We Made History!

My dear rat minions – today the Gods of Trading bestowed us bears with a momentous gift:

The 2002 DJI low of 7197.49 was not just breached – we closed below it! That is not just a major confirmation of Intermediate wave (5) of Primary 1, it is a confirmation of this entire secular bear market. The ramifications are of this are tremendous and will ultimately culminate in the DJI touching 4,500 or even lower (in a year or two).

Also, today also happened to be exactly the 100th time we closed down six days in a row in the history of the SPX. The odds for that are extremely low and the odds for seven consecutive down days are less than half of that. It’s time for a bounce, ladies and leeches.

The odds now strongly support the intermediate (5) scenario and all that’s left for us to do is pray for a reload bounce which might or might not materialize.

However, be warned in that market sentiment has been extremely negative today and is reaching levels that indicates that we are in the final stages of Minor 3 of Intermediate (5). Which means our next chance to load up will be near the peak of Minor 4 of Intermediate (5). So, the idea here to not load up on one of the smaller bounces just like the one we’ve seen today. What we need to see happen is a 20 point jump in the SPX minimum, or at least several days worth of slightly bullish sideways tape, which would satisfy my criteria for Minor 4.

The ISEE index was brought to my attention recently and promises to be not just more reliable than the traditional Put/Call ratio but also much easier to read (it’s a bit like the supertrin I introduced today). A reading above 100 indicates that more long call positions are being bought and a reading below 100 means that traders (but not market makers or institutionals) are bulking up on long puts. I did a bit of reading about it and it seems that the 10-day MA has been tracing the SPX extremely well in the past. Nevertheless, seeing today’s reading of 113 really surprised me – that is a bullish sign and hopefully what many of us are waiting for.

If we happen to bounce tomorrow then I would like to see 780 before I feel comfortable dipping in one last time. This would actually be a perfect setup as we have not breached the November lows on the SPX just yet. Otherwise I will keep you apprised as things unfold in order to pick a good level to dip into the cookie jar.

Gold did not follow suit today but I do see more upside potential and thus believe it would be premature to bulk up on short positions or puts. The same applies to Silver, which is currently tracing out an exponential curve.

The Dollar was pushing up today and I expect one more drop soon to complete its current a-b-c retracement. After that it’ll most likely initiate its 2nd booster rockets to propel it beyond 90 and breach its prior highs.

That’s all I have time for tonight folks – I leave you with this:

UPDATE 11:05pm EST: BTW, this was today’s Zero chart:

I think subscribers made their 39 bucks back today 😉

UPDATE 2: WOW – must read post about AIG from Karl Denninger – he’s one sharp guy.

Cheers!