Take a load off…

I am not one of the random speculators out there that is willing to believe that the market is being “held up” by any particular stock.  Or that their is one particular “shoe” that is waiting to drop, but I do think the action of FRE and FNM actually are on everybody’s minds.  While in some instances, this would be an argument against a particular wave pattern, I feel that the due to extreme herd mentality surrounding these issues, they are worth observing.  The orange lines on the chart represent an equality Elliott often speaks about in corrective moves.

The green channel is also used to identify corrective patterns in EWT.  I have drawn it using the first two highs of the pattern, and basing off of the wave B low.  Remember, we draw channels differently depending upon a corrective or impulsive move.  Last thing of note of the chart is the small scale fractal 1-2 which bears considerable similarities to this chart.

Here is the $INDU chart.  Not much new, the retest remains in place, anemic volume remains the norm, and today’s breadth was modest at best.  e, anemic volume remains the norm, and today’s breadth was modest at best.  While everything continues to support our view that a wave 3 is beginning to unfold throughout multiple timeframe, my personal “line in the sand” is 11,100 in $INDU.

Lowest volume trading day of the year!!

The $VIX is giving a nice retest of the break-out level I had been watching closely.  I will be continue to eye this for another confirmation that the trend is accelerating lower.  Either way, the fact that the $VIX close down 2% while the market barely kept its head above water is classic bullish optimism.

Here’s my view of the $COMPQ.  I have outlined two previous spinning top-ish candles that the $COMPQ displayed in the first move down.  My view is that we are in the second (right-most) box, and that we should speed lower.  The alternate view is that we are close to finishing an impulsive move to the downside, and should be prepared for a rally if indicators begin to point up.  The great thing about the location of these two candles is that they are accompanied by a gap lower.  I mentioned to Mole on Friday that the $COMPQ has a nasty habit of gapping away from it’s second wave peaks.  Finally, the 13EMA is about to cross the 30EMA to the downside, which has led to some serious declines the previous 3 out of 3 times it has occurred.  I do not use this as a trading signal, rather to watch the short and intermediate term trend.

$COMPQ daily "road map"

Let me close out by throwing up another chart I believe the mass public (at least those with some financial exposure) have seen frequently here of late, the $BKX.  Yes, I will finally toss the spotlight over to the current star of the world stage, the banking index.  Notice the orange trendline, and the 5 closes $BKX has had at or very near this level.  This index is sandwiched between a support level about to break, and both the 13 and 30EMAs.  Today’s high also represents the 61.8 retracement level of the move since the top in either April or May, the first of our typical targets. Volume has been “seasonly” decreasing, and we are about to have “good seasonal patterns” also.  What I see from the chart is a nice BB squeeze with the index positioned for a bearish break-out, to be easily confirmed with any volume.

Remember, patience is a virtue, and an absolute requirement for trading.  Confirmation is king, and he will be making his rounds soon enough!!

That said, I leave you where we began…

Take a load off Fannie:

Skål!