We Topped

So, I was just chatting with Berk – we were going through our laundry list of short victims. We just had loaded up on some brand spanking new CCJ puts when suddenly the market fell off the plate.

So, I’m like: “Berk – WTF just happened?”

Berk: “I dunno, nothing really – we TOPPED :-)”

I think that quote goes on my wall tonight. It’s not just funny – it pretty much summarizes one major tenet I have learned about trading, which is that the news does not matter (see AAPL) and that the market does whatever it does based on trader sentiment, or what Prechter refers to as socionomics.

I am somehow counting 13 waves up since the early October low, so this sudden drop down looks extremely promising. However, it is occuring on almost zero participation on the Zero Lite, and that is making me very very cautious. But we are starting to reach some velocity, and I’m not about to pull the cord just yet.

If you really want to know what brought the market down I tell ya – it was my new Peter Jones avatar 🙂

This man does not fuck around…

I’m re-posting Berk’s chart from 3:30pm as it wasn’t up very long:

12:30EDT – Berk here.  Going along with Mole’s definition of insanity… I bring this old adage for everyone to remember… “The markets can remain irrational longer than you can remain solvent.” Remember this as we are expecting every new high to be the top.  It sure as hell is close, but “close only counts in horse-shoes and hand-greanades.”  The market eats “close” for break-fast, lunch, and dinner.  (And mid-night snack sometimes too).  As a reitterance of the caution you now have grown accustomed to me promoting, I will let you know that only 1 indicator of my 13 has bulled back.  It was the $CPC, but not to a level to indicate a top.  Everything else has strengthened.  Look at the $SPXA200R…  95% today, with the cluster of MAs ringing in above the 90 level.  That means that roughly 90% of all $SPX stocks are above their 200MA, and have been since July.  We are due for a DIP (not a huge drop yet) soon, but let it come to you folks…  Don’t chase.

Overbought in an uptrend...

Enjoy…  Berkster out.

4:30pm EDT: The Zero chart is quite interesting this evening:

It seems that no participation now precedes drops in the tape. We shall see – I remain skeptical but encouraged by this little exercise in terminal velocity.

The daily Zero’s fractal continues to play out thus far – I’m pretty stoked about this of course but tomorrow will be the acid test, so let’s remain on guard.

Program Trading Update:

geronimo/ES: -9.5
evil.rat/ES: -2.25
evil.rat/NQ: -2.25

Rough day for geronimo – got stopped out through the big drop.