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What the…FED?
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What the…FED?

by MoleOctober 29, 2008

I am trying to rush this out before I head out for the evening.  Today’s action was not so standard Fed in “feel,” that is, the fluidity of trading.  Normally on Fed days the trading is rigid, programmed large lots, especially right before they speak.   Today, however, trading continued, albeit on light volume, right through when they were supposed to speak, with only a slight spike.  Quite strange.

Aside from that though…Fed cut, stocks rallied, stocks get hit by freight train.  The last 5 minutes were a huge shock to the bulls, but, personally, I don’t think the upside is done quite yet.  Why not?  This is an updated version of the chart I shared with Johnny last night.  Check it out.

There is no real short term divergence.  I expect us to pull back some, but another push higher should complete the c wave of [4].  Otherwise though, volume was fairly weak, and breath was about 55:45 to the negative.  As it stands right now, we could have completed the triangle, with a slight throw-over or we push higher to finish a flat.  The triangle still unfolding is the third option at this point.  As we know, all 3 of these choices will send us lower in a wave [5] once they complete.

Since this is gonna be short and sweet, lemme finish off with a nice Hat Tip for the sweet part.  This goes to BX (with KFN in a close second), which single handedly added 5% to my IRA today (granted this is my largest dollar holding).  Way to rally like nobody’s business.  Looking later, I find that some insiders have been buying up shares.  They will be happy to know they are in good company. 😉

Skål!


About The Author
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.
  • http://groups.google.com/group/monitoringthemadness/ johneeboy3

    My flat-o-meter says “preach it, brother!”

    The only thing on my mind is perhaps todays action is the completion of wave 2 of (C) only – or that 2 has a little further down to go. The last two days action can be counted reasonably well as 1 – zigzag2 – 3 – flat4 – 5 with a zigzagging wave 2 at or near completion now.

    If it's a flat, it would be sweet(er) if (C) played out as an ending diagonal. That would introduce a loverly shorting opportunity nearer to your (C) target zone.

    With that in mind, if ES gaps down at the open I'll find it hard to resist putting some parts of my nether regions on the long side.

  • BigHouse(Aka Mr Vix)

    Maybe if the dow goes below say 8500 then there might be no flat. It just goes down to 7000.It will be interesting to see how asia handles this in a few hours.

  • Ukla the Mokk

    Thanks for another outstanding analysis berk! I look forward to wave 5 beginning. My thoughts are that it happens immediately post-election.

  • Gumbo YaYa

    Berk, what time frame is that on BX? 60d/60m? Nice work!

  • BigHouse(Aka Mr Vix)

    anyone know what fair value is foe dow and s&p? for tommoroo

  • Growler

    I found this interesting and gives prudence to a theory I have.

    “It doesn't take a math genious to realize how screwed the banks are in this situation. They own billions of mortgage assets at peak prices that now must be sold into a lending pool that's 70% smaller. Its not hard to guess whats going to happen to housing prices over the next several years when there is 70% less money available to borrow. Can you say WATERFALL? Bank profits will WATERFALL down right along with them!”

    http://thehousingtimebomb.blogspot.com/

  • b_rad

    berk,

    how bout you share some of those ira gains w/ the rest of us!

  • ZigZag

    Hank “The Frac Man” Wernicki posted an interesting fractal tonight…

    http://www.traders-talk.com/mb2/index.php?showt

  • gagelle

    Yen is down.

  • jcoors

    I keep expecting the floor to drop out from under us. The big boys (Timmy, Atilla (although he thinks we'll see sub 900), even Mole/berk a bit) think the short term bear market is over. So I'm mostly in cash….

  • Ukla the Mokk

    There are so many issues that bounced off of fib retracements I drew long ago that I really feel like I missed a lot of opportunities. That being said, I would not be shocked in the least if we went higher on “not as bad as we were expecting” GDP news tomorrow. However, since I'm all cash and NOT in any plays, it's sure to tank.

  • Donna

    Wow!

  • BigHouse(Aka Mr Vix)

    Hey johnee if this turns into a flat how fast do we go up to wave A. Also will it go past it alot or allitle to end wave C ? Then will the turn for wave 5 happen on USA election day (+ or – a day)?

  • Ukla the Mokk

    For what it's worth, if we see downside action tomorrow, here are the issues I'll be keeping a very close eye on…
    APC, CELG, ILMN, SOHU, UUP, XOM

    If we see upside, I'm probably gonna sit it out.

  • BigHouse(Aka Mr Vix)

    Overseas is holding up

  • SteveInChicago (spsnomad)

    Wow! I don't know whether to be more impressed by the EW chart or by your total ownership of BX!

  • benji12

    futures are up 200 ahead of what everyone expects to be horrible GDP numbers. There is no way mkt opens down tomorrow.

  • LeoOfPisa

    Excellent analysis as usual. Thank you.

  • Bartholomy

    My strategy is simple, I commit sell order of ES at 950, 970, 1000
    The higher it get the more I get loaded.

    Found a great fractal pattern….. (the figure is not from me)
    http://www.traders-talk.com/mb2/index.php?showt

    Getting long on energy and materials and selling related calls, and thus reducing cost. (I love this strategy)

    I'm happy to have so much bonds… I will take some partial profit again.

  • DTStreetz

    Hey Ukla,

    Why is CELG on your watch list? I was just wondering.

  • JWBlack

    Maybe one of you technical guys can make the case for, if you haven't done so already (I'm kinda new here), lots of chop from here to early spring. Lots of chop = new lower low that looks like the end of the world might come and then a new higher high that looks like all our sins have been forgiven and then another new lower low in 2009 that scares the bejeezus even out of mole et al?

  • SierraSeller

    Good stuff as usual. i notice your MACD settings (8,17,9) are different than the std (9.12,26) that is on my chart set-up. Any special reason for the settings.

  • StoneDog

    I dont know about him, but those are default settings for the MACD on TOS.

  • Ukla the Mokk

    All from a daily chart: monstrous up day Tuesday, inverted hammer today with today's high barely touching a confluence of 100 and 50 SMA as well as the 38.2% fib retracement at $63.60 which acted as S/R in mid Sept as well as the gap at the end of June and previously at the beginning of June. RSI is over 50, but there is also strong support at around $59.30, which is also the 50% retracement on the same fib as the 38.2, so that will have to be watched. Earnings are over, so no worries there. And there's more convincing “evidence” on intraday charts, but I don't have a screencast account yet so I can't show you what I'm looking at. I need to get on that.

  • DTStreetz

    Thanks, much appreciated

  • Ukla the Mokk

    Screenshot of a 6-month daily…

    http://screencast.com/t/KsxB6Vgg9DC

  • molecool

    Perhaps I can offer my personal answer – Berk may have a different approach and I haven't asked him about it.

    I use 8.17,9 for the buy signals, and a 9,26,12 for the sell signals. Gives me more accuracy on the daily chart. For the record though – I have tried dozens of settings over the years and always wind up with stochastics. Very few read the stochs as well as me – and they have to fail me yet…

  • molecool

    I don't get scared – I get even.

  • http://www.evilspeculator.com berkshire

    I actually only use the (8,17,9) (which is standard for Prophet in TOS) for display purposes, because “everyone” can relate to it. I use an undisclosed setting when actually determining my divergences. Not that the “standard” doesn't work, I just like the tweeked version better. What can I say… 😉

    Skål!

  • http://www.evilspeculator.com berkshire

    Thanks… I try to deliver solid analysis whether it be short or long. I can't say that I haven't suggested BX as a stock trade a couple of times. Again though, I appreciate the props. Holla!!

    Skål!

  • http://www.evilspeculator.com berkshire

    As it stands right now (as expressed in my chart), wave [C] should have (or very soon have) completed wave [3], leaving only wave [5] as the final advance. That means most of the distance we will cover should be covered thus far. Not that wave [5] can't extend, but as I said to Mole, I expect 1400 (at minimum) out of the $NDX. I will be shocked if I don't see it, honestly. Though that also means that the flat (if it is one) should be nearly complete (barring a long wave [4]).

    Skål!

  • http://www.evilspeculator.com berkshire

    Look back a few of my posts and see if I recommend BX at all. I try to put you ahead of the curve.

    Took gains on…BX, KFN, DRYS, AKS, CNH, QLD, and i think that is it. All stock in the IRA just for future reference.

    Skål!

  • http://www.evilspeculator.com berkshire

    Yes Sir… 60/60, and thank you.

    Skål!

  • http://groups.google.com/group/monitoringthemadness/ johneeboy3

    Sorry, meant to specify that I was looking at ES. It's hard to make the same case for NDX – berks count is spot on for that.

  • jacksoo

    Empathy on Wall St

    http://screencast.com/t/M7Wu7X3RU8d

    jacksoo

  • http://groups.google.com/group/monitoringthemadness/ johneeboy3

    Any wavers got a view on spot gold currently? I like the look of the retracement, from a trading point of view… nice and overlapping with overtones of rising wedge/ending diagonal.

    By my view it's either going to go ballistic to the upside (unlikely, IMHO) or start another leg down soon.

    Any thoughts out there?

  • http://moontrader.wordpress.com/ Moontrader

    pretty interesting call on BX. What about the chinese buying back? Anyway, I'm inclined to give it a try.

  • toad37

    I hope balistic, I have calls on DBS (silver). I'm inclined to think it rallies.

  • http://moontrader.wordpress.com/ Moontrader

    BTW, I like your wave count. SPY/SPX could be developing the same pattern.

  • Growler

    That's my screen saver

  • boomer55

    Mole, would you share any tips or tricks on how you read the stochs so well?

  • Growler

    Mr. Mole,

    Which Stoch do you use (i.e. Full, Slow or Fast)?

    Thank You

  • T.B. Aurelius

    Berk+Mole.
    I tried to post a wave chart yesterday, couldn't get into the site.
    And now I am away from my office, and no screen capture here.
    If you would like, I will send it to you.
    Drop me an address at: T.B.Aurelius@gmail.com

  • Gumbo YaYa

    Berk, would love to learn more about how you use BB for trade signals. Maybe a post on this in the near future? I have been using the 60d/60m charts to trade recently & doing better with those instead of the daily charts. Daily charts are a mess right now & very foggy. Glad to know you are doing the same.

  • jch

    Do you mind sharing your settings on your stochs. Thanks

  • SierraSeller

    An “undisclosed” setting – sounds like secret info from Dick Cheny.
    I'll compare the Prophet display see what happens.
    thx

  • ablebonus

    Rick Santelli on CNBC just pointed out that the dollar index could be tracing out a 5 wave Elliott Wave pattern and this correction could be wave 4.
    My question for you wavers – If we are in a bear market for the dollar, wouldn't the primary trend (down) be the 5 wave and the correction (up) be a 3 wave, which we have just seen?

  • http://www.evilspeculator.com berkshire

    Sorry…can't give away all of my trade secrets for nothing… At some point I might mention it, but the standard still works pretty well.

    Skål!

  • Ukla the Mokk

    CNBC are a bunch of no-talent ass clowns.

  • Ukla the Mokk

    I don't know about the rest of you, but we've seen a decent amount of upward action these last few days and I'm liking it…only because I see the possibility for a good deal of bearish setups. Of my list last night, XOM could be nice if it hits $73.05. But another one that I like if it keeps going up is ILMN.
    XOM – http://screencast.com/t/Y5078ddD7H
    ILMN – http://screencast.com/t/aWmT0031jx

  • molecool

    It's not brain surgery folks – just start fiddling with the settings and see what happens. Part of the 'fun' is to explore and create your own indicators.

  • boomer55

    Hi group, Trying my first stab at Jing.

    http://screencast.com/t/7ql11tnM

  • molecool

    Rick was talking about EWT? I love that guy – LOL 🙂

  • boomer55

    Rick for president. He and Hames? seem to be the only ones who should be talking.

    Just posted my first Jing capture. Thoughts

  • http://www.evilspeculator.com berkshire

    So for all of you wondering…Though I still see some more potential upside, I could not resist the opening prices of some of my favorites, especially while the $VIX was pushing 7 down.

    On the list today is… BG, BIDU, CF, CHK, GOOG, FSLR, ICE, MA, RIMM. Honorable mentions would be WYNN, POT, and AAPL.

    Happy hunting.

    Skål!

  • BigHouse(Aka Mr Vix)

    I hope this market goes down the tubes. Tired of all this choppy stuff. But i know this pattern has some more to go.

  • SierraSeller

    thanks

  • SierraSeller

    thanks wasn't really looking for the info – undisclosed just reminded me of
    Cheny's “undisclosed location”

  • malusDiaz

    Danka for the trades ! Long live Berk & Mole!

    ./bow

  • http://www.myspace.com/181419967 JZT_CHIL

    Do you already have the “secret setting” for the BB? 🙂

  • molecool

    Send money.

  • SierraSeller

    I'm afraid the all the secrets are ………….ahem …………..still secret

  • http://www.evilspeculator.com berkshire

    German boot camp does not sound fun in ANY way…

    Skål!

  • BigHouse(Aka Mr Vix)

    I hope a hedge fund has to do a large liquidation today 🙂

  • molecool

    CLEAN CUPS

  • molecool

    Funny, I was thinking the same, watching the Yen go so strong today.

  • molecool

    Suit yourself – Heidi Fleiss and Claudio Schiffer are the drill instructors 🙂

  • Gumbo YaYa

    Where have I seen that before??

  • molecool

    Hehe – hey, AFAIK Jeff isn't using it anymore, so I stole it.

  • Growler

    ugh…Heidi Fleiss…..no thanks…

  • LearningWizard

    Novice question.
    How does the Yen affect equities prices and hedge fund liquidation?

  • MyLifeMyTrade

    I got into BIDU, FSLR, POT, OIH

  • http://www.myspace.com/181419967 JZT_CHIL

    Sierra, try this setting & see if it would work. Caveat as always is it doesn't mean it works all the time (^_^)
    BB [20,2.0] {20,3.0} [20,4.0]
    If you want you can email me for some ticker symbols to check.

  • SierraSeller

    I'll give these a try. . what symbols are you checling?
    sierraseller@gmail.com

  • molecool

    This is a big subject, but in short the Yen has been (ab)used to feed the Japanese carry trade for the last 8 years, which was almost like printing money for investment banks and certain funds (i.e. borrow money for almost no interest in Japan and put it in interest bearing instruments in the U.S. and Europe). All that is now unwinding and the debt that was purchased needs to be settled in Yen, thus it's going through the roof. It's not the Yen directly which is pushing down equities, it's the unwinding of all those carry trades. So, it's an implicit inverse relationship – if that makes any sense.

  • http://chciwyspekulant.pl spekulant

    what is 2sweetie's website url ?

  • LearningWizard

    Thanks a lot. Great explanation. If I understand this correctly, the Yen going up is not a leading indicator of equities tanking, it is a consequence.

  • Cross

    Thanks a lot. Great explanation. If I understand this correctly, the Yen going up is not a leading indicator of equities tanking, it is a consequence.