Which way...

Well with all the up and down today we managed to stay with in both the rising blue channel and the larger falling green channel. So which way now?


We did not break back in to the wedge on the VIX:SPX.

CPCI:CPCE 30ma is about to cross the 50ma. This has been really bad. Note the previous times it has crossed.

Wow part deux!

Yesterday a bullish engulfing candlestick pattern formed. This is a bullish reversal pattern. It needed an up day to confirm. But instead we got a down day that in fact formed a bearish dark cloud cover pattern. We need a down day tomorrow to confirm. I cleaned up the daily candlestick chart and drew a true channel (blue). You can see while we were down today we only traveled to the bottom part of the blue channel, we did not break down out of it. Also note that we held the Long term channel (green).So do we bounce up or break down?

VIX:SPX opened outside the wedge and managed to close outside the wedge today. The MACD histo looks like it could be starting to trend up. From this chart I would think we would break down out of the channel on the SPY chart.

Hey the CPCI:CPCE is starting to curl nicely, now we need the 30ma to cross the 50ma going down to really be able to pile in to the position.

Wow.

The VIX:SPX moved back into the falling wedge. I really expected the upper trend line to be support but we closed well below it. The MACD has not crossed over so there is a chance it might recover tomorrow. If not it will probably make another journey to the lower trend line.
Which is what we also see here. SPY was able to jump back in to the channel it had fallen out of and even retested prior to the holiday. Today's massive move up was able to break through that resistance and finish inside the rising channel (black). Also note that while it was a huge move up, it still stayed within the larger green channel that makes up the 5 waves for what I favor to be the current e wave count.

So whats it going to be? Break the green channel for good or continue down? While the stochs on the hourlies are overbought, they are not so on the dailies.

Very short term target 88 still...

In the VERY short term I am looking at SPY hitting 88 some time on Monday. 88 will be very strong support as it was resistance for the double top in jan/feb. After that I expect a bounce up to maybe 89 followed by an 87 target in the short term. In other words I expect it to be fairly choppy for awhile as we drift lower.

The moves on the VIX:SPX have been sharp and violent. I expect us to slow down a bit perhaps move down or sideways before we make the next run up.

A reminder...

A reminder that we very well can be in P1. Wave (4) hit the channel exactly and bounced off. It also made it to the same region has the wave 4 of wave (3). Note that the rise has been on declining volume on the dailies.

This does not totally negate that we could be in P2. Wave (5) might be truncated and look to be the same as the corrective in P2. I just favor P1 still because it fits the channel.
We hit the 90 target I had on friday. I will post an update on sunday.

Let the slide begin...

after a small retrace to about 90 (38.2% fib). There is a chance that we stop at the 23.6% fib (which is where we are right now).

This wedge started in early February. Tuesday we had a throw under followed by a strong rally in the VIX:SPX on Wednesday, though we closed within the wedge. There is room for us to sink back down in to the wedge a bit (hence a small rally) before we finally break the upper trendline for good. Again as with the chart above we could open up above the trendline causing the upper wedge trendline to become the new support.


So far this is looking pretty good. It looks like a long slide has started.
Finally we look at the CPCI:CPCE ratio. CPCI is the put call ratio on the indices, which is generally thought to be the big money, while CPCE is the put call ratio on equities, which is generally thought of as retail. The ratio of the two gives an idea of how the big boys are betting relative the retail investor. Looking at them in terms of moving averages gives a smoothed out representation. Right now it seems the big money is betting short...REALLY short compared to the retail investor.
Ok...here is a repost of the Monthlies with extremely long trendlines. Looks very kiss of death like if we end the month here.

This says up, so market down...

Sorry, very little time today...we had a bit of a throw under yesterday...bare minimum VIX:SPX moves to upper trend line...which means market will be down over the next couple of days...I expect a break up on the VIX:SPX followed by a retest of the upper trendline as support.

Just a little wiggle room left...

We closed right on the 61.8% retrace from the low. I had expected it to go down to the lower trend line of the blue wedge before bouncing, but it decided to break out of the wedge right away. Right now it is looking to test the upper lower trend line of the wedge that started on 03/06.


The VIX:SPX has a little room to go to the lower trend line so I suspect SPY might have just one more up day left before another sharp down turn. Which looks like it should test the black trend line in upper chart.

Whoops...

I guess you can only have 5 images per blog post. This is the last chart for the night. I expect this wedge to break up very soon. So get your options while the volatility is still low!

Gonna be rocky ahead.

Very short term it looks like we got room to move a little to the downside of a descending wedge and then we should break up and out of it. The target for the move down is about 88 and the target for the move up is about 90. After I expect it to continue down.

Longer term it looks like we are still with in a channel and have not bounced from the uppertrend line. I don't know if wave 5 will go that deep (GBT + Rob's count). But with the work Schweizer did last week, I am inclined to believe this is a major interim top.

How do you like this...getting xtrendish on this chart. Many people don't feel these really long term trendlines hold up, but they do. Note where they all intersected recently in the green.


The 20ma has definitely curled over on the BPSPX:CPC. Again this marks an important interim top. Waiting on the 20 to cross the 50 for confirmation. Though I have started building my short position already.

Now this is interesting, during the rise this indicator has been optimistic. Normally it has been a contrarian indicator especially in the short term. So I find it interesting that it is starting turn near the market top, could the indicator be in temporary alignment right now? I do expect that long term it is still a contrarian indicator.

Pre-Weekend warmup...

I like these charts...they are from Schweizer over at www.stocktock.com...you can read his commentary here. Great work Schweizer!

Green shoots wilting already???

Jobless claims were higher than expected. Bulls all think we turned around and today was a little bit of a wake up call. GM's time is limited and we can expect significant layoffs there also. But these layoffs are just the tip of the iceberg as it will filter through the rest of America's car making infrastructure. But of course we rally on bad job numbers, because we always do... I am still looking at an short term target of 88 for SPY.

The above chart looks like we have marked a major interim top. The BPSPX:CPC 20 ma looks like its starting to curl over. If the 20ma crosses the 50ma we will have confirmation that this will be a major down move. We still have to wait to see how this pull back plays out. Intermediate targets 38.2% retrace (83.21), 50% retrace (80.14) and a 61.8% (77.06).



The short term wedges played out but kept getting retested on the VIX:SPX...Zooming out we see that we are in a much larger bullish falling wedge. while the macd histo looks positive, the 50 ma has crossed the 200ma down which is a bearish sign. There is room for a move to the lower trendline before turning up.

This could be the big move down starting, but as yet I don't see the catalysts. Yes, CRE is bad and credit cards are starting to feel the pinch (Advanta has stopped lending...guess I have to switch out my advanta card). The employment situation is getting worse. Has anyone taken a peak at the problems with Eastern Europe? Its very possible, in Elliot wave terms, that we have finished an A move up and have started a B move to one of the fib targets listed...followed by a final C move to 1000+ to bring in the final bulls and crush the last bears. Time wise we could see this play out for the rest of the year with C peaking in January. This would mean that 2010 would be a very bad year.

Its also possible that this is the start of the move to below the March lows. Will just have to wait to see how it plays out.

Finally...

A close back below the dotted trendline. This trendline will now become resistance on any retests. The daily stochs have also crossed over. Looking for 88 as resistance. First it is the 50% retrace from recent 4/21 low. Second it is the resistance area from the late january and early feburary double top.

The 20 dma on the BPSPX:CPC has flattened...this has marked an important intermediate tops in this bear market. We will have confirmation when the 20 crosses the 50 down. This chart implies that this might be the top with a significant down trend coming up.

Ok finally...we broke the dotted trend line..

We broke the dotted trendline that was acting as support and resistance for the last 6-7 weeks. We also broke down out of a rising wedge. Conservatively I am looking for a pullback to the green trendline for the short term. Looking for a larger pullback possible in the intermediate term to about 79.

Oh...they were joking...

SNL rocks...with the article from the WSJ this weekend, their jest may not be too far off from the truth.


A bit of a hanging man candlestick formation formed. We need to wait to see what happens here.



We are still in a channel for a possible 5th wave down. But I don't see what is going to take us down in the above count. So maybe we are in P2 as I don't see how we will drop so quickly soon.

Pull back tommorrow...100% guaranteed...

Or your money back :-P Then again I have been expecting a pullback for about 4 weeks now...so what do I know...We have a spinning top on the Dailies as well as extremely overbought stochs. They have been slowly releasing results of the stress test and spinning it to the max. Tomorrow the actual news will be released, which good or bad should lead to a sell off.

We broke back into the triangle on my VIX:SPX chart. While I expect a sell off I still would not go short till the dotted trendline above is broken.

Still room for run up...

There is still some room for a run up in the wedge. Over the last couple of days the market has recaptured my dotted trendline which is now support again. It has also re-established the strength of its up move.
At this point I would stay out until the dotted trendline is broken again. The stress test will cause a sell off whether news is good or bad at this point. We pretty much have been just sitting around waiting for it. Ultimate target for this rally could be as high as 95/96, but we should have some sort of pull back before then.

Just one chart...

We are currently in a rising wedge that started around 4/17. There is room to hit 90 with in this wedge before it breaks...or it may break sooner than that. Note the slopes of the upper trendline starting from the 3/6 low. The rate of increase has been decreasing and flattening out. This top will be a slow curling over more along the lines of an inverted saucer than a head and shoulder spike.