Waiting for Godot…

The recent action of the market lately has me thinking back to high school, and the numerous lessons that I was supposed to have picked up on.
**Disclaimer:  If you don’t want to read a few paragraphs about my (likely) misinterpreted views of some random French play, scroll down until you see charts.  Otherwise, enjoy, and chuckle with me.**

Let me skip back in the time travel device to my senior year of English, and the existentialist classic, “Waiting for Godot.”  If you are somewhat familiar with the work, you are probably already laughing along with the parallels between that play and our current market situation.

A little synopsis, the two main characters, Vladimir and Estragon, are VERY busy waiting on someone named “Godot” to arrive.  They are standing by the tree (the only one they see, so it must be the correct one), where they remember Godot instructing them to wait.  However, Godot has a problem with timeliness, and does not show up for many days (he actually never shows), and the antics between Vladimir and Estragon pretty much depicts how many of us feel about the market, especially here lately.   The two protagonists try several times to leave the tree, but finally decided to take a stab at hanging themselves with a belt, but cannot, and reside to try again tomorrow (should they actually leave to find a belt suitable for hanging…).

So how does this relate to us and the markets?  Well, Godot is “the perfect entry” or even a clean entry.  We traders are Vladimir and Estagon, stricken with doubt and indecision.  Anytime one of us has our mind made up, the other comes in with the slightest bit of hesitation, and our WHOLE thought process is sent spinning again.  While we are reeling in our indecision, we try several approaches to make sure “we are in the right place.”  In trading, this might be switching from trend-trading to scalping, changing from options to futures and back, or just “re-exploring” old indicators.  All of which tell us, Godot is coming, to THIS tree, stay here and be patient.

Of course we wait, and Godot does not come, the clean entry has left us standing by the wayside, scratching our heads saying “that couldn’t have been Godot!?!”  “If it was he surely would have stopped here, with us standing by the tree!?!”  The market waits for very few my friends, occasionally, if you are important enough, you will get a retest, but don’t bet on it.

Taking another step back, how does my analogy play out?  Well, we are all waiting for the cleanest of entries, many of us have our heads spinning without conviction.  None of us actually know if the “perfect entry” will ever come, or where it will come to, but we all know that we must wait, Godot is coming…

This seems especially true with the current 4th wave correction.  It is whipping everyone left and right, bulls and bears alike, and STILL has no conviction on direction.  Many of us have no idea where the perfect entry would be, some of us know, but have to play the swings in between.  Very, very few of us actually see the perfect entry on the charts and are comfortable watching it all the way the final moment.

My last post was do or die, and we didn’t do, so we died.  Unfortunately, the bounce off of the Do or Die line, was not sufficient to put in another high to the upside, questioning that we will go higher at all.  Of course, we have not pushed enough below it to say that we are firmly moving lower.

To make matters worse, this week is expiry, and we have a FOMC meeting on Tuesday.  I have been saying that if we are to see action, I would expect it sooner than later, and since I have seen no action in one direction or another, I question that it is coming at all.

Since I was busy clamoring about Senior English, I will give you art class also, in that a picture is worth quite a few words.  Today’s action seemed to boast a little more for the bearish case, but you have to understand that the negative breadth and move was done on very light volume.  I mean, it was BLATANTLY obvious when the robots showed up this afternoon.  All in all though, volume has been pretty light since Thursday, and we can only expect this to get worse.

Since there was a little confusion last week over my count, I will admit, I am a little confused at the moment, but going forward, my best two counts on $NDX are on the chart.  I re-labled the resistance lines to use the final bullish hourly closes, and extremes, and we has rested right above them.  Traditionally, we have had a positive reaction to the rate cut, but going down to 0.50% makes it tough to put on the bull cap. ALL CHARTS ARE HOURLY.

Mole’s post yesterday displayed a number of reasons that we would be bearish on a number of timeframes.  To me, you couldn’t have done a better job illustrating how we know this is a bear market rally that is waning, and should soon resolve lower.  We do have to give the markets time to work themselves out, and until then, we can only add to the tally of bearish indications.  XLF and XHB remain strong indicators of where the market should be heading.  They have both broken their uptrend channel, but have not jumped back on the HOV lane to the abyss.  That is worth noting, but breaking bullish resistance is the major indication I am looking for.

XLF:

XHB:

Here are the horsemen of the NASD-Apocolypse.  Could be worse, but these horses are not headed to greener pastures…  We took a little counter trend play in AMZN today.  If the market are heading higher, we got a nice little entry, if not, we can cut quick and easy.

GOOG looks like you could build a pretty good bullish case too.  I could see up towards 340, but as it stands, we have an A = C equality suggesting lower lows await.

Something knocked AAPL off the tree this morning but it managed to recover some.  If did however, gap down this morning, and manage to close the whole  day underneath the bullish trendline.  Since these stocks are well known leaders, this doesn’t bode too well.

I had to save the best for last.  Aside from a mutated quadruple bottom on the 2 hour chart (ya right…), there is nothing bullish about RIMM’s chart.  This is the best descending triangle I have seen in a LONG time, and that is not just because the upper resistance line can be drawn ALL the way back to September if you use all data.

If you have come this far, and are still impressed, point each other up… Seriously though, the markets are at a cross-roads, and we just have to see if the market takes THIS route lower, or waits until we get a little bit higher to do so.

I am going to point the near term trend to “UP”, expecting a positive reaction going into the Fed meeting.  “UPDOWN” is the medium term trend, expecting the fed jubilation so fade fairly quickly this late in the year.  The long term trend will be dubbed “SIDEWAYS” until we get a move outside of this wretched range-bound market.

Skål!