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ISEE Red Candles
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ISEE Red Candles

by The MoleNovember 11, 2010

I finally had a chance to update my ISEE Equities chart. And what I see on the horizon has a clear bearish tint to it:

Traditionally an ISEE over 240 or 250 has brought about a downside correction within the span of a week or so. Here are the ISEE Equities readings for the past week:

Now, as you can see we breached the 240 mark on three occasions consecutively starting a week ago. However, in the past few months that hasn’t really led to a significant drop. Thus, what’s a lot more important is the 10-day moving average which I am computing manually in Excel – but it’s worth the effort as this chart provides a more solid insight to the changing tides of retail trader sentiment on a long term basis.

As usual retail traders are the last ones to chase the tape up. And as always I expect the usual outcome – which is for the little guy to wind up holding the bag when things start taking a turn to the downside. Now, that may be this month or perhaps as late as January, unless the Dollar paints a firm bottom risking much coin on downside is a risky endeavor. But take a very serious look at this chart and then tell me that equities have much more upside potential. Maybe on a long term basis – but I don’t want to be a buyer here unless we see a meaningful correction.

Bulltard of the Day: Retail Traders – may their respective deities watch over them.

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.
  • yudhisthira

    Most excellent chart. Thanks for highlighting the 10 day avg.

  • Joe_Jones

    5…4…3…2…1…Yoohoo, here I come, said the bear.

  • 99er

    ES and ZB
    Looks like they're ready for a move; are we back to “normal”?
    http://99ercharts.blogspot.com/2010/11/es-zb_11.html

  • Joe_Jones

    Smells like the green finish ramp up job.

  • jacksoo

    what the hell u holding joe?

  • http://evilspeculator.com molecool

    Yeah – not so fast – you probably didn't see my chart and the commentary but this may take a while to play out. My point here is to not chase the tape – despite the POMO schedule for the next two months.

  • http://evilspeculator.com molecool

    I added a sentence to the top I accidentally left out. If you're not a sub – please keep in mind that this is a long term chart and that I don't expect much bearish tape in the next few weeks – in particular in light of the brutal POMO schedule I posted yesterday.

  • http://evilspeculator.com molecool

    His ass in a sling? 😉

  • jacksoo

    LOL

  • amokta

    I see skies of green, and blue bears too..and i think to myself…what a wonderful whhorlld.

    -anyway, i can't decide which way to play the tape!! – currently long

  • amokta

    for what its worth atilla(xtrenders) went short recently (but declaring tops, is a 'warning' sign accordingto CS – in that declaring a top is a fools errand – my paraphrasing there, i.e. should one follow someone who calls tops)

  • BobbyLow

    As the market continues to defy conventional logic, about the only thing I can say is that it has certainly felt better to be a Shittee over the past month as opposed to being a Shittor like I've been for most of the past year.

    The 3:30 ES 15 Min Candle might have been a head fake and 3:15 Candle is still above VWAP so it doesn't look like a tankerooski for today. Regardless, the market will tank on it's own time not mine.

    What has been exceptionally pleasant over this past month is the avoidance of “Looking for P3” that I am re-naming “Looking for Mr. Goodbar” which was a 1977 Movie about a person who went out cruising at night looking to get abused. :)

  • amokta

    Movies in the seventies were a bit strange! There was also a film about a taxi driver?

    Yes me too – that P3 thing was like a lead weight tied to ones feet while trying to kick-box

  • bananaben
  • jacksoo

    worrying – they get to vote as well?!

  • BobbyLow

    I saw both Looking for Mr. Goodbar and Taxi Driver at the Movies when they first came out and yes they were both totally weird. Check out the pictures of Jodie Foster and Robert De Niro from 1976.

    http://www.imdb.com/title/tt0075314/

    But as weird as those Movies were, they're still not as weird as this market. :)

  • yudhisthira

    I think I saw that gun in someone's profile pic.

  • Joe_Jones

    HE HE HE!

  • amokta

    Yes, this market is weird indeed !

  • convictscott

    Bobby, I'm currently taking a close look at todays price action. I suspect a reasonable explanation is that since this is starting to smell like an inflection point the gap down on open panicked eager bears into getting short at the open, and weak longs to get out prematurely.

    Since both those groups of people were driven by extremes of emotion it made sense to be on the other side of that trade. When the market failed to fall off the cliff (or even break the daily low) shorts were forced to cover, causing the afternoon popped stops rally and attempted gap fill.

    With that in mind I have some observations. Firstly, the markets are behaving, well *normally* again. Regular buying selling pressure concepts are *working* again, when last month they werent. Ergo, to me, the overt manipulation has stopped. If I can understand the price action I can trade again.

    Secondly, the daily inside bar candle on $spx has a 70% chance of resolving at least the distance of the range of the candle, in the direction of its initial break. Betting odds, finally. And a super small range on the es makes for a big position with small risk for me. I sell on break of low, buy on break of high, 12.5 es points at risk for me.

    The euro/dx gave a valid sell signal for me yesterday. Looking at the position of the bollinger band, if it goes a little further to the downside (in euro) it should go to “walk down the outside” mode, but thats a little premature.

    So we have a situation where todays price action could be construed as a failure to breakdown to the downside after a gap down, OR todays high close could be viewed as a distortion caused by the dynamics of gap fill emotion, and that a little weakness will kick off a correction of unknown scope

  • BabyGuppy

    nice picture of the bear in Denver

  • convictscott

    Amotka, at this stage a correction is likely. The scope of that correction is unknown, and the highest probability for any correction in a rally like this is a short sharp drop which fakes out bulls, and provides yet another buying opportunity, fuelled by the 100th short squeeze in a row.

    Sure, something else is possible, but we have *no* evidence of it yet. Until we get a correction, look at how it plays out, we have no idea whether we are looking at 2-3 days of downside, several weeks, or a sea change. Certainly the highest probability is for just enough to shake out weak hands

  • http://evilspeculator.com molecool

    “So we have a situation where todays price action could be construed as a failure to breakdown to the downside after a gap down”

    Ookaayy – so what really has changed then? That situation has pretty much persisted for 18 months now.

    On a serious note – I do however see topping signals but it's too early to bet on the long side. I would not want to be long here though.

  • http://evilspeculator.com molecool

    I say they allow 1100 for appearance sake and then call in the storm troopers.

  • Clint

    This market makes one feel like if you made a huge bet that the sun would come up in the east tomorrow morning…you'd be wrong.

  • amokta

    Thanks CS – lets see what transpires!

  • convictscott

    To me the difference in the market now compared to a few weeks ago is the absence of the “mystery” 5 min supervolume spike candles every time the market looks vulnerable. In other words, the market is no longer being propped up artificially to my eyes, and is faltering ahead on its own momo.

    Most of my trades are in and out in 1-3 days, and I no longer trade equities, so I am somewhat nimble.

    I agree its certainly too early to say, just for me the *potential* exists. IMO if we go down tonight the odds favour at least 1-2 days more of weakness, which is enough for me to trade.

    In any case I cant really overthink it. I have a valid sell signal, short on break of the es 1201.75 with a stop 1214.

    By my way of thinking its not an error to take a losing trade, but it is a serious error not to take a valid signal.

  • convictscott

    And one other thing, if the market tries to go down here, but cannot get past 1200 $spx, I would take that as a sign that it is setting up for an explosive move to the upside, which I would want to be on.

  • convictscott

    Keep an eye on how the market reacts to $spx 1200, if it can pass that hurdle a positive feedback loop should be in play to the downside. If it cannot get to 1200 then to me it would be a sign that underlying demand is very strong.

  • http://www.hervey-bay-holiday.com kea11

    BobbyLow love the reference to “looking to get abused”; this has created a Eureka moment for me. See the definition for Masochists – definition here: http://goo.gl/fNM4V.

    The better you know yourself, the more you will be able to make good decisions in your life.

    This is a revelation, now I can enjoy my station in life knowing that I bring this on myself due to my own fetish for pain; yippee how enlightening. Think I'll write a book titled “The Secret Soup Recipe for the Bear Soul”.

    or better still:

    “Who Stole my Bear Soup; a story of how thieving Global Central Bankers and their cronies have stolen the money of the Middle Class for their own kind” Apparently they have done this misappropriation legally and with the blessing of those same Middle Class.

  • http://zstock7.com/ zstockmiester

    Holy Crap! That's a big bear…It's blue too, must be holding it's breath.
    I looked at HAL, Nope!!!!
    I ain't shorting that double top…
    Here's why!
    http://zstock7.com/?p=3653

  • http://www.hervey-bay-holiday.com kea11

    I take it that Normal is defined as the Nouveau FED primer QE Money era “Normal” rather than the Free Market “Normal”. Of course the former definition is completely correct and a valid position, cf flat earth normal versus round earth – evolve or die. Of course the round earth theory was Fact while the FED is still to prove one way or the other.

  • http://zstock7.com/ zstockmiester

    I”m looking for the pullback ( short term) to get to 11166.6 on the DOW. (ooouuu, 111 and 666, for all you illuminati folks)

  • Eva S

    HAL has been the best stock for me this week and made me a lot of $$$. Bought the HAL calls on Monday and am planning to sell tomorrow. The chart was just perfect. :-)

  • http://www.stringmandalas.com LosGatosCA

    ES indicators – 6 timeframes at End of Day

    http://www.screencast.com/t/IITya9r2H

  • 99er

    USDJPY
    Possible break again above upper trendline of Falling Wedge tonight.
    http://99ercharts.blogspot.com/2010/11/usdjpy_11.html

  • http://evilspeculator.com molecool

    Again, I would extend that sentiment all the way down to SPX 1100.

  • Eva S

    I was surprised how strong the market was on a day when CSCO dropped 16%.
    Also, precious metals are going back up. I actually shorted some miners 2 days ago and was smart enough to cover the following morning. I don't think I will be shorting precious metals any time soon.

  • http://evilspeculator.com molecool

    “IMO if we go down tonight the odds favour at least 1-2 days more of weakness, which is enough for me to trade. “

    That is kind of my window these days – scalps and swing trades which I usually cut off Fridays.

  • Joe_Jones

    S&P500 FUT dropping FAST in the last 1/2 hour. Bad news coming from Asia?

  • jacksoo

    wondering there's some ugly sh*t with the G20 – – hardly a place of best friends these days – – US almost pleading for the OK to keep QE alive but a lot of kick back as its screwing other nations. Don't think US can have it its own way – – everyone else now taking austerity measures US trying to say we ain't ginna take the medicine YOU are because we have control of worlds currency – –

  • Joe_Jones

    Funny, all of Asia is red right now, except Seoul. PPT at the G20?

  • BobbyLow

    Hi Scott,

    Yes we are certainly due for a correction. How much and how long in duration is the big question.

    I'm currently holding 4 Open Swing Trades at the moment (plus my near worthless Lottery Tickets). All 4 Swing Trades are in Decent Profit Territory. The 4 positions are: Long S&P 500 via Short SH and it is +3R, Long Naz 100 via Short PSQ and it is +2R, Long XLE and it is +4R and Short TLT which is +.5R.

    In times past, I probably would have taken much smaller profits much sooner while trying to move on to the next trade. But because I was prodded and encouraged by this Australian Guy whose initials are CS :) to establish a set of my own rules to follow, my written rules have not stopped me out yet. Actually part of me wanted to get stopped out today (still stinking thinking) so I could formally book profits, but my rules said no – not yet. My best guess is that it would take about a .5R to a 1R backwards move to stop me out from here. But on the other hand, if my indicators don't stop me out relatively soon then perhaps there are more multiples of +R's in the works. Also I'm still holding protection on each one of these positions that will work for me when I get stopped out. My original intent was to drop my protection if a trade was successful after 2 weeks but I've re-thought that one and am now comfortable carrying protection for extended periods of time.

    Also that was a good pickup on the “lack of mysterious 5 minute super volume spike candles”. I hadn't thought about that.

    In the mean time, all the “news” about the G20, CSCO's big disappointment etc., is all interesting stuff but from now on I'm trying my hardest to compartmentalize this information because it's effect on the tape has proven nebulous at best.

    So we'll see what tomorrow brings. I hope you have a good day where you are and we'll catch ya on the other side. :)

  • convictscott

    If you trade the softs, sugar should go on your radar right now

    After a down candle like that, a failed retest of the high is an outstanding short

    http://www.masterkillers.com/wp-content/uploads/2010/11/image11.png

  • http://profiles.yahoo.com/u/6NFOSGRXKB4LMGOAXV3ZY6IWZA Grainman

    Shanghai Copper March Contract Hits 5% Limit-Down; CNY65,860/Ton

    fresh off DJ newwires…… hope they love chewing on that FCX tomorrow….

  • http://profiles.yahoo.com/u/6NFOSGRXKB4LMGOAXV3ZY6IWZA Grainman

    Rice, soy, and maybe wheat will be too by 1:15 pm…. maybe by AM….?

  • 99er

    YM
    Back below prior support. So much for the G20.
    http://99ercharts.blogspot.com/2010/11/ym_32.html

  • convictscott

    Break of daily lows on es z0… I'm now short gold, euro, es.

  • jacksoo

    you think there's much downside from here scott? looking at 1197 area as possible bounce?

  • convictscott

    Well thats the thing. 1197 is approximately where the 20 EMA sits, which is a perfect buying opportunity IF the uptrend is still intact.

    So rather than predict how much downside there is, which is frankly stupid, I'd rather see, firstly that it can go down (looks like it from here) and secondly, how it reacts to 1200.

    If it washes off its upward momo with a sideways and down sloppy move back to 1200, then it is an *extremely* high probablity trade to the upside, as the short positions accumulated over a week will be forced to cover, driving the market to new highs and reinforcing the dip buying mindset, almost guaranteeing an extended move to the upside. Think about it, it does look good from the short side now, I went short today, others did too. If I have to cover I add to buying pressure, driving price UP.

    If, however it slices through 1200… its a different kettle of fish. Because 1197, as you say, *will* accumulate dip buyers. A buyer who buys today has an extremely short investment horizon, if things dont play out for him today, he may cover immediately, he is nothing like a long term investor prepared to hold for the long term. The mindset of a buyer at these elevated levels is somewhat different, his biggest fear is that he is the “greatest fool” buying off other fools and he is the last one holding the momo bag… therefore when this person sees a little evidence that he was wrong, he runs for cover quickly. We call this guy a “weak hand”.

    If the “weak hands” have to sell their longs, they drive the market down with their selling, creating the self reinforcing positive feedback loop where the market starts going down and more shorts jump on board, driving prices down, and spooking weak hand bulls out of their positions.

    So rather than predict whats going to happen, which to me is somewhat futile since WE DONT KNOW, I'd rather see how the market reacts, firstly to 1200 spx, then if it can get through that, to 1160….. then as Mole says, all the way down to 1100.

    Lets put it this way, this is NOT a time to bet on a trend change. P3 is buried at this point.

  • 99er

    DX
    Dollar futures now above upper boundary of up channel.
    http://99ercharts.blogspot.com/2010/11/dollar_478.html

  • Joe_Jones

    Well said. IMO, P3 is in a deep coma…but not dead. As long as 0.618 retrace of '07-'09 drop is not passed, P3 is not off the table.

  • http://evilspeculator.com molecool

    The question is this: Does it matter? I mean we can also talk about the next 'real bull market' – which may be in 2014. We really don't know.

    I know I was the one pushing for P3 for a long time – so I'm definitely responsible. But there came the point where I realized that the 'looming crash scenario' a.k.a. 'P3' started to lose credibility day after day, week after week, month after month. It's been 18 months now since the end of P2 (or whatever we'll eventually call it a decade from now) – that wave started in October of 2007 and ended in early March 2009 – that's 15 months. Corrective waves usually do not exceed the preceding motive wave, so every month we add now greatly decreases the chance that a simple correction is taking place. Even if it's a correction it may be a lot more complex and eventually turn into something else.

    It all comes to down to what I termed 'waiting for Godot': We can continue waiting for some big crash that everyone and the Fed is trying to prevent – or we can just trade the tape we have seen for 18 months now. You can say a lot about this ramp up but it's been moving up almost continuously 😉

  • http://twitter.com/forexchump forex chump

    I follow the ISEE call-put ratio but only equity. I have found that using both the 10 and 20 day moving average is probably safer for aggressive position traders. I look for the 10 to cross the 20 from above AND the 20 to be pointing down (chart) before getting aggressively short. If you go back to last April, the 10 day MA went as high as 250 but the market did not turn downward until several days later when the 20 started going down.
    On another point, I'm happy to see that you loved Seoul. I mentioned your blog to my Korean wife, she was pleasantly surprised. Now she wants to go back to check if she made the right decision to move across the pond with me a few years ago. (sigh…)

  • http://evilspeculator.com molecool

    Tell her it was a bad decision 😉

  • http://evilspeculator.com molecool

    The spoos just breached 1200…

  • fearful_syymmetry

    Glad I stayed up to see that bar. Thanks for the heads up!

  • malverd

    mole, ya think the dookie's gonna hit the fan tomorrow? Asia is down pretty hard…

  • http://www.hervey-bay-holiday.com kea11

    It's a War out there; “Activision has announced that Call of Duty: Black Ops, released just this Tuesday, constitutes the largest entertainment launch in history. In its first 24 hours of release, the game boasted a reported sell-through of roughly $360 million in North America and the United Kingdom. This beats out the previous record of $310 million for the same period, which was held by last year's Call of Duty: Modern Warfare 2.” http://goo.gl/BOS8R

  • Joe_Jones

    I think it does matter Herr Mole. With HFT, we got a 1000 pts drop on the Dow in 10 min on mini flash crash day. Wie aufficken ist das? Can't bank coin peacefully with this kind of risk. If there is a P3 or a C wave down, it is going to be brutal because the foundation on which this ramp up was built is shaky. When the FED stop the music, everything weak will come down, and then the rest. For me, as long as S&P1230 is not passed, it is still in the back of my head, and I am hedged for it. We will soon know tho how POMO will work this time and which way we'll head. The banksters stretched the rubber band to the limit so far, but they make more money on the short side as it goes faster, and I am sure that they still want to do it in the future because they have huge gaps on the B/S to fill. If we pass 1230, the rubber band breaks IMHO. They may not want to kill the golden goose yet tho. However, if they do, my ass is on the silver train.

  • Joe_Jones

    That is what we produce nowadays: gamers!

    We're well ucked!

  • gsavli

    looks like we really are in this channel (NQ):

    http://www.uploadgeek.com/share-24D2_4CDCD8B7.html

    it's been the same pattern for these last days: up during regular hours and then down after the market close. it's worked for me so far (went short NQ for the scalp at the close again), let's see if we get another one today after touching the lower boundary of this channel.

  • http://www.hervey-bay-holiday.com kea11

    Not only Gamers but War Gamers – in the Generation Z demographic, perfect timing to create an Army.

  • convictscott

    and the shape of the bollinger band on the 60 min es is looking very nice

  • SW6

    …why? because it has a relatively strong down slope when compared with recent days prior?

  • http://www.hervey-bay-holiday.com kea11

    I admit I feel the same way and because of this I may miss the bus to nirvana. But past history shows that Bear Market Rallies end badly and this FED pump just siphons more money and confidence from consumers, as in the end it's their money that the FED is appropriating for itself in the name of keeping them in work.

    Eventually the Money Wizards will be satisfied with how they have survived and passed on the impacts of their 2008 losses to Joe Public and will pull the plug – without buyers, who knows what happens?

    Unfortunately I got involved in Stocks in April 2007 and my opinion is coloured by a very difficult trading environment. Maybe I will never mentally recover enough to trust the market action which is a shame but I have found that timing is everything.

    It's interesting to follow those who are in and out of this market but being that the US market doesn't open until 1.30am my time that's not an option. Even Forex is not easy in my time zone as most of the bank squaring takes place in NY time.
    It is also interesting to note how the ES futures have currently broken through its September channel, after hours of course. Probably just a switch to get the G20 members to agree to US policy out of fear of impending market failure.

  • Bob the Horse

    Funny old game. I had taken my portfolio 45% long and yesterday it was still trading as though I was short. Not very short but still absolutely doing better on the way down than the way up. I think this si largely because I still effectively have a short banks vs. a long other stuff portfolio. And the market is really differentiating.

    I include this chart which I think is fascinating.

    http://www.screencast.com/t/B01n2JRSqSh2

    The point is that the big issues in the economy are still centered on a particular area – Banks. Other equities are being seen as protection against inflation/QE. I have just bought some more futures back on Estoxx at 2776 this morning and would buy the entire lot back down at 2730 which would be around 1180 or so on esz0

    Frankly – I view this as a godsend. Estoxx is back to where it was on Sep 9th, I am being given a chance to get out of my wrong short bet pretty much flat. No such luck for those short S&P sadly but ask youself whether people buying the S&P because of QE2 will be more likely to now buy bonds? I think dips will be bought – I don't like it but that is the reality

  • convictscott

    The bollinger bands are 2 standard deviations from a 20 SMA. Another way of putting that is that the inside of the bollinger bands contain 90% of the price action.

    So most of the time price wobbles between the extremes of the bands, but sometimes, price becomes embedded in either the top or the bottom of the band. If you are watching indicators this is usually the time when overbought indicators become useless and price keeps going up even though its overbought (or vice versa)

    In his book bollinger discusses the situation where price becomes embedded at an extreme and “walks” up the outside of one of the bands, and it is statistically provable that once price reaches the extreme of price action and stays there, it tends to stay in this zone for a while.

    Take a look at some charts on any timeframe, you will see what I mean easily, its quite a useful technique.

    For me, when bollinger bands go into this mode, firstly I take counter trend trades off the menu, and I also use looser trailing stops, since volatility tends to increase.

  • aussiebinlaughin

    Many of you in the UK may have seen this on channel 4 last night. This, IMO sums up the situation that most of us find ourselves in in the West. It shows how the UK got into the mess and even a realistic way of getting out of it…the only one Ive ever agreed with. If you want to get a grip in relatively simple terms of where we are and what it means and just how bad and/or unsustainable the position is for us, this is a must watch. It puts some stark context on how big our debt is and how clueless many of those in power really are. If youre like me, and as Mole has alluded to several times previously, reading all the articles etc takes up a lot of time and is often fruitless. I cannot recommend highly enough that you take an hour and a half out of your life to watch this.
    http://www.channel4.com/programmes/britains-trillion-pound-horror-story/4od

  • Bob the Horse

    That's why the central banks are going to try and inflate it away – there really is no other option.

  • aussiebinlaughin

    Did you watch it Bob? It did give what may be a viable option in the last half hour. I agree that the chances of our gov, or any other western gov doing that (cutting taxes and size of gov ruthlessly) are close to nill. Outside trading, which due to being too bearish I only do in a very small way these days, my long term ethos, simplistic as it is, is to have assets with as little debt as possible.

  • Bob the Horse

    My wife watched it – she thought it was interesting. I saw a bit but it didn't tell me anything I didn't know. It was good to see something on prime-time tv though – people need to understand what is going on and that there is simply no benefit to high govt spending.

  • EvilTrader

    EUR/USD retraced 23.6% frowm low now heading south.

    is it the dollar resurrection ?

    are we gonna see parity soon ?

  • amokta

    ftse/dax climb back up to yesterdays close. US futures pulling up too?

  • EvilTrader

    dont think so. Its a normal retacement, maybe its good short opportunity.

    If 1200 is broken for good in spx, watch below for a quick 50 points drop.

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

    DONTBLONG

  • Bob the Horse

    Not so sure. European Banks have had a big reversal, from -3% to +1.5% on the day. The reality is – the primary reasons to be bearish, namely European Banks, are reversing after a year of underperformance. I don;t want to be short them at these levels. I used to think the market couldn't go up with the banks going down and (in Europe) that has been broadly true. the SX5E has gone sideways for 15 months. But I don;t really think there is any downside in the SX7E (banks sector) from here. The EU are activating the stabilisation fund for Ireland and whilst that won't fix problems, it buys time. And if Banks are going up, so is the mkt.

  • Bob the Horse

    Would also add Irish Bonds are 60bps tighter today.

  • http://iberianviews.blogspot.com/ catracho

    Yes seems like the “fall “this morning would have shaken out weak longs and even encouraged some shorts to play…we all know how it has ended in the last 8 months… buy the red…sell in the blue

  • roncofooddehydrator

    ESZ0 bounced off the 200 EMA (2 hr) at 4am. I'm not overly optimistic about today being further red.

    http://screencast.com/t/DfjeGfszsqKG

  • Bob the Horse

    well, you all saw the POMO schedule Mole posted.

  • 99er
  • lilme

    From alphatrends – returns on POMO days vs non-POMO days:

    http://www.alphatrends.net/

    Worth a minute of your time, for sure.

  • gsavli

    we have 2 weeks of POMO every day ahead. Should be good to push ES to new highs, i guess.

  • OldChicago

    Did anyone spot a messy zig-zag bull flag on ES on multi-day time frame? The pull-back from top early in the week seems to be corrective, as opposed to compulsive?

    This is a major multi-day pullback. It could be a wave 4 or wave 1. Not sure how EWI are labelling. Let see if the tape can muster higher hi from here. Next week is OPEX. Volatility is certainly to rise. Day trade might be more profitable.

  • EvilTrader

    im afraid today was an exhaustion gap of this down spx leg.

    if 1200 hold, pomo will drive us higher, its hard to fight free money, unless europe sinks bad.

  • roncofooddehydrator

    Random question, because everyone is convinced the market will go higher from here due to QE2, is there any chance that it won't?

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

    So is it just me or is this the mini-me of the trip bottom at 1040?

  • Joe_Jones

    I sense some weakness on the Dark Side.

  • amokta

    Did you say a similar thing yesterday (or is it deja vue?)

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

    nah I think someone else said it felt like it – but today it actually looks like it too!

  • 99er
  • fuw

    …or aud/jpg was down testing the support at the 80-81area before going higher. I dont see weakness in it yet.

  • amokta

    Who knows if this is a major correction, like that off of the april highs, or a situation like the 1040 triple bottom!

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

    SLV:GLD looks to be breaking down out of bear flag on the 60.

  • http://evilspeculator.com molecool

    Very interesting pattern on the hourly Zero.

  • Joe_Jones

    Denninger's opinion as to why QE will not work to keep the market going up long-term:
    http://market-ticker.org/akcs-www?post=172027

    “Buying into high multiple stocks is only sane when the macro conditions exist for multiple expansion. That is, when you have a reason to believe that general multiples in the market will increase.
    Right now we have every reason to believe, due to cost-push pressures, that margins will collapse, not go higher. This will drive multiples downward, not upward.
    While there will always be stocks that buck a trend, the trend in this case is pretty clear – and it's not in old Jimmy Boy's favor.
    This appears to be exactly the same error he made in the early part of 2000.
    Consider yourself fairly warned, and if indeed margins collapse you will find these stocks he is touting get cut in price much more than the market as a whole.
    I'm going to be literally rolling with laughter if this rant job turns out to be nearly the same sort of top-tick, with the same sort of high-multiple margin-collapse story, that decimated anyone who listened to Cramer in the early part of 2000. “

    Any taker?

  • EvilTrader

    POMO is actually PORNO.

    P permanent

    O open

    R run

    N naked

    O operations

    http://www.youtube.com/watch?v=isDJBf_tArA&feature=related

    edited : wrong video :)

  • http://evilspeculator.com molecool

    I'm more worried about margin compression – that affects the producer first and the consumer second.

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

    SPX hourly at the channel bottom – bouncey bouncey, or…?

    http://bit.ly/d9X1t4

  • Bob the Horse

    There are big differences between now and then. Yields are 2.7% not 6.7%. The Fed are trying to create inflation, not hiking rates. Stockmarket multiples are pretty average, not at all-time highs. Companies may well see margin pressure, and may well see multiple contraction but that won't mean they have to go down. It could mean that stocks simply under-perform nominal GDP, i.e. derate into a reflationary environment.

  • 99er
  • http://evilspeculator.com molecool

    It's been delayed this morning – some 'glitch'.

  • Planspieler

    Hm, margin pressure means falling profits, means P/E expansions. So you need an aggressive move down in the price (stock market) to have a contraction in multiples….

  • gsavli

    we have a POMO today, on monday, tuesday, wednesday, thursday and friday and monday and tuesday.

    you have to lower the tape at the beginning in order to get max results from this, i guess.

  • 99er
  • 99er

    Dow futures now backtesting lower boundary of up channel. Looks bearish to me. Korean dog meat is going to make the market puke I'm afraid.

  • Bob the Horse

    Yields are now testing the high of 2 days ago. If they can break out, equities are going up as it means QE2 is working.

  • ricebowl

    Either QE2 is working or dollars are toilet paper now. Or maybe they're one & the same.

  • Joe_Jones

    Like the pig in Geico's commercial

  • roncofooddehydrator

    Just a refresher on the odds of higher closes after multiple POMO days:

    http://www.tradingtheodds.com/2010/09/permanent-open-market-operations-pomo/

  • Bob the Horse

    On the contrary, in an inflationary environment you can have margin pressure AND an increase in nominal profits. See Zimbabwe for details.

  • http://evilspeculator.com molecool

    As cynical as it is, it's actually a good point.

  • Bob the Horse

    Yes – that is the whole point after all.

  • Planspieler

    You need wages to rise for that.

  • 99er

    SPX
    Blame it on the dog meat served to the G20.
    http://99ercharts.blogspot.com/2010/11/spx_5404.html

  • Joe_Jones

    LOL

  • Joe_Jones

    Going down folks

  • http://profiles.yahoo.com/u/27ZC2SBQHQE6XD4KTTKHVENQNQ Ray

    Mole – I have been a subscriber for two months and I have never seen a zero pattern like this. Does zero factor in POMO?? If POMO wasn't around the corner I would be all in short.

  • Wave_Surfer

    Going down? or is it done going down?

  • BobbyLow

    So far today, I've been Stopped out of my PSQ Short at Net +1.2R and Stopped out of my Short SH at net +2R. I gave up about 1R on my Stops but my plan worked exactly like it was supposed to. Also my Protective Options are beginning to take hold and I'm still long XLE and Short TLT.

    One Small Step for Man and One Giant Step for BobbyLow. :)

  • Joe_Jones

    P3 started? 😉

  • http://evilspeculator.com molecool

    😛

  • http://evilspeculator.com molecool

    Hi Ray – well, you decided to subscribe within the most annoying tape we had to endure 😉

    The pattern you see now is actually a lot more 'normal' and supportive of potentially more red candles. But email me a chart if you want should you have specific questions.

  • ds2

    I don't have Jing, but we are at the bottom of my SPX wedge w/ first touch point on Oct 19th. It's do or die time. POMO anyone?

  • ricebowl

    EWT question. Comments on the following count?

    P2 I1: March 2009 – June 2009
    P2 I2: June 2009 – July 2009
    P2 I3: July 2009 – April 2010
    P2 I4: April 2010 – July 2010
    P2 I5: July 2010 – pres.

    Does that seem reasonable?

    I am still expecting this turd to keep melting up. ^VIX was at the lower BB, and ^TNX and ^TYX were at their upper BBs. The latter two have retreated a little but continue to push up into the BB — not a good sign for those hoping for a drop. More importantly, QE massacred the bears. I expect more of the same from QE2. So I'm saving my ammo and probably going to take a small long on this pullback.

  • Joe_Jones

    P.M. fall look like the Fall 2008 remake

  • EvilTrader

    SPY downtrend channel @1 min was just broken.

    We may very much have seen the LOD.

  • Joe_Jones

    I do not see a 5 waves count for P2, but rather an A-B-C
    A: from March 2009 to April 2010
    B: April to July 2010
    C: July 2010 to Nov 2010

  • 99er
  • gsavli

    nope, volume is missing.

  • Joe_Jones

    For now…

  • 99er
  • gsavli

    it's really interesting. volume says, there was no real panic with this move. let's see how this day ends.

  • jacksoo

    nice chart

  • http://evilspeculator.com molecool

    NEW POST!!!!!

  • ricebowl

    That makes more sense, actually. Thank you.

  • ricebowl

    I don't think this wave up is done, either. ^VIX bounced softly off of its lower BB. Both in January and April when we had significant corrections, ^VIX gapped up and out of the BBs within a couple of days. It was very violent.