Sunday, January 31, 2010

Still waiting...

Looks like (v) still has a little bit more to go before [i] is finished. I am looking for it to fill the gap (down to 106.9) before the bounce for minute [ii].
Vix still looks bull flaggy.
BPSPX:CPC looks to cross soon to confirm the intermediate turn.

Looking for a little move down to finish [i] before the bounce for [ii].

Thursday, January 28, 2010's move was unexpected...

It looks like we were still in wave (iv) yesterday. Today might been the end of wave (v) with the new low, but we could easily be in an ending diagonal wave (v) that would call for new marginal lows.
Its getting harder to move away from the 20ma. We should start moving in that direction tomorrow and into monday.
Still looking good, the BPSPX:CPC will not cross until we are in minute [iii] down.

So essentially there could be another marginal low coming, but then we will get the sharp bounce for wave [ii].

Wednesday, January 27, 2010

The bounce is underway...

I am looking for a bounce into the gray rectangle marked. An ideal target would be the green circle marked. Its the intersection of the 62% retrace and a trendline support.
I posted the chart last night showing that it would bounce on the tourquoise trendline. Well what do you know :)
VIX should move back to the center of the BB (20ma) before bouncing back up.
BPSPX:CPC is looking good. The 20ma should cross the 50ma with in the next 5-10 trading days.

Tuesday, January 26, 2010

[i] about finished...waiting on [ii]

The final move for wave [i] should occur tomorrow. I suspect that it will finish in an ending diagonal followed by a sharp move up for wave [ii]. The green dot in the TOS chart above is on the tourquoise line of the Stock Chart below.
The above chart I posted a while back and is basically trendline supports where I expect the market would bounce at.
VIX painted a bull flag, so I suspect a little bit of up tomorrow on it. This would mean a little down in the market.
The above is a longer term view of the BPSPX:CPC, note how accurate it was during the bear market. Remember that it is not a short term indicator, but rather an intermediate/long term indicator. In essence its a sentiment indicator using the ratio of the bullish percent index to the put call ratio. So when we see the confirmed sell signal, it does not mean that the next day will be up, it means weeks/months later you will have done well if you had sold/shorted.

Sunday, January 24, 2010

Rebound before we see some real action...

SPY rebounded at a lower trendline support. I was early on the rebound call missing out on the bulk of the drop on Friday. Currently looking for a rebound up to the 62% retrace (may only go as high as 50%...or we might see bullishness come back and push it up to 78%)
The VIX move was very unexpected on Friday, which was essentially a 4 sigma move it looks like. The VIX will retrace in side the BB on monday.
The early sell signal has been given by the BPSPX:CPC as the 20ma has turned down. A cross of the 50ma will confirm.

So essentially, I am looking for the wave [ii] retrace next week lasting 1-3 days. After which I am looking for minute wave [iii] down.

Thursday, January 21, 2010

Wave (iii) down...but which wave (iii) :-P

The above is my count based on the squiggles. It is signficantly more bearish than competing counts. I am looking for a low around 111.3. Now if it goes significantly below that, then I expect that will be the end of (iii). If it rebounds in that area I suspect it will retrace to around the 50-62% area(where ii is marked) and then we will see iii of (iii).
The VIX made a huge move today. It crossed the upper BB and finished above it. The day following a BB puncture, is usually a move back into the BB. This is why I am leaning towards a retrace up as shown by my wave ii, be warned as the move up can also be wave iv of (iii).

BPSPX:CPC 20 ma has started to curve down this is the "early warning" to sell. Confirmation does not happen until the 20 crosses the 50ma.

Tomorrow I expect bit of a retrace up.

Wednesday, January 20, 2010


Basically its a repeat of the Sunday forecast. Looking for SPY to reach the 62%-78% area (114.31-114.67) and then a downturn from there.
VIX painted another shooting star. SPY should move up at least in the morning, maybe into Friday also. Then I expect a selloff.
BPSPX:CPC 's 20ma looks to be flattening out. I would not expect a cross of the 50ma until the first Minute 3 down.

iPhone update

Spy retraced much higher than expected, ruling out that P2 finished last week. While spy did not make a new high, the SPX did. Vix is diverging and not making new lows. Expect a sharp pullback in the next day or two.

Sunday, January 17, 2010

A look ahead...

The above chart assumes that P2 is over and we have started P3. The drop on Friday looked very impulsive. We either finished a wave 1 down or are about to finish it. The red line above assumes that wave 1 is finished and shows about where the wave 2 retrace will head before continuing down for a wave 3. The blue line assumes there is a little more down in wave 1.
The above chart shows various trendline supports. The red lines represent a bearish falling wedge. SPY finished just on the trendline leading me to believe that wave 1 is over and that we will travel to the middle of the wedge before collapsing out of the bottom in a wave 3.
The VIX looks vary odd having painted multiple shooting stars outside the falling wedge. At this point the VIX's next major move appears to be to the upside.

Still waiting for BPSPX:CPC 20ma to cross the 50 before I get too happy.
The VIX:VXN made an all-time low this week.

Basically looking at a move up in the near future to some point around 114.5-114.8 before a sharp drop down to the 111's.

Bonus Chart:
Nice shooting star on the Monthlies and the monthly stochs are extremely overbought.

Thursday, January 14, 2010

New high by 0.01 on SPY

Well that wave 1 down turned out not to be. SPY made a new high today by 0.01. SPX made a new high though the /ESH0 did not. So we again must wait to see if this is the top or will it extend higher yet again. A turn now will be a double top.
The hourly chart is showing negative divergence in the stochs.
The VIX daily has diverged a bit as we have made a new high in SPY, but did not make a new low on the VIX.
The BPSPX:CPC has not given a sell indication yet. Its been the most reliable indicator through this downturn and correction. Still holding a small position in FEB Puts.

Its interesting that INTC's good numbers have not had a larger effect on futures in AH.

Wednesday, January 13, 2010

Did P3 start?

We did not stray to far from the 62% level, SPY peaked out above the 78% retrace before sliding back slightly. Wave 1 was a leading diagonal down with wave 2 having a deep retrace. The target for wave 3 is the 111.75 area or lower. For this to happen SPY must collapse tomorrow, in fact a gap down and further selloff would be do it.
VIX is still playing outside the wedge, but within the BB. The next 1-2 days should send it back into the wedge and above.
Just looking at the BPSPX its interesting that while the market was up, it was down. A bit of a negative divergence.

In conclusion, I am looking at a sub 112 target in the next few days. That is unless we open tomorrow above high of today.

Tuesday, January 12, 2010

iPhone update

Spent the entire night figuring out someone elses database and am just getting in. Basically I can squeeze in five waves down from the top. So if that structure was a leading diagonal wave 1 down, then the 62% retrace would be to the 114.5 area. If I can get up early enough in the morning I will post a chart. An argument can be made that the waves down were corrective. If that's the case then a marginal new high is possible. This brings us to one of the key issues with EW, you don't really know where you are at early on in a transition between higher order waves. Are we finishing P2? or Have we already started P3?

For now I believe we will get a continued bounce up in the morning and if we don't go too far above 114.5, then we will see a sharp wave 3 sell off tommorrow late or Thursday. If we do make a new high... Then that's all she wrote and it's all down hill from there.

Monday, January 11, 2010


The ramp up in futures was rather spectacular this morning with a large gap up in the morning, followed by weakness throughout the day. A possible 1-2 formation formed, but its still too early to tell if this is the top. Ok, not really the VIX spiked out of the bottom of the BB.
The VIX closed outside the bottom of the BB. I fully expected today for the VIX to retrace back into the wedge, but the ramp up in stocks was far greater than I expected. Can you believe the VIX is the in the TEENS? No need to hedge your longs...this market is going up forever! :-P

I am underwater in my small put position of feb 112 on SPY. But tomorrow I will be increasing that position. Again I will not take a larger position till I get a signal from the BPSPX:CPC combined with at least 5 waves down from the top.

Further evidence that we might have turned:
A bit of a head and shoulders pattern has formed in bonds. The head seems to have formed and the right shoulders is forming on declining volume.

Sunday, January 10, 2010

VIX over throw...SPY too...Next week will start P3

Looks like I might have been off by a few days. A new rising wedge formed on SPY with a bit of an overthrow towards the end of Friday.
The VIX daily had a large overthrow out of the bottom of the wedge and closed there. Initially I thought the intraday overthrow would mark the turning point. But its more than likely that Friday was the turning point.
BPSPX:CPC turned sharply upwards. We would need a strong down day or two to flatten it and continued down before the 20ma is going to crack the 50ma. So for now small short positions are warranted, but I would not go large till BPSPX:CPC confirms the down trend.

Wednesday, January 6, 2010

When does it turn?

Tomorrow will be interesting, charts say its going to be down tomorrow. But indications are that the jobless claims numbers tomorrow and the employment situation on Friday should be good. After all Challenger jobs and ADP numbers have been improving. The market has been able to climb a wall of worry over the past 9 months. Will it finally turn with numbers are good?

The green area shows where a potential bear flag has formed on the 1 minute chart as well as an HS formation.
VIX shows a classic bullish falling wedge with a slight over throw today. The VIX made a new low, wow no one needs to hedge their positions. Everybody is very happy and unworried...
BPSPX:CPC 20ma is still rising. I posted a longer term chart to show why I use it
Finally, although the dollar has decoupled from the market lately, its getting ready to make a strong run. Equities will not be able to ignore it.

The top should be this week.

The market has been propped up in one of the best bull runs ever. It looks to be nearing the end. For the very short term we have traced out a bearish rising wedge. Tomorrow should be down.
VIX is nearing its bottom trendline of its bullish falling wedge. The VIX should break out to the top side with 2 days.
BPSPX:CPC 20 ma is rising again. When the 20 crosses the 50ma we will take a large short position. More than likely I will increase my initial position when the 20ma flattens and starts curling down. Currently looking at FEB ATM puts and MAR puts.

Now that I am back in a routine, I will be posting more often and will put up a count.

Sunday, January 3, 2010

The Beginning of the End...

Thursday SPY drifted out of the rising wedge, then all of a sudden at the end of the day there was a sharp drop at 3:30 that sent the VIX soaring as well.
BPSPX:CPC 20ma looks primed to roll over. This would the market topping again.
VIX closed out of the bullish falling wedge that began in November.

Everything is pointing to a major pull back.