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MIA But Not Out
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MIA But Not Out

by The MoleFebruary 16, 2010

I didn’t have an opportunity to post during the session today but wanted to share a few thoughts with you ahead of tomorrow’s session.

Clearly the bears got burned today and that OPX gangsta style. The tape ramped all day and there was nothing but fear and short covering among the bears. NYSE A/D ratio closed at 4.7, the highest reading since November 10th. So, just looking at the momentum chances are we are already tracing out Minor 2 of Intermediate (1) – or worse 😉

The ‘good news’ for the bears is that we should get confirmation very soon. I’m currently counting a zigzag followed by a flat. Look at that fib I painted from the bottom of my x wave. Traditionally the maximum length permitted for the c wave of a flat is 165% of its a wave. What’s really interesting about this Maginot line (look it up) is that I actually had drawn this fib during the session – way before we touched it at the close – funny how that works out sometimes.

If this is really some type of alternation (EWT speak for a combination of various corrective waves separated by an x wave) then it should stop in its track right now and here. If we push much higher chances are now increasingly pointing towards the Minor 2 scenario. Again, this is merely academic for anyone holding long term puts right now. Just so you know what you are dealing with: A Minor 2 wave can correct almost all the way to the prior high, which would be 1,150.41 – so theoretically we could push to 1,150.40 and the current count would be maintained. The second we run beyond that the entire Primary {3} scenario goes out of the window and it’s back to the drawing board for the bears yet again.

But it’s way too early to worry about that. The Dollar has been digging in its heels and conversely the Euro has been lagging the advance we’ve seen in equities. Therefore the odds still point to either Soylent Orange or Soylent Blue – pick your poison.

Early retracements can be violent and scare off the bears hoping to ride the wave down – and in the end lure them into giving up long term positions. This is part of the game and if you don’t have the brass balls to ride this out then you’re going to be left behind sooner or later.

But yes – we can’t keep running like this forever – would be good to see this thing slow down and that soon. Especially since the time cycle has now shifted downwards again – if we are starting to break away from that and there is follow through to this rally then the bears might be in trouble. I would have preferred to not see a new high for the year in the NYSE A/D department – that’s a bit concerning. Let’s keep that in mind as we run through the rest of OPX week.

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.
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  • yudhisthira

    Awesome chart. My powder is still good. Ready for more skirmishing….hiding behind trees and rock walls. Going short again.

  • boldventure

    You make good points Mole…I agree that there is not much room to the upside or the trend could possibly be changing here if we break back above the 50DMA. I do see this possibly kissing that 1105 line on your chart or maybe even higher some to the 1110 range. That should be about it IMO. Ater that I that see a strong sell-off to the 1030 range or more with maybe only a day or two of rally (headfake) on the way down.IMHO Just can't see a rally to new highs here with the previous run up we have already had since the lows of last year, and with the economy in such bad shape. Unemployment, states finacial condition, mortgage resets coming, Fed has to pull in liquidity next month, foreigners not buying treasurys, Pizza Hut selling pizza at 1/2 price, blah,blah,ect,ect…….If you want to go short just wait til short term direction changes and get on board, don't worry about being early and catching ever bit of it cause you never can safely.( if it falls hard there will be plenty to catch)

  • n2thezonez

    I went short at the close, just to see how it happens. 50% retrace of the downtrend and a good number of SPY Feb puts were closed today while open interest in SPY Feb calls expanded.

    It never fails to amaze me how far up the market can be moved in the absence of any volume. Fading it may cause me to take an L tomorrow, but it just seemed a bit self-indulgent on the bulls behalf, all things considered.

  • bergs

    Mole, excellent catch on that fib. Dang fell asleep for most of the day. Damn those nasty virus.

    http://screencast.com/t/ZmJmZDFk
    As you stated she will have to terminate quickly.

  • string01

    Cool. I was playing with Fibs yesterday and drew that one as well. Left it up all day.

  • bananaben

    Thanks for all you do Mole. Today was tough indeed. Will still be 100% short by 1105 – about 90% now. My balls are made of stainless steel – 301 pre-tempered to be exact.

  • string01

    Stained jelly here.

  • Persian_Gerb

    Is it me, or is the SPX just completed the head of an inverse H&S. naahhhh, it couldn't be that easy.

  • Persian_Gerb

    you have my vote, not sure how you take it. unless your hedging out the pain.

  • http://dreadwinaard.livejournal.com/profile dreadwin

    $RUT has had 5 up days in a row, and $RVX could not break the early Feb. low. I closed my SPY calls, added a few Feb. 109 SPY puts at close. I like 107 for SPY at Opex.

    I think GDX is saying that we have a reversal tomorrow.

  • http://dreadwinaard.livejournal.com/profile dreadwin

    Waitaminute! Pizza hut is selling pizza at 1/2 price? For real?

  • lilme

    Rising bond yields seen spurring US stock gains – per Shiller –

    http://www.bloomberg.com/apps/news?pid=20601109

  • momac

    Thanks for the update Mole, I added a bit to my short positions at the close today. I'm ready for a down day tomorrow.

  • roncofooddehydrator

    Thanks mole, your posts always seem to bring clarity to where we are and where we're heading.

    We hit the 30 EMA on the $SPX daily today and came within fractions of the 60 EMA. Ideally we would bounce back down from here.

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

  • https://evilspeculator.com molecool

    Ha! You're a lot more confident than I am – hope you wind up on the right side of the tape.

  • kostee

    The other crazy Russian. Are we getting MOLED? What we fear the most is not what we trade. Long and strong till ES 1250 in may or sooner, then sell and go away till october. summer is for ……….wooopie!!!!!

  • Blind_Squirrel
  • momac
  • momac

    You and me both Mole. 🙂

  • AudioTactics

    I'm looking for 1105 before we fall but I wouldn't be surprised if we get to the 1110 or even 1120 area.

    What I don't expect is new highs but time will tell…

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

    DAX 15 mins..we broke out now headed for 5684..but another gap opening, out of last 9 only 1 has NOT filled intraday.. http://www.screencast.com/t/YTNlNTI3Y fade?

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    thanks mole. too sick to comment properly

  • gatopeich

    Thanks Mole. Believe it or not, your posts are helpful.

  • http://chartsandthat.blogspot.com/ ultra

    DAX at 38.2% fib only – so could have more to go. Then again, it may just be made of lead.

  • gatopeich

    Been following those gaps too, even managed to trade a couple of them. I hope today we'll get another gap-closing!

  • http://chartsandthat.blogspot.com/ ultra

    Cheers, Mole. Nice to know we are counting the same thing.

    Talking of NYAD – nice divergence here – what is it they say about more extreme readings in wave 2?

    http://content.screencast.com/users/ultrabear/f

  • gatopeich

    30-min DAX's RSI over 73. Overbought it is I guess.

  • tradejane

    Yes, it looks like it might have another 50 pts to go. And I think shorting that area will make a nice trade. But today's gap up could be a first indication that the 5980 I mentioned a while ago is still in the cards. Which is just fine with me, as I believe it might make an even better shorting point.

  • tradejane

    Same here. I hope we get well soon.

  • goldpackers

    Thanks Mole. Have to favor this is an X wave that tops at 1194ish – orange. I have a turn due 2-17/18 or 1120 into 2-24/25 – blue. Then a retest of the lows. But this implies new highs are ahead.

    Just have trouble counting the drop as 5 down

  • bobthehorse

    We have spent this morning selling some positions down and de-risking the portfolio. Whilst a further squeeze is possible we are now at levels where I am more interested in protected against the downside than participating in the upside.

  • gatopeich

    I guess you mean 5680 rather than 5980!
    If so, still thinking DAX can bunce 50 points after stickin for half a day in overbought territory?
    This morning I went 100% short on the IBEX, as I still have a bit of faith in German economy, while Spain is no doubt in deep trouble.

  • aussiebinlaughin

    Euro heading in right direction (for a bear) after that bounce yesterday, hoping it pulls down SPX with it.

  • CorporalCarrot

    OK folks, so we are now still below the level of 10,300 where the typical bear in my bear diary was salivating; and some 300 or so points higher than the level at which most bears were worried they would not get another bounce to short.

    And yet again, now we are here…………..do you have what it takes to short this market. Do ya punk?

  • tradejane

    No, I mean 5980.

    Today was the first gap up above an important resistance on the hourly chart. Those are bullish but they generally fail, the first time. Which is why I think that a run to the 5700 area will make a nice short. [Of course it could drop from here (5640) too but unfortunately that would be too easy!]

    Anyway, if we drop to, lets say, 5550 but rally back up to 5700, this will imho support a move to 5980.

    Just a theory of mine, actual results may vary, etc.

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    thanks, and yes, hope we get better soon

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

    yes bears is scared, and with reason after the head fakes in last 9 months…I've seen many references to this pull back being just like July last year..and we know where we ended..UP..it seems most are waiting for the break..but as you said close to 10300 with a stop prob good for a tester

  • http://chartsandthat.blogspot.com/ ultra

    I see a few bulls are ambling out of the barn right around now too.

    Nice.

  • goldpackers

    Gold stocks did not perform nearly as well as the metal and they tend to lead.

  • goldpackers

    Have to favor we are up into 2-24/25 and closer to 1120 spx before a retest.

  • gmak

    IF upload Geek ever gets working I'll show you a pretty picture. ES has apparently hit 1100. rut-roh. Is a Gartley moment coming? On an unrelated note, I caught an interview yesterday. Is that injured American skiier ever photo-genic! There is one non-competitor who will be handsomely rewarded by the entertainment industry for her genes.

    https://evilspeculator.com/?p=14624&success

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  • raised_by_wolves

    SLV, 30-min is breaking through MA(208) support:
    http://content.screencast.com/users/raised_by_w

    SLV, daily has yet to reach MA(208) support:
    http://content.screencast.com/users/raised_by_w

  • CorporalCarrot

    OK folks, so we are now still below the level of 10,300 where the typical bear in my bear diary was salivating; and some 300 or so points higher than the level at which most bears were worried they would not get another bounce to short.

    And yet again, now we are here…………..do you have what it takes to short this market. Do ya punk?

  • http://twitter.com/tradejane tradejane

    No, I mean 5980.

    Today was the first gap up above an important resistance on the hourly chart. Those are bullish but they generally fail, the first time. Which is why I think that a run to the 5700 area will make a nice short. [Of course it could drop from here (5640) too but unfortunately that would be too easy!]

    Anyway, if we drop to, lets say, 5550 but rally back up to 5700, this will imho support a move to 5980.

    Just a theory of mine, actual results may vary, etc.

  • http://sshamster.blogspot.com/ Stainless_Steel_Hamster

    thanks, and yes, hope we get better soon

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

    yes bears is scared, and with reason after the head fakes in last 9 months…I've seen many references to this pull back being just like July last year..and we know where we ended..UP..it seems most are waiting for the break..but as you said close to 10300 with a stop prob good for a tester

  • http://chartsandthat.blogspot.com/ ultra

    I see a few bulls are ambling out of the barn right around now too.

    Nice.

  • goldpackers

    Gold stocks did not perform nearly as well as the metal and they tend to lead.

  • goldpackers

    Have to favor we are up into 2-24/25 and closer to 1120 spx before a retest.

  • gmak

    IF upload Geek ever gets working I'll show you a pretty picture. ES has apparently hit 1100. rut-roh. Is a Gartley moment coming? On an unrelated note, I caught an interview yesterday. Is that injured American skiier ever photo-genic! There is one non-competitor who will be handsomely rewarded by the entertainment industry for her genes.

    https://evilspeculator.com/?p=14624&success

    NEW POST
    NEW POST
    NEW POST
    NEW POST
    NEW POST
    NEW POST
    NEW POST
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  • raised_by_wolves

    SLV, 30-min is breaking through MA(208) support:
    http://content.screencast.com/users/raised_by_w

    SLV, daily has yet to reach MA(208) support:
    http://content.screencast.com/users/raised_by_w