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Divergences Galore
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Divergences Galore

by The MoleJune 4, 2010

If you happened to snoop around the blog late last night you might have caught my promise to post two kick ass charts which would blow your mind. Well, I had to take care of some personal business this morning (let’s just say that neighbor’s rooster won’t ever croak again at 5:30am) so this post comes a bit later than I had hoped.

While everyone remains focused on the short term drama (i.e. non-farm payroll report) I choose to focus on the long term. And the charts I dug up last night provide clear and irrefutable clues on how to recognize long term market highs and lows – while they are in process I may add, not after the fact. And of course, in good ole’ Mole tradition, they are based on divergences – which I seem to have a knack for digging up.

You might want to click on them as they are quite large. So, what are we looking at here? The black signal of course is the SPX and that’s our anchor against the blue indicator line. That one is based on the SPXA50R – which is very simply the percentage of symbols in the S&P 500 which currently trade above their 50-day SMA line. Not surprisingly that range goes from 0 – 100.

But wait – it doesn’t end there: Now I put an 84-day SMA on that signal and the result is the blue line you see charted. And what it reveals is quite stunning as we see divergences of varying magnitude on every single major turn in the market. I have already highlighted many examples which are quite clear in their form and final resolution.

What also stands out is the fact that in less than one year we pushed above the average registered at the top of the market (in fiat Dollars) in 2007. Now, I ask you – that alone points towards the ‘slope of hope’ – not the ‘wall of worry’. Which btw, is a term not coined by T.K. from you-know-where but by Robert Prechter himself.

My second chart covers the same theme but is a lot more long term. This time I took the SPX200AR (i.e. all the symbols in th SPX above their 200-day SMA) and used a 42-day SMA. The very same story, which is astounding to say the least. What I found fascinating is that we went from less than 5% to over 90% in a mere seven months. Seven months!! Slope of hope indeed…

These two charts (among many of the other long term evidence I have presented in the recent past) will be integral to our long term trading endeavors as we move forward. Getting positioned ahead of long term trend changes right at their cusp should prove to be quite profitable (although nerve rattling at times). The longer I play this game the more long term focused I become. First up I sleep a lot better (and I can laugh off moves and opening gaps like those in the past two weeks) – but the noise level also seems to be so much more muted.

About today’s gap down and the continued drop since:

Frankly, I’m a bit surprised – I had thought that Soylent Green would get us to 1120 but we are now nearing the point where a lot of stops will be run. Technically the {c] wave can be counted as completed – and we can drop from here, but this would be happening alot earlier than I anticipated. But I knew that this market would throw us all a curve ball – which is why I insisted on staying short and why I was ready to sit through some pain.

Before I run out – a quick look at the EUR/USD. You all know that I follow the EUR/JPY when it comes to matching moves in equities. But what’s interesting about the Euro in general is that the up moves and the expended energy in momentum measures like the stochastics are quite weak in comparison with the resulting price moves. Just compare the last two rallies – the recent one didn’t even make it above my 80% mark. What may happen now – and of course this is not a prediction, only a possible scenario – is that line might get embedded and we see the Euro drop into Dante’s Inferno. I have highlighted a recent example of an embedded situation in blue above.

Mr. VIX is also back at it’s BB center line. If we push above (and I’m frankly surprised we haven’t yet) then we may also be back in 40 territory in no time. Fat lady has not sung yet however – judging by the past few weeks a price move like today should have led to a push above 35 or 36 – so there is the potential that this is some bear trap. I am not going to over-think this however and just keep sitting on my long term puts. Days like today show me that timing this house of cards is near to impossible. But the writing is on the wall, my dear stainless steel rats, this market is on the brink of extinction. Just a matter of time.

Public Service Announcement:

I have aΒ  little surprise for you guys – the Evil Speculator SWAG Outlet is finally up and running! The prior evil tees from -271 didn’t make me aΒ  dime (to keep the cost down) and that was a untenable situation for any self respecting market megalomaniac. Some intrepid rat pointed me towards cafepress and I got busy. Now, there is a cup for your poisoning your boss, a cool bag for your evil plans, evil tees of course, a mouse pad, and even a clock for your trading hours (you have to mark those yourself – LOL). So, go knock yourself out – and remember what GWB said: Go out there and spend – it’s patriotic! πŸ˜‰

Alright I have to run out for two hours but expect to be back before the bell. It’s been a very short week but by all means a very interesting one.

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 the usual social media waterholes.
Enjoyed this post? Consider a small donation to keep those evil deeds coming!

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  • RobbyES

    Hey Guys…Long time lurker – first time poster πŸ™‚

    Yes, I found it interesting that the highly college educated actually tend to be terrible traders.

    Check out this interesting article from last month which discusses why trading firms are out there recruiting successful poker players.

    http://tinyurl.com/2wtcoz3

  • DudePlunger

    Nice post mole, thanks. I was thinking the exact same thing as you about today's drop. We are making new lows on the /es and approaching 1070 as I write this, and oil just cracked below a shelf of support at 71.60—stops were run as there was a burst lower and higher on the DOM…..if that was all the support we could see <$70 oil by day's end.

  • http://thebhbgroup.com TheBHBgroup

    Dr copper also sitting at a major support line at 281 now….if broken then 260 is given quite quickly….need to be smart and watch here now and start covering some short term trades in case they ramp on some bs next week!

  • equity_momo

    1040 , 1220 , only those numbers matter if youre looking at the bigger picture. Alot of alpha in between i admit but this market will tell us if we are going to test all time highs or break the march 09 lows by the start of the 4Q.

  • katzo7

    Doubled down, SL just below my 1071 level, that is what these levels are for. VVST play.

  • http://www.mylifemytrade.com MyLifeMyTrade

    backed up the truck to catch knives under 72

  • Long_John_Silver

    Strong work mole – thanks – need to rethink my strategy for the long term as I haven't done the LT put trade you speak of, deciding on specifics & an entry point, maybe now …) cheers, LJS

  • katzo7

    T=1081-2
    1074-5 will offer resistance

  • http://www.mylifemytrade.com MyLifeMyTrade

    100% agreement with you bro – both with the bullish and the bearish thesis (need to be explicit.. unless people start thinking I am first born son of beanie)

  • elliott_surfs

    with you on this – although I'll admit i'm not too familiar with a grind down…still used to those daily grind ups =p

  • http://www.mylifemytrade.com MyLifeMyTrade

    Looks like we may get the gap fill near spx 1068.xx

  • http://thefxspeculator.blogspot.com Onorio

    A drop bellow 1068 confirm soylent red cenario IMO.

    We should dip bellow 900 in this move in the next week or so.

  • katzo7

    Damn, stopped out, no more countertrend plays for me. Mole is right.

  • WTFed

    is that the divergence you were looking for?

  • MDX

    Hmm appears to be a divergence on the Zero thingy ?

  • katzo7

    I was gonna post when mole said that that from my charts I did not see it as dead.

  • katzo7

    I had a very good buy signal, a 85% success rate. It did not work. careful of countertrend plays.

  • WTFed

    Now where are my cajones?

  • Clint

    We can still have a good time in between all that…even if it ends up being like 890 to 1050 for a while.

  • katzo7

    Hopefully where you left them. Or your wife called looking for them. I covered for ya and said you were at the dentist. lol

  • WTFed

    Just when you think you have a divergence they take it away from you!

  • DudePlunger

    I got short Oil (/QM, not the big contract /CL) 71.600, here is why: http://i47.tinypic.com/n2eckk.jpg

    1. We couldn't even close above the 38.2% retrace from our 2010 highs-lows. We tested it 3 times though.
    2. We just pierced through a shelf of support at 71.600
    3. Euro new lows for the year.
    4. 10/40 ema crossover on the 1 hour, trading hours only. Last time we had that was at $85.

    Gameplan- I'm short 2 from 71.600. I'd like to book profits on 1 by day's end. For now, I'm letting them ride and waiting to see what happens.

  • BobbyLow

    Yes on the 1040, 1220 in the intermediate term.

    But regardless of how we close today, IMO, this market is FUBAR.

    Going back a few years, I remember when the ENRON disaster hit the news. It didn't hit the news when everything was going well in the markets. I remember because I was a Perma Bull back then and thought how could this disaster come out now?

    Well it seems that Bad Things are much more likely to come out during Bad Markets that in turn compound and make Bad Markets even worse. (Bad things are much more easily contained and kept under wrap when things are going good).

    The shit that is happening now also reminds me of the Cartoon Movie Ice Age when the Squirrel made the first crack in the Ice trying to save his nut. πŸ™‚

    http://www.impawards.com/2002/posters/ice_age.jpg

  • http://www.mylifemytrade.com MyLifeMyTrade

    70 wont hold the way it is being pounded

    Trend down day (which it has been so far) may take us down to 55… lets wait and watch… key levels to the downside are 66 and then 55-56

  • Scoops

    Pick a Canadian bank and short it. Any bank. Our real estate bubble just burst. No need to look at the gory MLS stats.

  • http://www.mylifemytrade.com MyLifeMyTrade

    I will just like to point out that JNK is way off the intraday lows and TLT is somewhat off the highs..

  • bananaben

    “Days like today show me that timing this house of cards is near to impossible. But the writing is on the wall, my dear stainless steel rats, this market is on the brink of extinction. Just a matter of time.”

    Beautiful shit Mole! Don't forget that video that someboday shared showing that JPM had huge contracts out for a major drop in June with Goldman by Sept. Wonder how bullish Bob is doing today? πŸ™‚

  • katzo7

    Just read your response to me Bobby and agree with it but also thinks TV carefully selects news items to highlight to fit the market sentiment.

  • ricebowl

    Bullish Bob? Not Prechter, I assume…?

  • http://www.mylifemytrade.com MyLifeMyTrade

    can you please elaborate more by what you mean by “just burst”

  • Clint

    Is this a spot to roll the dice with a small amount of one's capital on some way out-of-the-money June puts on the major indexes for next week's action ? – Double or nuthin at least.

  • http://www.mylifemytrade.com MyLifeMyTrade

    I have a hard time thinking who would buy into close on a day like this.. Euro breaching psychological 1.2 mark.. Longs would be very afraid into the weekend, I think.

    No more knife catching for me today. Thank you

  • katzo7

    Me either althoug I goe a engulfing being build on my 5 min., very interesting.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Can you name a few that are traded on US exchanges?

  • tradingmom

    RY, Toronto Dominion (not sure ticker)

  • https://evilspeculator.com molecool

    Hey, no single comment on those first two charts? I know they look simple but sometimes truth hides behind fairly simple charts. I for one got very excited when I cooked them up. Any insights, comments, thoughts? Come on guys – you are way too focused on the short term, folks!

  • katzo7

    This is gonna get ugly, no countertrend plays IMO. lol

  • WTFed

    eyes glued to ZL

  • bananaben

    BobtheHorse – now watch a massive rally materialize on Monday and I get my ass licked!

  • gsavli

    and if PPT tries anything here, it might get expensive for US taxpayers.

  • DudePlunger

    Should we expect an eventual bottom where the blue line is below the level we saw in 2009? Also, I'm thinking this may be a very good chart to keep an eye on for intermediate and longterm bottoms. Also, notice the slopes of those lines….it seems when the slope increases to near 1, we approach a near term bottom as the bearishness gets too severe.

  • elliott_surfs

    But if you held til Tuesday, I'm sure it would be reversed – and then some

  • equity_momo

    Please all take notice of GOLD. I am NOT a gold bug but i see trends like that kid in 6th Sense sees dead people.
    If you want to minimise net delta in this mkt you could do alot worse than simply be long gold short whatever risky whalesh*t you like.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Ok. JJC is the ETF that tracks copper in case any of you care.

  • ricebowl

    IMO holding through the weekend will be rewarded, but it's going to take balls. I'm not even going to try TA here. Every time I apply TA to this, it bends me over the table.

  • http://www.mylifemytrade.com MyLifeMyTrade

    holding longs or shorts?

  • DudePlunger

    I'm terrified to hold 2 oil contracts over the weekend. I'll hold 1 with confidence if I can book some profits on the other though.

  • Clint

    yea we just have to roll the dice on a leap of faith on this one. Either it works or it don't. Id say the odds favor that it does.

  • gsavli

    smells like capitulation here. bottom kinda holding, while volume is picking up.

  • katzo7

    Unbelievable. This is a 5 min. so diff. time frame and diff. EW count.

    http://screencast.com/t/ODc2OGE3O

  • katzo7

    Fully agree

  • tradingmom

    I have a bunch of front month puts. I hate holding them over the weekend, too much time lost.

  • http://www.mylifemytrade.com MyLifeMyTrade

    one more try at 68.75

  • http://www.mylifemytrade.com MyLifeMyTrade

    Here is a joke “AAPL isn't impacted by rising unemployment rate… The folks first go stand in a line for file for unemployment, collect their check, then go line up outside AAPL stores to buy ipads and iphones – to them there isn't much difference.. after all, they are standing in a line in both places”

  • katzo7

    MACD about to break zero on 240, every one else is below.

  • tradingmom

    Look at the ZL — very strong signal now.

  • DudePlunger

    Booked a small $250 profit on 1 contract of oil. I haven't had a very good week, so I think it's a good idea to just book some gains and let the other contract ride with a very loose stop. Love the setup on oil though, I think it's poised to head to $60 by month's end.

  • katzo7

    l
    l
    V

  • Tooncez

    using just my eyeballs, it looks like we are about to curve exponentially down, is there some TA for that?

  • Clint

    The TRIN has gone from 4.50 to 7.50 in the last 10 minutes. Either we're done or the real storm is still coming in.

  • equity_momo

    I dont have the balls to do it large but Apple is a major short. One day we'll look back and say “its market cap was HOW BIG??!”
    Interesting that the stellar bluechips are all outperforming today. The MOMO long only funds are all hiding out in quality. They just cant bring themselves to go to cash yet. When the day of reckoning comes this “quality” is going to be in for a rude surprise.
    Redemption city.

  • roncofooddehydrator

    The trend down day and the gap unfilled have me nervous about holding short over the weekend. I'm going to go neutral at the close.

  • http://www.mylifemytrade.com MyLifeMyTrade

    ok.. took a final try at 65.75 with 1 pt stop

  • http://www.mylifemytrade.com MyLifeMyTrade

    Its called inverted Eiffel Tower pattern

  • equity_momo

    Youre not alone , alot of coin to be banked. However , i think we are close to the dumb money giving it up and i suspect the shorts will be overwhelmed. Flash crash was just a prelude.

  • http://thefxspeculator.blogspot.com Onorio

    Dont fight this tape man, is useless.

  • Scoops
  • http://www.myseattlesports.com spdrman

    burn baby burn

  • elliott_surfs

    lol – it just one upped itself. 12.57 baaabaaay

  • Clint

    TRIN now 11.20. Thats pretty friggin serious.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Out.. Holy shit -17 on Zero; -10 on ZL – never seen that huge signals

  • BobbyLow

    Of course those charts are excellent and help to reaffirm my own commitment to being Long Term Short. I also run my own charts on the Daily's which show a Bow Tie or Rope headed down on 8, 13, 21, 34 EMA's and the 50 SMA. All these stars line up.

    I look for your charts and your interpertation of EW (I can not and will probably ever be able to read EW cause I probably fall into the 10% that just can't).

    But regardless there was nothing that happened on Zero or in my experience based judgement that told me that it would be wise to take a counter trend long position today.

    I do focus on both the short term and long term because I'm a stock junkie. But that's just me. πŸ™‚

  • Tooncez

    How's your TL doing?

  • psycho_puppies

    I don't have a chart but I think the virgin is about to park the fat lady… maybe I can find a video.

  • shortcover

    rolling some covered calls up and out FAZ, SDS,TZA

  • malverd

    anyone think the mar 6 low will get taken out at eod?

  • gibbsfe

    Hey, you long time ZERO veterans: Have you ever seen numbers this low? What does it mean?

  • http://www.mylifemytrade.com MyLifeMyTrade

    The TL broke when I was out for lunch… I hope this was a genuine and honest question

  • shortcover

    let's hope so…

  • Clint

    Maybe next week.

  • http://www.mylifemytrade.com MyLifeMyTrade

    I have a hard time seeing what will stop the slide before EOD other than short covering.. But I have to assume that there weren't all that many shorts.. The fear over the weekend must be ECB printing 10 trillion bailout

  • DudePlunger

    I'm already looking and telling everyone, “APPLE HAS A BIGGER MARKET CAP THAN MICROSOFT!!!!”

  • DudePlunger

    Or buy a little protection, and if monday/next week follows through you can buy more protection to hold on to your shorts with comfort.

  • Clint

    I think this might really be that weekend where no one wants to hold. Very interesting. Can't wait till Monday.

  • equity_momo

    Exactly ,that should be the wake up call. Jobbs aint no Gates. And MS survives just fine without Bill , Apple and Jobbs are like Siamese Twins.

  • equity_momo

    Probably going to close around these levels but if the Global PPT dont come up with some extra strong Kool Aid this weekend we are going to see momo's fold next week. No doubt.

  • DudePlunger

    I just called a friend to tell him that. Absolutely crazy slow grind lower today. Also, take a look at the massive divergence between Gold (up .6%) and Silver (down 2.85%)

  • http://www.mylifemytrade.com MyLifeMyTrade

    The short covering rallies usually dont start till 3:30pm – and the way QQQQs didnt bounce with ES… tells me possibly some more downside to go..

    Honestly when the down move didnt stop at 66, the next place to try longs if at all is 1055.

  • lilme

    I showed it up to 14.87 11:30 am to 12:00 pdt

  • amokta

    ok, were down a few points, could this be a head fake? (!)
    seriously though, tempted to close out longtermputs but lets see

  • Clint

    Wow..I didn't see that. Well..we're down over 300 pts…so it wasn't lying.

  • http://www.mylifemytrade.com MyLifeMyTrade

    We haven't had a daily close below 1068.xx spx so far in this move down.. Lets see what today brings.

  • Tooncez

    the one you said was headed down?

  • psycho_puppies

    What des it mean?

  • http://www.mylifemytrade.com MyLifeMyTrade

    IMO a new low on the closing basis will be quite bearish

  • DudePlunger

    Breakaway gap today. Mole, this looks to me like the beginning of minute 3 of minor 3…..thoughts?

  • malverd

    i think a lot of people will sell into the weekend

  • http://www.mylifemytrade.com MyLifeMyTrade

    We have one more down leg to go today (AT LEAST)

  • psycho_puppies

    I agree that would be bearish.. what what do those numbers mean?

  • http://www.mylifemytrade.com MyLifeMyTrade

    Oh I am sorry.. I didnt understand your question.. Those are just the levels on the ZL signal.. never seen such a huge negative signal.. I think the signal is some sort of a measure of ratio of selling pressure to buying pressure..

  • katzo7

    Yup, that up move was a failed EW5 move, I posted a chart this morning. it basically just ran out of steam to power higher.

  • Clint

    Good thing the unemployment numbers were positive this morning…or we might be down 600 pts instead of only 300. Thank God for those census workers. All 500,000 of them,or whatever ridiculous number it was.

  • katzo7

    MLMT, hope you are out of oil service, just took a look T=85-6 OIH.

  • http://www.mylifemytrade.com MyLifeMyTrade

    I got stopped out of literally everything EVERYTHING when I was out for lunch

  • Rayden

    Trade report: just bought a put backspread in ES. Sold June 1065 @ 45.50, bought 2x June 975 @ 19.75. Moderate quantity, this is a 1/4 sized position for me. Will close trade if ES > 1105 (breakeven), ES < 930 (big gain), or 2 weeks pass (maximum loss).

    Rationale: vol is (relatively) low given that we are near a multi-month low. That by itself means it's time to buy ratio spreads. Since if we go up vol will almost certainly drop, and vice versa, they should be put backspreads set up for a small credit.

    I had lightened up and flattened my short position a *lot* when we broke below the May 6th low, but I am afraid of missing a large down move completely here. I think it's almost certain that we get a curveball of some kind, just because markets are perverse. One type of curveball which I have been mostly focused on is a very deep correction of Intermediate 1, up into the 1150-1170 stratosphere, which will kill most bears who will be shorting it all the way up and will probably stop out before it is done. However, the other type of curveball is a straight drop down from here without anybody being appropriately short. I am happily positioned for either eventuality now. Monday open at 1100 or 1000, it's all the same to me…

  • http://www.mylifemytrade.com MyLifeMyTrade

    1056.74 is the lowest SPX close for the year. Keep an eye on that… Close below that and I will give up my bullish thesis..

    So far, on a closing basis, we have not had an intermediate term lower low… that will be a signal for major fund managers etc that this is bear market.

  • Bob the Horse

    The data was actually quite positive when you look at the detail. Although private sector payrolls was poor, the average hourly wage and hours worked were good. So if you look at overall payroll income, i.e. number of jobs x hours worked x hourly wage, it is pointing to an acceleration of consumer income. I got a small day trade long on before the number which is way offside now but i have left it on. Will look to buy first thing Monday morning I suspect. We are still in a corrective move up in my view and that can push on all the way to 1180.

  • katzo7

    Charts tell me to cover shorts @ 3:30 (cons.) or at 3:58 PM (risky), not at 3:45.

  • tradingmom

    Staying long SRS and MCO puts (July) over the weekend. Out of all front month puts and covered all other shorts. What a week! Have a good weekend, everybody. Thanks for all the great charts.

  • DudePlunger

    Nice trade, like the rationale like the setup.

  • Rayden

    Interesting. However, there was a new overnight high on ES, so yesterday was probably not minute 1 and 2. Today (the gap) may have been minute 1. Also this probably is an even smaller degree πŸ˜‰

  • Scoops

    So far Margin Clerks 1, PPT 0. Far as I am concerned they have been intervening the whole day as this looks and feels like a controlled fall. Kind of like the talking head said on CNN about trying to put on a spray head on a gushing garden hose.

  • DudePlunger

    Well, I thought that the move up from 1036 to 1107 was Minute 2….I'm not very good at counting waves though which is why I pay mole $50 a month to do it for me :D.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Bob – it is critical we close above 1068.xx (which is the lowest close for this bear leg). we close below that and then its trouble..

    And if somehow we close below the lowest close in Feb (1055.xx), then Mole and company have their P3

  • Bob the Horse

    I was small down (at Europe close). It's interesting as I am running 110% long stocks with a 65% shotrt futures positions. But I am long a bunch of Pharma and other defensives with some cyclicals that are global but based in Europe (i.e. like the weak Euro as it lowers the cost base). But my portfolio today traded more like it was 10% long. That tells me the market is becoming more selective in the down days – it's concentrating even more in the European Banks (which I capture in the future short), and we are no longer getting the total capitulation of everything as we got last month. Narrower leadership often signals the end of a trend. So yes, for now, I am stil Bullish Bob.

  • http://www.mylifemytrade.com MyLifeMyTrade

    I am onboard with you about 1180.. but my line in sand is close above 1068.xx

  • Clint

    Like I said…good thing it was”positive”. I think 1180 is going to be a stretch anytime soon now. Hell…getting a close over 1100 is going to be a technical challenge now. Big week next week for everybody…whichever side of the coin you're on.

  • katzo7

    True dat, look at a day or week chart, not bullish in the least way.

  • Clint

    Double true dat !!

  • katzo7

    Sigma 4 day today?

  • Tronacate

    With the fractual playing out so accurately…..I would be hesitant to take ANY long positions.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Bulls will try all their might to close spx above 1069.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Likely not… short covering rally will come to the rescue anytime

  • ds2

    I never post charts, but this is interesting to me at least
    Big
    http://screencast.com/t/Y2RlODZlZm

    Small
    http://screencast.com/t/NmZhNWQyMDAt

    just nudging bellow my trendline

  • katzo7

    My EW 1060 level just tagged.

  • Rayden

    Sorry, didn't mean to sound so critical. The breakaway gap is an interesting observation that I had missed, believe it or not. I guess I was referring to how if minute 3 started with the gap today, I don't see anything that looks like a recognizable 2 of any degree yet.

  • Tronacate

    Funds are all in…….the only thing they will be staring at monday will be redemption requests

  • http://www.mylifemytrade.com MyLifeMyTrade

    Funds were all-in a month ago. Not true any more.

  • katzo7

    l
    l
    V

    EOD

  • Scoops

    When's the last time copper sold off almost 6 %?

  • http://www.mylifemytrade.com MyLifeMyTrade

    Here comes short covering… keeping my eyes peeled to see where spx closes

  • roncofooddehydrator

    Definitely going neutral at the close. If Monday gaps down again and this sell off continues, there will be plenty of opportunities to go short again. I feel there's more danger of a gap up taking away my profits from today.

  • EvilTrader

    holy blip.

    down we go.

    Markets dont bottom in days like today.

    Expect heavy selling and capitulation (?) next week.

  • katzo7

    l
    l
    V

  • Tronacate

    Don't think there'll be anything but margin calls to watch

  • Tronacate

    Should finish at LOD

  • Clint

    Is 1068 the significant number for you ? Above it semi-positive ? Below it..look out ? 8 minutes to go and we're at 1061.

  • katzo7

    MLMT, you have to just look at your charts, When you say stuff like this I wonder where it comes from. “Bulls will try all their might to close spx above 1069.” Just look at your charts man. It is all there.

  • http://thefxspeculator.blogspot.com Onorio

    Agree…more downside next week IMO, we could see -1000 early next week.

  • katzo7

    l
    l
    V
    EOD

  • jigdaddy

    wow. this was truly unexpected. i had a shit feeling last night that we would rally and i was so close to ditching my long term puts…thank god i held on to them…actually thank you mole for the constant reminder of thinking long term!

  • equity_momo

    Covering half my shorts which are a few days old at the close purely because its friday. remain 50% short and will see how next week unfolds (looking to toss out the 50% at first legitimate opportunity)

  • DudePlunger

    Take profits, enjoy your weekend with a smile on your face that you were short ahead of a 300pt down day. If you trade futures, you can always re-enter Sunday night.

  • Tronacate

    See you all monday……kawching

  • http://www.mylifemytrade.com MyLifeMyTrade

    Please go read my prior comments..

  • jigdaddy

    dude, you killed it on that fractal…nice job man…

  • http://www.mylifemytrade.com MyLifeMyTrade

    Yup 1068-69 is the lowest SPX close for this bear move.. Below it means a good chance of 1040 being taken out.. Above it is semi-positive.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Mole. Today I have backed up every comment with reasoning… referring to TLs or price levels or the zero signal. I even stated some trades.

    But it looks like people who are leaning bullish are not welcome.

  • malverd

    closed below fat finger 5/6 low; i have a close of 1064.88

  • Gold_Gerb
  • http://thefxspeculator.blogspot.com Onorio

    Just because you`ve been talking the same for the whole week.

  • http://thefxspeculator.blogspot.com Onorio

    Just because you`ve been talking the same for the whole week.

  • http://www.mylifemytrade.com MyLifeMyTrade

    Good luck to you all.. P3 and whatever… see you all in October at SPX 1260

    I am out of here…

  • Clint

    Looks like “Hello 1040”.

  • Scoops

    Keep the shiny side up. Peace.

  • Scoops

    Does that mean they are less all in, or more all in then? Can you clarify that comment? If there are redemptions then they are still all in with whatever scraps they have left to invest with, and the forced selling brought by the redemptions doesn't put them in any better position to be buyers right?

  • WTFed

    Have a great weekend everyone.

  • Rayden

    Thanks!

  • Rayden

    Hey Tronacate – where's the fractal?

  • http://thefxspeculator.blogspot.com Onorio

    Im sorry to hear that man. People here are not against you, just analyze you post during the week and you`ll see why you loose credit here.

    Good luck man, see you some day.

  • https://evilspeculator.com molecool

    Meh – don't be a cry baby. You should have seen the heat I got when I told folks to get out of gold (right at the top) over at the Slope.

    I mean – what is trading really? Can you win doing what everyone else is doing? To make big profits you have to take money away from a lot of people on the other side of your trade. And that's tantamount to standing up in a crowded room and telling everyone that they are wrong. Trust me – you don't make friends that way. Most people are lemmings by nature – they do whatever everyone else is doing. I know that sounds very cynical but I'm only the messenger – just look at history.

  • malverd

    Funny how the “news” isn't talking about the close below the 5/6 low

  • amokta

    i have a confessional – i sold out all my US-side puts, overall profit + left some 'free' puts on SNDK/DTG/GLD running (long exp). Still have my UK puts on UK banks running in profit – tempted to sell on monday, but could hold (they are worth more than US account) .
    Want to start with a 'clean sheet' i suppose.

  • DudePlunger

    Well Mr. Mole, my jaw dropped on that Daily Zero reading. I'll patiently wait with my oil short intact, and create a plan this weekend for /ES trading next week.

  • https://evilspeculator.com molecool

    I guess it sinks in after the 100th time – LOL πŸ˜‰

  • Tronacate
  • katzo7
  • Tronacate

    Fractual update…..feel free to critique

    http://content.screencast.com/users/trona/folde

  • https://evilspeculator.com molecool

    MLMT and whoever else: Can we please stop with the drama? I don't care who is right or wrong or who started it and why. Let's keep it civilized on all fronts and focus on banking coin!!!

    Everyone cool off, have a good weekend, and come back in good spirits. This shit is supposed to be fun now!

  • Tronacate

    Thnks……even a blind squirrel finds a good blonde pussy every once in awhile (did I get that right? πŸ™‚ ))

  • https://evilspeculator.com molecool

    Let me do the honors: I saw your chart the other day and didn't have the time to respond (unfortunately). Now, this could be coincidence and as you know I don't follow price fractals – however, thus far it seems to pan out precisely. Keep looking for those for all of our benefit!

    1+

  • amokta

    Like your thinking Batman !

  • https://evilspeculator.com molecool

    I'm actually a bit confused – this came out of nowhere. Will pour over my charts all weekend and try to come up with something intelligent by Monday. May the lord have mercy on my puny brain…

  • https://evilspeculator.com molecool

    Of course not – nothing to celebrate – and it's a psychological affliction called selective reasoning.

  • malverd

    Oh no, msnbc is talking about a double dip πŸ˜›

  • Tronacate

    Pretty soon I'll be seeing patterns all over and have imaginary people talking to me

  • https://evilspeculator.com molecool

    It's evil speculator (a bit like HBO) – you can say 'fuck' here πŸ˜‰

  • Tronacate

    (phuck)

  • https://evilspeculator.com molecool

    I don't know but I like it.

  • katzo7

    Keep on looking (and posting) damn it !! As I said, you are a freakin pro.

  • malverd

    we have a restaurant here called braums. they always ask if i would like a double dip (ice cream) at the drive thru. every time they say that, it makes me think of the markets

  • BobbyLow

    Well turned out to be a mighty fine day. TGIF

    Have a great weekend everybody.

  • Tronacate

    Katzo……..one lucky call is not pro……..thanks for the endorsement, but that is beyond a stretch

  • malverd

    so what do you all think, more down side monday? i'm thinking so.

  • https://evilspeculator.com molecool

    Oh shit…

  • katzo7

    All you need is a good eye and the ability to make associations. There are many repeating patterns with 50 to 80 % reliability. Actually, some of the real smart ppl who read too much and philosophize about the direction are not good traders, they try to trade what they thing and not what they see. Many pit traders do not have a college education. Saw a TV program on that. They are having trouble trading now because of the computers and the fast speed.

  • https://evilspeculator.com molecool

    Can anyone properly swear around here? Here, let me help you:

    http://www.youtube.com/watch?v=1WeAgC-cXlY

  • katzo7

    Ms. Market usually rests after a big move day.

  • katzo7

    Sure. Why the pluck do you ask?

  • DudePlunger

    Anyone else feel exhausted? I do. Oil continues lower after hours, I'll short another one below the low of that huge up day we had on May 27 ($70.70), and I'd like to book profits on my contract from $71.60 around $69-$67.

    Have a great weekend, take care everyone!

  • psycho_puppies

    The virgin is going to do the fat lady doggy style live on CNBC.

  • Tronacate

    Love that one!!……..and this one:

    http://www.youtube.com/watch?v=acLW1vFO-2Q

  • katzo7

    I mentioned today to some to take a look at a long term chart and how could you possibly be bullish. Here is a month chart. As you can see, this excess started way back in 2000 with the Fed. pumping and came to its ultimate conclusion in 2007. Channel sloping down with a throw over in fall 2007, sign of excess. It actually goes back to the post war 1950s (upward sloping channel) but we will not get into that as it does not fit on the chart. On this chart we are witnessing a larger wave down commencing in 2000. Now was this an accident, did it just happen without design or engineering? No. These ppl are smart and know exactly what they were doing. If everyone is bullish and the market keeps on going up (think retirement accounts) then no one really makes any money as it is always relative. It is the extremes where the real money is made by savvy individuals. And ppl who can read the charts. My teacher told me the 2008 debacle was coming in real time. And I did not believe him until each day I saw it basically walking down a channel. Do not trade what you think, trade the charts and the charts alone.

    What do you do? Go fully short Monday morning? No. We just witnessed a period where the both the bears and bulls were set up. Not fun, Put your channels on and play the extremes. Crowd behavior is not what to get involved with.

    http://www.screencast.com/users/katzo7/folders/

  • jigdaddy

    anyone care to give me some feedback on my chart here:

    http://www.screencast.com/users/jigdaddy/folder

    we broke thru the 78.6 fib and the 50% line of the downward channel…..

    next target would be test of may lows or a bounce back into the upward channel..

  • jigdaddy

    mole quick question, when shit hits the fan where is the safest place to store your much hard earned cash?

  • katzo7

    Jig, I would put the Fibs on the other way, you are trying to see how far up you retrace. A full retrace, all the way up to the top would be a 100% retrace.

  • equity_momo

    …Usually.
    I saw ALOT of “buy to covers” at the close today. And it was just a steady downtrend ALL DAY. What does that mean….
    Im liking this set up more and more for bears. 1040. thats all that matters. and when it breaks , oh boy , if you arent short , youre gonna miss the ride and possibily even get run over in the process because EVERYTHING you see will tell you to buy , and you'll catch a falling torpedo.

  • equity_momo

    ….in dollar bills under the mattress and in gold ounces under the floarboards.
    Laugh it up but you asked.

  • katzo7

    Yup, looking forward to the EW5 down move.

  • equity_momo

    Dont.
    Unless you have a doctors or tax bill to pay you should run those puts till they make your eyes bleed with joy (or expir
    UK banks are every bit as FUBAR'd as US banks , and some. And thats a great ITM option to have. You have the possibility these names tank huge over the Summer , dont give that upside away because youre seeing q bit of profit. NEVER trade profit and loss.

  • amokta

    ok, lets see what happens monday (or over weekend re news!)

  • amokta

    I was almost going to paste a short excerpt from todays ewi stu, but i pressed relaod, or back button and all my prepared cut/paste is gone.
    Im sure nobody wants to know anyway !

  • equity_momo

    Bob youre on GMT right? We should have a beer sometime and you can give me a chance to correct your outlook on Govn propagander. In return if you can tell me something CNBC and every single analyst in the industry hasnt about the macro outlook im all yours πŸ˜‰

  • amokta

    …intensity of today's selling pressure was rare….what one would expect in a third wave decline at multiple degrees of trend…. top alternate wave count… this afternoon's low completes wave b (circle) of 2, which unfolded as a flat Wave c (circle) would equal wave a (circle) at 1123, which is the most common relationship. As long as prices remain beneath yesterday's 1105.67 high, this potential will remain less likely. A break of the May 25 lows β€” 1040.78 in the S&P β€” will eliminate this alternate from consideration. Conversely, a rise above yesterday's high would indicate that the market was simply “sold out,” with few left to drive prices lower, at least near term. …. elevate the alternate count to the primary wave structure

  • UayBalam

    I enjoyed your analysis and commentary. Hope you reconsider.

  • n2thezonez

    I really believe that it was driven by the Euro which traded terribly over the past 36 hours, breaking below what had been a strongly supported price and down to a 5 year low. The tremors in the Sovereign CDS market and the SocGen rumors just fanned the fire.

    Over the past 2 weeks, on my monitor it has appeared that the SPX wanted to rally, but the currency and credit derivative markets weren't having any of it.

    It makes for tough trading, IMO. I trade SPY options, but find myself monitoring the Euro more than anything else. The Euro seems to trade in a very technical fashion, provided there's no major headline and no Central Bank intervention. Unfortunately, those headlines and interventions are appearing on a very regular basis, making action very unpredictable on a short-term basis.

  • Anonymous

    I’m went long at 1070, but that apparently was the wrong move. I’m either going to get raped on Monday, or I’ll be fairly happy. I’m extra pissed about today because I went completely flat yesterday and sold my Sept puts.

  • Anonymous

    I think Bob deserves more respect than being called “Bullish Bob”. Right or wrong, he does his own analysis, and he follows it. He isn’t one of the goobers running around on CNBC telling you that stocks are headed to the moon and you have to buy now or you’re going to get left behind.

  • Anonymous

    Considering the number of headfakes we’ve had both ways, I wouldn’t count on it going either way just yet. Today does make me question, though. I’m in the bull camp — I want to see at least 1120 before we head down to the 900s again. It’s possible that I’ve got it all wrong, but earlier this week I allowed myself to be convinced that the bulls were ribeye only to get sucker punched.

    I said the other day that 1065 was my line in the sand for the bull case. I’m not sure anymore.

  • yudhisthira

    Man, that is slow wave count analysis. Geez.

  • psycho_puppies

    Those guys are a major help. If it doesn’t go down it may go up.

  • yudhisthira

    My largest trading account since I got whip-sawed in Oct 2008.
    Too much leverage then, hadn't discovered trading blogs.
    Called Hochberg for short term advice, he was only long term.

    Pray to God that Goldman Sachs (doing God's work)
    does not make Mole an offer that is “too good to refuse” for Zero Lite.
    Don't ever sellout, Mole, It'll never see the light of day again.

  • Long_John_Silver

    Sage counsel, especially given the latest indications from the zero. I've run my account into dust chasing the whipsaws this week, trading my instincts. They were right, but always a day early or a day late. Thanks for sharing your thoughts, trades & insights – ljs

  • n2thezonez

    On stockcharts, they have both the closing $TRIN and $NYUPV-$NYDNV printing more extreme readings than on any day during the 2007-2009 bear.

  • Thespookyone

    I don't hunt fractals down, but have seen them work. Was a great catvh on your part-and obviously is working flawlessly-congrats!

  • n2thezonez

    Looks like a reasonable roadmap to me. Having looked at the breadth readings registered today, it would seem that some early week bounciness might be in order. At the same time, printing a new closing low and closing the week on the weekly low implies the likelihood of lower prices in the near time.

    A replication of that fractal would fit the bill on both fronts.

  • Scoops

    Most of them I think. CM, BMO, TD, RY

  • Scoops

    This should break it down nicely. I would have wrote the same, being a
    former Realtor, but Garth has such a good way with words.

    http://www.greaterfool.ca/2010/06/03/the-big-one-3/

  • Artyom

    Mole, any way you can provide those first two charts (say weekly) for your hungry little rats? We’ll appreciate it a lot and won’t bite you next time you try to pet us.

  • Wave_Surfer

    > Actually, some of the real smart ppl who read too much and philosophize about the direction are not good traders

    cough

  • katzo7

    A good day for me. A bad day for the bulls. I do not wish ill on anyone. But also, I will not stand by idly and see ppl steer others in what I feel is an incorrect direction. And this direction was obvious.

    A possible road map for the future. I reserve the right to change my opinion at any point based on my charting. As you can see, if this plays out, we will be only moving down to the EW3; we will still have an EW4 up retrace to go and the disastrous EW5 down move, a move to below the extant March 09 666 low. But I digress, that is a long way aways.

    http://www.screencast.com/users/katzo7/folders/

  • katzo7

    –hands Kleenex–

  • Scoops

    Can this be right? I havent checked elsewhere can't be bothered.

    http://stockcharts.com/h-sc/ui?s=$CPC&p=D&yr=2&

    http://stockcharts.com/h-sc/ui?s=$CPCE&p=D&yr=2

    I am stunned, stunned if these numbers are correct. To me this means that everyone, I mean everyone is expecting a super duper bullish Monday.

  • Wave_Surfer

    Hm… I guess I see a moderate reading.
    If by “everyone, I mean everyone is expecting a super duper bullish Monday” you mean, there is not a reading that indicates widespread panic, then, ya, I agree.

    When I look at CPC graph, I see a recent low at 0.56 and a recent high at 1.53 and a current reading at 0.97 – almost perfectly in the middle of the recent high and low.

    I guess I see it as moderate. There is some fear, but considering the move of today, not a lot of fear. Also, the fear is not so high that it indicates that the indexes must reverse immediately. There is still plenty of room for things to fall before excess fear requires a bounce.

    Are we seeing and saying the same thing?

  • psycho_puppies

    I’m expecting ^vix 150 but I’ve been a day early on my predictions.

  • yudhisthira

    Only thing worse would be a 1,2,1,2 count:
    http://screencast.com/t/ZWNiMWRjZG

    I am sticking with yours for now.

    Don't know much about xtrends.
    His money quote,
    “It is my collective read that US financial markets may finally be shut down on Monday June 7, 2010, if Fed Desks dont intervene on Sunday night.”

    Apparently talking to my inner bear.

  • yudhisthira

    Entire move from Mar 2009 as a fourth wave.
    Haven't seen that count before. Gotta keep my mind open.

  • katzo7

    Remember that is a month chart. I always validate any count with the underlying indicators. They support, I go with it; they vary from the norm, I dig deeper.

  • yudhisthira

    Thanks. Keep the charts coming.

  • yudhisthira

    How 'bout that zero daily chart? God!

  • Wave_Surfer

    I thought you said you were NOT trying to insult me when you asked if I studied Philosophy in college?

    Anyway, I have a degree in Computer Science. I don't know if that is too theoretical to allow me to post here.
    Some might think I am bragging, so I should mention that I got moderate to poor grades at a college with VERY Low prestige, so I hope I can still be considered uneducated enough to be able to trade.

    My point, to make it clear, is…
    1) I have not been combative or critical of others, so I was a little surprised at some of the responses I got.
    2) I thought, since this blog seems to have more intelligent posters than most, that some people might find some of my thoughts interesting. I was wrong. Message received.
    3) Good traders tend to be outside the bollinger bands and can come from very different places. There is not just 1 simple stereotype that fits top trades as “The (New) Market Wizards” has shown, so instead of judging people on having too little or too much education or being too thoughtful to be able to trade, maybe we can focus on what the market is most likely going to be doing in the future and riding that wave.

  • katzo7

    What? That comment was in no way pointed towards you or others on this board. That comment actually comes from a program I saw on CNBC about floor traders. Many had never been to college. They survive on their quick wit and acumen, like a boxer who anticipates by instinct when to duck and dodge. I consider you a good internet friend Wave Surfer.

    And I guess a bit of that comment was directed towards a few here who write paragraphs on why the market will do this or that but never post an analytical chart (dog ate the homework). I am a visual person, as you know. I want to see the bells and whistles. If someone is going to philosophize that the market will go up immediately and it is in a downward facing channel, I have a big question mark in my head.

    I read everything, and think I rarely react against ppl's thoughts except when I feel they are so glowingly wrong that it is obvious. I then do feel a responsibility to present my side of the picture.

  • katzo7

    And Wave Surfer I thought what you said in that passage was quite good about who is the “actual contrarian” and threw in the Philosophy major to try to be funny. It made my head spin and I immediately had to go to a concrete chart afterwords (humor here). Humor evident in person is lost in electronic media. You may have missed the activity here in the past couple of days (hint, hint).

  • Wave_Surfer

    <funny story>
    Actually I was gonna get a minor in Philosophy while getting my B.S. in Computer Science, but while I was taking my last class to get the minor, I decided that I would *MUCH* rather spend time with my girlfriend, who became my wife, than do any homework for my “Ethics and Media” class, so I guess I am not hopelessly theoretical after all. πŸ™‚
    </funny story>

    I will see if I can more Elliott wave counts in the future, but between you, the other posters and Mole, it seems like everything is already taken care of in that department.

  • Darkthirty

    I know fundamentals don't count, but it's also good to remember that the POTUS is just an everyday Chicago politician and will do anything for a $. When it was reported that he and joe both “leaked” the job #s combined with the wave count and TA, I went short at the close and slept well.

  • Darkthirty

    Put that on a line chart, another option is a possible c of B today, with C up yet to come

  • jigdaddy

    yes, thats exactly what i meant to do πŸ™‚

  • jigdaddy

    I felt pretty dumb to ask but it's worth asking. Or should we trade
    our bills for Guns ammo and canned food?

  • Scoops

    Yes my thoughts exactly.

    Too add, when taken in the context of the disastrous and somewhat historic
    internal deterioration today it just seems so low. Everything else needs an
    Al Gore projection screen to show how off the grid it all is.

    More downside to come I am sure.

  • equity_momo

    I agree with you both. It could be just another mututal fund monday but just remember always to hold those core shorts because when the real panic comes its going to make the flash crash look like a speed bump.

  • equity_momo

    Nobody responded to my post earlier on gold. it was just a quick heads up…. that kind of reluctance to go down and even grind higher in this tape is just downright scary to me.
    I know where the smart money is going…. we are going to see a liquidity crisis at some point this summer.

  • katzo7

    Saw it, read it, agree EM.

  • katzo7

    This week we saw a particularly viscous move in the market. As I keep on saying it will rob from both sides, bull and bear.

  • mensajero

    TWM short term target 26

  • katzo7

    I respect you a lot WS. I am fiercely loyal to my friends and will do
    anything to help them (i.e. my posts). Do not ever think I am throwing you
    under the bus, you misinterpreted what was going down. This is the key
    phrase “A good day for me. A bad day for the bulls. I do not wish ill on
    anyone. But also, I will not stand by idly and see ppl steer others in what
    I feel is an incorrect direction.”

  • katzo7

    Yup, reach the goal no matter what.

  • katzo7

    The title of this post is it is OK to be wrong. No one gets this market correct all of the time. 0% is an “F.” 50% is a “B.” 80% is an “A+.” 100% and I want your number. I just went back and looked at my post of the day chart of the VIX I posted yesterday pre-bell. Wrong, on gap fill. Wrong on Tuesday being blast off day on the VIX. But maybe correct on VIX maybe starting to go parabolic. Still TBD tho. But if I get this stuck in my head it could very well be antithetical to my trading. And I do not want to be the deer stuck in the headlights of market dynamicism.

    When wrong it is how one deals with it. Sometimes it is a good idea to just shut down the 'puter and walk away. Two wrongs definitely do not make a right in this business. Humans are complex but really, there are only two emotions that count here. Greed vs. fear. Feel secure vs. feel threatened. This is what the market bases its premise on. When one is so secure in the fact that they have gotten the direction correct, that they will reap rewards beyond belief, look out. I have seen this numerous times and have experienced it also. When I see this activity occur on a blog, I just sit back and wait. No argument to them about balance will be convincing. And if this happens to you, listen to your body talk. I bet one could chart the postings of a few select steady contributors and see an inverse correlation between the correct market direction and the # of postings. We just witnessed that. Some useless philosophical pontification by katzo, means nothing, counts for nothing. Only trying to explain how to develop an edge.

  • katzo7

    I just want to point out if I may from yesterday per-bell:

    “Overnight bullishness has set all EWs on all charts at EW5s across the board and all indicators are peaked except for the oscillator and MACD which shows divergence under the EW5, a necessary and good precursor for a turn. Can it go even higher? Yes.
    Here are the turn levels I am getting.
    1108 – 1113 to 15 – 1130

    EDIT: The level 1108 seems to be a major target.”
    AND “That sell off substantially reorganized the charts now. That 1108 was an important target, as I said, all indicators peaked. Everything pointing down now IT. ” I saw that 1108 on numerous charts as EW targets. It is not always this clean and easy.

  • raised_by_wolves

    Psst, want to see a chart?

  • katzo7

    Yes, yes, yes.

  • katzo7

    and a bit later.

    “I want to urge caution and good $$ management (stops) but I am seeing EW5 down setups on the numerous charts I watch. We like EW5s, they really move fast once they start. This is something I call SuperPositioning, when numerous charts stack up like this, it can, and I underline the word can, be hard from market to break all of these. It can happen, not impossible but takes much force.”
    AND
    “Observe MACD cross on the 5 min. concurrent with the tick I watch. Looking for DJ to be down 210-20.”

    I do not do this to start a katzo admiration society, I do this to exhibit how cogent and careful research and that alone will save you from harm's way. Mole espouses this with his posts, no BS. Someone said that I “wished” for this sell off. That is so far from the truth. I analyzed it and am only an innocent bystander in a multi-car pile up, I control nothing.

  • raised_by_wolves

    First, I'll serve you an appetizer. This is my $DXY chart which has the same lines as it did a month ago. The only thing new are the candles. You can see that it is significant that this big-dots dotted line has been thrust through. The uptrend continues. I could draw an up channel but my single internal up trend line has been serving me well.

    http://content.screencast.com/users/raised_by_w

  • katzo7

    How are the purple diagonal lines derived?

  • http://thefxspeculator.blogspot.com Onorio

    93 next week? πŸ™‚

  • raised_by_wolves

    Another appetizer . . .

    (SLV/GLD) . . .

    http://content.screencast.com/users/raised_by_w

    Now that the trend line with the highest upward slope has been broken, there are two possibilities here: A bounce off of this lower upward sloping trend line or another breakdown.

  • katzo7

    What is for dinner, beef? lol

  • raised_by_wolves

    In addition to the common 0.25, 0.5, and 0.75 coefficients, I also use the uncommon 1.33, 1.76, 2.35, 3.13, 4.16, and 5.53 coefficients. PRSGuitars introduced me to the 1.33, which lead to the other coefficients. The are default settings of mine in TOS. In Prophet, I have to do them by hand.

    Here's an example in Prophet which shows how I plot the channels ahead of time and how I like to use counter trend channels to do this. Essentially, they are diagonal instead of horizontal price levels.

    One of my $INDU charts . . .

    Overview . . .

    http://content.screencast.com/users/raised_by_w

    Close-up . . .

    http://content.screencast.com/users/raised_by_w

  • raised_by_wolves

    Would the highest dotted line satisfy you? πŸ˜‰

  • katzo7

    GLD
    One final high but overall very weak move (see flatlined indicators, MACD). After that EW4 went in, this should have started with a steep EW5. Actually, if you look, the steep move occurred at the end of the EW3. Caveat ~ I have gotten gold calls wrong.

    http://www.screencast.com/users/katzo7/folders/

  • katzo7

    Very interesting. Thnx. Is PRS still around?

  • raised_by_wolves

    Because it's past 4 AM here and I'm finally feeling tired, I'm going to cut this short. So, we'll skip the steak dinner. Instead, we'll go directly to martinis and roulette.

    (GS*(SLV/GLD)) . . .

    http://content.screencast.com/users/raised_by_w

    This is a game of Russian roulette. Below this line there is a potential 1.33 backstop but not much else. If you see this chart crashing, either GS or SLV or both are crashing. To determine which is the better short when, simply chart (GS/SLV).

  • raised_by_wolves

    No, he couldn't handle Mole's threats to shut the comments down when most people were just bitching about not being successful shorting the rally.

  • raised_by_wolves

    PS: You can follow PRSGuitars on disqus.

  • katzo7
  • raised_by_wolves

    I would have shorted GLD during that EW4 but decided SLV was outperforming to the downside. Not that it's enlightening in anyway, but here's my much neglected GLD chart with the recent addition of the white trend line. Personally, I wouldn't short until that trend line breaks.

    http://content.screencast.com/users/raised_by_w

    In my mind, when GLD starts downtrending so should most everything else.

  • raised_by_wolves

    This count looks like Mole's Soylent Green count but with the addition of the recent abc correction up and the direction pointing down instead of up from here.

  • raised_by_wolves

    I'll experiment with that Fib later.

  • raised_by_wolves

    5 AM. Time for bed.

  • katzo7

    CYA

  • Wave_Surfer

    We are cool. πŸ™‚
    As far as bulls, I am in the Pretcher / “Dow going to 400” crowd. ;-P
    Yesterday was good for me. Even though my account was 40% in cash and the rest were in spreads, I was rather surprised at how much my account grew. πŸ™‚

    Like Mole and others, I was thinking that yesterday was most likely going to be up more, but, I profited handsomely from the move down. Since I am not really a day trader, I plan on being short through some vicious bounces. Plus it is too hard to know what it will do every day the night before, so I just have to expose myself to some potential whipsaw, again, like Mole keeps saying.

    Your calls are good. You are one of the few people that can do a good job of applying EW to even day trading, but since you may have either changed market directions or moved in and out of the market 10 times before I do it once, I am probably not able to apply your info well. Although, if it is one of those days where I am considering moving in or out of a position, I try to use your info to help me with getting a better entry/exit.

    It seems like several of us are more natural bears because it seems that several of us are now doing better at reading the market than we were doing during the latter part of wave 2. Even though there are some rough whip saws, over all doesn't it feel like we are reading the market better?

  • Wave_Surfer

    Yep! I agree with you 2.

    It seems like most of us are on the same wave length when it comes to the need for long term puts. About the only way to make sure you don't miss a key wave, that you don't want to miss, is to have some longer term puts that can ride out any bounce given to us.

  • Wave_Surfer

    Good point. When looking back to the bigger mistakes I made during Primary wave 2, I noticed that the glaring, bright red stop sign that I ignored, which caused me so much pain was this.

    Yes, the market was moving down fast, but I kept discounting that after 2 or 3 days down, several short term indicators were flashing overbought. I kept figuring, “eh, probably just gonna be a 1 or 2 day bounce and then back it goes.”

    Well that was wrong thinking and the last month or 2 has made it more clear. The market moves down and, over all, the fear is not reacting as much as it did. Sure, the flash crash move was a move that was outside the 3rd standard deviation, and sure there was a crazy spike in VIX, but over all and during other days in May, moves down in the market, did not create the kind of moves in VIX and other indicators that the same move down would do during P2.

    Anyway, back to your point, I agree and I agree that it is a very key point!
    In the past, a far less destructive move in the market would register as far more oversold than things are reading now.

    I should probably be borrowing money now! This may be one of the few, last times where you can buy More longe range puts while the vix is not that horribly high. VIX of 18 is far better than 35, but 35 is not super high compared to where it will probably be for the next year or 2.

  • Wave_Surfer

    I been looking at the SLV/GLD behavior/relationship lately. I sense it is trying to tell us something rather important. The divergent behavior of the 2 is now reaching into the months, which is not real common.

    Thanks for the graph.

  • Anonymous

    Yes, thanks for posting this with your thoughts – a few levels beyond my current skill & helpful for learning more sophisticated approach

  • katzo7

    WS, let me look at two things you mentioned.
    1) “I am in the Pretcher / “Dow going to 400″ crowd.” First, after being a
    follower, I am self reliant now. You, I, or Prechter have no idea where we
    are going. That needs to be proved to us each and every day. Say to
    yourself, I am XX and I have a market problem (this was supposed to be the
    humorous part, lol). Ask every day, did it validate my thesis or go contrary
    to it. If it stopped and turned at 500 would you be waiting for 400? We can
    look for certain things to happen but the market is always evolving in its
    ability to test us. That two 2 day up and short with a piece of baloney (I
    posted a chart) taught me something about rules.
    2) “It seems like several of us are more natural bears because it seems that
    several of us are now doing better at reading the market than we were doing
    during the latter part of wave 2.” Again, don't be a natural bear or a
    natural bull, be a natural money maker. Yes, the market is exposing itself a
    bit better to us now but the swings are tremendous (higher VIX). There is
    always a fine line between me switching from bearish to bullish. . . 200+
    points up makes me question my call but 300+ points down makes me resume
    bearish. Every move is constantly tested again my model I continually post.
    About reading the markets better. Any market transition is a tough spot,
    again a fine line between right and wrong. We just went through one as
    witnessed by the emotional outbursts on this site.

    G/L in trading.

  • mensajero

    I'm not a fan of this one here. short term target 17.12 with a possible completion of a diagonal dynamic triangle that will end it's pattern at 15. http://www.stockcharts.com and look up the issure OVTI. I beg to differ on the targets given by boxer on yet another blogsite.

  • mensajero
  • Scoops

    I don't know why this made my skin crawl, because frankly I have no fucking idea if this is bullish or bearish. Picked this up from Caldero's blog. Full credit to him for noticing this. This is an amazing statistic anyway you look at it.

    http://dl.dropbox.com/u/1221522/UPDNwklyvolume.jpg

  • Clint

    Well..we'll see what's what on Monday. Will the global markets crater on Sunday night ? Will the SPX hit…and or breach 1040 next week ? Are we gonna double dip from here down to the March lows…or not ? Lots a money in the right answer to those 3 questions alone.- I”m thinking oil spill clean-up news might determine what we do Monday morning.

  • trabuco

    I would bet it's a distortion due to the flash crash…

  • Scoops

    That was on May 6. Its a weekly chart, not a monthly.

  • trabuco

    TRIN was bearish this week but nothing nearly as abnormal as what your chart shows.

  • https://evilspeculator.com molecool

    That's almost an exact replica of my A/D – D/A chart…

    It's funny how this stuff gets posted here – after I report on it for weeks on end…

  • https://evilspeculator.com molecool
  • https://evilspeculator.com molecool

    “I do not do this to start a katzo admiration society”

    Only if we get to wear silly hats.

  • katzo7

    Send 50 cents and two Cheerios box tops to . . .

  • Scoops

    Its not my chart, I said it was Caldero's and its volume and on a weekly
    basis, not advancing and declining issues. I'm sure there would be
    similarities from any breadth type measurement though like you said.

  • psycho_puppies

    WOW! I suspect we’re going to see quite a few shocking charts as this unfolds. I mean as 401k and pension plans evaporate bad shit happens.

  • psycho_puppies

    http://stockcharts.com/def/servlet/SC.pnf?c=$VI… I don’t know how to read P&F charts but they are fun for mental masturbation.

    On this vix chart we are still at the lower end of the bollinger band even after yesterday. http://stockcharts.com/h-sc/ui?s=$VIX&p=D&yr=1&

  • yudhisthira

    Is this the count that you describe, a fifth of a third wave?

    http://screencast.com/t/OGQ5MjQwZmMt

  • katzo7

    Yes, exactly, nice job Y. But we have to verify it. If this count is correct, we should continue down this week in a fully blown EW3 with all rallies being sold off fairly soon. I also base my count on the lack of divergence in the oscillators appearing on the day, week, and month EW count in a 3 to 5 comparison.

  • amokta

    Also, many site arre adopting your hybrid subscriber/non-subscirber blog content system (pug and hob to name two)

  • katzo7

    A possible break through resistance this week?

    http://www.screencast.com/users/katzo7/folders/

  • Clint

    Looks like the oil spill clean-up is making some positive progress. Of course that's according to BP. So does this mean we're gonna be up 400 pt on Monday morn ?-I rolled the dice and held a nice short position,so i hope not. We shall see. Should be an interesting week.

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

    sorry but can't see why there should be any correlation..sounds more like an excuse for why the market does what it does..

  • amokta

    strange, the live cams are no longers showing the sea bed, they are just showing 'success' feeds of surface footage of people moving to and fro on deck

  • Clint

    Well I'm hoping not…at least for the first hour…but you never know. Lots of PR involved here. . I just rolled the dice and decided to hold. We shall see.

  • yudhisthira

    Ok, how's this chart for that scenario?

    http://screencast.com/t/YzVhMTRlO

    It would certainly be aggravating for bears.

  • http://thetickerstreet.blogspot.com/ TickerStreet

    moleo, you are funny. stockcharts has that standard chart and everyone I know use that chart long time before you posted it. Lol

  • http://thetickerstreet.blogspot.com/ TickerStreet

    Do you want to see progress?

  • Clint

    Well…you know on this issue , of courseI do. It's just too horrific to want to see anything else. But I don't trust BP's info..so I guess well just have to see. But they need to get this fixed. There always another trade. But even so..i still think we lower before too long because of other global economic problems that look to be quite extensive.

  • http://thetickerstreet.blogspot.com/ TickerStreet

    When does life not have any problems? Tell me, problems are always there.

  • yudhisthira

    This….
    is…..
    Sparta!

    Never done that before…

  • MDX

    Even if we will lift up 400 pt on Monday morning, that will be another opportunity to load up on shorts, IMO.

  • Gold_Gerb

    the tradition continues….Good!
    [post comment 304]
    πŸ™‚

  • Gold_Gerb

    Mole use to have this great chart showing the correlation of subprime & SnP sinking together.
    Well, it's that time again, the other ARMS should reset [in great number] this summer.
    just a thought.

  • Scoops

    That's all fine but I don't have a secret decoder ring, hence didn't see that, and don't expect to be chastized for contributions, few and far between they may be.

  • equity_momo

    katzo your charts are excellent and indicative and you read them well but when you say break of resistance i assumed you were posting something bullish – do you mean break of support? (not being semantical just dont want to be misinterpreting what youre saying)

  • equity_momo

    The market is setting the news , not vice versa. Anyone trading on the oil news flow is going to get chopped up like tinned tuna. We may have a VST bounce but the bulls are going to need more than oil clean up news to fix this broken market.

  • https://evilspeculator.com molecool

    Yeah, but who keeps you out of trouble when the going gets tough? There will always be copycats but there is only one Evil Speculator πŸ™‚

  • https://evilspeculator.com molecool

    Just pointing out the facts, if that's okay.

  • katzo7

    Absolutely correct, break of support. Look at those two horizontal yellow lines. Good point. I am not bullish.

  • katzo7

    Just look at the charts, man. Read EMs comment below.

  • katzo7

    OIH ~ target 85-6. Look at that channel on the day chart. The oil drillers were touted here recently, it even became an emotional issue (mole warned against getting too emotional). Again, look at that channel.

    http://www.screencast.com/users/katzo7/folders/

    And UNG.

    About to go parabolic? Maybe but something bothers me about this one. Money will flow to the weakest of a pair, but oil going down and natty going up like this?

    http://www.screencast.com/users/katzo7/folders/

  • tgarfield

    http://www.bp.com/genericarticle.do?categoryId=

    you have to check different rovs – Skandi rov 2 has the BOP head at the moment.

  • tgarfield
  • amokta

    yes, managed to find that
    still a lot of leak going on there!

  • katzo7

    Here is my stock quote list. particularly notice the relationship between S&P, DJ, TRAN, and RUT. These last two have been lagging the down moves. But now . . . Will this continue?

    http://www.screencast.com/users/katzo7/folders/

  • equity_momo

    Ah i see , thanks for the clarification Katzo.
    Can i ask your opinon on the “flash crash” move – are you including that in your EW counts. There seems to be some conjecture. I am using it in all my TA as it happened , i dont understand the theory that we should ignore it . It was real. The proceeding bounce could also be a very squashed right shoulder.
    What bothers me is alot of TA are looking for a right shoulder similiar to the 07 topping process. Do you think we have already put the RS in?
    Flash crash wave 1 and bounce to top of shoulder wave 2 which puts us in a wave 3 of 3 now?

  • equity_momo

    I hate the x3 etfs on longer time frame Katzo (curious what do you define as “longer” btw) , i really think structuring your own option portfolio is much much better than buying and holding these things. Theyre a total scam , leave it to the VST for those , i dont think theyre even worth studying technically.

  • katzo7

    Longer time frames for just the MACD evaluation is the 60/120/180/DAY, not meaning holding these for a longer time frame. That is what I was referring to. I place emphasis as to whether these time frames are above the zero or below, above bullish. And I agree with you about these etfs BUT if one can catch a move correctly a triple is a triple.

  • katzo7

    I mentioned, during our “EvilSpeculator Emotional June Outburst” that one needed to look at the longer term picture to get a sense of where the market is headed. One could be a beanie and argue for 1250, 1500, 2500, even 5000 S&P without charts and based on whim or a wannabe guru status but that gets us nowhere IMO. It only serves to get them attention. I also mentioned that the market “doesn't just turn around these lower indicators easily on this MONTH time frame.” By all my counts, these are all going down. I guess one could argue that the MACD could pop over the zero line and turn this bullish but I know that under an EW4 retrace, the “MACD comes just up to, or breaks just above the zero line before heading lower.” Now, I am not trying to convince anyone here and will be watching this like a hawk and reserve the right to change my opinion based ONLY on charting action, not on whim. Trade your own book. I am only providing my perspective.

    I also said this pumping went back to post WWII, you can see it here from the 70s. The market always provides needed balance, trees do not grow to the sky. IMO we have had our rampant speculation. My house was going up in value 10-20% a year. Now time to pay the piper, initiating first in Europe, then here.

    http://www.screencast.com/users/katzo7/folders/

  • equity_momo

    Yes getting them right is nice! Also , the Transports…
    The Transports are not followed closely enough imo – i have followed Richard Russels Dow Theory for years and although there have been a few head fakes , both up and down , the past 2 years in that theory , it offers alot of insight into the internals of the market and i appreciate a guy whos so old , been through so much , and is still sharp enough to impart his knowledge onto the next generation(s). He is a wise man.

  • katzo7

    Just saw your comment EM. No, I am not including the FLash Crash low in my
    calculations. In a way this is taking a conservative approach. You saw my
    1.618 & 2.618 calculations right? I went from the next day, if I used the
    Flash Crash day, the market would point to a much lower measured move. Let
    us try to get to the first calculations and then go from there. My
    justification in doing this? That Flash Crash spike down just does not look
    right in proper EW proportional relationships for a EW1. If I used it, it
    would extend the EW1 down move much too low in relationship to the size of
    the EW2; I am a stickler for correctness in this way so I will be creative
    and go with this unless I view something else.

  • equity_momo

    Interesting , ok. Would you mind linking your 1.618 and 2.618 calcualtions here again please.

  • http://centrifugaldeforest.blogspot.com/ Centrifugal_Deforest

    A Trader's Guide to Courage (and the first bullish rant here in some months):
    http://tinyurl.com/2cw8cdl

  • Pingback: Tighten Your Seatbelts | the evil speculator - one nefarious trade at a time()

  • https://evilspeculator.com molecool

    Tim my neighbor? Nah – I don't live in the burbs mate – tried it up there way back and was bored to tears.

  • katzo7

    I know, a joke as he has chickens too. What do you think Monday will bring?

  • katzo7

    Here ya go. Look at that osc. That is the tip off that this recent rally,
    the one I am calling a failed EW4 attempt even though the proportions are
    way off, it started way too soon barely gettin' off the bottom. That
    oscillator should have moved up near the zero line.

    http://www.screencast.com/users/katzo7/folders/

  • Farathall

    Katzo — what charting tool do you use?

  • katzo7

    eSignal. it is expensive, 3K down and about 100 bucks a month.

  • Farathall

    Thanks — a bit out of my current price range πŸ™‚ But very nice feature set!

  • amokta

    regarding etfs, which family is better, in terms of accurately tracking underlying on intraday basis – proshare or direxion. also it seems DB(deutsche bank) do etfs too, but not sure re liquidity/reliability.

  • http://oahutrading.blogspot.com/ steveo77

    I want to find a way to short Canadian housing, and Australian housing, what say you?

    But I think your theory is spot on. ALL indicators I use, including the proprietary ones, are pointing down, well let's say 18 of 20.

  • katzo7

    About Canadian and Australian, others would know better. I just do ES,
    stocks, and puts and calls.

  • yudhisthira

    From early Feb to late April, the 3X Russell Bull ETF, TNA, went from 34 to 72.

    http://screencast.com/t/NDZkYjNiZ

    If I had the guts, it would have been a great play.
    It's crashed to 42 as of Friday.
    It was around 10 in March 2009. 700% up in 14 months.
    I would not hold 3x etf that long, but theoretically it would have worked for someone.

  • http://oahutrading.blogspot.com/ steveo77

    Katzo, what are you pinning that fib Fan to, I cant see an obvious point of pin?

  • http://oahutrading.blogspot.com/ steveo77

    5 hits on the triangle, and then out the other side, seems to work great. Trick is which hit do you count as “1”. These are not EW counts, just numeric counts.

    I know you mentioned before….but how do you bet this ratio? On the ratio components themselves, or as an overall market indicator?

  • http://oahutrading.blogspot.com/ steveo77

    I got Esignal through Forex.com account…haven't toyed with it much though.

    Don't like Forex.com though…they run your stops more blatantly than TOS

  • http://oahutrading.blogspot.com/ steveo77
  • marketsniper

    Hey guys. Mole, have liked your work for a long time even IF we disagree about gold. LOL

  • katzo7

    The very top of that EW5 move. That is the pivot.

  • gagelle

    Mole, excellent analysis as usual. I hope to be coming into some money soon so I'll be able to actually trade on a regular basis. So I'll be spending some more time on your site.

  • katzo7

    Stupendous post mole. Your charting skills put me to shame. I never ever ever thought that the Soylent Red was dead, was not so outspoken about it (WTF katzo quiet for once??) but just sat back and watched what I look at for indicators. They validated your thoughts.

    http://www.youtube.com/watch?v=pPirYDvwM30

  • katzo7

    Gagelle, are you single?

  • katzo7

    What, you have been bullish on gold since 1970 right? lol My St. Gaudens I bought for 800$ are now set at $2000.

  • katzo7

    Good research Yud.

  • marketsniper

    Actually, my first gold purchase with my OWN money was in 1956 (age of 8). Bought a 1846-D (Delonaga Mint) $5 gold piece for $34…it was a nice one. I grade it now at an AU55. Approx. value=$4800.

  • equity_momo

    remember, ETFs are rebased every day. Those x3 etfs would have lost you more money just buy holding them even when the big move came.
    Its important to look at the underlying – if x index moves 10% , your x3 etf wont move more than 30%. So looking at charts more than a few weeks old imo on x3 etfs is worthless. A few months MAX in extremely rangebound markets.

  • equity_momo

    Respect πŸ™‚

  • psycho_puppies

    “But the writing is on the wall, my dear stainless steel rats, this market is on the brink of extinction.”
    http://www.youtube.com/watch?v=SeDnvu2gIFw

  • yudhisthira

    I like the fact that is chart looks pretty sick.
    What is the component theory that this is a measure of fear?

  • http://oahutrading.blogspot.com/ steveo77

    f'n sweet chart RBW!
    could be IHS, hehe.

  • http://oahutrading.blogspot.com/ steveo77

    It goes down before and while market goes down. It keep going down while market pauses….that is the key.

    FF going down means increasing fear BTW

    the components are shown.

  • http://oahutrading.blogspot.com/ steveo77

    Euro is going up to test gap
    Iran is selling Euro until September, read my blog

    We are at a 50% channel line on a PRS channel that is sloppy as hell but has strong touch points, I am keeping it. We either bounce up around here or if we break the fifty, sled ride downward.

    http://screencast.com/t/NDM4ODk3OTct

    Junky stocks and junk bond did not get killed however, in a panic, you would think these categories would be killed.

  • FranceHasTheBomb

    Just thought I'd let you know that there's a nude post up…

    https://evilspeculator.com/?p=16631#comments

  • yudhisthira

    Neat indicator. I've saved it.