Thursday, February 26, 2009

Should be down tomorrow...

Target for the next two days is 72-73 area followed by a bounce back up to the 78-79 area...then a final plunge down to 63-64 area.

Then it gets interesting. Keep track of the following to see if we make the bottom or not:

p.s. Didn't you like how absolutely HORRID the jobless claims numbers, durable goods orders and new home sales were and the market still rallied in the morning? I don't think those bulls were too happy. But did kick off triggers I had for more puts!

Wednesday, February 25, 2009

No chart tonight, TOS a little messed up

No chart tonight, my TOS feed is messed up for SPY, and I don't have a ton of time to redraw it on the $SPX. So go back to yesterday...we didn't make it quite to my target, but there is a good chance that wave 4 on the chart might be over and we are headed to a near term bottom in the coming days.

Also, we are coming to a crucial point, whether we are coming up on the end of wave 3 of 5 down (the big red 5 on the chart) or whether we are coming to the end of wave 1 of 3 of 5.

Tuesday, February 24, 2009

The count...

This is my count in the context of the larger structure...see previouse post for close up.

A litte more up...

Ok...after debating with blustar from Traders-Talk...I have revised my count as shown above.

Here you go a falling wedge:

But note that it is not support by declining volume, so there is much less of a chance of a breakout to the top. Also ignore that last candle, its a screwed up TOS datapoint.

Monday, February 23, 2009

Ok...a little more...then a little bounce...then back down

Sorry for not using the normal labelling conventions, but as always I am running short of time. I am looking for a bounce up after a little more down. I determine my target at 73.29, by looking at wave 1. It moved about 5 points and through wave equality wave 5 should move about 5 points. I have wave 4 ending at 78.29. 78.29-5 = 73.29. I will take anything around 73.5 as close enough. You can watch the stochs on the hourly. If it breaks my trendline, that is the start of wave 2.
Wave 2 could trace as high as 82, but I am looking at 80.4 as the max right now. In fact I will start building a short position at 78.5. Currently I have a few left over puts to get rid of in the morning and picked up a few atm calls on SPY at eod.
Plan is to dump the rest of the puts at 73.5, pick up a few more calls (no where near a full position as I hate being long in a bear market).

Sunday, February 22, 2009

Here we go...

That is the primary Elliot Wave Count I am going by. Note that the candlesticks in the green circle form an In Neck bearish continuation pattern, of course this pattern needs to be confirmed Monday. Basically I am looking for the collapse of the market sooner rather than later. Hints at bank nationalization and failing European sub-prime countries could trigger this in the near future.

Also, I have access to Stockcharts now. So I am presenting some charts I have previously been unable to present. Above is a hybrid chart combining the New 52 week low and CBOE Put/call ratio that I always talk about. If you look at the MACD on that chart, you will see that the it spikes to confirm an intermediate bottom. Also whenever the 25ma crosses the 50ma moving up, thats when the market will probably drop.

The above chart is from Unersaettlich and Schweizer from It is the ratio of the SP500 bullish percent index vs the CBOE put call ratio. Basically when the 30ma crosses the 50ma going down, there will be a sharp drop in the new future. You can see that we just crossed it not long ago. There maybe some small bounces next week. But it really looks like we are in a STRONG downtrend for a few weeks. But of course you never know these days what Obama and Gethner have up their sleeves...but they sure are running out of new cards to play.

ps. Rick Santelli rocks!

Thursday, February 19, 2009


Looks like we are stuck in 2 of 3 of 3 of 5 till after opex...We should fill the gap up from the morning but stay in this range...

Wednesday, February 18, 2009

Just down.

Target 75.

Tuesday, February 17, 2009

Down we go...

Looks like we broke under the greentrendline for good. That 65 target is a first pass guess of the low. It bill be refined daily as we get closer. Daily stochs are still pointing down and the MACD has just crossed over. So we have a little room to run. Expect a big bounce around 75.

We could still retrace all the way up to 82 potentially...But I am leaning more the the green line as we retraced to the first fib and then made a new low for the day.
Trimmed my SRS position back a little. Will buy more if we bounce.

Saturday, February 14, 2009

Triangle ending soon...

Its the weekend and I find myself with time sitting here waiting for my car to be lets take a look at what happened this week and where we might be going. Thursday we had that surprise turn around towards the end of the day with the announcement that Geithner would be giving details of his housing plan some time in the next couple of days/week. If this super secret plan is as good as his overall economic plan that he announced...well the markets are pretty much toast.
I have laid out the two scenerios that I believe we will face. The Blue Scenerio is that we are in a wave 3 down and are finishing wave 2 of 3 of 5. Basically we might get some choppiness but we will continue down STRONG after that. In the Red Scenerio we have not finished the larger wave 2 and can expect a bounce up to 86-87 range before a plunge down.
SRS has show good relative strength....and I expect CRE to continue to have problems as the quarter progresses. SRS has the potential to be in the $150+ range after next quarters earnings report.
While we concentrate on our own economy, the world at large is in serious trouble. Lloyds lost a huge amount in the UK and will potentially need more Government money. Germany's Hyper Real Estate is about to go under and is VERY close to German Nationalization. Japan's economy shrunk 10% and China's "growth" is down to single digits.
China also wants guarantees on the debt its holding as the American government has been doing some "reckless" spending. Its clear that China and other countries are going to trim back their Treasury bill purchases to minimize risk. So what now? The fed will have to continue to "buy" the T-Bills and at some point, they will have to increase the interest to get anyone else buy. This will lead to higher interest rates and put a severe dampening effect on the economy. Basically we are debting up future generations. While America maybe the greatest country in the world today, we are likely to become a second rate debtor nation in the future.
12% of the stimulus will be spent by the end of stimulating is that? 57% will be spent from 2011 onward.

Thursday, February 12, 2009

Crazy Day...

Well...we did get the heavy selling I was down and sell to about 81...But wow I did not expect it to go straight up after that based on rumors about Geithner's housing plan. So today we blasted off on rumor again just like we did on the "bad bank" plan. I am looking at 84.37 or 85.17 as the turn around points. Tomorrow will be tremendously interesting as we will be going into a long weekend with little economic news tomorrow. So effectively we will see what the sentiment really is. Is it the bulls or the bears that are willing to carry positions over the weekend? My thought is that the market is still generally very bullish based on the CBOE put call ratio of about 0.9 but its turning down again.
Sold some of my long position of SRS at 64, 66, 68 and 69...and rebought at 62 and maybe 61(left an order out there haven't checked to see if it got filled). Still holding my puts...Tomorrow the market will reveal its true colors...

Wednesday, February 11, 2009

Something is coming...

We traded in a flat narrow range delimited by the blue lines. Towards the end of the day we formed an ascending triangle...ok not a really good one :-P We should get some direction tomorrow. The top line of the larger triangle can now be seen at the top, which means we are going to soon break one way or another out of this triangle.
If you look at the stochs on the 30 minute or hourly you will see that we did a nice job of shaking out the oversold conditions today.
My view is that we are in wave 2 of 3 of 5...which means we should see a HEAVY down day tomorrow.

Tuesday, February 10, 2009

Finally Wave 3 down???

The daily candles have formed a bearish evening doji star on the daily candlesticks. We also see the stochs have curled down. This could be the start of our journey to the sub 700 area. BUT we still have not crossed over the green trend line, so there is hope yet for the bulls. For those trading the channel they bought today kicking up the close at the end. Each successive bounce off the trend line has brought about a lower high.
The CBOE equity put call ratio is still at extreme lows, which is tremendously Bearish. If this is truly the start of wave 3, we are looking at sub 700 within the next 2 weeks...then a bounce back up for wave 4...and then a final low from wave 5 (looking between 600-650). I suspect/hope this will be THE LOW...If not (in other words we V bottom), then we are looking at potentially 300's before year end. I will post an updated Elliot wave chart with projections for the end of wave 3 tomorrow.

Monday, February 9, 2009

Might be looking at a double top...

Might be looking at a double top and the end of wave 2. Futures are back down after Obama's speech. Still short...

Sunday, February 8, 2009

What do you know...I found some time...

Hey look, a rising wedge!...bad news is that volume is not supporting this it might not break down tomorrow...Stochs should turn down...Geithner postponing the plan a day really leaves the market hanging. My guess is we go down tomorrow...but not hard...stay kinda choppy waiting on news.

Still in 2...

Well...time is short again today...needless to say I did not expect the strength in buying over the last two days. I did think we were going to end the week up due to the weekly candles...but nothing like what we saw on Friday.
So now the count puts us back in Wave 2. CBOE equity put/call ratio hit a yearly high thursday...and was still way up there Friday...we are in super bearish areas. Alas we could see a little more upside in the morning until Geithner's speech at noon...followed by Obama's later on.
My favorite quote came from (I think) Calculated Risk regarding the performance of home builders. They have more than doubled off their lows and were exceptionally strong on friday.
"Nothing sells homes like more unemployed people..." This was in regards to the high unemployment numbers Friday, and the strong homebuilder stock appreciation :-P

PS. I am currently fully short :)

Friday, February 6, 2009

Sorry...little time today...

Still holding short positions. I don't think we will finish above 85.5 as we will remain inside the triangle until Geithner gives the market something to chew on. Today will just be choppy.
Employment rate was horrid this I guess a bit of rally to start off with...then a gap fill and the choppiness.

Wednesday, February 4, 2009

Still on course...

Wow, I thought the market was too weak to make it to the 61.8% retrace level. We got there and it was pretty much the Kiss of death from that point. The fear is starting to build though we saw some bulls come in at the end of the day. If this is the start of this portion of the major move down, then pretty much expect it to dive tomorrow and into Friday and Monday. Looking for a minimum of 818 before we get another little bounce.

But be careful, it looks like its collapsing before hitting the upper trend line of the triangle. There is still the possibility of more choppiness and that wave 2 has not quite ended. At most it may try another shot at 85.4, but I really don't expect that.

If the white candle was a little longer...this looks like a dark cloud cover formation. BAC is a mess and it broke 5 today. SRS was showing unusual relative strength this morning, the SP500 was up a good amount and SRS was also up. The impending CRE collapse is getting nearer.

Tuesday, February 3, 2009

On course...

Same chart from yesterday...I like how the chart is following my randomly drawn purple line for the retrace :) Anyway you can draw any number of ascending triangles today (though not supported by volume divergence), I have one in orange. I think a pop tomorrow with one last try at the 50% retrace (84.63)...then down from there. I bought some puts in the 84.3 area today...deeply...deeply regret closing out WFC puts yesterday, banks looked sick but the market was recovering.

I normally concentrate strictly on SPY...but there are a few others I will be loading up on this go around. SRS as I think CRE is going to be bad (don't get me started about SPG paying its dividend with stock...who wants to be diluted each quarter???). WFC, JPM puts as they have out performed their peers, but a closer look reveals ALL the US banks are sick. SPG puts or just a flat out short.

Is there a chance we could rally to 85.5 or 90 or 100+? Well yes, and then I would have to rework the wave counts. In fact if you were swing trading the channel you would be long right now and looking for about 100 before going short (depending on what channel you were using).

One of the keys to watch is if we break the lower green trendline. It starts at the November low and we have touched it twice since. If it breaks, it definitely confirms the current direction. Whereas a break of the upper trendline could confirm a rally is in progress.

Monday, February 2, 2009

Slight adjustment...

Updated the chart slightly based on the actual low we made. My target was 81.5 and we actually made it all the way down to 81.31. Using the new low and redrawing the fib, I have a new adjusted target of 85.41 for the retrace. I will probably layer back in shorts around 84.5. In addition we are in a falling wedge, but I did not draw it as it is not being support by volume.

The daily candle sticks formed a bullish reversal pattern (Meeting lines formation).

Sunday, February 1, 2009

Follow up to my morning comments...

Bounce this week is likely. Last week's candle formed an inverted hammer, which is a bullish reversal pattern. The week before was a bullish hammer formation which again is a bullish reversal, but obviously it did not reverse last week. Stochs are turning down though.

Here you go...

The daily looks like we are going to drop out the bottom of the symmetrical triangle this week. Note the trend line on the stochs. I expect that line to hold on the next bounce on the dailies.

I am in the camp that believes we have started the move to a major bottom. In Elliot wave terms the move started at 94 and wave 1 finished at the purple 1 in the chart. Wave 2 ended at the island top reversal from Wednesday. We have started wave 3.

I expect a bounce at 81.87 up to around 85.5 then another move down from there. That is what it looks like to me at the moment. The move up may overshoot as it may line up with bail out news. In any event watch the volume. If the move up is on diminishing volume (on a daily basis), start layering in more shorts.
A major news event and change in sentiment could morph the structure into more corrective up and down choppiness. Also don't go by any time references on the chart, these are swing targets only. I moved in short on last tuesday and added a little more on wednesday. Exited part of my SRS position and some mar puts at eod on friday. Why not exit all of it and play the bounce? Well there is a chance we may make a big move down monday and I didn't want to miss that and I had to balance that with the likelihood of the bounce (very high).
Key factors: O's new bailout, Bad Bank plan, Jobless claims, Employment Situation, Overseas bank problems, Retail closures.