Intra-Day Update: Chop Chop Pop Drop

UPDATE 10:06am EST: I have to say I have mixed feelings this morning. On one hand I’m happy that we’re pushing up as this leaves us with a glimmer of hope that we’ll see higher prices before the inevitable big drop. But I’m also getting a bit frustrated with a market that cannot stay in one direction for more than one day. Maybe the smart thing is to refrain from trading until January 5th – I’ve kept my exposure very small until now which was the right decision based on some of the comments I see floating around here and on the slope.

The markets right now are going wherever the market makers want it to be. Yesterday the NDX turned on a dime one single point away from 1157.41 – the December 12 low. Coincidence? I think not – the remaining big players running the tape are intent on teasing this thing out all the way to the end. Had the NDX breached that point the current wave count would have been defeated, which in a way would have been a good thing. The way it is now we’re back in limbo and anything can happen. Caveat Emptor!

UPDATE 11:04am EST: If you look at my Zero chart you’ll know that I was actually pretty surprised that we breached that first 877 retracement level. And what do you know – we actually pulled back and are now wedged between the Camarilla 878 pivot and the 877 RL. Maybe the big dogs went out for an early lunch and a lap dance. If you tried to chase the market (always a bad idea) you’re now being punished for it – and rightfully so.

Although I dropped a few bucks on THI and GNK I’m actually pretty pleased that we’re going up. If we can keep going here there might be a glimmer of hope that we’ll actually see new December highs before 09. As you might remember – that was the big X-Mas present I failed to get this season.

UPDATE 11:19am EST: Fibs baby, fibs!!!

Even in the thinnest of markets it always comes down to fibs. We just popped from the 38.2 to the 61.8 fib line and are holding thus far – spot on those fibs. Neglect them at your own peril.

UPDATE 1:18pm EST: So, I know feel vindicated as I was aghast at the fact that we blasted through that the 877/63 and 882/79 RL on a weak signal. We all know the mice have a habit of dancing on the table while the cat is out of the house but it was quite a push and looked like good ole’ program trading that kicked in right at the open.

As you can see by the blue line/dot combo and the blue blocking dots on the RL the Zero told us to hold off on adding long positions until we would breach the 890 RL. Rightfully so, as we are now below the 882/79 RL again. Frankly, we shouldn’t even be here and as I posted earlier – hot air can only lift you that high. I expect another whack at the 882 towards the close and maybe we breach – if not I think we’ll chop around here for a while.

Another lesson learned is the amount of RL pain the MMs seem to be able to exert. I think right now it’s about 3-4 SPX points on an 80% RL – this might change when velocity picks up a bit and the RLs move further apart. So, seeing 885 being touched on an 882 RL was to be expected and is something I am already taking into account with the current version of the indicator.

Valuable lessons learned for going forward. If nothing else this tape seems to provide a great training/tuning environment for the Zero. So far I’m very pleased with its performance – in particular given the current conditions. I cannot wait to throw this thing at a real trend and see how it holds up. Remembering even some of the old charts (i.e. starting mid/late November) in combination with prior versions of the Zero I think this should be very interesting 🙂

BTW, whoever gets my ‘computer says no’ reference gets 5 gummi points.

UPDATE Closing Bell: Well, I be damned – we actually made it to the 890 RL. Based on my current RL/Zero algo a 2.2 signal should have been blocked at the 882/79. A 79% RL under normal conditions needs about a 4+ signal to be taken out – I’m sure we did not see that today. But it’s thin tape, so anything can happen I guess as there is nobody around to defend important resistance/support levels. And I remain very hesitant to weaken the threshold on that algorithm until after Jan 5th when we see some real volume. My old mantra – never optimize an indicator during holiday tape. So, if you feeling lucky (punk) feel free to ignore the blue lines and just trade the direction – meaning if you see a blue line just interpret it as either a green (pointing up) or red one (pointing down).

I’m elated however as it puts the old wave count (and my X-Mas present of SPX 920) back into play. I’ll hop over to the gym now but will be back later this evening with a forecast. All in all this was a very good and productive day my dear rats.