We could be headed to New Lows...

That island top reversal/bearish evening star formation I have in the green circle above marks an intermediate top. I hope everyone got really short the next day. Anyway I am looking at a move to 81.5, where we should get a bounce back up. This bounce is fairly significant as it will validate certain counts. Targets for the bounce range from 84-85 area if we are in wave 2 of 3 of 5 down. Other targets are in the 88-90 area if we are still in wave 1 of 5 down.
I will look at the charts this weekend and put up what I think Sunday evening...

No time today...

No time today...other than to say I believe we are in wave 1 of 3 of 5 to the final bottom...We should get a bounce around the 81 area to finish wave 1.

Yikes...

Macd crossed over...histo still a bit descending and volume wasn't thrilling...skating on top of the rising wedge...possible shot at 88.85...really depends on market reaction to durable goods and jobs numbers...Will post more tomorrow.

Rising wedge still

We can make one more run at the top...which will put is in the 86-87 range, then its likely a plummet from there. Volume has been decreasing on this run up from 80.6 and the MACD histo is diverging. The stochs on the 10m look like they are about to roll over. 87 would put us at the 50% retracement and would fill a linger gap that we left there, while 85.5ish would be a 38.2% retracement and give us the bare minimum we need before a plummet. Or we could just plummet starting tomorrow :-P
Banking stocks continue to wave their bear flag. WFC reports tomorrow and could have impact. Leaked news about the "Bad Bank" plan has given the bulls renewed hope. But of course any plan will be hotly debated by congress ad nauseum, while market deteriorates.
Buying bad assets will help the banks and improve the "look" of their balance sheets. But the days of insane profitability are over, with new regulations and tighter controls banks will no long be able to generate the income they once did.
Pokerden's view: We have passed the point where having banks lend will rescue the economy. Bank have tightened lending standards and they are not going to lend to the same people/groups/companies that they once lent to. Many of those seeking loans are desperate now, some might survive with the loans others will not. Consumers have cut back on spend, houses are not selling, and jobs are being lost. Moving bad assets to the government will not stop this.

Bonus...a SICK bank...

Bonus time tonight...Several of my colleagues bought BAC on the recent drop...including myself. I haven't had time to look at the chart until now. Good thing I was only in it for a trade :) BAC has set up a huge bear flag. We see volume declining as well as negative divergence on the MACD histo. This thing is about to crash.

So if this bear flag plays out to its target...then BAC should be $-2.00 !

Ok...to be fair...C and WFC are exhibiting the same behavior :-P

Chop chop...rising wedge...

Lots of chop today...though we did form a rising wedge. The wedge can collapse now or it could make a run for the upper trendline (as high as 86), before retreating backdown and finishing wave 5 of 1 of 5 :-P
Also the dotted line represents the neckline from an H&S pattern that formed today. Lots of job cuts today...not looking good for the economy.



We are also in a larger descending wedge. So an obvious forecast would be for the small rising wedge to break down and hit a low in the 78 area and then bounce out of the descending wedge up to the 90 area.

Still a bit more down before up...

There will still be a bit more down before up...Actually from a technical perspective, the market is extremely week. We have had 3 days to recover one down day and still have been unable to do it. I am looking for a rally...but not just yet I still think we got a little ride to the mid to high 700's first. SPY was unable to break out of a symetrical triangle that has formed over the past week...today we saw two attempts and both fell back in the triangle. Finally the PUT/CALL ratio has dropped significantly, which means the retail has been picking a ton of calls expecting the bounce. This is extremely bearish.

The stochs on the daily look like they are turning up...but they can stay in the oversold region for many many days before turning...so unclear right now.

I flipped on Thursday to net short, holding a small amount of feb calls and a medium amount of mar puts. Here is an updated ewave chart, so far no changes.

My messy chart today...but I had a slight eureka...

The above is the simplified cleaned up version of the below...




You guys are going to have to concentrate hard to figure this chart out :). Basically I am too lazy to split everything out.
What the chart basically says is that wave 1 has not finished! Ok...this goes against pretty much everyone out there (ie daneric, kenny, and the other e-wavers) But it struck me that from 91.07 to 80.18 on the chart was basically a 5 wave structure.
Now if you look at wave 3(black) of that structure you will see that its wave 4(black) retraced almost EXACTLY 50% (85.95 area) like it should.
Now if you consider that wave 3 (red) you will see that its wave 4 retraced VERY close to 38.2% (84.34 area). This tells me we have not completed wave 5 yet, so I expect a final push into the 76-78 area to finish the BIG wave 1 down. After that I am looking for a retrace up to the 86-87 area to finish wave 2 (I believe this will coincide with the stimulus package). Then a collapse for the MONSTER wave 3 down.
Also note the green triangle that is formed by the choppiness over the last few days (courtesy of johneeboy3 from Atilla's Xtrends) The triangle should resolve in the next day or so, and my guess is down as that was the trend entering the triangle. Schweizer135 off of StockTock also noted that we are in a descending channel and have had sell offs after hitting the 50dma.

Its the weekly wednesday night worry...

Jobs numbers thursday morning...If you are a bull you are worried that the numbers will be bad and everyone will finally realize how bad the situation is and start selling...If you are a bear you know the numbers will be bad and you know how bad the situation is, but you are worried that all those damn bulls are still buying.
I am currently long...but I sleep much better when I am short :-P

To Bull or not to Bull...

This is the same chart from yesterday except its the SPY daily instead of 30 minute. I released my hedge right before lunch and had a good day with the calls. The Slow Stochs say we are over sold on a daily basis and are due for a nice turn. The big question now is where do make the turn. My first target is the 85.63 area on SPY. This is where the earlier wave 4 ended and has shown to be a resistance area. The next is 87.32 and then 89. I think a ton of bears are going to jump on as soon as we hit 85.63. Its going to be tricky determining if that will be the true turn. I tend to think it will be higher only because most bears think it will be the lower number. Hopefully news from Obama and Geitners confirmation will push the market higher.
As the days progress it will become more clear. After a good day, we contend with good news from aapl that should help the market tomorrow.
SRS should be getting pushed to low levels again, and I am looking to pick up in the low 50's to the low 40's. I picked up a tiny position today at 57.61. SRS is a hard play and takes quite alot to stomach its swings. I averaged down from 100+ buying my biggest chunk in the low 50's, only to exit the entire position for a small loss yesterday. I expect REITS to really be hit hard soon.

Or maybe we finished Wave 1...

Maybe we finished wave 1 of 5 and have not started wave 2. The reason I say that is because SPY had an satisfactory retrace of wave 2. It did not quite make it to the fib area that it is suppose to according to ewave theory.
But if what we thought was wave 2 was in reality wave 4 of a five wave structure that would make up wave 1...then it starts to look right. You can see above that wave 4 retraced back up to a satisfactory fib level.
This means that wave 2 of 5 has not started and we should still see the rally in the following days/weeks up to the 89 area if todays low was the end of wave 1.

Hmm...Obama crash...

Ok... Sure didn't go the way I was thinking, the UK banking situation and State Street sure did not help things.
Lets start with the upper left chart, its based off one by Schweizer135 from Stocktock. It shows that we are in a rising trend still and have hit the bottom channel.
The upper right chart is SPY 60 min and it shows that we formed a sharp declining wedge today. We broked out to the down side of the rising wedge much much sooner than I anticipated. I left my original forecast in there in green.
The lower left chart is the vix and we can see that a rising wedge has formed there, I expect it to break and pull back a good bit before the next run up. Which would correspond to a rally in the market.
The lower right chart is ES minis. It shows that the futures contract was able to retrace up the 86 area before the collapse. This could mean that wave 2 is over.
But I doubt that. I think we will get a good bit of rally over the next few days. All though I expect more poor earnings, I also expect much news from Obama.
But to play it safe I did partially hedge my position Feb calls with some Mar puts. Intermediate and long term, I do expect the market to take a severe dive. Short term I expect a little bit of a rally.

More specifically something like this...

SPY is forming an ascending wedge pattern. I expect SPY to do something similar to the above and throw over out of the wedge only to come crashing back through to start wave 3 of this 5th wave down.

Where are we headed?

We retraced almost exactly 62% from the high back to the low. SPY formed a bottoming candle on the daily (green). I expect a 62% retrace back to the high, which would put SPY at about 89.5 area. I will more than likely start scaling out of my feb calls into mar and jun puts starting around SPY 88 area.

Rethink that...

Feb calls for the wave 2/bounce up/retrace play. Mar and Jun puts for the big drop.
Anyway we got a descending wedge right now, so we can expect a bounce up at some point but the wedge is in its early stages. Right now it looks like a bounce in the 82 area.

Now if we bounce in the 82 area...looking for a target of about 86.75 at a minimum, and likely 88.22. I think there will be some very interesting times ahead...Retail is hurting/collapsing...which will bring down CRE...Credit cards are going to start defaulting...both of which will add pressure to the financial industry.
Obama will take the reins soon.

Like I told Crunch in the comment below...

I sleep better at night being short.

With that said I trimmed back short positions today at 84...Waiting for a retrace at least back to 87.82 area (38.2%). I will mainly be looking at mar and jun calls. Save the Feb calls for day trading.

Descending Wedge...Should see some upside in the morning..

Looking for a retrace in the next couple of days to the 90-91 area (either 50 or 62% retrace), then a BIG drop from there.

Probably a retest of the lower trend line and then a downer...

We stopped right at the line for the bear channel. It is currently acting as support. Stochs are a oversold on the 60 minute.


A descending wedge was formed on the 5 minute. I suspect we will break out to the upside. Potentially testing the lower trendline of the ascending wedge on the 60 minute chart. Potentially getting as high as 89-90. Oh my god...I am thinking it will go up :-P

So is this IT?

Is this the commencement of the big drop? Has wave 4 of C ended? Have we started on our journey to THE LOW?

Classical Rising wedge...

Classical rising wedge...Note the negative divergence in the price oscillator, macd histo and the rate of change. The bull has lost momentum based on the posc and macd. The negative diverging rate of change says the up trend will soon reverse.

Rising Wedge

Its probably all about the jobs number...

Bear flag in green, little bearish rising wedge in blue...this is all with in the red lines which is a bearish rising wedge on a larger scale.
Everything is set up to go down...but its all about the jobs number tomorrow...

Bearish rising wedge on spx

Good and bad...

The Bad...we busted out of the bear channel at the end of last year and have been able to maintain trading above the channel. Ok...its good if you are a bull :)
The Good...we have formed a rising wedge that looks like it will break in the next week or two. The upside from here looks fairly limited. We probably need to retrace and hit the top trendline 1 more time. Likely around inauguration.