Tuesday, August 31, 2010

08/31/10 update

Looks like we are in wave (v) of minute [i]. Looks ok so far, tomorrow or thursday will be a big day. With yesterdays set up I expected a deep gap down at open, basically a gap below resistance. It did not play out as planned but we had a bit of a "flash" drop before recovering.
VIX retreated a little, but nothing to warrant a trip to the lower BB.
VIX:VXV ready to launch again.
A close up on the BPSPX:CPC. Shorting is still a good bet based on this chart.

Monday, August 30, 2010

08/30/10 update

The VIX daily bounced beautifully off the 20MA. It looks like it will push against the upper BB for a possible extended wave v.
VIX:VXV repositioned itself for launch again, moving above the red dotted line.
The BPSPX:CPC has curled over nicely on the 20MA. Everything is point to a move down over the next few weeks.

Short update as I don't have the use of my regular computer. Today was a little confusing as I thought we were in a B wave of minuette IV. But towards the end of the day the sell off started accelerating. Now its left till tomorrow to see what the true direction is. A gap down is not likely to be filled. Today's move down was on low volume, as we are in a down trend this signals continuation. Don't expect the move down to end until we have a high volume day.

Friday, August 27, 2010

08/27/10 Update

Sunday 9:40pm update: the VIX:VXV reset back to launch position. Futures are currently up. Market might be up for 1-2 days, but I would not count on it. If it is up, it is an opportune time to short.

12:40am sunday update. Green going to cross red from the bottom soon...

Wow that wave series ended quick today right after 10. So right now we are about at the top of where wave (iv) should be. The only issue is the size of the waves. There is no way to hit the minute [i] target if wave (v) will equal wave (i). So we are potentially looking at a possible extension of wave (v).
The VIX retraced to the 20MA which is the perfect launch point for wave 5's. Timewise I would think there is a need for more time in wave(iv), but some alternate counts have wave (iv) starting where I have wave iii marked above.
BPSPX:CPC 20MA has definitely curled over. The time to Short is now :)

Thursday, August 26, 2010

08/26/10 Update

Subminuette iv shifted a little but today moved as expected. In fact the level that iv reached made more sense than what I had posted last night. I am only looking to around 103.5-103 as my target for (iii). Now if you are really staring hard, you might see an inverted head and shoulders formation with [4] as the left shoulder, [5] as the head and todays close as the right shoulder. If the inverted HS plays out...then iv becomes either a complex iv reaching higher or potentially its (iv) instead. Still looking for Minute[i]/minuette (v) to finish below 101.
Whats been interesting is that this whole move down from the top of minor 2 really has not move the VIX that much.
BPSPX:CPC is performing as expected signaling an early sell signal. The sell is not confirmed until the 20ma crossed the 50ma.

Wednesday, August 25, 2010

8/25/10 Update

Ok, so the labeling of that submicro wave [2] was a bit ambitious last night. Today the wave played out and made it much easier to label. It looks like we completed a micro wave iv up. It fit perfectly in the channel and hide the right time lapse. So now we are looking for the final microwave 5 down to finish (iii).
VIX:VXV pullback a little today...but should rebound tomorrow.
VIX itself had a bearish engulfing candle form on the dailies. This signals more rise in the market. We will see how this play out with the count.
BPSPX:CPC has pulled back down again.

Tuesday, August 24, 2010

Looking good for shorts

The above is how I see it playing out right now. The submicro waves in red and ending at wave iii in the short term. The ES is up afterhours but on the SPY count we could easily still be in submicrowave [2]. A little messy on my positioning...but I assure you that 5 will occur after 4 :)
VIX stayed high today. Looks like we will be expanding the BB here.
VIX:VXV crossed its moving average AND crossed the red dotted line which is a sell trigger line.
BPSPX:CPC has crossed nicely back under both the 20 and 50ma's. This should start curling the 20ma over. Again on the intermediate term this signals building a short position. My thought is that this will ultimately have a target of minute wave[i] under 100 on SPY. The BPSPX will then cross over positive for minute wave [ii] up.

Further out, I am potentially seeing Intermediate wave (1) down finishing before Christmas and then a huge rally up for wave (2) into next spring. Intermediate wave(1) should take us to below 666 on SPY.

Monday, August 23, 2010

Tomorrow we know for sure...

Everything has been lining up...maybe too perfectly? We should be in the middle of wave (iii) down and if we are then tomorrow we should see a waterfall like drop. If not we could retrace up a bit to finish some potential complex wave (ii).
I would have liked the VIX to have retraced a bit lower today. This is what is giving me doubts in the extreme short term (tomorrow).
BPSPX:CPC was up SHARPLY. BPSPX was down but there was massive buying of calls in equities.

The massive drop in CPCE is usually seen at peaks not valleys in the market. This usually takes place because of irrational exuberance. So did everyone buy calls because it was easy money today? As it is a contrarian indicator, this would point to a drop in the market.

Sunday, August 22, 2010

The week should finish down...

The wave ii retrace should take us to somewhere between 108.17 and 109, before we start the descent for wave iii of (iii) down. We should be below 101 by mid September.
The dailies showed that SPY pierced the neckline but regained it by the end of day Friday.
BPSPX:CPC is still living below the 20ma, which means the 20ma is curling over down. The next week will be an excellent time to finish building out a large short position. On a time basis it probably should be done on monday. Wave i took about 2 days. Wave ii should end with in 1-3 days.
SPY and VIX were down. The VIX kiss off the 20ma should signal the start of wave iii down.
Here is the longer term SPY chart with the huge HS pattern shown.

I was going to right about the Hindenburg Omen this weekend, but of course life got in the way. Suffice it to say we had a confirmed second signal on Friday. A key point to note about the Omen is that a portion of market is making new highs while another portion of the market is making new lows. This is not just a few stocks but a significant portion in each direction. Basically the internals of the market are no longer moving together and this generally happens right before sharp down turns.

Thursday, August 19, 2010

Hazy a few days followed by extreme downage...

Tomorrow might be down a bit in the morning then up, or it might be just up tomorrow. Basically I am looking for a retrace potentially to the 109 area, but possibly higher if Daneric's expanded flat plays out. So we are either in the midst of (iii) down or about to be.
We bounced off the neckline of this head and shoulders formation. Potentially we could trace out a big more of a shoulder, but again it points downward after that. The HS target for $SPX is about 1000 and for SPY its about 100. This is a good target as Minor 1 wave down on SPY was about 101.
VIX touched the upper BB. It should pull back for a day or two before exploding out like it did at the end of April. The lower probability option is that the VIX just shoots up now.
BPSPX:CPC was up today even though it was a down market. On close examination we see that BPSPX stayed the same, so the put call ratio was down today. This hints at a positive day tomorrow. But todays value was still below the 20MA so it is bringing down the average. Time to short big on the next spike up in the market.

This weekend I will be looking at the Hindenburg Omen in greater detail along with the new version from this past weekend.

10:07pm update:

Looking through some charts and I ran across this one. The green lines are points where the VIX:VXV crossed its 50MA moving up. Sharp declines have generally followed. Looks like we hit it again today.

Wednesday, August 18, 2010

Ok so it got complicated...

It could be a simple as the abc illustrated above or it could become something more complicated like a double zigzag. If you go back and look at the close on the above chart you will see that SPY dropped down to the 109.3 area right before the close, then the closed printed 109.79. Immediately after the close it traded down to the 109.2 area again. So the close managed to print right on the dotted blue trend line on the chart above. It is OPEX week after all...
VIX was trickier and ticked up even though the market was up. It bounced off the 20ma again.
BPSPX:CPC is probably the most interesting chart tonight. While the market was up, it was sharply down. This divergence leads me to believe that that the market will turn to the down side very soon.

Tuesday, August 17, 2010

Did wave 3 down start?

Last night's post seems to have been spot on. We made it to just above the 50% retrace and not quite to the 62% fib before turning back. Now is this the beginning of a wave 3 down OR are we in some sort of b wave in a complex ABC up for minuette 2?
I had thought the wave 2 would end at the lower BB on the VIX, but the kiss off the 20ma on the VIX daily is also a good place to bounce.
Finally its this chart that leads me to believe that we have started a minuette wave 3 down. The market was definitely positive today but the BPSPX:CPC was down. That is a clear divergence and has caused the 20ma to flatten. There is a chance that we may turn up tomorrow for one final push, but the odds of that appear low. Even if there is a spike tomorrow, it will not last long. Now the trade using BPSPX:CPC isn't made until we see a tick down on the 20ma and its not really confirmed until the 20ma crosses the 50ma. But in this instance the EW count and state of the VIX gives us some hints.

Monday, August 16, 2010

That may have been the end of a wave 1

It did not drop to the level I had noted in last nights post (106 area). The rebound today was too deep for me to think that we are in some sort of wave 5 still to a new low. So now I am looking for a retrace for a wave 2. The ideal retrace would be to the 62% area (110.86), but a 50% retrace or slightly less would be good enough for me to start building a short position.
Three days at the upper BB is enough...time to head for some vacationing at the lower BB.
BPSPX:CPC 20ma has flattened out a bit. The time to go short is getting closer.

Sunday, August 15, 2010

Sunday update

A little bear pennant formed on Friday. The target for the rising wedge is about 106, which looks like a good target for the bear pennant and the end of a wave 1 down.

The VIX can take another shot at piercing the upper BB. After that I suspect it to travel to the lower BB.
BPSPX:CPC is starting to curl as the dailies have been below the 20ma.

Wednesday, August 11, 2010

The you figure it out update...

The wave 2 retrace did not make it to the 0.62 retrace level, but close enough. It looks like we have started minor 3 and are looking to finish minuette 1 of minute 1 looks to complete in the next couple of days. Then the retrace up for minuette 2 and a sharp drop for minuette 3 is shown above.
EW count above tries to predict the future. BPSPX:CPC was sharply down and we will see the 20ma curl over. Once it curls, its time to go short big.

VIX daily touched the upper BB. There is room for a little more wiggle up and then a trip back down for minuette2.