Thursday, December 31, 2009

Happy New Year!

Bearish ascending wedge formed. I expect another run up to the upper trendline before this one breaks.
BPSPX:CPC ma's need to cross again before another large bet is made. This will not happen until after P3 has started.
VIX is in the middle of the wedge but in the lower porition of the BB. I expect it to bounce off the lower trendline before breaking the wedge up.

I will not be posting again till Sunday, so happy new year!

PS: By run up I mean Thursday and Monday potentially...then its downhill for the market.

Saturday, December 26, 2009

Short Week...

SPY has made new highs. Next week is a short week so I expect it to be choppy again. A bearish rising wedge has formed. Is this the top of P2? Hard to say there is still room to rise a bit but its doubtful that it will make it to the 62% retrace of P1.
BPSPX:CPC has finally crossed up. Now we will wait for it to cross back down before we make another large bet.
Vix is nearing the bottom of its bullish falling wedge. An intermediate sized pull back looks to be in the near future.

Wednesday, December 23, 2009

Happy Holidays

Spent the night giftwrapping...The high is near/the top is near...Looking at Feb put options for Monday. VIX is in the TEENS! This is still the holidays so I expect light trading and the market to stay at elevated levels. Monday will be interesting as it will be after the healthcare bill passes which many have thought would mark the top of P2.

Tuesday, December 22, 2009

iPhone update

Vix hit the lower trendline and spy peaked above the channel. Looking for spy to hit the lower part of the channel.

Sunday, December 20, 2009

Up early in the week.

Looking for a retrace at least to around the 111.05 level. The green dots are potential future targets. A new high will negate it hitting the green dot towards the bottom.
$SPX is not overbought yet. It has formed a succession of wedges each back testing and then failing.
The VIX has held the red-dashed upper trendline. I am expecting a move to the lower dotted trendling on the VIX.

In conclusion, I expect it to be up early next week.

Thursday, December 17, 2009

More top Forming or is it in?

After the drop this morning, the majority of the day was spent tracing out an inverted head and shoulders pattern. If this was wave 1 down, then the wave 2 retrace(62%) should take us to about 111.36. Now take a look at the inverted HS pattern. It has a target of 111.38.
The above chart shows the 61.8% retrace level at 111.36 and illustrates a possible wave 1 and 2 count.
The VIX has room to move down, while it moved up to the upper trendline today, it did not pierce it.

In conclusion, I am looking for a bounce up tomorrow followed by the start of a wave 3 of 3 down. But thats just one interpretation. Kenny has this down day has a wave 2 or 4 down. Followed by a wave 3 up. This has me rather torn as I know the period around Christmas is usually bullish and choppy as trading will be light.

Wednesday, December 16, 2009

iPhone update

Vix finished near support. The past few weeks of channeling has appeared to create a channel with an upward bias. Topping process continuing.

Tuesday, December 15, 2009


The wedge retested yesterday and today was down, but we formed a new wedge and backed tested it!
The candle stick formation on the dailies is similar to a bearish tri-star pattern. We will have to wait till tomorrow to get confirmation.
VIX looks like it could go either way at the moment.
I posted the BPSPX:CPC chart today but I am not looking at it specifically. Note the red lines. It shows there has been a negative divergence between the market and the BPSPX. A new daily closing high was made, yet the BPSPX was not as high as the previous peak. This implies the market is making new highs on the backs of fewer stocks.

Hard to say what it is tomorrow. I am still looking for a strong pullback and then maybe a new high through Christmas.

Monday, December 14, 2009


Traditional TA said it might pop up today. But volume has been declining for the last 5 days and a rising wedge formed today on the 5 minute chart.
At least in the last few days the market has decoupled from the dollar some what.
Vix looked like it bounced off the green support line. I cannot see it falling too much more from here. If it hits the teens, then its time to take out a mortgage on your house and short the market. That past weeks have been gap up, surge, churn for a few days, gap down churn for a few days then we start the cycle over. This last move up has involved 2 separate gap ups and we have not been able to make a new high.

Lots of economic news tomorrow, but the FOMC meeting starts, so there is probably going to be anything until Wednesday 2:15 and on top of that its Quadruple witching week.

Still holding short...

11:25pm edit:
This is on the SPX simply because my SPY chart is covered in lines at this level. Anyway it looks like a break down of the bearish ascending wedge and a retest of the lower trendline. The BB's show contraction so a strong move is coming. Again this chart would lead me to believe there is a strong down trend coming, but we are approaching Christmas fast...traditionally this is a choppy rally as the market is thinly traded...

Sunday, December 13, 2009

Immediate move down...

We need an immediate move down for the count to hold true. We have had a 3 day up move on declining volume. The dailies are not over bought as 4 weeks of sitting in the channel has relieved any extreme conditions. Typical TA would suggest this has been a consolidation period before another move up. The only issue has been that the consolidation has had an upward bias, which normally points to a move down.
The VIX hit support. Its time to rebound or move to the lower BB. Similar to the BB on the SPY dailies, the VIX BB has been contracting. The move coming up will be a big move.
Of course we have the ever popular "Batman" formation, which I feel is just a sharper head and shoulders formation. This is a reversal pattern in a rising market.
In conclusion, my bet is that the market will make a big move to the downside. This is OPEX week, so it will be interesting. Max Pain was at 105, the last time I checked.

Thursday, December 10, 2009

Still no change...

iPhone update...forecast is unchanged. We hit the 62% retrace today, but the majority of the day looked like consolidation for another move up. I am looking for the retrace to hit the 70%+ area before turning.

Wednesday, December 9, 2009

Ok...nothing changed...

Essentially nothing changed today...instead of wave 5 of 1 truncating, we put in a full wave 1 down today. So we are basically waiting for waive 2 to finish. It could have easily finished today, but we could see a gap up tomorrow to the 62.8% area before the wave 3 sell off. So my longer term forecast from yesterday still holds.
Vix can easily launch from the 20 ma. But we could also head to the lower BB band. MACD histo increased so I am leaning to the VIX hitting the upper BB.

In conclusion, its time to get short again for a near term drop. But its not time to go any where near a full short position yet.

Tuesday, December 8, 2009

Ok some targets...

Tomorrow I expect a pop in the morning to finish off wave 2 around the 62.8% retrace setting up a potential 1-2, 1-2. The red area is the first target. Its the most bullish of the correction trendlines.
Above are three targets, the first is the same as in the first chart. The next two are less bullish correction areas. The last dot is consistent with the last two pullbacks we have had.
The targets finish off minute wave 1 down. Then we would get a wave 2 up (Christmas Rally) up to the 109.5 to 110.75 area in January followed by a large wave 3 down.
The VIX is tricky. It did not pierce the upper blue trendline. In fact it looks like it wants to head back down (market back up). The only think we have going for us is that the MACD has hooked up on the daily.

So I am looking for a pop early tomorrow followed by more sell off.

Monday, December 7, 2009

Well here goes...

Ok, I have 5 waves down from the top and today finishing a wave 2. A bear flag was also traced out at EOD.
VIX worries me a little as it opened near the 20ma and closed away from it. I would have been happier if we closed aboved the 20ma.
VIX:VXV still signalling a sell.

Well we did move up slightly and then turned over today as I thought. If this is truly the start of P3 we should see a strong gap down and continuation tomorrow, if not, then I would consider this a correction and likely a higher high in the future. So basically get out of any shorts if we go above 111.5.

Sunday, December 6, 2009

This week will be interesting...

Looks like 5 waves down from the top. It also looks like we have nearly completed a wave 2 retrace up...just a bit more to 62.8.
Vix BB contracting on the daily...we will get an explosive move soon. My bet is that we are a little bit up monday, followed by potentially the start of a wave 3 down.
VIX:VXN signalling sell as well.

Conclusion...maybe up early on monday followed by a sharp down turn.

Thursday, December 3, 2009

Is this the start of P3?

Hard to say but it looks like we will be travelling to the bottom of that rectangle. Speaking of rectangles, is that really a rectangle formation? It appears to me to definitely have a bullish bias as each "touch" of the upper line is higher than the previous.
BPSPX:CPC 2o ma's are getting ready to cross up on the 50. Note that today was a big down day but the BPSPX:CPC was up...CPC actually went down by a significant amount...Lots of calls were being bought.
Vix almost filled the gap...pretty damn close. Its near the middle line, I would suspect its time for it to travel to the upper BB again. It is near the midline so it could reverse here.
VIX:VXN definitely giving a sell signal.

Mainly based on the VIX:VXN I think tomorrow will continue to be a down day. Playing it slowly...waiting for the BPSPX:CPC 20 ma to cross up and then back down before I take another large bite in the market. Currently still holding a medium small short position.

Wednesday, December 2, 2009

Short term we pop out to the top side of the rectangle

Short term we may bounce back to the lower bound of the rectangle. But I would expect us to pop out for a new marginal high before turning over. SPY formed the same pattern in the first two weeks of June before spiking up and out and then rolling over down.
Looks like the VIX wants its gap filled.
This VIX:VXN is signalling for the market to roll over soon.

In conclusion, Up and out before the market rolls over is the greatest likelihood. Second is today was the really weak up and out and the market is ready to roll over.

Edit: I have not looked at this chart in a short while:
I am expecting the 30ma to cross the 50 going up, so more than likely new highs in the near futures, likely before end of year before the roll over for P3. Regardless there should be some pull back from the extended levels right now.