Monday, November 30, 2009

The market is as congested as I am...

We are stuck in the grey area for the moment. Will we pop out and try to make a new high or are we in the slow roll over to oblivion?
CPCI:CPCE has crossed over during this down turn, it did not during the previous bounces...thats one vote for oblivion.
VIX:VXN (I dug this up from a year ago) just bounced off the red line which generally means the market is going down...but as noted in the chat above it has not been reliable recently...half vote for oblivion...
VIX really wants to go my guess is the market will be heading lower over the next few days.

Friday, November 27, 2009

Futures just lost support...

The emini's just lost their support at 1083...tomorrow is going to be real interesting. Gap down hard before bears can take a short position and bulls can get out of their long position...

Thursday, November 26, 2009

Futures are down big right now.

Futures are down 24 points right now...maybe Friday want be so hot.

Tuesday, November 24, 2009

Not much to say...

Not much to say tonight, I won't be posting any charts till this weekend. Its a holiday week so trading will be extremely light tomorrow and Friday.

I expected us to chop up tomorrow and into Friday's session. Will we make a marginal new high on SPY? Maybe...but that may be it for a long while. chart:
Vix hit support...Hard to believe the vix will drop too much more. During any other time, I would expect a STRONG reversal in the VIX and a SHARP drop off in the market.

Monday, November 23, 2009 it will be choppy...

We painted a bull flag on SPY today. So I would expect another up day tomorrow. But this week is a short week and there are 2.5 trading days left. SPY looked like it made an intraday new high but its debatable whether its a bad data point or not.
Tomorrow GDP is released, the previous GDP was 3.5 and there are rumors of a significant reduction to that number. This is followed by consumer confidence at 10am. Wednesday brings employment situation, consumer sentiment, durable goods, and personal income and outlays prior to turkey day. My expectation for down next Monday was based on the fact that this is a light trading week and its usually choppy around holidays, so the movement today was unexpected.
VIX jumped out of its bullish falling wedge...There might be a retest before it continues up.
Bonds fell out of their bearish rising wedge. In fact, gapped down huge and barely filled the gap. There might be a retest of the lower wedge line.

While I expect a new high in the near future. I think a SIGNIFICANT correction will happen soon. While there might be some upside tomorrow, I expect it to turn real soon.

PS...going massively short this week.

Sunday, November 22, 2009

Choppy up next week...

If this was a super ugly wave 1 down, then next week should be a retrace up to 110.65. I would expect an extremely choppy retrace on light volume for the week. 3.5 trading days next week, I would not expect major moves.
VIX has room to move down a bit more. Looks like an early pop monday.

In conclusion, I expect next week to be very choppy with light volume. I don't expect the fall to happen until next Monday after Thanksgiving. Perhaps from lower than expected Black Friday revenues?

Thursday, November 19, 2009


Most of the day was consumed tracing out a bear flag. A traditional bear flag would have a target of about 107.9. But this bear flag looks like its a wave 4 (with wave 3 being the gap down and fall this morning). The target for wave 5 would be about 108.8. The trouble is the counts are very cloudy right now.
We still have a positive divergence on the VIX dailies vs the SPX. The VIX retrace was a little disconcerting. Not shown in the above chart but the retrace down intraday on the vix was exactly 61.8%. This is an interesting point for the VIX to reverse back up.

So in conclusion I expect it to be down Friday initially...then a rally recovery...followed by more down into Monday for a short term low (>103)...then more rally potential into Thanksgiving and afterwards.

Below is a bonus chart:
The dark line is SPX:GLD while the pink line is the SPX. Note that they more or less trace each other up to September. At that point we continue to rally in the SPX...but relative to GLD we have been in a decline.

This is bonus chart #2:
redvetttes has brought this to my attention. The 3 month tbill is wacky all of a sudden...showing the behavior we had during the credit scare last year.

11:51 edit: There is an outside outside chance that we could fall sharply tomorrow and then have a major collapse Monday (black mondays always started with down Thursdays). I give this about a 1% chance right now. The counts don't support this and the only reason I bring it up is because of the the Tbill chart above and a move to the upper BB for the VIX daily.

Wednesday, November 18, 2009

Wave 4 stretched out through the whole day...

Today was a whole lot of nothing part two. Wave 4 extended through today and carved out a symmetrical triangle within a larger rising wedge. Looks like a spike up and of the triangle with a touch of the upper wedge line tomorrow. That should end this wave 5 and we should have a steep correction.
VIX should spike down to the green line and then reverse upwards.
CPCI:CPCE signaled a sell. But this thing has been flipping back and forth alot.

Conclusion, my expected up then down from two days ago will play out on Thursday. We should spike to the 112.4 area before reversing hard for the correction. As far this being the top of P2, its hard to tell. The nature of the correction should give us some clue.

Tuesday, November 17, 2009

Today was a whole lot of nothing...Tomorrow will be interesting though!

Today was spent entirely in wave 4. Tomorrow I expect either a gap up or a spike up to finish off wave 5. After that a sharp decent.
BPSPX:CPC 30ma is flattening and should start to turn up over the course of the next few weeks. In the near term I expect a pullback so the 30ma may continue down a little more.
Still exhibiting positive divergence on the VIX. I expect a sharp spike below the blue trendline and then the vix should spike up for a 4-5 days or more.

In conclusion, it looks like up and then down :-P

Monday, November 16, 2009

P2 top may be further than anyone expected...

So can this top be the next P2? After so many shots will this be the market turn or will it continue up forever?
BPSPX:CPC crossed back over again and I am convinced there is a higher top yet to be achieved. The time frame for this will be long enough for the 30ma to cross back above the 50ma. In other words, I am not expecting the current pull back that should start in the next day or two to be the beginning of P3. (Now that I have said it, it probably will be :-P)

There was positive divergence on the VIX. A new SPX high was made, but the VIX did not make a new low. This should point to a pull back in the next day or so.

Also, if anyone was paying attention, Dow transports made a new high (confirming the high in DJI for the Dow Theorists). I suspect this rally will continue for at least a month or two longer (with a modest pullback coming soon).

Sunday, November 15, 2009

At least the weekend is over...

Spent the weekend taking care of sick kids while my wife attended classes...So its Sunday night and I am beat...and the BPSPX:CPC recrossed down. But the first cross signaled a sell. So again I am waiting this week.
Vix had a bottoming candle on Wednesday that was confirmed on Thursday. At this point it can explode up or down. At this point I am sitting back and waiting a bit.

Thursday, November 12, 2009


Ok...nice down off the top...saw some 5 waves in there. All happy here...
Now this is a problem...The BPSPX:CPC has been very reliable so far this bear market signaling entries and exits. Today with a down day, it actually signalled an exit of short positions.
CPCI:CPCE still in sell mode.
Vix moved as expected with a long white bar to the center line of the BB.

In conclusion I would expect this to be the beginning of a 5 wave move down from the top. BUT the BPSPX:CPC leads me to believe that we may still be in P2. My plan is to scale back my puts and see watch what happens.

Wednesday, November 11, 2009

Top...(again for now...)

Another doji formed at the apex today. This marginal new high on looks to be a short term top that could potentially be the long term P2 top. We have to wait to see.
I was surprised by the BPSPX:CPC. I thoroughly expected it to tell me to cover my short positions today. But today was a down day for it.
CPCI:CPCE FINALLY gave a sell signal today.
VIX formed a bullish long legged doji. Looks like it tested its support and has now turned around.
Bonds formed a shooting star type formation, so I expect them to start retreating soon.

The previous P2 top was invalidated, but just barely. The new top appears to be where we are at now, barring a major advance. Market momentum in the day was dead and the rise today is attributed to the gap up caused by the futures market.

So still holding short...

Tuesday, November 10, 2009

Keepin the Faith...

Frankly this minute [ii] is getting a little long in the tooth. It still has not made a new high, but the longer it drags out at this level, the greater the chance it will make a new high. Daneric's 535 ABC count looks good right now and it suggests that we are in wave 5 of C for a new high.
BPSPX:CPC has not given the "close your shorts" signal yet. But its really close...when the little pink line crosses the green line going up...its time to be long. Unless we make a drastic turn tomorrow, it is going to cross.

CPCI:CPCE has yet to cross so through this all it never signal to go short.
VIX held at support today.
Bonds confirmed the trend reversal today with a red candle and a lower close.
USD held support today also. Bullish falling wedge still in play.

So in conclusion, really not much has changed from yesterday except some time value was ground out of the options. If we burst to a new high, that level of course could be the end of P2.

Monday, November 9, 2009

Flying high on vapors...

Wow...look at it hug the trend channel today. In fact if you look on the 60m chart there are no red bars today. We are getting close to 110.33 which is the top of what I think P2 is. Right now its fairly easy...if we exceed the top then that was not the top of P2...and probably where we are currently is the top. If we don't exceed the top...that was probably P2 :)
When we break that trendline I have on the stochs, I expect we will retreat sharply.
Today was a MASSIVE up day and guess what...the BPSPX barely budged. BPSPX:CPC has not crossed the 20ma up so I do not have my cover short/buy long signal yet. But it sure looks like its heading in that direction.
CPCI:CPCE ma's actually crossed intraday, which is a signal to short, but by EOD they were equal.

VIX has been making higher highs and lower lows since September. Back from my EE systems days, this really looks like an unstable system thats about to explode:) Its sitting around support right now.

In conclusion, I think its minute [ii] of minor 1 of intermediate 1 of Primary 3 still. A new high will change that view. But what now? We are inches away from a new high, BPSPX:CPC is heading for a cross of its 30ma. Juice the futures a little tonight and we can gap above the previous high. In fact, based on recent trends closing at the high of the day should carry the momentum through till tomorrow.
VIX is at support, so I expect an immediate turn around, or perhaps consolidation in both the VIX and SPY for a day and then a collapse in SPY and a spike in the VIX. We have been rising on declining volume for 6 days now. To me this is like a game of hot potato right now. Who is going to be the last one stuck...Again, if we break the 110.33 level...then my view changes.

Ok...bonus chart...I was looking through my Stock Charts book...and forgot about:
The bonds formed a bearish doji star today. Which is along the lines of what I thought would happen tomorrow in SPY...a consolidation day followed by a reversal down on Wednesday.

Edit 8:56pm: And one more chart.
If this rally is fueled on the fall of the dollar. How much further does the dollar look to fall? Today it ended on the green support line, any break of that is a bit open until the red support line. It has formed a bullish falling wedge. I would expect to see it spike out of the wedge in the very near future. Of course a rising dollar would be detrimental to equities...

Sunday, November 8, 2009


Wow...doesn't that look so easy?
Edit: as of now the minis have made a higher high, which tells me minute ii is not done. I would expect another shot at the 62% retrace(107.55).

(9:30p est)In fact the minis have touched their 62% retrace exactly. I expect a gap up in the morning and at some point 107.55 on SPY. Of course its possible to retrace higher, its worrisome if we get beyond the 78.6% level.

DISQUS is now working

Had a little issue with DISQUS not allowing comments. Its fixed now. Friday's post contains my analysis for next week.
The above is the BPSPX:CPC chart. Now that 20ma has crossed the 50ma down, I will be looking for the BPSPX:CPC to cross the 20ma up as a buy signal / cover shorts signal. Along with other positive divergences this should signal the end of Minor 1 down on the SPX.