Bullish Delusions Crushed

Today’s update will be pretty brief for two reasons: First I’m pretty beat as I only got a few hours of sleep last night. Secondly, there is not too much to report and I’m tired of repeating the same info over and over again. Yes, wave {3} of 3 of (3) is nearing its end, but 3 of (3) is in full force and should complete towards the 3rd week of October.

Say again?

Approximate SPX wave count plus projections.

Okay, here’s the only chart I will post today – it took me a while to product this Michelango, so study it with the awe it surely deserves. It seems that after putting in a series of one-twos we completed a iii and then a iv yesterday. We then bounced off 1070 (as expected, which also is about 50% of iii) and then embarked on subminuette v today. That one offers two scenarios now (i.e. our fork in the road):

• Scenario A: It completed today (thereby also terminating (v) and {iii} ), and we push into {iv} from here.
• Scenario B: It will terminate tomorrow – in that case 950 should represent considerable support. We would then push into {iv} from wherever the low occurs.

I have also highlighted the ‘drop zone’ for minor wave 3 of intermediate (3). Again, short of a crystal ball (which is still in the shop) we can only extrapolate from what we’ve seen thus far. If you measure wave 1 of (3) it is reasonable to project that the downside potential can extend up to 1.618 times its (fib measure) height. However, I think that a conservative target is the 925 area, in particular if {5} is preceded by a {4} that retraces to the 1100 area.

Well, I hope all that didn’t make your head spin – studying the chart for a while should make things clear to you. However, please try to not to drool with your mouth open while you’re trying to figure it out. We’re trying to run a classy joint here.

Breadth was extremely negative today – the $NDX was only able to produce one single positive symbol, and the $SPX closed at 24.5:1 – now that must be some kind of record – is anyone besides us tracking this? The Dow got hammered into the ground – just the way we like it. Those permabulls had it coming a long long time – and after Sept 18 I did promise that my revenge would be painful and merciless. Well, I’m just getting warmed up – there’s a lot more pain to be inflicted before I have my fill. Yeah, that’s right – better try to stay off my blacklist.

That’s about it for me this evening. The Dollar pushed up – as expected – however corrected down later in the day. Gold is consolidating upwards but a bit further than I anticipated. Frankly, the tape of the last two weeks is starting to look like a furball my cat coughed up, and I rather not deal with it until it figures out what it wants to do. Gold does that though – and I can speak from experience – it drives you nuts for weeks on end and then makes a 100 point move in two days. So, yes – I’m keeping an eye on it but have no exposure at this time.

I’m going to pop a bottle of Hefeweizen now and enjoy the rest of a hot day in sunny L.A. If you made profits in this crazy market you obviously were inspired by our forecast and thus deserve a ‘Mass’ (one liter glass) of your favorite lager. May I suggest you pick among my favorite candidates – Whole Foods in the U.S. carries many of those beauties:

Cheers!