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Hitting The Wall

Hitting The Wall

by The MoleApril 30, 2010

I don’t want to pop any champagne bottles prematurely but it’s increasingly starting look like the bulls have run into a wall here. This was the second time an attempt to breach that 78.6% fib mark I drew yesterday. Doesn’t mean not yet another attempt will be made on Monday but it’s looking decent right now and Soylent Green has been revived – for now.

Charts below for holders of the secret decoder ring:

What we now need to see is a relentless drop below 1180 and that in a hurry. If we hang around here then I am afraid we will remain stuck in this annoying sideways action for quite a bit longer. Strike your enemy while he’s down – if the bears permit the bulls to take a breather the weekend will take care of (i.e. reverse) any retracement, as usual.

From a wave count perspective we are at an inflection point – if this is only a 2nd Minuette wave down then Soylent Blue is running out of space and time – we would need to see a reversal pretty much now. Until we either bust higher above today’s highs or below Wednesday’s 1181.62 low we are a bit in limbo land here. Let’s hope for a quick resolution as I have had enough of this spasmodic action.

A little shout out to everyone: I keep seeing extremely bearish comments and the first submitted to this thread claimed that the bulls are completely fucked now. Well, I’m not saying that we won’t see a decent reversal, BUT let’s please keep things in context please:

The COMPQ is down a whopping 1.39% this week – after having ramped it up the bears’ asses for 13 months. Let’s cool the emotions and trade the tape – I know you all are yearning for those 2008 drops but we are a long long way from that. Stay frosty and don’t let wishful thinking influence your trading decisions. Finally, do NOT chase any downside – especially on a Friday.

UPDATE 1:50pm EDT: About half an hour ago I issues a quick warning to my subs on the Zero Lite chart. This is what I was thinking:

At this stage of the trend it is expected for dip shit buyers to swarm in fairly quickly. Just think about it – it’s been nothing but 13 months of up up up trend – people are conditioned to see quick drops as long opportunities. Now, as soon as I saw the Zero Lite pull straight up from about -1.5 to -0.7 I expected the zero mark to be touched. Maybe the warning was a bit risky but I prefer to err on the cautious side.

Now I was lucky making that call and we reversed about 40% of that drop. To all the subs I recommend this now – keep looking at the Lite signal and wait for a slice through the mark to a least -0.5. Above that I only expect gyrations and a ramp up from here. If we do drop below -0.5 there’s a good chance we’ll see a sell off into the close. The bulls know they have to put a floor underneath this now lets this will get out of hand quickly.

UPDATE 2:20pm EDT: I don’t know who is stepping in to buy the dip here – I don’t see anything on the side of the institutions. Really strange tape today – crack open a cold one and call it a week, folks – this is getting a bit too sideways too late on a Friday for me.

More long term I have two juicy bonus charts for my subs. Again, secret decoder ring required – if you are not a member please go here to sign up. About the cost of five Starbucks lattes, you caffeine addicts!! And the barrista here whips up great charts instead of the empty foamy dish water you get on the financial MSM 😉

The equities/copper divergence is alive and well thus far. So, if you are holding long term puts – do nothing. I think there is a decent chance we will see a January repeat in equities unless we see a reversal on the copper side of this chart. Make sure you have enough theta though – very much possible we may see new highs before the final drop. These patterns don’t mean there won’t be a quick snap back to shake out the hobby bears. But thus far – odds are starting to look decent for an actual reversal.

This is actually some very good news for the bears. As of this writing we are not getting a close below the first candle inside the 2.0 BB. That is actually extremely good news for the bears as it would cancel out the third and final step leading to an equities buy signal. Heck – the same happened to us bears a little while back – tit for tat.

Now, I’m not becoming an überbear here right away – don’t get me wrong – but I’m cautiously optimistic here. At least Soylent Green has a chance. But we MUST NOT close below yesterday’s close on the VIX – hope that is understood.



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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