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by The MoleNovember 30, 2009

My apologies for being MIA most of this trading session but I have been working. Today’s tape has kept us in the sideways grind we’ve been enduring for weeks now. A hard run up followed by a sell off, followed by sideways action and as I’m typing this the tape is pushing back up again hard. Seems any remaining fear among investors has quickly dissipated – plus poor ole’ bucky just keeps asking for punishment. Time for a wave count:

What’s mostly important about this chart is that we have remained below the lower boundary of that channel going back to early August. Should we drop from here (orange) a lot of support awaits around the 1050 mark. Let’s zoom into this a bit:

Quite frankly – things are a bit messy right now. The best way to count it at this early stage is that we are either in some Frankenstein triangle (greeen) or we are whipsawing around on our way down to shake out the weak hands (orange).

I’m a bit split right now actually. My daily RSI_EMA suggests that we are on our way down and that we should continue until we reach the 20-30 cluster which would also coincide with the SPX 1050 support zone shown above. However, we seem to be consolidating and the dip buyers are already swarming in. NYSE A/D ratio is currently at 0.94, which is mildly bearish and I just can’t shake that inkling that another ramp attempt is in the works. Supporting that suspicion is also the Zero Lite which is completely flat at this point.

So, be on guard – the odds for trading these gyrations are horrible at the current time. Since we heading into X-Mas season liquidity will start draining quickly after the final EOM rush. So, anything could happen and unless the bears are able to finally gain some ground this might be nothing but some sideways consolidation before a final push higher. When it breaks it will break – and as of the final day of November the bears yet have to force the hand of the bulls since the beginning of March – the onus is on the market to confirm a trend change. But for the record – on a more long term basis this market is rolling over and it’s only a matter of time until we see a fast break of the eternal stair step pattern to the upside. But it might not happen until January, be prepared to roll your December and even your January puts into more longer term ones unless we see some downside soon. And even then it might be good medicine to buy yourself more time.

Finally, if you haven’t had a chance – please check out my weekend post – some very important long term charts in there.

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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 the usual social media waterholes.
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  • gregn

    Mole, did you decide on the franchise offer?

  • roncofooddehydrator

    This is one ridiculous ramp at the end of the day…

  • molecool

    What are you talking about? The one involving selling hamburgers on the moon? Yeah, sure – it's done – you get a free burger and fries if you bring your NASA employee pass 🙂

  • gregn

    I am leaning towards orange scenario. As per my chart from earlier, we are back under 200 period MA (15 min bar) which has always signaled more downside

  • clutchshorter

    Wow seriously, this ramp up is so obvious. It was flat to slightly down for most of the day and then at 3:30 PM, it suddenly rallies into positive territory.

  • gregn

    I was too busy watching my puts decay to catch the sarcasm in that post.

  • Gerbil_gold

    I'm hearin ya, but the pesimist in me says we need a big up, then comes the crush.
    See that red line on yer chart (1110)? be afraid.

    soylent green it's….Peop<nevermind>

  • Tronacate

    I'm surprised there wasn't more reaction from Iran voting to put more centrifuges on line……

  • dollar

    3:50 PM Dubai World says it's in “constructive” talks with lenders about restructuring $26B in debt, about $6B related to the Nakheel Sukuk. The company says it plans a multiphase “expedited” restructuring with regular communication. Markets turned into the positive on the news.

  • gregn

    Close to posting new HOD.

  • LogansRun

    I'm constantly surprised with how bullish people are. However, these daily ramp jobs are obviously timed and orchestrated institutions.

  • Me_XMan

    Another Wow! day.

  • Me_XMan

    Me too.

  • BalaB

    hmmm…As long as the USD remains challenged, Buy on the Dip remains envogue. However, this presents excellent trading opportunities (“Sweep” Trade)

    Nov. 30th ES Trading Video

  • LogansRun

    LOL – now the markets are selling off. WTF guys! Come on – there were “constructive” talks in Dubai!! What BS….

  • goldpackers

    Bove in Barron”s and GS recs killed my FAZ. Hope this is an X wave in FAZ and another ABC up. If not then new lows cause there is no 5 wave up count.

    Turn 12-1/2 12-10/11 Gonna be wild over the next week to 10 days!

  • centerline

    end of day stuff was timed perfectly today. someone really wants to keep this thing going at least a little longer.

  • rosocecasita

    More likely is that the trading algorithms all hit at the same time, you can see the pulses on the $tick every 3-5 min.

    The simplest answer is the most likely.

  • goldpackers

    1098 to 1103 will be key Thought 12-1/2 would be low, we will see. How much heat will Bernake take Thursday?

  • Gerbil_gold

    “Month End” for this simpleton IMHO.

  • rosocecasita

    Daily Report:×49

    A strong up day, that sells off hard would trigger the Hindenburg Omen, tomorrow, look at the FLUX.

  • gregn

    FWIW, got a BB buy signal on /DX, should be good for a little equity correction:

  • gregn

    iPhone tethering is pretty screwed up, wrong link:

  • dreadwin

    What I saw today was a massive, brutal short squeeze in IYR during the last hour of trading. IYR (real estate ETF) was up 3.75% for the day, while the SPX was up … about .4%. This might have something to do with the new margin rules for leveraged ETFs that start tomorrow (SRS, DRN, etc.) I bought Jan $9 calls in SRS near the close. I expect some sort of retrace, and am positioned accordingly.

  • tradejane

    I've been way too busy today, so all I can say is “ditto.”


  • fast996

    Brutal wasn't the word. The market on a whole looks to be very toppy here a every high flyer looks to be doing some kind of EDT here or having broken down a B top today.

    Intersting that AIG got slaughtered and the IYR and BKX were squeezed in a manipulation play.

    A lot of movement to make final tops here and it wouldn't surprise me if the DX rallys strongly from here and the equity markets crap big time starting tomorrow.


  • molecool

    Wow – 26 comments – where is everyone?

  • dreadwin

    Apparently, there is some rumor that a brazilian firm is looking to buy part of SPG's European operation. But the whole sector, especially the junk like DDR is up huge. Buy the rumor, sell the news…

  • gsavli

    well, fcuk it, just had to short some FAS…

  • fast996

    Still thinking that fridays low was a 1 and off the low we completed a abc-x-abc today near the close for the 2 up.

  • dreadwin

    Can't speak for everyone, but I was having diqus issues earlier. I would imagine that most bears have been whipsawed and are in their caves licking their wounds.

  • tfinavia

    I was inside the charts thinking, wow, if it goes up it will be up otherwise it will be going down.

  • rikardo_kurvio

    ES didn't closed above m emergency exit area 1052s, but the overnight action can do it. then i'll take the green path

  • AS2009

    We closed above the 20 MA on the SPY monthly – very bullish candle ….

  • The Unknown Trader

    I heard about someone trying to open a restaurant on the moon one time. They had to close it because the patrons were complaining about the lack of atmosphere.

  • centerline

    Busy day. Not much time to watch or post. In general, I will probably burst into flames on this… but I do not buy the green path yet (crazy, right? we have been here before like a dozen times or so. I know.). Rather, I would like one more day at least to see what gives. Virtually every other market is in decline at this point – and IMO, the fractal play (and orange plunge) are still in play for at least 1 more day. VIX trending in the right direction as well. And the futures aren't exactly celebrating that end of day ramp job.

    See everyone tomorrow. Got to go.

  • Gwaihir

    Comparing the very unusual ise equity move of the last three to days to the one mid-June this year calls for a orange result.

  • weasel_whisperer

    If you're going to open a burger joint on the moon, I think it should be a Sky Burger, not a McDonald's.

  • molecool

    LMAO 🙂

    Parking is pretty easy though… and of course we valet.

  • b00b

    question for you mole:

    i've always appreciated your long term charts/outlooks
    I dont understand the EWT counting system though….

    speaking long term here, what you call primary 1 is the trip down to 666 correct?
    primary 2 would be whatever top we make now… ?

    then does EWT say primary 3 MUST go down below primary 1 (666) ?

    where I am going with this… if you believe when the 2 top is in, EWT guarantees we hit <666 before we see price at the 2 top again…?

    and if it did not for some reason, say we drop to 750 then go back up over the 2 top, you would have to recount the past couple of years, as those would be incorrect?

    hope you can follow that.

  • Bullturnedbear

    Thanks Roso,

    The Hindenburg Omen would be an extremely bearish development. I think it is pretty rare, is that right? Do you know a rough time frame after a trigger? Eg, After a trigger the market should decline heavily within 1 month?

  • rosocecasita

    Very rare, 1 every decade rare,

    1 Hindenburg omen is good for upto a year,

    I believe it's something like this: “A Hindenburg Omen does not Gurantee any decline, but Every Crash is preceded by one.”

    At the bottom of this page you find the necessary elements for the HO:

    There has not been a HO issued yet, (there was 2-3 in 2007/2008) but there has been Low grade 1.5-2% (not the 2.2% needed).

  • nummy

    This is jiving well with my count from a couple of weeks ago … I shorted mad at 10,493 Dow … I didn't like the fact that my 3 of (C) is an expanding diagonal but I have come to accept it. Anything above 10,681 invalidates my count.

  • nummy

    We closed below the 25 MA .. it's arbitrary

  • AS2009

    My understanding was the big boyz use 20,50,200 MA 🙂

  • nummy

    MAs are the least of their tools

  • goldpackers

    WOW !!!!!!!!!!!!!!!!!!!! Bob Froelich who is bullish 99.5 % says the Dubai situation has bearish reach and beware!!!! Gotta go open the Scotch bottle on that one!!!!!!! Would have anyway for the Pats and the Saints!!!!!!!!

  • amokta

    tell me what is the 'basis' for so called trend-lines or support lines. Ok so the S&P has broken a lower trend line, but surely, it would not be expected to carry on at its same rate of increase – surely it can break a 'trend-line or support-line', yet still be in an upward trend/bull market. so what defines a change in trend. I am dubious about drawing straight lines on biological/fractal systems. or are trend lines simply arbitrary bean counters,and other factors (such as elliot/sentiiment analysis) are needed to confirm trend change per se

  • molecool

    Yes, that's just what they keep telling the retail traders to then swing the tape the other way 😉

  • panzer

    Mole, step back a bit, away from the broads, look at the above chart, and tell us whether it is of any real predictive value? If i had a million dollars, which I do not, I would break it up into 20 equal increments, and place these bets all over your possible charts. So what, I get my blind dart thrower and he does an equal job. Figure this: if you have a fifty percent accuracy rating, how good are you? a friggin coin flipper. come on, we must higher standards. Use that excellent cocunut god gave u and take a position i can wager on, palezze. I need some huge dough to show some ladies a terrific time, and do this in the face of my x wife who is a moron, but you need to provide better info and have a position. You write with conviction; I will listen carefully. A good mind is worth it but you have lost your confidence. Screw it, man up. be objective. ……………

  • http://it's%20a%20secret hindyomen

    you rang?

    i follow the hindy counts carefully. it's been really hard to get one because the march lows took the markets so far oversold. i do not think we can get enough lows now, but say there were a sharper decline, then a rally up (led by commodities), then, we could *maybe* put together a HO

  • amokta

    Not that i have any better ideas! I suppose there is a lot more to real trading, an that probably comes with experience/pre-cognition

  • jamesmarkii

    The traditional definition of a Hindenburg Omen has five criteria:

    That the daily number of NYSE new 52 Week Highs and the daily number of new 52 Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
    That the smaller of these numbers is greater than 75. This is not a rule but more like a checksum. This condition is a function of the 2.2% of the total issues.
    That the NYSE 10 Week moving average is rising.
    That the McClellan Oscillator is negative on that same day.
    That new 52 Week Highs cannot be more than twice the new 52 Week Lows (however it is fine for new 52 Week Lows to be more than double new 52 Week Highs). This condition is absolutely mandatory.

  • formykids

    I'm just f'in pissed off and about had it – not that I post much anyway, but i'm even losing the stomach to lurk.

  • fast996

    Given the sell off of AIG today I thought this mite be timely.

    By Marla Singer at Zero Hedge

    “Buried in the depths of page 26 of the Office of the Special Inspector General for the Troubled Asset Relief Program's (SIGTARP's) November 17, 2009 report “Factors Affecting Efforts to Limit Payments to AIG Counterparties” hidden in footnotes 33 and 34 is something of a mystery. It might be the beginning of an interconnected financial chain involving Dubai, the Federal Reserve, AIG, Basel I, Eastern Europe and even Switzerland and which, even if it doesn't worry you, probably should. Or it might be nothing at all.”

  • catracho

    trend lines break
    . not always ..but worth paying attention when they do..

    psychologically it means that buyers (uptrend) or sellers (downtrend) have lost strength… a warning sign..

  • catracho

    AUDUSD.. is this a possible count..if so we may be on cusp of wave 3 of III down?

  • Scoops

    Developing: Bank Of Japan Announces Special Monetary Policy Meeting At 05:00 GMT, Likely QE Announcement Pending
    Submitted by Tyler Durden on 11/30/2009 21:15 -0500

    Yen drops, Dollar, Euro surge. Yen – The Carry Currency, the sequel coming to a theater near you.

    TOKYO (Dow Jones)–The Bank of Japan policy board will hold an unscheduled monetary policy meeting from 0500 GMT “to discuss monetary control matters based on recent economic and financial developments,” the central bank said Tuesday. BOJ Gov. Masaaki Shirakawa will also meet the press from 0730 GMT.

    I'll be tuned in….

  • Centrifugal_Deforest

    The S&P has gone nowhere in the last 6 wks; the XLF is at the same level as early August.

    The true contrarian in this period was market neutral – tough to outdo a coinflip, especially if you thirst for excitement, no?

    My advise for 95% of us (you!), unless you have something screaming at your insides, wait and be one-step late to the attack (and back-off abruptly if it doesn't then follow through). Tops are a process and most of the easy money can be made easily enough by waiting to pounce. Mole is illustrating potential scenarios, does that very well and a dull market pleases very few folks…certainly not those sporting conviction.

    Excitement is coming, but it's tough to predict how it will set-up. One thing though – everyone is getting comfortably onto one side of the ship. That keeps my blood red.

    Rock on!

  • fast996

    As Ben B. twists in the wind. I love a good fight.

  • The_Grim_Reaper

    This is the long and short story of why the market is in a range. It's all about financials. Just look at the different MAs providing resistance AND support. It's congested and trying to make a decision. I personally don't care which way it breaks, but I hope it does soon because this range is boring.

  • Rush23

    SPY looks like it might be a broken trend retest of support connecting March and July lows. Similar to what RUT did on the first break, only not as deep.

  • PortfolioTilt

    We are still sideways and have been for nearly two months, this is a tough environment. We have a 25 point trading range on the S&P in play since November 9th (between 1085 and 1110)

  • jamesmarkii

    something is going to break….but to where?

  • PortfolioTilt

    At this point in time, it is extremely difficult to speculate where we will break. Plenty of stocks are rolling over, and plenty of new names are breaking out and look strong. This consolidation has brought with it, a clear rotation in leadership. What I do know for sure is that we are still in a primary bull, and we are experiencing an intermediate correction. It is very difficult to trade during sideways (whipsaw) action, I would say the sideline is the best place to be until the picture is a bit clearer.

  • Publius Federali

    Newsflash**** The US Fed has just announced a press conference for 0455 GMT where Ben will shave his beard and announce a new QE program. The actual amount has not been set but will be 4x whatever Japan announces five minutes later. In the event Japan announces an amount larger than US$500 billion then Big Ben will scrap the 4x solution and set the QE at $50 trillion plus a direct $3 trillion payment to Goldman Sachs.

  • Scoops

    Lots of juicy action in the currency markets atm. Very interested to see how this is going to play out. As of right now the buck is catching a good bid, and the markets favorite correlation is alive and well. ES, GOLD, EURO, all down from session highs. So far anyway…

  • molecool

    NEW POST!!!

  • rosocecasita

    Aye, if you go to the bottom of the index page, all the rules and links to the relevant indicators are in one place:

    There have been some low grade HO's (1% -> 2% & all other conditions , but didn't break the 2.2%)

  • rosocecasita

    we could get one today if we have a sharp selloff from about 10 am (EST) to the close, met the 100 new highs,

  • rosocecasita

    Aye, if you go to the bottom of the index page, all the rules and links to the relevant indicators are in one place:

    There have been some low grade HO's (1% -> 2% & all other conditions , but didn't break the 2.2%)

  • rosocecasita

    we could get one today if we have a sharp selloff from about 10 am (EST) to the close, met the 100 new highs,