There’s The Rub

The index futures are pushing up hard right now (ES at 953.5) and it seems I once again will awake to see some red digits in my account – wonderful. Since I know what makes you rats tick I can easily guess the one thought that’s rattling around in your little rodent brains:

Oh might omnipotent and handsome Mole – is there an end to this merciless bear squeeze or is this a one way ticket to Dow 10,000?

Well, most likely not – this thing is quite obviously running out of steam – just pick your favorite momentum indicator: Daily MACD, stochastics, RSI, ROC, etc. However, be warned – just a few days ago I was fairly sure that we wouldn’t see 6 or 7 continuous up days in the NDX – today was the 9th! And this is really the one we should be looking at since the Nasdaq is a favorite among program traders – thus it has been spearheading this rally. However, since my count is on the SPX and the DJI let’s look at the latter tonight:

So, here’s the rub. The good news is that the wave count is getting fairly clear at this stage of this Primary wave. We are most likely close to completing Minor A of Intermediate (Z) of Primary wave {2}. This either happened today or will occur by this Friday. Based on what I’m seeing in the futures right now I wouldn’t be surprised if we got some kind of doji or small down day tomorrow followed by what I would call a ‘token’ retracement – my personal estimate would be 8,670 – assuming we push all the way to the PPTPL – our old Plunge Projection Team Panic Line. That should be somewhere around 9,030 – otherwise there is diagonal resistance around 9,200 (forgot to draw that on the chart above). I have also highlighted the 9000 mark as I would be surprised if the bulls wouldn’t at least try to make a run for it tomorrow or by the Friday close. The last time we painted 9000+ on the Dow was on the first two trading days of this year – and the bulltarts want that trophy back (and will succeed in getting it).

I however still think we will get our token retracement as the bulls are running out of buyers and there are few remaining bear stops to sweep – no squeezie, no cookies. However – it is also possible we get some nasty sideways consolidation which would resolve the currently overbought conditions without giving us a chance to recapture some of the losses. So, the next two days are really key – I would like to see the tape find its level and then embark on its counter move. If we are still where we are now by Monday and I don’t see an acceleration to the downside I would have to finally admit defeat and close out my puts for a loss.

The Dollar is benefiting equities as it has embarked on what appears to be its final 5th leg in this downside consolidation. Although a temporary push to the upside is possible I think we’ll see 76 before this thing finds a bottom for this year.

Gold/Silver: Don’t touch it right now – give it time – I think we push a bit higher there to complete the current retracement. For the record – in the last year Gold has basically made no progress – it’s been one big churn factory – I hate it and will probably not touch it for quite a while. At least until we complete Primary {2} on the equities side.

As a last thought – I’m not one to capitulate without a technical reason – however, at this point I have already lost this battle. Even if we do drop to my target and I get my money back – the last 9 days have taken a big toll psychologically and I’m actually looking forward to taking a long weekend and hopefully not having time to think about the market. In life there are certain fights that you just can’t win – sure, you might come out of it with a technical win or a break/even but deep inside the struggle you went through took more out of you than you can ever get back. If you’ve ever been there I’m sure you know what I’m talking about. You should be feeling good about yourself but somehow you can’t.

I think after the last 9 trading days we are all in need for some good ole’ fashioned therapy involving a baseball bat:

So, that’s the rub, folks – see you on the other (ugly) side.

12:46am EDT: Bank Atlantic strikes out and announces shitty “earnings” on hour before midnight. Spread the news…