are overpaying. You can get 95's for that price (Dec 2010 puts).

  • Schwerepunkt

    We seem to be in no-man's land right now.

  • raised_by_wolves

    Similar story on $VIX/GLD. The yellow trend line is holding so far. If there is a further retrace in equities, what bears don't want to see is a reentry below the lavender trend line.

    http://screencast.com/t/MTk2MDI0NjI

  • gmak

    ON the 5 min SPX, I've got a TD resistance line right at the S1 pivot at SPX = 1106.90; and a TD support line at 1091.76. The 9 pMA, 34 pMA and S2 pivot are all around 1097 – 1097.30.

  • raised_by_wolves

    Bring it on bulls. Go for the white line on $TRAN. I dare you.

    http://screencast.com/t/ZTg2NzY4

  • Shiftlemac

    Many thanks gmak. I think I'm going to split my money between some 95's and 70's.

  • raised_by_wolves

    C'mon bulls, you can't even get it up above purple on $INDU. What gives!?!

    http://screencast.com/t/MjVmNzU5NjMt

  • gmak

    70's are lottery tickets with a strong chance that you lose the money. Don't buy them unless you really REALLY an afford to lose that. They are pretty for OTM.

  • Schwerepunkt

    Lower than expected existing home sales. Let's see what happens now . . .

  • gmak

    My 3rd link in the “Empire strikes back” comment earlier doesn't seem to work either. Try looking at the 3rd chart down, here:

    http://www.zerohedge.com/article/700-billion-us

  • jaxon

    Wild conspiracy hypothesis: engineered deflationary equity crash, gov't seizes control of retirement funds (which are mostly in bond market) to “protect” investors. Remember FDR confiscation of gold. Seems far fetched? Tax threat crippling job market and growth. Gov't needs cash. Hmmmmm…..

  • raised_by_wolves

    Update on $SPX/GLD with Rat Bands. MA(104) hasn't even been touched.

    http://screencast.com/t/NzhlNTQzMWQt

    Is this all you got, bulls!

  • Shiftlemac

    Well, I agree it's a gamble, but it's a relatively cheap gamble that we double dip by the end of the year with a possibility of big rewards. So yeah, thanks – I'm putting less into those and it's only money I can afford to throw away, but it is backed up by some (vague) rationale.
    Thanks for your feedback – much appreciated (and keep up the good work on here – I'm sure there are many like me who watch but never say anything :))

  • raised_by_wolves

    Inconceivable! 😉

  • CorporalCarrot

    Today could be a potential epic fail for the bulls. As I said earlier, I really felt they needed to get it done. The failure to consolidate the futures gains could be significant, and I would imagine there has to be the beginning of some nerves out there. If this begins to break down, we could see red today IMO.

  • goldpackers

    Just last week they were floating the notion of turning IRAs and 401k into annuities with interest paid by treasuries. It is not far fetched.

    Neil Bortz, a nationally syndicated talk show host in the ATL, has been warning of this from day one.

  • centerline

    If you have not already heard of it, try reading about the South Sea Corporation… or the South Sea Bubble. The truth is often stranger than fiction for sure. And the extents at which the desperate and greedy will go is simply limitless. Got to think like a crook in this market for sure!

  • BigHouse(Aka Mr Vix)

    Looks like market is heading down to red. hee hee

  • CorporalCarrot

    For a bit of perspective heres my updated 10 minute chart with that bear flag that painted nicely and confirmed on Friday.

    This is looking weak;

    http://stockcharts.com/h-sc/ui?s=$INDU&p=10&b=5

  • raised_by_wolves

    Stainless Steel Hamster, are you out there? Notice the 50% fib on SPX priced in GLD?

    http://screencast.com/t/ZTFiMTZiMT

  • Schwerepunkt

    SPX hit your 1090 line in the sand on Friday, and was breached by ES. Have you abandoned that line? Existing home sales was not a good number, though prices were up. Interested to know what your thinking is.

  • bobthehorse

    ES held on a closing basis. I would not dispute that the technicals look poor although if it rallied from here it would retrospectively look like a classic de-risking correction. I would not describe myself as comfortable but this is not Jan 2009.

    My problem is I am looking for a move to 920 on an intermediate-term basis. Just not yet – I think there will be one more rip higher. So far, that is still very possible and if I am right, this is just the spoof move that gets people short in order to create that rip. But I might be wrong.

  • raised_by_wolves

    Maybe it's time to stop worrying about the bulls pushing this market higher here and now and start thinking about the bounce zone that Mole has drawn for us.

  • Schwerepunkt

    Thanks. Any thoughts about this week's big supply of 2,5,7-year treasuries? Or FOMC?

  • rikardo_kurvio

    this ain't quite bearish

    russel fut
    http://www.screencast.com/t/MmQ5YmRhYmM

  • goldpackers

    Need to stay below 1100 spx here or next stop is 1108

  • raised_by_wolves

    Also, anyone remember the values that the Hamster squeaked on Friday?

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    don't laugh too soon, check the top hamster (208) it bounced cleanly from there… it needs to break the 208 to call it a top

  • raised_by_wolves

    Ah ha, here it is:

    “hamster time, VIX 33, bpspx 73, spx:gold 0.985, spx: 1083, tran 3650

    any or all of this “places” (anyone can keep track real time and say when they are hit?) are danger zones, a bounce can happen there and then it's another opportunity to create a bear trap

    you should trust a rise to spx1123 and then new significant low, otherwise….”

  • Schwerepunkt

    Dallas Fed report coming at 1030h. May provide a wobble.

  • goldpackers

    This will be a WAR at 1080 to 1100.

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    explain what you see

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    we' havent reached that, it was…

    hamster time, VIX 33, bpspx 73, spx:gold 0.985, spx: 1083, tran 3650

    any or all of this “places” (anyone can keep track real time and say when they are hit?) are danger zones, a bounce can happen there and then it's another opportunity to create a bear trap

    you should trust a rise to spx1123 and then new significant low, otherwise….

  • raised_by_wolves

    See below. I beat you to the punch. 😉

  • gmak

    I'm not sure that one candle makes a flag. Look back at JUL and see the 4 or 5 candles that formed a bear chart – and look which way it broke (up).

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    i saw, i just copied to spare you the trouble of fudging through my posts 😉

    can you keep an eye real time and warn?

  • Gerbil_gold

    I just break the 3min candle into one minute candles, then pray hard to the market gods with one eye open. and my head tilted.
    works every time!

  • Rightside_ot_trade

    Good one gmak

  • raised_by_wolves

    Alright, there's the MA(208) holding $SPX/GLD up, which coincides with the 50% fib support.

    http://screencast.com/t/ZjgwNTJi

  • standard_and_poor

    Reprint from 8 hours ago in the Slope:

    China may have one more sloppy intermediate wave 5 to 230 ($CZH) left in her prior to a sizeable correction.
    Our Nasdaq ($COMPX) in my humble and unpartisan view may see intermediate wave 3 complete
    in the area of 2721 at best.

    Currently 0% invested in largest account, was stopped out on Thursday and Friday.
    Have been mostly net long since early March 09 (closed out last of long term puts first week of March 09).

    Waiting for 2113.99 to 2140 to buy back same longs at a slight discount and increase exposure from a prior 90% long to 100% long. If 2113.99 to 2140 isn't hit first I'll start buying at 2256 $COMPX – which ever scenerio
    is hit first I'll initially take a 25% long bite.

    Daily trend is obviously now down, but my monetary and long term momentum models still scream buy.
    I realize I could be totally off base in my interpretation but that's what stops and poor houses are for.
    If we break 2113.99 $COMPX I'll be looking for some shorts, not any time prior to that.

    As of Friday we were only 5% below the SPX high yet everybody is predicting the top of P2.

    I'll pop in next week if time permits, best of luck.

  • gmak

    SPX seems to be consolidating on the 1097.31 (S2) pivot. I still have the TD overhead resistance at the pivot at 1106.90 and support below at 1091.76 (also a TD line). This is no man's land.

    In favour of a bullish quick trade based on SPX TA on the 5 min chart:
    1. Support on the S2 pivot
    2. Bullish cross on 9 and 34 pMA

    In favour of a bearish quick trade:
    1. 9 pMA is sloping downwards a bit. 34 pMA is flat.
    2. TD Pressure is closer to overbought than to oversold

    Sitting on my hands here…..

  • Schwerepunkt

    Still in no-man's land. RSI is very middling. No buy or sell signal on an intra-day basis. There was an oversold buy signal late on Friday, so I would think odds are we finish green today, possibly as high as R1 at ES1106, but no higher than that.

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    and try checking long term, a sustained breach with a failed retest should anounce a new bear

  • WTFed

    Prechter too.

  • raised_by_wolves

    I'll keep an eye on $VIX 33, $SPX 1083, and $TRAN 3650. Those lines are on charts now. We need to convert $SPX/GOLD 0.985 into an $SPX/GLD value, and then I can keep an eye on that too. The one I can't keep an eye on is BPSPX.

  • raised_by_wolves

    By the way, you are aware that $SPX 1083 and $TRAN 3650 are vastly different places, correct? Those two will not occur simultaneously.

  • Rightside_ot_trade

    now I am starting to understand the 2009 MBS purchases:
    “…because Fed MBS purchases effectively allowed MBS holders to switch their holdings to Treasuries at preferential terms, better known as the “reallocation trade” in essence achieving the same effect as if the Fed has purchased these…”

  • goldy

    I am glad teh old charts are back :-)

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    thanks, and careful spx:gldis not spx:gol, not by a long shot

  • TransworldDepravity

    bad case of writers block all weekend. check your mailbox, the pigeon dilivered a muttony bomb.

  • momac

    Wow, I'm disappointed in the bulls. After last week, I figured we'd be up several hundred points by now. “knock on wood”

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    who knows?

  • gmak

    Maybe the sacrifice of a lamb under the full moon, or a gerbil under R.G.s full moon. :-)

    ________________________________

  • gmak

    <thumbsup> !

    Or it gives liquidity to put into risk assets like equities and commodities.

    Drowning Bank: Here Mr. FED. Take these stinky MBS's and give me some shiny new digital FRNs.
    FED: Here you go, friend. Nudge, nudge, wink wink.
    Drowning Bank: This new money is burning a hole in my pocket. Let's put it to work in emerging market equities. Or maybe in high yield bonds. The FED won't let them fail.

    ________________________________

  • BigHouse(Aka Mr Vix)

    Would this market go red geeez

  • yudhisthira

    SPX falling out of a 4th wave triangle from Friday's low? RUT leading the way.

  • bobthehorse

    think it will be a non-event. longer-dated stuff is going to be more important but that went okay earlier this month. This growth wobble has come at a good time for T-Bill demand . . .

  • raised_by_wolves

    $SPX/GOLD 0.985 converted to $SPX/GLD should be about 10.05 or a nudge higher, eh?

    http://screencast.com/t/ZmI5MTE4NWQt

  • raised_by_wolves

    AMZN has found (temporary?) support here:

    http://screencast.com/t/YmRkZTQ1Y2I

  • raised_by_wolves

    That's why I have puts on $RUT :-)

  • BigHouse(Aka Mr Vix)

    Obama coming out and talking sometime after 12 pm . Lets hope the market tanks…

  • CorporalCarrot

    I wonder can Apple give this market an adrenaline shot tonight?

  • gmak

    For a quick trade:

    You can go long at around SPX = 1091.76 with a stop below SPX = 1090, and a target of at least 1097; OR; you can wait for SPX = 1090ish, go SHORT, with a stop above 1092 and 1086 as a target.

    SPX seems to have trouble getting back above the “Since AUg 17th” trend line on the daily chart. Definitely below the 50 DMA at 1114.65. That would be my “TOP of any rally” pick, right now – over the next few days.

  • raised_by_wolves

    Although AAPL remains green (versus AMZN's red), it has thus far failed to move above the 203-204 zone where I have placed this line:

    http://screencast.com/t/OTNkODYx

  • clutchshorter

    Purchased 2 June SPY $109/$104 Puts

  • raised_by_wolves

    WAR IS PEACE

  • raised_by_wolves

    Right back at you. How many times have you reshorted today? 😉

  • yudhisthira

    Need more dollar help.

  • raised_by_wolves

    Then you'll have to keep the watchful eye on SPX:GOLD and BPSPX. I'll handle the others.

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    another 1984 moment… 😉

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    then you wonder why gerbil runs away….

  • Gerbil_gold

    i heard that.

  • raised_by_wolves

    FREEDOM IS SLAVERY

    This truly is a slave society that we live in. If compound interest isn't working for you, you are a slave. Most people think that compound interest is working for them. They are ignorant. Not only is dollar devaluation over the long-term working against them but they also have mortgage debt, car loans, and credit card debt. Against that, gains in the 401K are irrelevant.

  • raised_by_wolves

    You rodents have good hearing, I'll give you that.

  • BigHouse(Aka Mr Vix)

    Stupid market wont go red..

  • Gerbil_gold

    ah…first crack of bear getting impatient.
    Be Afraid.
    ;-D

  • raised_by_wolves

    I heard you have some friends at the FED. See what they can do for us. 😉

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    was just warning gmak that one night he'll fall asleep and a little rodent *MIGHT* find it's way to his neck.. carrying a saw….

  • Gerbil_gold

    why the neck? ;-D

  • raised_by_wolves

    The question is, which neck? 😉

  • raised_by_wolves

    Just a little while ago, /ES did go red – momentarily.

  • Gerbil_gold

    that's the pavlog bell. very subtle.

  • TransworldDepravity

    I'm touching nuuutthing! nuthing! I'm a bit hedged right now. Small positions. Thinking of taking profit on my HUM puts and POT needs to go green and retrace to 115 so I can get out of my calls. Theta is burning on these Febs.

    Just waiting for an opportune rally to buy dec otm puts.

  • http://centrifugaldeforest.blogspot.com/ Centrifugal_Deforest

    Buying $SWN long; 1-3 day trade; benching 46.05 (50-day ma) on closing basis

    SWN group is a leader on session and it is up from the 50-day; easy trade idea and helps me neutralize 4now

  • raised_by_wolves

    I'd be surprised if it doesn't again today.

  • raised_by_wolves

    Have you ever been here: 48°31?0?N 35°52?0?E

  • Gerbil_gold

    Turkey? no.
    but that place is just north of Malooleksandrivka.
    sounds translated like Molesville to me!

    EDIT: Turkey what was I thinking!

  • raised_by_wolves

    First time I've looked at anything below a thirty minute chart in a long, long time.

    http://screencast.com/t/NDA2NzM3N2

    I wanted to see the battle for the trend line closer up.

  • goldpackers

    Looks like a C wave back to 1105/8 and better stop there or 1119

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    a good clean kill, don't play the torture game, just get the job done and then profanate the corpse if you must, but first make sure the enemy is dead 😉

  • raised_by_wolves

    Pavlograd (AKA Pavlohrad), Ukraine.

    Molesville sounds like a nice place 😉

  • raised_by_wolves

    Wannabe carnivores 😉

  • Gerbil_gold

    14 million starved. god rest their souls.
    make Haiti looks like a cocktail party.
    http://www.faminegenocide.com/resources/ukraine

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    omnivores… we also walk (and then kill and eat) wolves

  • raised_by_wolves

    Gerbil, I like the fact that you dig a little deeper for information.

    As for the subject . . .

    http://screencast.com/t/MWRkN2E3

    . . . sigh.

    Sad, sad, sad.

  • raised_by_wolves

    Haha, you and your delusions of grandeur!

  • Gerbil_gold

    It gives market trading some perspective eh?
    it's good to be alive & well fed.

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    another set of roswell autopsy photos?

  • raised_by_wolves

    I couldn't look at any pictures or video of Haiti until last night.

    Wow, the living are putting orange peels up their noses to block the stench of the decomposing bodies buried under the rubble or laying in the streets.

  • Gerbil_gold

    Sad.
    I had a freezer go out once in the summer, the smell was beyond words.

    Time for renewal.
    http://en.wikipedia.org/wiki/Caterpillar_D9

  • raised_by_wolves

    Relative to Hamster, I'm not well fed.

    Relative to victims of famine, I eat like a king.

  • Schwerepunkt

    Pan-Slavism at its best.

  • raised_by_wolves

    Yeah, it also puts flirting with Anna in perspective. I don't feel like doing any of that today.

  • gmak

    This thread is deteriorating. Must be a boring market. Notice that USD is starting to consolidate a bit in DXY?

  • Gerbil_gold

    thank you sir, didn't know it had a name.
    http://en.wikipedia.org/wiki/Pan-Slavism

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    You ran out of orange peels?

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    sorry, as far as I'm concerned we're still on down trend zone, nothing to see…

  • gregn

    SPX found support from bottom of Nov-Dec range: http://screencast.com/t/MTVjMzE3NWQt

    Also, on daily, found support on 80MA http://screencast.com/t/MDNjODAyMDkt

  • Gerbil_gold

    it's a doji day, can't you see it!
    right there! under you tiny nose!
    ;-D

  • raised_by_wolves

    Do you ever do put verticals to reduce theta (as well as potential profits)?

  • Gerbil_gold

    careful, i thought that subject was off limits??

  • gregn

    Grabbed some calls for possible retest of 1115 resistance.

  • http://evilspeculator.com molecool

    Arbeit Macht Frei.

  • raised_by_wolves

    It's an attempt to get Mole to show up. I'll deal with the problem of his wrath when . . .

  • raised_by_wolves

    There you are! :-)

  • bananaben

    Will these worthless bulls get a nice 100 pt. rally going? Pathetic bulltards! Looks like I prodded them a little – maybe we will get somewhere here. Looking for a better short entry of course.

  • raised_by_wolves

    Let me guess, at least one of those words isn't in the German-to-English dictionary.

  • raised_by_wolves

    Yeah, Mole's charts are excellent, aren't they? Not only that, but they are also the epitome of evil!

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    someone stole the ironworks with that… and the reward the polish government was offering was very low, I'd pay more for it

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    not realy, either green to 1120 or red below open

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    he's here… I can feel… I see… people

  • K.I.M.
  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    try history books… for the full phrase

  • elliott_surfs

    Really feels like bears have taken over – before last week, they would have turned up at least 100+ pts after 1 heavy selloff, let alone 3.

  • gmak

    Yep. That's the dashed green line on my last SPX daily chart posted. (the Nov-Dec support) here:
    http://evilspeculator.com/?p=14236

  • gmak

    Too cool. That level of resisstane just jumps out at you from a chart, no? Alos 50 DMA is at that level, and the 5 DMA will be soon.

  • gmak

    What is that? Your chart doesn't have labels.

  • Gerbil_gold

    it's 133 lines, silly. who needs labels?
    😉

  • gmak

    But what is the underlying security?

  • http://it'sasecret hindyomen

    if they park a doji here i'm going to be mighty angry

  • leftbankwine

    This weeks close looks very important, after a negative egulfing pattern last week, if the SPX cash market closes below 1085.89 we will have a higher high this month, and a lower low this month, which gives us a negative outside month. Last months high was 1130.38 while this months high was 1150.45.

  • gregn

    I love when moving averages line up with resistance levels. It's even better when a MA will line up in the short term future.

  • K.I.M.
  • raised_by_wolves

    Gregn and gmak,

    I see the support lines that you guys have identified, but don't forget about these resistance lines:

    http://screencast.com/t/NDkwZDQ5Y2It

    It takes a lot of bull to break these lines . . .

    http://screencast.com/t/ZmE4MzEwNmE

    . . . just like it took a mean bear to break them. 2002-2003 wasn't mean enough.

  • Gerbil_gold

    Dec 17/18th had a lot of chop.
    so, I'm gonna hope for 1120.

  • Tronacate

    A/D line starting to roll over again……

  • Tronacate

    The monday pump is not having it's usual effect……

  • gmak

    There is definitely some swing trade money to be made here!

    ________________________________

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    1120 is a mighty bad value, opens up for a sordid gap up + ramp up that breaks resistences and a safe bull camp

  • raised_by_wolves
  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    yes, that's why breaking gold is so important for bulls, it would allow a 1350 on spx on sub 1500 gold and an ambiguous count EWTwise

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    yes, it was in several ones, but this one is the most emblematic

    http://atlasshrugs2000.typepad.com/.a/6a00d8341

  • raised_by_wolves

    A beautiful photograph. An ugly place.

  • raised_by_wolves

    Good point. For this reason and others (e.g. trend line resistance), I think that orange is a more probable scenario than green.

  • Gerbil_gold

    While I agree,
    it's hard to swallow a plunge below 1090 early this week.
    For 2 months, the price swung between 1090 & 1116.
    Money managers just don't “run to the hills” after taking big positions like that do they??

  • http://chaugner.blogspot.com chaugner

    keep in mind that after such a strong move, sideways does not necessarily mean its bearish. The market is trying to absorb last week but we are not seeing strong continuation (of course after 2 consecutive 2+ deviation days its normal lol).

    I am not reading this bullish or bearish, yes sideways means absorbing pressures on either side and then continuation – but that is if we have an established trend. Yes we may have a trend changer here (well the chances now are as high as they have ever been) but we need to remain cautious. Market may hold in this range until wednesday afternoon, possibly a new low but it should be marginal, do not expect a break above 1110 either here.

    So for now, 1085-1115 is what matters, a break on either side and we can position ourselves much easier. Due to work I missed all of last weeks run down so a bit frustrated that I was not able to capture the drop. Got to make sure I do not start chasing in this range here. If you are short above 1130 there is nothing to do for you, would not even get a hedge, just stay short, but without a position now, would not make a pick here.

  • http://trading-to-win.blogspot.com/ DavidDT

    wait…
    did not you go to exile last week?

  • Gerbil_gold

    oh I DID! – at least somebody read my post.
    then the DOW dropped 500+.
    it's springtime for the bears!

  • http://trading-to-win.blogspot.com/ DavidDT

    “Don't be patzy, be a smarty – come and join the Ponzy party”

  • gmak

    <thumbsup>. Well said!

  • goldpackers

    Looking like a 4th wave triangle with waves d and e to go, then spike down late today or on the open tomorrow.

  • bananaben

    Case Shiller will be negative tomorrow – the first time since April. This time the “second derivative” will be negative and probably increasingly so. I expect a down day tomorrow with possible rallying later in the week (Thurs./Fri).

  • bubble jeopardy

    Agree, but not sure at what degree. Looks also like 1s and 2s could be overlapping, no?

  • mmTesla

    I'm thinking we test 1135 by the end of the week. Lots of volume and pivots at that level to turn around, but 1125 is a good place for a short squeeze.

  • skynard

    Financials on a rebound. What is the line in the sand for it to be W4? 1105 SPX?

  • goldpackers

    Thinking 4th wave triangle to 1088 but above 1101 spx favors 1,2s to the upside for at least 1108 if not 1115/1120

  • Lordted

    Nice to see you're still alive !

  • http://centrifugaldeforest.blogspot.com/ Centrifugal_Deforest

    Short outline of how I am playing a (posible, maybe, could-be or not) bounce…

    http://tinyurl.com/ye8x63y

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    indulge this poor old hamster, draw your trend line from the 1991 low through the 2002-2003 low, turning into support until 2007 and then being resistence for the wave 2 of may 2008.

    then do your paralels and get back here 😉

  • Tronacate

    If housing doesn't recover we're toast and the figures are getting worse. It looks like walking away from a mortgage is becoming socially acceptable. Pretty soon people won't give a rat's ass about their credit score because they don't care and don't want any credit.

  • http://chaugner.blogspot.com chaugner

    1125-1135 would be too easy for both bears and bulls. If we make it this high I HIGHLY doubt we just experienced a trend changer. Whenever a new trend is established, it has a very high probability of not giving a meaningful retrace until much later and screwing people on both sides. Bulls would love to get back to 1130 to lighten up and remove some risk, bears would love 1130 to short at perfect range. If this was a real changer here I personally think 1065-1094 and then lower.

    If we get all the way back to 1130, I think we may make a move to new highs yet again or at least a double top.

  • Tronacate

    I see the scenario where people will run up their credit cards and then just stop paying…….especially people with a good number of high limit cards.
    It'll be fuck over the banks like they fucked us……..just wait…….payback is coming.

  • raised_by_wolves

    Here's $SPX/$VIX with Rat Bands and Deep Purple.

    Weekly
    http://screencast.com/t/ZDhjMGMzN2It

    Daily
    http://screencast.com/t/YTQ2YWM3MGIt

    Special thanks to Stainless Steel Hamster for Deep Purple.

  • http://trading-to-win.blogspot.com/ DavidDT

    “This financialization of our consciousness under American style capitalism has become all we know. That's why we fear its loss. Hence the bailouts of the thousands of “zombie banks,” dead but still walking, thanks to the people's taxpayer offerings to the money god so that banks will not die. We believe that we dare not let corporations die.
    “Corporations feed us. They entertain us. Corporations occupy one full half of our waking hours of our lives, through employment, either directly or indirectly. They heal us when we are sick. So it's easy to see why the corporations feel like a friendly benevolent entity in the larger American consciousness. Corporations are, of course, deathless and faceless machines, and have no soul or human emotions. That we look to them for so much makes us a corporate cult, and makes corporations a fetish of our culture. Yet to us, they are like the weather just there.”

    Joe Bageant

  • bubble jeopardy

    That pretty much describes the situation.

  • bananaben

    I agree with you. I think that the high for the week will be seen today with some muted rallies on Thurs/Fri (GDP!!!). I'm just disappointed with this rally but the day is not over yet.

  • momac

    I think that people have already started doing this. Time to short all the credit card companies. :-)

  • Tronacate

    Huge distribution bar on IYR 5 min

  • http://chaugner.blogspot.com chaugner

    “If this was a real changer here I personally think 1065-1094 and then lower.”

    I meant 1065 first, then back to 1094, then lower.

  • http://chaugner.blogspot.com chaugner

    yeah its quite difficult as I said below, however, a close above the open today, short term goes to the bulls at least till mid weak as bears will want not want to get screwed being short into wed afternoon at higher prices.

  • Tronacate

    I'm activating every zombie card in my wallet……..everythings ready to max out if needed……..stuff the cash in a safe and tell them to fuck off

  • centerline

    Is ironic. The system desperately needs to make new loans in order to avoid deflationary spiral. But the system itself is so debt saturated that it cannot reasonably take on any more loans without significant risks, even beyond the crazy risks that got us here in the first place. This end of the parabolic curve sure looks like a red-hot poker put where the sun doesn't shine. Bound the leave a mark!

  • yudhisthira

    Awesome

  • raised_by_wolves

    Dammit, someone else, independent of me, came up with the same million dollar idea I had (not joking), and they're implementation is miles ahead of than mine. Shit, now my only remaining option is growing my trading account by 10,000%.

    http://www.washingtonpost.com/wp-dyn/content/ar

  • Tronacate

    exactly……..debt destruction was the only answer and they fucked up by giving money to the banks…….the last thing people need is a loan…….

  • raised_by_wolves

    Ever read Steve Keen?

    Check out http://www.debtdeflation.com/blogs/

  • Tronacate

    Everybody thinks their lives are SO important………pimples on the ass of progress……..every one of us.

  • bubble jeopardy

    Like Hussman has written, the bondholders should be taking the losses, not the taxpayers ultimately.

  • centerline

    No. Haven't read him. Thanks. I will check it out.

  • Schwerepunkt

    How do you say “Are you going to eat that?” in Japanese? Where do you find these pics?

  • rikardo_kurvio

    great photo :)

    must be some local fastfood. the real eye-mac

  • raised_by_wolves

    Yesterday, I had an epiphany that my life really didn't matter more than anyone else's. Already today, I've returned to my selfish, narcissistic mode of thinking. Why do I always have to go back to staring at my own smart ass in the mirror and thinking it's so fine? Fuck me. Fuck Fight Club. Fuck Marla!

  • Gerbil_gold

    pssst. it's the LSD.
    ;-D

  • raised_by_wolves

    Like others, Steve Keen called the Global Financial Crisis ahead of time. Like Karl Denninger, he emphasizes the importance of the debt/GDP ratio. Denninger offers more concrete facts. Keen offers more abstract concepts. Keen works on dynamic economic models. He thinks the majority of academic and virtually all government economists are ideologues.

  • K.I.M.

    triangle broken on eurusd, of course we go up !

  • raised_by_wolves

    Then I need more of that shit, not less!

  • Schwerepunkt

    Hmmm. Why the Euro plunge just now?

  • centerline

    sort of. Just need to add in the George Carlin theory that we are here to make plastic. When there is enough plastic, mother nature will get rid of us and let some other creature have it's turn on earth as top of the food chain.

  • raised_by_wolves

    Call me stubborn, but I'm sticking to my plan and not buying to cover until after there is a close above my purple trend line.

  • bubble jeopardy

    10 min. $spx in a ascending triangle?

  • lilme

    Here is some bear meat from Dr. Roubini's den, Satyajit Das, derivative expert:

    Botox, Part I

    http://www.roubini.com/globalmacro-monitor/2583

  • Gerbil_gold

    purple lines and girls, ah yes – it's coming back to me.

  • Schwerepunkt

    Seems that was a headfake. Euro advancing with the market now.

  • TransworldDepravity

    Great speech.

  • Gerbil_gold

    how about an ugly cup n handle @ 1100?

  • raised_by_wolves

    I've never had a girl in what people call real life. I've only had girls in my wildly vivid imagination.

  • TransworldDepravity

    purple rain purple rain

    or

    purple haze

  • Gerbil_gold

    I've never had a good trade in real life, only in review of the historical charts.
    “could woulda shoulda”.

  • labdude

    One from the 60's, one from the 80's?

  • raised_by_wolves

    If the entire financial system is lost, including our trading accounts, at least the resources remain. It's conceivable that we have a resource-based economy. Unfortunately, without the rules we already have in place, we'll be fighting for those resources, I fear. The people are fucked if the current system remains in tact. The people are probably even more fucked if it fails. Can there any conclusion other than “we're fucked”?

  • Nightwind

    Vix back inside BB

  • Schwerepunkt

    Now the buildup for AAPL and TXN.

  • mmTesla

    My assumption of a squeeze to 1135 is assuming we retrace to 1125, 1125 looks like a really good place on the chart to turn around which looks like it would be prime for a short squeeze. Until wednesday plays out, all bets are off on what happens imo. If I had to make a prediction, I would say IF we get to 1125, we will probably end up having a slightly negative doji day, then they would run up the overnight futes and we would gap up over 1125 and briefly test 1135, then next week trend down. But like I said it all depends on what happens on wednesday.

  • bubble jeopardy

    won't take much longer to find out

  • Schwerepunkt

    Wednesday? Is that Fed Fuck day?

  • mmTesla

    State of the union among other things, I don't think news drives the market, but the games that are played on that day will be very telling.

  • TransworldDepravity

    Self reflection of the color purple manifested by the elusiveness of the woman that fulfills your needs or the drug that can mask the feeling.

  • http://retracementlevels.zstock7.com/ zstock, Pro Select!

    Dow 10100 held, just as predicted–I have a chart signal that's been very reliable, that told me so.
    http://zstock7.com/?p=2277&dsq=31287176#comment
    I expect another leg down, when Dow reaches its 50 day approx 10,350

  • labdude
  • http://evilspeculator.com molecool

    Second leg towards buy signal. Take notice rats!

  • Schwerepunkt

    thanks, but I was aware of everything going on Wednesday. Thought I'd give it a new name, that's all. Fed Fuck Day. Has a certain ring to it.

  • http://evilspeculator.com molecool

    Wow – are we now delving into existentialism? How about some Kant or Brecht?

  • labdude

    That or Fed Ass Rape Day–or FARD for short.
    FART–Fed Ass Rape Tuesday?

  • Schwerepunkt

    I prefer Emmanuelle to Mr. Kant . . . hehe

  • Schwerepunkt

    Nice.

  • labdude

    May start doing drugs before it's all over (have not since the 70's)

  • Schwerepunkt

    I'm waiting for fa_q to do another drive-by when he calls the top. He called the bottom on Friday pretty damn exactly. Read to pile into the shorts.

  • labdude
  • raised_by_wolves

    Don't know about my current one, but my last three we pretty sweet. The one before those was stopped out.

    My worst trade ever was my first short sell. Shorted Washington Mutual at two bucks and something cents. Bought to cover at three bucks and change as it went to four dollars before going to zero. That was a really good lesson. I had to spend a lot of time panhandling before I was able to trade again.

  • http://centrifugaldeforest.blogspot.com/ Centrifugal_Deforest

    That one is in-house

  • http://centrifugaldeforest.blogspot.com/ Centrifugal_Deforest

    Thx – I almost went for it.

  • raised_by_wolves

    Grrr, you mean people have already explored the same thoughts I'm exploring? Fuck this. I give up. There is no independent thought no where.

  • TransworldDepravity

    But that's where all the nutrients are

  • raised_by_wolves

    The enemy is at the gate but hasn't got in yet according to the $VIX/GLD ratio trend lines.

    http://screencast.com/t/NzY3NDE1NW

    This ratio is my little experiment so while my trades depend on it everyone else should take it with a grain of salt.

  • http://evilspeculator.com molecool

    Don't let them fake you out before the close, rats 😉

  • raised_by_wolves
  • raised_by_wolves

    Watch me now, I'm going to burn down a casino.

  • Schwerepunkt

    Aren't you expecting a rally based on the VIX BBs?

  • raised_by_wolves

    Start with the nutmeg in the spice cabinet. Don't overdose though. Remember, nutmeg is infinitely more dangerous than LSD.

  • Schwerepunkt

    Don't you have to eat like several tablespoons? Gag.

  • bananaben

    Markets falling apart fast – added some shorts at the high. Looks like somebody knows Case Shiller will be negative tomorrow. How long before we go over the waterfall?

  • boldventure

    WOW low volume today!

    Bulls seem concerned here…this is pure speculation and just my thinking, I think the bulls want to wait for AAPL's blow out qrt off their always low guidance( and hear how great the last qrt was, sales, forward outlook. Probably run up in after hours and set the table for strong rally tomorrow 200-250 on the DOW. Follow thru WED to get the other dip buyers in with some skin for another 150-200 DOW rally. Thursday have big sell off with VIX pop -300-350. Friday flat and look out for melt up mon to turn into black mon..Just a guess at best. We willl see

  • john_matrix

    great post mole, your nasdaq chart looks very bullish, after a good 10% correction

  • raised_by_wolves

    “The true test of a first-rate mind is the ability to hold two contradictory ideas at the same time.”

  • Schwerepunkt

    So, the consummate trader is either a bullish bear or a bearish bull? LOL

  • raised_by_wolves

    Called a wolf for short 😉

  • raised_by_wolves

    Go one tablespoon at a time. Too many tablespoons, and it's game over.

  • Schwerepunkt

    Ah, I see: eats and shits, and drinks and pisses at the same time.

  • raised_by_wolves

    Speaking of AAPL . . .

    Not counting the gap up, bears definitely won today. Notice the tug of war:

    http://screencast.com/t/NjIyOGU2ZDA

  • K.I.M.

    just have a deep conversation about earth, sun and company with my 7yrs daughter, come back and guess what, we're still in the channel :) http://www.flickr.com/photos/42905134@N08/43043

  • Gerbil_gold

    why do I have the feeling Mole is gleaning over his signals right now?
    ;-D

  • raised_by_wolves

    Just the key to getting the kill. Are you suggesting there's more to life than calories?

  • centerline

    Did the VIX manage to stay outside the 2.0BB at close?

  • http://it'sasecret hindyomen

    it's not back inside BB2.0 using SMAs…
    does this signal require EMAs or SMAs?

  • Nightwind

    i use EMAs, looks like its sitting right on top of it

  • raised_by_wolves

    Question, where are we in the bigger channel including the 133? Do you mind quartering it up for me?

    http://screencast.com/t/NTEzOTliY

  • Gerbil_gold

    I shorted WaMu @ 11. made lunch money around newyears. before it went to 13.
    leave it to me, to almost get burned….again.

  • momac

    Damn, is the bump up to 1110 to 1120 still on the table so we can load up on shorts again or did today nullify that? You can sure tell that something has changed. This wasn't the same behavior we've had for the past 9 months.

  • Gerbil_gold

    SPARTAAA!!!

  • raised_by_wolves

    Dude, please stop talking this way. Self-deprecate about other aspects of your life if you want, but please stop doing that about yourself as a trader. Seriously. And I don't mean stop doing that out loud in my presence. I mean, internally, get it together man. You're smart. Now, just get yourself together. So, I say no to leaving it to you to almost get burned again. There is no spoon. Agents are still dangerous though. So, be fearless and careful at the same time.

  • TransworldDepravity

    Never reshort evAr, no matter what that wolf tells you.

    😛

  • raised_by_wolves

    Before today, I don't remember the last time I watched a one-minute chart before.

    http://screencast.com/t/ZGY4OTMzM

    Think I turned into a scalper? Think again. I didn't execute a single trade today. I just wanted to see the Matrix in it's high fidelity glory. It's either get stopped out or continue to hold short tomorrow.

  • K.I.M.

    It really doesn't matter, chart just shows that we manage to stay in downward channel for a few days, that's all. A small victory for bears. What I'm really looking for is this one, i've posted it before http://www.flickr.com/photos/42905134@N08/43048… This needs to be broken, don't you think ? bigger picture : http://www.flickr.com/photos/42905134@N08/42950… and man, I'm glad that someone looks at my charts at all, right or wrong they are.

  • raised_by_wolves

    Absolutely, I agree that your dotted red line needs to be broken.

  • centerline

    AAPL blows out earnings.

    I am not playing this one…. but if this one sells off tomorrow big time, the writing is on the wall for buy the rumor, sell the news this earnings season. Of course, there is the Tablet thingy release coming up this week which might delay a sell off or really put this one into chop mode.

    Just thinking aloud here…

  • raised_by_wolves

    I forgot to look at $OEX. Like your dotted red line, I have a white line there that held. Also, notice that the price action failed to close above the green trend line but never challenged the dotted green trend line.

    http://screencast.com/t/ZDQwODYwYTQt

  • BigHouse(Aka Mr Vix)

    NQ loosing all its gains now lol

  • K.I.M.

    well in that case raised by wolves won't be killed in market :)

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    just two?!?! you should be able to have between 4 and 6 quite easily

  • BigHouse(Aka Mr Vix)

    N/Q down now 9.50 lol lol lol

  • K.I.M.

    that dotted red line of mine is … well it just shows where market stands at the time of picture was taken (prtscr and stuff)

  • raised_by_wolves

    I've survived the rally thus far. If the market killed me here, that'd be like Im Westen nichts Neues.

  • yudhisthira

    Which way is the fake out? Half-way to Friday's low on ES.

  • raised_by_wolves

    Oh, I assumed you drew that weeks ago. LOL!

  • raised_by_wolves

    Which reminds me, there was something I needed to indulge you with, wasn't there?

  • K.I.M.

    Yeah of course, I have crystal balls. LOL !!!

  • raised_by_wolves

    Like me 😉

    Helps to draw a thousand lines. I'm always right about at least one of them. 😉

  • kryxtal

    AAPL's being a bit schizophrenic after hours. Low of 195, high of 208.

  • TransworldDepravity

    No VIX buy signal today however, I still think we keep going up tomorrow. Filled candles outside BB indicated in the past a reversal. Also it hit the 200 day MA.

    http://stockcharts.com/h-sc/ui?s=SPY:$VIX&p=D&b

  • raised_by_wolves

    I do show a lot of support nearby for Nasdaq. Instead of gapping up above resistance, maybe, just maybe, PPT will gap down below support. Wishful thinking on my part?

    http://screencast.com/t/MTAxMzNjYm

  • lilme

    Precisely, reflecting the general market.

  • raised_by_wolves

    http://screencast.com/t/MTIyODFm

    However, the EMA(200) was broken and not (yet?) taken back.

  • panzer

    What does anybody think of two year Leaps short? thanks

  • Tronacate

    AAPL is just like lipstick……people buy silly things to make themselves feel better…….kinda like a last meal before you're beheaded

  • TransworldDepravity

    Ah, well the 208 does contain it nicely for now. I tried taking another look on my end because we had black candle day (closed below open price). Probability favors a reversal next day. Learned this trick from a cobra.

  • http://dreadwinaard.livejournal.com/profile dreadwin

    $RUT:$RVX did give a buy signal.

  • http://it'sasecret hindyomen

    LOL

  • Schwerepunkt

    Apple “rockets”; TXN “soars”. So why is ES down a buck in AH? Eh?

  • raised_by_wolves

    Do you want the two anchors exactly here and here?

    http://screencast.com/t/MjhlNmY1ODg

  • http://evilspeculator.com molecool

    Based on what I'm seeing yes.

  • TransworldDepravity

    I can't recall but did the Russell lead today?

  • funkypenguin

    Interesting article – the beat according to this was due to accounting changes. Seems like there is some sanity returning to the market to consider obvious things like this –

    http://www.marketwatch.com/story/apples-upside-

  • http://dreadwinaard.livejournal.com/profile dreadwin

    It lagged, in the sense that it filled the gap from Friday. It was up less than $SPX today.

  • raised_by_wolves

    Speaking of $RUT, this channel looks interesting to me:

    http://screencast.com/t/MmJkZGJlOTc

    If January stays below that 25% channel line and February continues down, then there is still this 0% channel line that needs to be broken:

    http://screencast.com/t/MTE3YWUzMTE

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    an eary adopter of the next harmonic? 208 is something I mentioned to rbw today

  • rg64

    Any ideas on the US Dollar?

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    yes, my take on the slope of the market from 1991 onwards, BTW, noticed the 208 coment from TWD

  • raised_by_wolves

    Yeah, because I was showing it to him, silly Hamster.

  • raised_by_wolves

    TD, are you still around?

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    it's something like 15g per hundred pounds of wheight and uneatable unless you make nutmeg caipirinhas (regular caipirinhas with cachaça, lime, sugar and finely crushed ice with the nutmeg sliding in with the ice as you drink)

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    try sartre to reinforce your bad temper or camus to look with a less grim perspective

  • CorporalCarrot

    Folks

    Cramer tonight is shameful. Shameful. Its great to see the disbelief and completely missing the point to understand the bullish perspective, but his take on Obama is just shameful.

  • raised_by_wolves

    In case those Fib fans are too hallucinogenic for you Hamster:

    http://screencast.com/t/ODQyZTQ3ZTAt

    One hypothetical situation would be a red Feb followed by a green Mar:

    http://screencast.com/t/YzA0YjQ1NWEt

    How would that scan with EWT, gold ratio theory, and PPT manipulation?

  • CorporalCarrot

    Anyone got pricing on the futures here?

  • http://it'sasecret hindyomen

    he's trying to cover his own ass for being so damn bullish

  • http://sshamster.blogspot.com/ Anonymous

    nopes, my mistake, 91 and 98 low, should touch the summer 2008 high

  • vision_invisible

    tell me more…he thinks Obama is taking down the market and that Bernanke is the key to financial nirvana?

  • gsavli

    Futs are all over the place. ES 1092.50, NQ 1802.5, subject to change.

  • raised_by_wolves

    SSH, now that I have Baby Blue and Pink drawn, are you telling me to draw something like Green? That's what a 1991 low through 1998 low looks like. The mid-line acts as resistance for 2008.

    http://screencast.com/t/ZGVhNDcz

  • raised_by_wolves

    By the way, this is $INDU, not $SPX. Do you prefer one over the other?

  • raised_by_wolves

    I’m too lazy to keep coming to this second page. I have responded at the top of the first.

  • raised_by_wolves

    Sorry, Panzer, I skipped that chapter (along with most of the others) on leaps when learning about options. Try asking again tomorrow when there are more people around.

  • Tronacate

    Maybe he's on the Rush program of 75 vikes a day……tends to cloud your judgement

    Like Obama has anything to do with this mess……..Paulson is the sob that needs to be hung by his nutz in the town square

  • Tronacate

    How about a fucking gentile instead of Bernanke?…….just for a change of pace…….how about Ron Paul for a change we can believe in?

  • TransworldDepravity

    Iit bedder naught bei a ded perrat! 😉

    http://www.screencast.com/t/MDE3NGQ3YW
    Purple most handsome

  • http://evilspeculator.com molecool

    Not gonna happen – Bernanke will be confirmed.

  • boldventure

    Sweet Spot #'s for Tues. 1-26-10

    SPY 111.92 at or below (favors short position) Keeps fallin SPY 52wk high 115.06 ( just 5 trading days ago)

    VIX 22.55 at or above (will support short position)

    UUP 23.04 at or above ( should support short position)

    Current SPY number leaves plenty of room for upside and still not be violated about 22pts on S&P or approx..204 on DOW. If cover, you can consider re-enter with at or below level…or use as stop to secure gains till next position.

  • Tronacate

    I know…….just hoping for a different outcome. Same-o Shame-o

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    no raised, your top green can start where it starts, but must cross 2008 top where the third from top crosses (forget about some minor breaches)

    smaler slope

  • Tronacate

    NIHD just had a big ah volume spike…….any news?

  • momac

    I don't know if anyone has mentioned this, but the goldman saks bonuses that are being paid partially with stock was set with the close of todays price. More than likely, GS share price will start heading back up again now.

  • labdude

    Privileged assholes.

    If stock drops–they are covered.

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    parrot band, very colorful, been talking to raised? (the one with googly eye

  • Tronacate

    Got that right……..let's see them do God's work by giving all their bonuses to Haiti relief…….

  • FranceHasTheBomb

    Computer-driven trading raises meltdown fears (mentions that 200k spike in the futures a few weeks ago):

    http://www.ft.com/cms/s/0/84950872-09e5-11df-8b

  • labdude

    The Natural Order of Credit Cycle Correction
    By Bill Bonner

    http://dailyreckoning.com/the-natural-order-of-

  • TransworldDepravity

    Reminded me of the monty python conversation we had the other night with the parrots which indirectly led to the discussion of your(s) vibrant kaleidoscopic banded charts. Suffice to say, it leads me to conclude that RBW is your artistic director.

  • labdude

    RBW,
    Regards the nutmeg comment to me earlier–I'll pass.

    http://wiki.answers.com/Q/How_long_does_a_nutme

  • http://evilspeculator.com molecool

    gmak or Michael: Can one of you please put up a quick comment cleaner? I'm traveling and won't be able to post until Thursday again. Thanks!!

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    nopes, he learned from me… not that I should mention it… it was deniable

  • gregn

    I doubt anyone saw my trendline chart that I posted about 5 days ago, but it looks like it played out exactly how I thought it would, SPX found support at the bottom trendline: http://www.screencast.com/t/OTZmZTlm

  • TransworldDepravity

    nice. now we bounce for a bit.

  • TransworldDepravity

    “Deliriants are the sort of thing which lead people to cut off their arms….”

    Yeah…..

  • lilme

    Is this necessary?

  • vic_vega

    I just saw this, f'in beautiful!!

  • yudhisthira

    ES is feeling sick.

  • Schwerepunkt

    ES has lost another 4.75 pts down to 1087 and change. maybe ES won't cooperate and let shorts get positioned somewhere above 1100 after all.

  • BigHouse(Aka Mr Vix)

    i like when the market is sick…P3 is looking good here… Good times are here again..Sell the rips later in the week.

  • elliott_surfs

    whoever drew that downward channel earlier in the day, spot on mate.

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    does that upper trendline happen to start at the 741 november 2008 low?

  • http://centrifugaldeforest.blogspot.com/ Centrifugal_Deforest

    Sure, I can work on something later tonight (unless gmak planning a Premarket Renaissance) .

    Futures getting clipped this hour.

  • http://oahutrading.blogspot.com/ steveo77

    Sure are alot of cigarette smoking avatars and hamster types too….just saying.

  • http://oahutrading.blogspot.com/ steveo77

    Pretty much…that's it.

    Life's only meaning is the meaning that you give to it, so don't worry about all the other crap.

  • http://oahutrading.blogspot.com/ steveo77

    Shit I called this in 2004 before I even started reading Pretcher, and I am just an engineer.

  • bananaben

    Good evening fellow ratlings. Bernanke's nomination is not a sure thing – Obozo doesn't have the votes as of yet which is why there is no vote scheduled. If you haven't called or written your senator yet – DO SO tomorrow!! Tell the them abolish the Fed altogether while you're at it.

    Of course, if he does get renominated, there will be a sizable rally. This may coincide with GDP numbers as strong as 5-6% (wouldn't surprise me). Keep on your toes (or claws)!

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    only one hamster in this blog since…31 july 2009, talking of which… here's my first post

    Dear Herr Mole

    Any comments on a possible ABC (wave 4) from 741 to 990 or 1190

    It's been a while that I wanted to ask but only today did I register on discus.

    Best regards from a fellow european (though from sunnier lands than germany)

    http://evilspeculator.com/?p=9647#dsq-comments

  • gregn

    ES at bottom of range http://screencast.com/t/ODY2N2I3M

  • http://www.portfoliotilt.com PortfolioTilt

    Not much conviction during today's buying, looks like we are still in a correction, and futures also look pretty weak although it is still early. Current prices are trading below Friday's lows http://bit.ly/7NzX6d

  • http://oahutrading.blogspot.com/ steveo77

    Wow that seems like a long time ago! Looking through the old avatars….

  • Gerbil_gold

    What good is a rally if the futures create an open tomorrow gap down?
    <grumble grumble grumble>

  • http://oahutrading.blogspot.com/ steveo77

    No offense, but can I group hamsters and gerbil together, or is there some issue there?

  • skynard

    Greg,

    Do you think that if the down trend continues it would complete W1 and rally remainder of week to complete W2.

  • gregn
  • http://trading-to-win.blogspot.com/ DavidDT

    should they gave used last year's accounting method earnings would be 2.40 instead of 3.50
    revenue grows attributed to that as well
    numbe ris never a number in insulation

  • gregn

    I am no EWT expert, so I can't comment. I am betting on a bounce, however.

  • bananaben

    I just expect some sort of rally in the Wed-Friday period. Hopefully we gap down hard tomorrow and have a solid sell-off all day. Then if there is a rally later in the week extending into next I will have a nice buffer between it and my fresh short positions.

  • skynard

    Counting on one as well, 1085 SPX should hold. If not it could get ugly.

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    still some days short of 6 months… somehow short of the 1190 I so feared (c=2.618XA)

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    gerbils end up shaved and shoved around and inside, hamsters do not condone such filth

  • alessiov

    Probabilities that the High and Low of the day has been made for the ES during RTH

    1st 30 minutes – 50%
    60 minutes – 70%
    90 minutes – 80%

    Obtained this data from an IOMT webinar

    does anyone have any other useful stats?

    Thanks in advance.

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    close but no cigar, that's why tomorrow we'll fall, the slope is slightly wrong, there is no rebound line there (unlike july were there was a support and it was broken on the last fall)

  • gregn

    1113 is an obvious long target: http://screencast.com/t/Y2NhMjVhNzU

  • yudhisthira

    Sick is fine with me. I have a bad cold myself. I will wake eight hours from now and expect to see my TZA just doing fine….or not.

  • gregn

    FWIW, there is some bullish momentum divergence in /ES: http://screencast.com/t/YThlZmM0Y2Y

  • goldman1

    It looks like Jim Rogers is at it again tonight on Asia Confidential, Bloomberg. He wants them to disband the federal reserve. Funny video. Here is the link.

    http://bit.ly/7aQ5n7

  • jacksoo

    nice spot

  • rg64

    Ol bucky is kicking up its heels tonight. It looks like it consolidated right below the 200 day moving avg. If it breaks north it should do so with gusto.

  • rg64

    I dont like a bounce here. Not yet anyway.

  • gregn

    Playing out so far. I want to switch to futures trading only in AH. I think it is simple compared to trading intraday when you have to worry about news — I have just traded several times here and there and every trade was profitable — much more predictable than trading during trading hours in my opinion.

  • jacksoo

    sometimes – today is a good range day but many others are just flat – usual times for activity ; Asia, Euro, US open (about 1hour before thru 1hr post) – -be careful with s/l they tend to yank price around a lot when vol is thin.

  • bobthehorse

    We are now 100% long, as of 7 minutes ago.

  • jacksoo

    hi bob – seeing a few conflicting theories around (surprise, surprise) some calling the end of w5 ~1080 and now and up to around 1110-1115 others seeing the 1080 as an end to w3 with a w4 up but only to mid 1090;s before a w5 down to 1050 or so – whats your thinking?

  • http://evilspeculator.com molecool

    Poor Bob – I remember you were long before the slide…

  • PRSGuitars

    I have a great deal of experience in jumping ship to overnight futures — I will email you my thoughts (if you arent offended with a little unwarranted advice) as I have gone through a VERY similar thought process in changing my exposure and flexibility.

    Basically, it's like the golden triangle of fast food (or some variation of the name): you can either have quality, speed, or cost (two of the three, really). You can never have all three. Either your product is quality and fast, but expensive (panera) or it's inexpensive and fast, but not that good (mcdonalds).

    Options offer scalability but limited trading hours and are subject to the greeks + spreads of MMs. Stocks offer the most scalability but are subject to options trading hours and furthermore offer limited leverage for traders like us (I suspect). Futures offer flexibility with trading hours but are fixed-width ticks and offer limited scalability unless your account is of sufficient size.

    Flexibility of time, scalability, and leverage. The golden triangle of trading.

    I for one am considering straight forex as I've lately been outclassed by needing to maneuver 25% of my trading account at once. It's like playing poker with only the option to fold or raise with 25% of your chips. Quite unnerving… hence, I want scalability and overnight liquidity, but with leverage. Is that so hard to ask?

  • bobthehorse

    I have taken a bit of a hit in the last few days but I was short at the top and gradually went long. Am also long a bunch of stocks which are relatively doing okay. Overall, still up 4.5% for the month which I doubt will be the case at the European close today!

  • bobthehorse

    I am kicking myself because I am playing for a short-term ramp within the context of what I believe will be an intermediate term move all the way down to 920. Then I think the market will go through the all-time highs. As it stands it looks like I am being an idiot and should have just played for the 920 and ignored everything else.

    But I have (unsurprisingly) gone through everything I look at several times and I would not want to be short here. I have done my absolute best to try and look at this through a neutral pair of eyes.

    1. Short-term, some of my custom indicators are suggesting we are at maximum points of oversoldedness, i.e. odds of material bounce are very high. Minimum upside targets would be 1130 even if we have had an intermediate-term trend change. If this is still an uptrend, the upside target would b 1200.

    2. My core belief is that equities track nominal GDP. When that is accelerating, you want to be long. And all of the fundamental analysis I have done recently suggests we are about to see a renewed acceleration in Q1. There was a peak in late Q4, and there will be a second one in late Q1. That (I think) may prove to be the final high and where I will look to play for 920.

    As ever, I only say what I honestly think. I've been wrong before and I'll be wrong again. But most of the time my analysis has served me well.

    My gut feel is that what we are seeing is a taster of the move to 920, driven by Obama Bank plan and Bernanke worries. Once those are out of the way, the shorts will get squeezed and we will get that final top. What I don't believe is that we are back in a 2008 environment.

  • bobthehorse

    It has gone a lot further than I thought it would, that's for sure.

  • Blind_Squirrel
  • jacksoo

    Thx for detailing your thinking bob. No idea if you're right or wrong.
    Currently long from 1083 looking for low 1100's .

  • PRSGuitars

    I find that gearing yourself to exit a trade countertrend that you believe to be 'with trend' is hard. Where will you exit this trade if it goes against you? If it moves for you? Will you manually scale out, stop out after the first retrace, or set targets?

    For example, in 2009 you could easily buy and hang on. Does it seem plausible to you that we ramp towards 1110-1120 and fail incredibly hard a la Mole's green scenario?

    I often worry about what would wreck me the most, which is being long for a pop and hanging on as it 'pops' to 1100 and then grinds back down to my entry (and through it). I don't have the timeframe as you appear to — thus, my hand is not as strong. I'd appreciate your perspective/strategy.

    Personally, I'm nervous to play a bounce until we see a decent flush and reversal — the Thanksgiving flush was rough as I was knifecatching far too frequently for what I thought couldn't occur under light trading. (laughs to self) Seriously, though, with EUR/USD depleting rapidly I'm wondering if that doesn't foreshadow equities' movement by a few days/weeks.

  • MariAroma

    Tonight Break Point Trades suggests one more move down (wave 5) to 1080-1085 on the SPX; then a bounce up.
    MP3 and charts here:

    http://breakpointtrades.com/controls/preview.ph

  • Blind_Squirrel

    Goldman below is a banned poster who is
    Mike Vadon Blog Plague.

  • MariAroma

    Tonight Break Point Trades suggests one more move down (wave 5) to 1080-1085 on the SPX; then a bounce up. MP3 and charts here:

    http://breakpointtrades.com/controls/preview.ph

  • MariAroma

    Who is the “we” in “We are now . . . “

  • bobthehorse

    We run funds. We refers to my business.

  • jaxon

    Train wreck straight ahead.

    https://mail.google.com/mail/#inbox/12668402e90

  • bobthehorse

    Well I would not recommend following my exit strategy. I can take a lot more pain than most people. I tend to exit trades when I think something has changed, I have probably only been truly stopped out once in my life.

  • jacksoo

    ???

  • CorporalCarrot

    Morning folks. Is the whole global fiat currency ponzi scheme coming to an end? I see Japan on the ropes, Euro isn't much better.

    Fiat currencies only work when everyone plays by the rules. A system of IOU's built on the assumptions that the country issuing the IOU's will act responsibly, falls asunder when the policeman for the entire system, i.e. the US Government & Federal Reserve, abuses the power vested in them by virtue of their “reserve currency” status, and allows the US to completely outsource its productive capacity while compensating by fuelling a debt-engorged consumption bubble that undermines the whole system. All the while, allowing Wall Street to rape and plunder the middle class of the country.

    Of course this can only go on for so long. Cracks are starting to appear. What happening to Japan right now is a little amuse-bouche for where the US is going if it continues down its current path. All the while the political establishment (and in this I hold both sides of the house), does not have the appetite to face up to this.

    The MSM seems only concerned with stock prices. As if they are somehow divorced from reality. Cramer last night had absolutely zero shame, in lambasting Obama and presenting a complete distortion of how the poor downtrodden multi-billionaire capitalists in Goldman Sachs were being oppressed by communist Obama and his lackeys. As if they were completely innocent of everything. As if they had never had a bailout, or never accessed the fed discount window by becoming a bank holding company while gunning VAR to all time highs and distributing record bonusses while main street suffers its worst unemployment in 80 years.

    Whether this is P3 or not, and I continue to sit on the fence here, the easy money in this rally is definitely over. For once, I have followed my own preaching advice for the last week and have not traded the market at all. I've just sat on my short positions which are outperforming my longs substantially. I continue to believe that overtrading this situation is a recipe for disaster, and that a black swan event could be imminent.

    Incidentally, bob on the fundamentals side, Karl Denninger did a great piece on durable goods the other day. November was revised from +.2% to -.7% with no fanfare or explanaton other than “statistical error”.

  • bobthehorse

    Durable Goods is very lumpy so the MoM numbers can be all over the place. The overall level looks like it bottomed in March – if we have any sort of true cyclical recovery, there is 30% upside to orders. Likely only to occur over a few years but you might find, given where inventory levels are, that you will get a decent chunk of that upside in the next 12 months. The magnitude of the collapse is really breathtaking – we are back to 1995 levels of orders, i.e. 15 years of economic growth wiped out! To me, that suggests a bounce could be very powerful indeed even if (as I do) you retain a longer-term bearish stance. I mean, if Durable Goods Orders rose 10% in a single quarter, it would feel like a huge boom yet in reality we would still be 20% below 2008 highs.

  • CorporalCarrot

    Big UK GDP disappointment has caused (paradoxically) a rally in the FTSE off the days lows, presumably as an interest rates play.

  • I_got_Prechterized

    can anything productive come out of discussing the fundamentals? we all know they basically mean nothing. As someone who has incorrectly tried shorting this market on and off for several months, I feel sentiment has changed. As a bear, I finally feel on the offensive. Technically, it looks ominous for the bulls. Yesterday was really the day to do some damage control and the bulls failed. The bull/bear ratio over the last few weeks was probably the most important indicator to note. The bears had more or less capitulated. If the trend has changed for good, dip buyers will likely get their heads ripped off for many months to come.

  • bobthehorse

    Fundamentals drive sentiment and vice versa. That's how cycles work. Understanding whether you are in a virtuous circle or a vicious one is probably the most important determinant of whether you should be selling rallies or buying dips. Markets always turn before the economy but they never fall when the economy is accelerating.

  • I_got_Prechterized

    I don't buy it. I think this adage that the mkt is a forward looking mechanism is hogwash. In late 07 as we were entering the great recession, equities were still near their all time highs. where was the clairvoyance of these brilliant markets then? After a dozen+ years of watching the markets, imo, this is 1 big casino and fundamental analysis is pointless.

    It seems as if you've been very good at making money on the move higher, which is a rarity among bloggers on this site and many similar. I just hope you don't get married to this bullish stance, as many bears have to their bearish tendencies, for the last 6 months.

  • ASDF123

    I don't know if Mole will pick this out of four hundred some odd comments, but what do you Elliot Wavers make of this interpretation? We are about to hit the fifth wave of P1 instead of P3.

    http://slopeofhope.com/2010/01/the-long-view-if

  • bobthehorse

    I am a bear, both long-term and medium-term. But right now, I am bullish.

  • CorporalCarrot

    Although we may differ in a short term interpretation of what the fundamentals are; I am 100% in agreement with Bob here. Fundamentals, or perception of fundamentals do matter. When fundamentals then beat or miss expectations you get effects on the market.

    Now interpretations may differ, which can give people counterintuitive results. Noone quite knows where the rubber meets the road on whats truly important. Thus you have situations where bad data gets greeted positively, because the only driver of pricing at a particular time is interest rate expectations.

    We all know if we had perfect foresight, that stocks would price identically to bonds as you could perfectly project the income stream and price it based on the yield curve. Its the speculative element that causes it to differ.

    But in the long run, fundamentals will win out. As someone said, in the short term the market is a voting machine but in the long run its a weighing machine. But capturing the market mood in the short term is critical; so Bob may believe that a short term re-stocking cycle could lead to the market temporarily pricing in those flows in perpetuity…..leading to a short term severe rally but ultimately a great shorting opportunity. I may differ, but the fundamentals do matter.

  • I_got_Prechterized

    that's an interesting view and one I've considered. It might be naive to think that 30-50 years of excessive debt and leverage in the equities market and economy as a whole will unwind in a few years. This could be a massive secular bear market and we could very well just be in P1. That's all too long term for me though. I see 1080, then 1115 and then tank city!!!!!!!!

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    today I recalled my first comment 6 months ago where I said about that much, and have said often until 990 was broken, that this was a wave 4, but I saw this as wave 4 of P3 (unlike jack I see the botttom in nov.2008 @741)

  • CorporalCarrot

    Folks,

    A couple of charts.

    First, here is my “momentum visualiser” where a week or two back I was trying to demonstrate that despite popular perception to the contrary, momentum was severely waning in this rally. I have not updated it, as it kind of speaks for itself and we are (at least temporarily) in negative territory so I'm not going to figure out where the “point gain per day” is, until we reach a new consolidated high at least (if we are still in the uptrend).

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=1&

    Some observations;

    (1) Based on current /ES, we are back at October 12th price levels. Thats 3.5 months of going nowhere in the market, which must represent considerable technical damage, and must leave a huge number of purchasers during that timeframe feeling quite nervous at this point.

    (2) The only remaining unbreached trendline of significance is the one commencing after the july rally, and connecting all the lows since then. This should offer support in the 1080-1090 area.

    (3) A breach of those levels, should see us move down towards the 200 ema (currently 1047). This was the first significant stalling and consolidation point off the march lows in june/july, and we could reach this at the point where its 1052-1057.

    (4) RSI on the daily is at the most oversold since the July bottom. Remember what happened after that!!!!

  • raised_by_wolves

    Looking at $INDU, yesterday's low was at a 78.6% fib (July low to current top). The price action bounced from there back to my purple trend line and then backed down a little. I expect the green line to be visited next. If that green line holds, I expect a bounce back to the purple line. That would coincide with Mole's orange scenario playing out.

    http://screencast.com/t/YTQ5ODY2OG

  • jacksoo

    “RSI on the daily is at the most oversold since the July bottom. Remember what happened after that!!!!” but go back a few weeks and dropped a further 30pts from that level before it bounced. Who knows, good information though.

  • raised_by_wolves

    I expect the blue trend line that everyone's watching to continue to be violated. Yesterday, the price action moved from below to above and then below again. I would be surprised if that didn't happen again.

    http://screencast.com/t/MjNlZmM4OWQ

  • CorporalCarrot

    Yes, DYODD and all that. Just trying to look at it from both sides, and be analytical and not get giddy. Essentially I am saying that we have been here before, and it hasn't worked out so caution is still warranted.

  • raised_by_wolves

    SSH, here's the channel you asked me to draw (green) and its sidekick (pink).

    http://screencast.com/t/YjIyZGI4

    And here's a closer view.

    http://screencast.com/t/YjI5MzlkZDgt

  • rikardo_kurvio

    so far recent action is similar to november's.

    nasdaq100 fut daily charts with emas
    http://www.screencast.com/t/Mzg3ODM1ZD

  • raised_by_wolves
  • weasel_whisperer

    There are many reasons for not reappointing Bernanke, and perhaps a few for reappointing him, but whether he is a Jew or gentile is not one of the reasons. If I misunderstood what you have written, I apologize.

  • bobthehorse

    I'm sure he meant gentile in the sense of 'gen-teal', i.e. honourable and distinguished, belonging to the class of gentlemen

  • jacksoo

    maybe – might have been referring to the statistical anomaly though i suspect.

  • jaxon

    Sorry. John Mauldin's Outside the Box newsletter has an article about commercial real estate that points to an impending crash in commercial real estate. I couldn't cut and paste the entire article. The newsletter is free. Check it out.

    http://www.johnmauldin.com/outside_the_box.html

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    LOL. I should cut this talk short (because mole, i.e. the owner, doesn't want politics here), but given tron's past experiences of calling nazi to others…

    might be fun

    Seriously, I'm calling it a stop before it gets out of hand, berna is an asshole regardless of sex, race, color or creed so not worth dickering around by where you want to pick on him,

  • jacksoo

    Thx will check it out.

  • gmak

    I can picture SRS (the widow maker) putting on her leather outfit, thigh high boots, mask, and strapping on the '45s. heh.

  • Nightwind

    You forgot the handcuffs..

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    thanks

  • jaxon

    know what you mean. but they cannot slow bleed this thing forever… or can they? at some point the Fed and the bond market will have their “High Noon” moment.

  • ultra

    EW theory says that because this is wave C down (from October 07) of a flat that began in 2000, it has to unfold in 5 waves.

    The fib that Jack mentions is a big clue that the five wave labelling for “P1” may be wide of the mark.

    However, no way is the rally from March a four.

    I look at 1930 (banging the drum again… I know – zzzz) and see that we can still go straight down from here (same retrace then, 61.8% from the wave b/ii high).

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    how about a flat 4 from november 2008?

  • ultra

    We have not been here before

    http://www.screencast.com/users/ultrabear/folde

    I love the timing – lots of UK press about saying how we're finally out of recession (GDP grew 0.1% – basically a rounding error).

    Oh the irony.

  • gmak

    You guys are great! Lots of useful information, insight and opinion. I almost hate to do this, but….

    http://evilspeculator.com/?p=14356&success

    NEW POST
    NEW POST
    NEW POST
    NEW POST
    NEW POST
    NEW POST
    NEW POST

  • ultra

    ok, I'll grant you that one is a possible, but that really looks a lot more like a five than a B to me into March.

    killer thing is the fib, to my mind – now this I see all the time at all timeframes (the retrace resolves relative to the wave B high and not the orthodox top) but *only* with ABC moves – so what are we meant to make of that?

    this is why I keep saying that this is exactly how things panned out in 1930 and then the frog was slow-boiled for several years afterward rather than another crash happening.

    oh, and the other thing about 1930 – it bounced before it took out the prior wave A low of December 1929, so if that repeated, we would almost certainly not take out the March lows by year-end.

    it's just a possibility to bear in mind.

  • jaxon

    BTW, I threw out the wild notion of an “engineered” deflationary crash as a rationale for government taking control of retirement funds as a way of “protecting” the investor. Of course, the irony is that the majority of savings are in bond funds which would allow a crash without destroying the very thing needed. Taxation has too many negatives. So………
    The point is that at some point the best “solution” may be to let go……
    Perhaps it wouldn't be the first time if some of the conspiracy theories revolving around the depression were true.

  • honeyeater

    SSE Composite Index lowest close for 3 months…down 2.42% @ 3,019.

    Keep a decisive break of 3,000 on ye radar, as it has implications that will put a dampener on the red dust rising in Australia's Pilbara.

  • bobthehorse

    I am kicking myself because I am playing for a short-term ramp within the context of what I believe will be an intermediate term move all the way down to 920. Then I think the market will go through the all-time highs. As it stands it looks like I am being an idiot and should have just played for the 920 and ignored everything else.

    But I have (unsurprisingly) gone through everything I look at several times and I would not want to be short here. I have done my absolute best to try and look at this through a neutral pair of eyes.

    1. Short-term, some of my custom indicators are suggesting we are at maximum points of oversoldedness, i.e. odds of material bounce are very high. Minimum upside targets would be 1130 even if we have had an intermediate-term trend change. If this is still an uptrend, the upside target would b 1200.

    2. My core belief is that equities track nominal GDP. When that is accelerating, you want to be long. And all of the fundamental analysis I have done recently suggests we are about to see a renewed acceleration in Q1. There was a peak in late Q4, and there will be a second one in late Q1. That (I think) may prove to be the final high and where I will look to play for 920.

    As ever, I only say what I honestly think. I've been wrong before and I'll be wrong again. But most of the time my analysis has served me well.

    My gut feel is that what we are seeing is a taster of the move to 920, driven by Obama Bank plan and Bernanke worries. Once those are out of the way, the shorts will get squeezed and we will get that final top. What I don't believe is that we are back in a 2008 environment.

  • bobthehorse

    It has gone a lot further than I thought it would, that's for sure.

  • Blind_Squirrel
  • jacksoo

    Thx for detailing your thinking bob. No idea if you're right or wrong.
    Currently long from 1083 looking for low 1100's .

  • PRSGuitars

    I find that gearing yourself to exit a trade countertrend that you believe to be 'with trend' is hard. Where will you exit this trade if it goes against you? If it moves for you? Will you manually scale out, stop out after the first retrace, or set targets?

    For example, in 2009 you could easily buy and hang on. Does it seem plausible to you that we ramp towards 1110-1120 and fail incredibly hard a la Mole's green scenario?

    I often worry about what would wreck me the most, which is being long for a pop and hanging on as it 'pops' to 1100 and then grinds back down to my entry (and through it). I don't have the timeframe as you appear to — thus, my hand is not as strong. I'd appreciate your perspective/strategy.

    Personally, I'm nervous to play a bounce until we see a decent flush and reversal — the Thanksgiving flush was rough as I was knifecatching far too frequently for what I thought couldn't occur under light trading. (laughs to self) Seriously, though, with EUR/USD depleting rapidly I'm wondering if that doesn't foreshadow equities' movement by a few days/weeks.

  • Guest

    Tonight Break Point Trades suggests one more move down (wave 5) to 1080-1085 on the SPX; then a bounce up.
    MP3 and charts here:

    http://breakpointtrades.com/controls/preview.ph

  • Blind_Squirrel

    Goldman below is a banned poster who is
    Mike Vadon Blog Plague.

  • Guest

    Tonight Break Point Trades suggests one more move down (wave 5) to 1080-1085 on the SPX; then a bounce up. MP3 and charts here:

    http://breakpointtrades.com/controls/preview.ph

  • Guest

    Who is the “we” in “We are now . . . “

  • bobthehorse

    We run funds. We refers to my business.

  • jaxon

    Train wreck straight ahead.

  • bobthehorse

    Well I would not recommend following my exit strategy. I can take a lot more pain than most people. I tend to exit trades when I think something has changed, I have probably only been truly stopped out once in my life.

  • jacksoo

    ???

  • CorporalCarrot

    Morning folks. Is the whole global fiat currency ponzi scheme coming to an end? I see Japan on the ropes, Euro isn't much better.

    Fiat currencies only work when everyone plays by the rules. A system of IOU's built on the assumptions that the country issuing the IOU's will act responsibly, falls asunder when the policeman for the entire system, i.e. the US Government & Federal Reserve, abuses the power vested in them by virtue of their “reserve currency” status, and allows the US to completely outsource its productive capacity while compensating by fuelling a debt-engorged consumption bubble that undermines the whole system. All the while, allowing Wall Street to rape and plunder the middle class of the country.

    Of course this can only go on for so long. Cracks are starting to appear. What happening to Japan right now is a little amuse-bouche for where the US is going if it continues down its current path. All the while the political establishment (and in this I hold both sides of the house), does not have the appetite to face up to this.

    The MSM seems only concerned with stock prices. As if they are somehow divorced from reality. Cramer last night had absolutely zero shame, in lambasting Obama and presenting a complete distortion of how the poor downtrodden multi-billionaire capitalists in Goldman Sachs were being oppressed by communist Obama and his lackeys. As if they were completely innocent of everything. As if they had never had a bailout, or never accessed the fed discount window by becoming a bank holding company while gunning VAR to all time highs and distributing record bonusses while main street suffers its worst unemployment in 80 years.

    Whether this is P3 or not, and I continue to sit on the fence here, the easy money in this rally is definitely over. For once, I have followed my own preaching advice for the last week and have not traded the market at all. I've just sat on my short positions which are outperforming my longs substantially. I continue to believe that overtrading this situation is a recipe for disaster, and that a black swan event could be imminent.

    Incidentally, bob on the fundamentals side, Karl Denninger did a great piece on durable goods the other day. November was revised from +.2% to -.7% with no fanfare or explanaton other than “statistical error”.

    http://www.market-ticker.org/archives/1900-Dura

  • bobthehorse

    Durable Goods is very lumpy so the MoM numbers can be all over the place. The overall level looks like it bottomed in March – if we have any sort of true cyclical recovery, there is 30% upside to orders. Likely only to occur over a few years but you might find, given where inventory levels are, that you will get a decent chunk of that upside in the next 12 months. The magnitude of the collapse is really breathtaking – we are back to 1995 levels of orders, i.e. 15 years of economic growth wiped out! To me, that suggests a bounce could be very powerful indeed even if (as I do) you retain a longer-term bearish stance. I mean, if Durable Goods Orders rose 10% in a single quarter, it would feel like a huge boom yet in reality we would still be 20% below 2008 highs.

  • CorporalCarrot

    Big UK GDP disappointment has caused (paradoxically) a rally in the FTSE off the days lows, presumably as an interest rates play.

  • I_got_Prechterized

    can anything productive come out of discussing the fundamentals? we all know they basically mean nothing. As someone who has incorrectly tried shorting this market on and off for several months, I feel sentiment has changed. As a bear, I finally feel on the offensive. Technically, it looks ominous for the bulls. Yesterday was really the day to do some damage control and the bulls failed. The bull/bear ratio over the last few weeks was probably the most important indicator to note. The bears had more or less capitulated. If the trend has changed for good, dip buyers will likely get their heads ripped off for many months to come.

  • bobthehorse

    Fundamentals drive sentiment and vice versa. That's how cycles work. Understanding whether you are in a virtuous circle or a vicious one is probably the most important determinant of whether you should be selling rallies or buying dips. Markets always turn before the economy but they never fall when the economy is accelerating.

  • I_got_Prechterized

    I don't buy it. I think this adage that the mkt is a forward looking mechanism is hogwash. In late 07 as we were entering the great recession, equities were still near their all time highs. where was the clairvoyance of these brilliant markets then? After a dozen+ years of watching the markets, imo, this is 1 big casino and fundamental analysis is pointless.

    It seems as if you've been very good at making money on the move higher, which is a rarity among bloggers on this site and many similar. I just hope you don't get married to this bullish stance, as many bears have to their bearish tendencies, for the last 6 months.

  • ASDF123

    I don't know if Mole will pick this out of four hundred some odd comments, but what do you Elliot Wavers make of this interpretation? We are about to hit the fifth wave of P1 instead of P3.

    http://slopeofhope.com/2010/01/the-long-view-if

  • bobthehorse

    I am a bear, both long-term and medium-term. But right now, I am bullish.

  • CorporalCarrot

    Although we may differ in a short term interpretation of what the fundamentals are; I am 100% in agreement with Bob here. Fundamentals, or perception of fundamentals do matter. When fundamentals then beat or miss expectations you get effects on the market.

    Now interpretations may differ, which can give people counterintuitive results. Noone quite knows where the rubber meets the road on whats truly important. Thus you have situations where bad data gets greeted positively, because the only driver of pricing at a particular time is interest rate expectations.

    We all know if we had perfect foresight, that stocks would price identically to bonds as you could perfectly project the income stream and price it based on the yield curve. Its the speculative element that causes it to differ.

    But in the long run, fundamentals will win out. As someone said, in the short term the market is a voting machine but in the long run its a weighing machine. But capturing the market mood in the short term is critical; so Bob may believe that a short term re-stocking cycle could lead to the market temporarily pricing in those flows in perpetuity…..leading to a short term severe rally but ultimately a great shorting opportunity. I may differ, but the fundamentals do matter.

  • I_got_Prechterized

    that's an interesting view and one I've considered. It might be naive to think that 30-50 years of excessive debt and leverage in the equities market and economy as a whole will unwind in a few years. This could be a massive secular bear market and we could very well just be in P1. That's all too long term for me though. I see 1080, then 1115 and then tank city!!!!!!!!

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    today I recalled my first comment 6 months ago where I said about that much, and have said often until 990 was broken, that this was a wave 4, but I saw this as wave 4 of P3 (unlike jack I see the botttom in nov.2008 @741)

  • CorporalCarrot

    Folks,

    A couple of charts.

    First, here is my “momentum visualiser” where a week or two back I was trying to demonstrate that despite popular perception to the contrary, momentum was severely waning in this rally. I have not updated it, as it kind of speaks for itself and we are (at least temporarily) in negative territory so I'm not going to figure out where the “point gain per day” is, until we reach a new consolidated high at least (if we are still in the uptrend).

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=1&

    Some observations;

    (1) Based on current /ES, we are back at October 12th price levels. Thats 3.5 months of going nowhere in the market, which must represent considerable technical damage, and must leave a huge number of purchasers during that timeframe feeling quite nervous at this point.

    (2) The only remaining unbreached trendline of significance is the one commencing after the july rally, and connecting all the lows since then. This should offer support in the 1080-1090 area.

    (3) A breach of those levels, should see us move down towards the 200 ema (currently 1047). This was the first significant stalling and consolidation point off the march lows in june/july, and we could reach this at the point where its 1052-1057.

    (4) RSI on the daily is at the most oversold since the July bottom. Remember what happened after that!!!!

  • raised_by_wolves

    Looking at $INDU, yesterday's low was at a 78.6% fib (July low to current top). The price action bounced from there back to my purple trend line and then backed down a little. I expect the green line to be visited next. If that green line holds, I expect a bounce back to the purple line. That would coincide with Mole's orange scenario playing out.

    http://screencast.com/t/YTQ5ODY2OG

  • jacksoo

    “RSI on the daily is at the most oversold since the July bottom. Remember what happened after that!!!!” but go back a few weeks and dropped a further 30pts from that level before it bounced. Who knows, good information though.

  • raised_by_wolves

    I expect the blue trend line that everyone's watching to continue to be violated. Yesterday, the price action moved from below to above and then below again. I would be surprised if that didn't happen again.

    http://screencast.com/t/MjNlZmM4OWQ

  • CorporalCarrot

    Yes, DYODD and all that. Just trying to look at it from both sides, and be analytical and not get giddy. Essentially I am saying that we have been here before, and it hasn't worked out so caution is still warranted.

  • raised_by_wolves

    SSH, here's the channel you asked me to draw (green) and its sidekick (pink).

    http://screencast.com/t/YjIyZGI4

    And here's a closer view.

    http://screencast.com/t/YjI5MzlkZDgt

  • rikardo_kurvio

    so far recent action is similar to november's.

    nasdaq100 fut daily charts with emas
    http://www.screencast.com/t/Mzg3ODM1ZD

  • raised_by_wolves
  • weasel_whisperer

    There are many reasons for not reappointing Bernanke, and perhaps a few for reappointing him, but whether he is a Jew or gentile is not one of the reasons. If I misunderstood what you have written, I apologize.

  • bobthehorse

    I'm sure he meant gentile in the sense of 'gen-teal', i.e. honourable and distinguished, belonging to the class of gentlemen

  • jacksoo

    maybe – might have been referring to the statistical anomaly though i suspect.

  • jaxon

    Sorry. John Mauldin's Outside the Box newsletter has an article about commercial real estate that points to an impending crash in commercial real estate. I couldn't cut and paste the entire article. The newsletter is free. Check it out.

    http://www.johnmauldin.com/outside_the_box.html

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    LOL. I should cut this talk short (because mole, i.e. the owner, doesn't want politics here), but given tron's past experiences of calling nazi to others…

    might be fun

    Seriously, I'm calling it a stop before it gets out of hand, berna is an asshole regardless of sex, race, color or creed so not worth dickering around by where you want to pick on him,

  • jacksoo

    Thx will check it out.

  • gmak

    I can picture SRS (the widow maker) putting on her leather outfit, thigh high boots, mask, and strapping on the '45s. heh.

  • Nightwind

    You forgot the handcuffs..

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    thanks

  • jaxon

    know what you mean. but they cannot slow bleed this thing forever… or can they? at some point the Fed and the bond market will have their “High Noon” moment.
    my thought is that it will be sooner than later.

  • http://chartsandthat.blogspot.com/ ultra

    EW theory says that because this is wave C down (from October 07) of a flat that began in 2000, it has to unfold in 5 waves.

    The fib that Jack mentions is a big clue that the five wave labelling for “P1” may be wide of the mark.

    However, no way is the rally from March a four.

    I look at 1930 (banging the drum again… I know – zzzz) and see that we can still go straight down from here (same retrace then, 61.8% from the wave b/ii high).

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    how about a flat 4 from november 2008?

  • http://chartsandthat.blogspot.com/ ultra

    We have not been here before

    http://www.screencast.com/users/ultrabear/folde

    I love the timing – lots of UK press about saying how we're finally out of recession (GDP grew 0.1% – basically a rounding error).

    Oh the irony.

  • gmak

    You guys are great! Lots of useful information, insight and opinion. I almost hate to do this, but….

    http://evilspeculator.com/?p=14356&success

    NEW POST
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  • http://chartsandthat.blogspot.com/ ultra

    ok, I'll grant you that one is a possible, but that really looks a lot more like a five than a B to me into March.

    killer thing is the fib, to my mind – now this I see all the time at all timeframes (the retrace resolves relative to the wave B high and not the orthodox top) but *only* with ABC moves – so what are we meant to make of that?

    this is why I keep saying that this is exactly how things panned out in 1930 and then the frog was slow-boiled for several years afterward rather than another crash happening.

    oh, and the other thing about 1930 – it bounced before it took out the prior wave A low of December 1929, so if that repeated, we would almost certainly not take out the March lows by year-end.

    it's just a possibility to bear in mind.

  • jaxon

    BTW, I threw out the wild notion of an “engineered” deflationary crash as a rationale for government taking control of retirement funds as a way of “protecting” the investor. Of course, the irony is that the majority of savings are in bond funds which would allow a crash without destroying the very thing needed. Taxation has too many negatives. So………
    The point is that at some point the best “solution” may be to let go……
    Perhaps it wouldn't be the first time if some of the conspiracy theories revolving around the depression were true.

  • honeyeater

    SSE Composite Index lowest close for 3 months…down 2.42% @ 3,019.

    Keep a decisive break of 3,000 on ye radar, as it has implications that will put a dampener on the red dust rising in Australia's Pilbara.

  • standard_and_poor

    Like wise your “LORDSHIP”, how about a tune from across your side of the pond, what’s popular now?
    Here’s a great new site I’m exploring:www.thegatesnotes.com

  • Lordted

    Here’s one for the age: http://www.youtube.com/watch?v=TjHJ_snG3RI

    Looking for a bottom around the end of this week I think

  • Lordted

    Nothing happens this side of the pond mate…. Nothing worth mentioning
    since The Beatles.

    Here’s one by the main man :
    http://www.youtube.com/watch?v=WGiV7mxzdGQ&feature=channel

    Released after his untimely death I think? The man is an inspiration. you
    remember those sort of folks don’t yer?

    They’re all long gone…

  • standard_and_poor

    Thanks, I’ve heard the song but up until now I hadn’t seen that video.  Bono comes marginally close. All is not lost my friend.

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