Kiss of Death on resistance...

The dotted line served as support early on in this rally and then turned into resistance. I really did not expect another trip to this trendline but we Kissed it and immediately retreated. The last 6 days of advances has been on declining volume. There should be a significant pullback tomorrow. Jobless claims on Thursdays has sent the market rallying the majority of this year EVEN when bad...in fact especially when its been bad...will tomorrow be different?



VIX:SPX retreated to retest the wedgeline again. I expect a jump in this chart tomorrow.

GDP numbers were bad...-6.1% compared to an expected -4.9%...yet the market rallied! It showed that consumer spending is up. Thats good...except for the fact that unemployment is at an all time high and rising.
The government is loaning credit card companies money based on credit card back securities...so they can lend money to consumers to spend...so the consumers spend running up interest and fees. Yay we are saved! But how is this jobless consumer going to pay off their credit cards...How are credit card companies going to collect this money to repay the Fed...

Last gasp?

We made it back to the black dashed trendline that has acted as both support and resistance through out this rally. We have been trading withing the green channel since 4/20. Having reached the top I expect a pull back in the short term. I also expect the pattern to break down out of the channel.

The weeklies on SPY are very overbought. When we turn down the correction will last many weeks.


VIX:SPX was down but held the upper trendline of the falling bullish wedge. The pattern is still intact and I expect an immediate pullback in the market on monday.

Still looking at a possible HS from the day before...

We opened right at the wedge line and dipped down into the falling wedge on the VIX:SPX today before finally rebounding strong and finishing outside the wedge. Look at the 200dma as resistance, but I expect we will make it through on the second attempt.

It looks like whenever the derivative(as in instantaneous slope) of the 20ma on the BPSPX:$CPC goes to zero from positive side (slope is up left to right and starting to flatten)...then the market marks a MAJOR turn. This is usually confirmed when the 20ma crossed the 50ma.
Well...it looks like it flattened today...

H and S's oh my...or the B correction :)

Head and shoulders pattern forming with a target of about 78.75. We should start heading to the neckline soon.



It looks like the VIX:SPX ended right at the upper trendline of the wedge...which before was resistance and now is support. MACD finally looks like it crossed. Nothing to do now except wait for the 79 area and re-evaluate. Market could take off...but I don't see it as likely as we are getting hints that the banks are having issues despite all the bravado of paying back TARP. We find out today that TARP has only 110Billion left out of the 700 Billion. CRE is still falling apart though you wouldn't know it by looking at SRS. Chrysler has 9 more days to figure out what its going to do or risk BK...GM in the same boat but with more days...

The auto repair update...

Sitting here getting new tires and alignment...even Tire Kingdom has wifi! Anyway we have broken out of the wedge with a thrust. Also the Vix is getting ready to break out of the top of its bullish falling wedge.
VIX:SPX has busted out of its bullish falling wedge and ended yesterday right at its 200 dma. Today it gapped above it and is using the 200 as support.

Still looking at 760's as the target. Will have to be careful around there as that could be the bounce point or just a consolidation area before a move to new lows. We won't really know till we get there and might not know even when we are there.

Still wedging...

To big a todo list for the wife this weekend. Still in the wedge...we have room for another trip to the lower trend line and back to the top of the wedge before breaking. But everything is flashing overbought so I expect it to break on the next trip down.


VIX:SPX is experiencing a throwunder. We should pop back in its bullish falling wedge in the next day or two.

Running out of wedge...

We are running out of wedge. I have been waiting for this wedge to break for weeks now. Again everthing is overbought on most time frames.
The stochs on the daily have been diverging. Every day we are looking for that gap down day that will establish and island top...and so far every day we have been disappointed. But everyday more and more people are convinced that the bottom has been put in.
Again we have travelled down to the lower trendline on the VIX:SPX...Looks like tomorrow should be a bounce up in the ratio.
Long term we are inching to extreme optimisim...

Lets head to 74.5...

The wedge looks like it will break down tomorrow. If we manage a gap down then we can form an island top. If we can gap below the dotted trendline it should act as resistance going forward.
Still working on mapping out several valid e wave variations...the above (3) give you a hint of the one I am leaning towards right now.

While we are close to breaking out of the wedge on SPY...the equivalent $VIX wedge is not even close yet.

Wow...

The market has been able to keep itself up since 03/06/09 with no significant pullback. This rally has been the sharpest and longest rally since...the Great Depression :-P
Unfortunately the last three candles formed a Bullish Side-by-Side Whitelines formation. This is a bullish continuation pattern. Technically the three candles leading up to this formation where in a down trend...so we will have to see how it goes. Today was interesting as the markets were more or less flat, but the $VIX was up a startling 3.5%! So on a day in which the market open low but stage a good rally to get back to even...the vix spiked?? Something is not right, somewhere...
I expect the VIX:SPX to start making a steady march to the upper trendline. MACD still hasn't crossed over but I expect it will soon. Sentiment has swung to optimistic long term as well as short term from www.sentimentrader.com:

This weekend was far more busy than I anticipated. Tax time crept up on me again :-P. I am still working on documenting out the various e-wave charts that seem plausible at this juncture. Expect something this week. So friday we took a little trip to the top of the wedge. As this is basically the third touch of the upper trendline, I really expect it to break down soon. Stochs are basically overbought on all time frames. MACD is showing a negative divergence in the chart above.

We jumped to the lower trendline on the VIX:SPX, this should be about it. The vix should turn around now and start heading back to the upper trend line and more than likely explode out.

More ascending wedginess...

Momentum has slowed down considerably, daily stochs have crossed over down and we have a smaller wedge (black) that has developed.

Still waiting for the vix to make a move. The bollenger bands are still contracting, a big move should come soon. Not a lot of detail today as I am a bit under the weather.

Wedge broken...let the retrace begin!

The new wedge is finally broken with a close under the lower trendline. The daily MACD and stochs have curled over. What was unusual about today is that SPY dropped 2.33% and the VIX dropped 1.33%! So even in a falling market, fear has lessened.

So all though the VIX dropped...the VIX:SPX went up and we are approaching a breakout of the bullish falling wedge.

Also, I have received more Ewave counts from Traders-Talk and other places. I will compile a larger post with all the counts this weekend...basically I need to redraw them all in stockcharts as I can't save different annotations for the same chart in prophet.

ho hum

Volume is lightening as well as stochs advancing more into overbought territory even though today was a down day. Still waiting for the bearish rising wedge to break. Meanwhile I am busy charting alternate counts that have only been described in written form.

MACD on the $VIX:$SPX still hasn't crossed...but the bollinger bands are starting to pinch. This suggests there is a move coming, the falling wedge suggests that the move will be up. A move up in this indicator is a move down on $SPX :)

Here are some competing E-Wave counts...

Above is Kenny's count on the $SPX...wave 4 of (5) was a bit unsatisfactory but other counts suffer from the same problem. That and the ending diagonal formation (you have to zoom into a smaller time frame) caused Kenny to predict early on that wave 5 was finished. This caused him to revise his count to the above...he caught it first and caught it early!


The above is Rob46 and GBT's count from Stocktock.com. It differs in that instead of moving wave (4) back, it moves wave(3) forward to the March low. Wave (4) might be almost complete at the 23.6% retrace...but likely is tracing out an ABC pattern which will finish at 96. The A leg looks complete or near complete and we should be experiencing the B leg(pullback) soon, followed by a final thrust to complete the C leg at around 96.

What makes the above counts tricky is the B pull back for the second count will look the same as wave 2 of Kenny's count up. The C leg thrust up will look like wave 3 up in Kenny's count. For a good while they will have the same potential targets.


Finally there is a more obscure count (I think Chrys from Atilla's Xtrends) that says wave (4) finished on 11/04/08 and from then on we have been tracing out a HUGE ending diagonal. Some people don't like that count (daneric :-P) but after going over the Elliot wave book I have found examples of ending diagonals that were exceptionally long time wise. The advantage of this count is that the unsatisfactory wave 4 in the counts above are easily explained as the unusual looking 5 wave structure from 1/06/09 - 3/06/09 is really simply a 3 wave structure within the 33333 ending diagonal.

Those are the mainline counts that I am considering. Kenny's Primary wave 2 count is where alot of E wavers are behind right now I believe (Daneric, Kemal, Mole, etc). GBT and Rob46's count is the one I am leaning towards myself, it looks just as natural to me as Kenny's.

Chrys count is more obscure and I haven't found anyone really following it. I don't know if I like some of the compressed structures early on, but its scale on the ending diagonal is possible and it takes care of certain other problems. You can also look at it as simply a bullish descending wedge that needs one more touch of the bottom trendline before busting up through the top.

Hey we hooked :)

Again..see earlier posts for this weekend...as I expect to have 10+ posts this weekend.


This is a ratio of the put/call on the indices vs the put/call on the equities.

More Wedging

Please note that this weekend I will have multiple posts and that you should scroll down to the first saturday post.


We have rising wedged again on the SPY as well as putting in a double top of sorts. How much higher can it go without a pullback? According to this chart not much more...but from my previous posts this weekend there could be some room to run still.

The search continues...

The vix is in a shallow descending wedge...it is approaching a trending line from the january highs to the march 19th high. There is a bit more room to run in the wedge, but that would require breaking the trendline. Whats also points to more potential bull run(SPY) is that the macd just crossed over and the stochs have room to run down.
The vix:spx ratio is also in a descending wedge and there appears to be a bit more room for it to run down (market run up) before bouncing off the wedge line, of course it could immediately reverse, but we will have to see. MACD still has not crossed over.

The search far and wide for answers...

I will be posting bits through out the weekend...Here is one:



Note the negative divergence in the Zweig Breadth Thrust from 3/18 to present compared to SPY.

Cleaned up a bit...

We broke the rising wedge on 3/30. At that point I had thought that was it we are headed down from there. Wedges don't have to retest their lower trend line. This one did. It is interesting that with all the hype about M2M and the G20 meeting that the market rallied to exactly the test of the lower wedge line shown in the chart above. The red dotted line is a trendline from the bear market that connects Feb highs and has been acting as support recently. At minimum I expect a retreat to 76. That will fill the gap on 3/23 as well as being about a 50% retrace. From there it gets tricky. A break lower of the red line with it becoming resistance could take us to new lows or at least the 62% retrace.


On the dailes we had a shooting star formation shown in the green circle above. Tomorrow is confirmation day. If we can get a gap down and move lower, we will for an evening star pattern which is a strong indication of trend change. A non filled gap down would also form an island top reversal which is what started this down leg on 1/06.


No break out yet in the vix:spx ratio.

Still looking for the crossover...

Still looking for the macd to crossover...but at least we got a falling wedge on the $vix:spx...so we should be getting ready for a break out soon.

Just looking for wedge breaks tomorrow...

Today we gapped down into the red wedge from yesterday and then broke up through the top trendline as I feared. Tonight we are keeping it very simple. Just looking for breaks of the red and orange bearish rising wedges. Typically through out the bear market we have been rallying on jobless claims...kinda weird but we have. Let's see if anything has changed for tomorrow...perhaps bad numbers in a bull market and people may start behaving correctly :)

Target is about 78.9 which is the bottom of the triangle trendline.