SHORT TERM: limit down early – market rebounds, DOW -312
Overnight the Asian markets were substantially lower, Europe opened lower and closed down 5.00%. US index futures were limit down (60 SPX points) overnight. At 6:00 AM OPEC announced they were cutting Crude oil production by 1.5 mln barrels per day. At 9:00 PNC announced they were acquiring troubled National City for $5.5 bln. At the open the market gapped down to 899, and in a few minutes was trading at 853. That was a few points under yesterday’s lows, and the low for the day. At 10:00, while the market was rebounding, existing home sales were reported up 5.5%, to the best level in 13 months. Making note of these news events because on a day like this they can be overlooked. By 11:30 the SPX hit 888, then pulled back near the lows of the day at 860 before moving higher into the close. For the day the SPX/DOW were down 3.50%, and the NDX/NAZ were down 3.10%. Bonds were down about 21 ticks, Crude lost $3.00, Gold rallied $18.50, and the Euro was lower. Support for the SPX remains at 848 and then 789, with resistance at 912 and then 935. Short term momentum, despite the volatility, remained in neutral most of the day. With today’s close at SPX 877, the market has made a lower weekly close than the 899 weekly close of two weeks ago. This market has now accomplished what we were expecting, based upon historical crash like scenarios, (see last weekend’s report). We can now expect the market to go through a bottoming process. It may take days, or weeks, with possibly a new intraday low as well. Best to your weekend!
MEDIUM TERM: downtrend SPX 840 low holds
LONG TERM: bear market
Hate to bust the bubble (literally) but the USD isn\’t a safehaven. Dollars are being unwound from various bubbles created around the world due to the easy US money and better return in other countries, particularly those commodity based currencies and ones with a higher interest rates (ex. €). Investments and interest rate spreads drove folks to take cheap money and put it into higher return currencies. Now that the bubbles have burst, all of those trades are being unwound. In addition, lots of debt is denominated in USD even outside of the US due to the liquidity of the instrument (i.e. USD) which is also creating USD demand to cover principle and interest (in some cases LIBOR based) payments. Finally, the banks are hoarding dollars, the USD is currently scarce driving up its value. All this results in the perfect storm.
Anyone has comment on why this time the safe haven is USD instead of Gold? Is it because Gold is way overvalue when the whole financial crisis started and "smart" money don\’t feel comfortable while USD is way depressed, so they put their money there? OR is people still feel America is the place to be while this crisis unfold (that US government will come out of this storm intact?) This action is very confuse to me (the latter one) though… the eye of the storm came out from America why would people put their faith in USD? Unless they feel that now USD is precious because there are so many unpaid debt (Credit) out there that now people would need to use hard cash (USD) to pay it back? But then again, FED can just print more money so why park money in USD?
Anyone has a good explaination?
Hi S2,
Did some work on the currencies this week.
Typically these panic moves last about six months and form an ABC.
They should be in the tail end of wave A down now.
Also the CRB/BDI need to bottom soon to get a rally in stocks.
Gold is not acting like it did in the 1970\’s. Then it was the safe haven.
Now the safe haven appears to be the USD.
tony
Serg, More real estate would go to foreigners if USD declines. Although USD is still a currency safehaven to some degree, the shift has been taking place away from US dominance and confidence for years and will continue to for decades more unless some bright folks emerge to mitigate the damage. Even though the US economy will still be weighty in the world, our debts, deficits, population productivity declines, energy production efficiency declines, credit declines, manufacturing decline and technology curve peak are more US-specific than anywhere else in the world, although Europe is not far behind.
RE, I appreciate the concern. I already lost my shirt years ago and am still paying the price but recovering. I trade much lighter and with a lot more discipline now. It has made me a better trader. Anyone here knows I usually consider multiple alternatives and am flexible most of the time. It\’s a constant fight to maintain discipline and objectivity though. One of my alternatives allows for a 4-8 week bounce and then another wave 4-5 to new lows.
The primary count I\’m following for the moment. Coordinates with Tim Bost\’s turning points nicely as well. A week of ups followed by a month of downs in 5 of 3. Friday was 5 of c of B of 4 of 3 of 5 of C of 4. Whew.
Good post Erik and there isn\’t much there I disagree with. Your comment last night that "it\’s different now" is what gave me the shivers. It\’s rarely different. As I posted last night, this decline has been remarkably similar to 1929 and in 1929, we bounced very hard around this point. I\’m seeing some very high quality and profitable agricultural and commodity stocks that are down 70 and 80% right now. That\’s total nonsense at this point and I know that if I\’m seeing that, then so is Buffett and thousands of other money managers with cash to deploy. When they rush in (and history says they will), there is going to be a nuclear explosion upward.However, many Elliott Wavers in addition to McHugh have us going down much, much further from here and if that happens, I will have to concede that it really is different because that\’s never happened before. McHugh is predicting an eventual collapse of the government and he would probably be right. However, even though I\’m playing an option strangle that will profit handsomly from it, I\’m just doubtful that his market collapse is going to happen. I think Europe and Asia and the US small-cap markets got their Black Friday Wave 5 capitulation and the PPT caused it to be truncated (on the large-caps) here. If the S&P had fallen the 10 or 11% that the foreign markets fell on Friday (they came back a little), it would have bottomed very near the Wave prediction of 780 to 800.I guess we\’ll know tomorrow if my pet theory is right and if it\’s not, God help us because "it might be different now"
Hello….
The comments recently made, by Erik, Jeff, RE, Serg. Are stimulating,
informing and much appreciated….
Jeff\’s comment, of Living along the banks of the Yanzte river in China.
Make sense to me. My own choice is the Li Jiang river in south china.
And, my experience is that the chinese lady is not a servant type any longer.
They are intelligent, motivated, interested in western culture.
Bud
Jeff,I know your view is to not get too comfortable with the downtrend – it can\’t last forever.I do want to share that if you keep an open mind you always see the alternate counts. It takes a lot of practice to look at all the possibilties. The better one is at knowing what *could* happen in the different scenerios the faster you can react to any change you aren\’t expecting.What I\’ve learned this year with ewt has been invaluable. I\’ve been doing EW for about three years, this past 6 months had been my \’ah ha\’ moment.1) always keep alternates in play, just realize they have a lower probability of happening.2) be careful3) don\’t get too confident, but if your tracking a wave properly you\’ll be right and rewarded4) waves WANT to finish. Interruptions occur (corrections) but they don\’t last.5) anything can change on a dime.6) fib. Projections are amazingly accurate7) trade impulsive / motive waves onlyWith that being said, subwave 5 will finish and we rally. Some areLooking for failure HERE, others looking for 775, others for 550. There is sill the chance we head to 1050 to complete the previous correction.Each of these a trader should accept as plausable. One of them fits a wave completion, fib. Projections, and trading impulsive waves. It\’s the one going with the trend. It\’s the most LIKELY. Doesn\’t mean it has to happen.I will be prepared for each of these scenerios, but only trading one.What\’s interesting is the for about 2 months now this decline has been east to follow.Good trading.
anyone knows good liquid russian etf?
I checked RSX but options there look thinly traded
wanted OTM but if they thinly traded ITM is probably safest
Russia may double next week
>Then, USD would collapse to fulfill its H&S pattern to the $40s while gold skyrockets in waves 3-5.
Stu,
what do you think will happen with real estate if USD drops to 40?
KWave projection
http://forkoholic.com/images/KWave2023.jpg
>Fortunately for Buffet, the options cannot be excercised before 2018 (most expire even later) as they are European style
Dude, looks like he\’s betting on Bull Market 2012-2016 during 2nd term of 2nd Clinton administration.
Frank, you are spot on.In March this year, Warren B. and Charlie Munger wrote put options on 4 indexes, at the money. One index was the SPX at 1300. They received USD4.5 billion as premium. Optionmonster calculated that Buffet is about 13.5 billion under water at SPX 900. Fortunately for Buffet, the options cannot be excercised before 2018 (most expire even later) as they are European style. However, he certainly has to provide enough collateral at all times. Right now, Buffett\’s losses on his holdings amount to 9 billion on paper. So he still has approx. 40 billion left. But expect him to increase his hedging as the world indexes continue to spiral downward. How does he hedge? Buying Put options at VIX >100? Hardly. The only way is by selling the indexes short.How do the wealth managers at Northern Trust, Merrill Lynch, Goldman, JPM Private Bank, UBS, Bessemer Trust and so on hedge once they receive more and more calls from clients concerned about their dwindling portfolios. Well, by selling futures. Aggressively. After all, their very existence is at stake.At the latest, the wealthy people of this world woke up when they heard last week what just happened to Kitk Kerkorian (from 20 to 2 billions) and the Russian oligarchs. Expect a wipe out in Las Vegas. Kirkorian (MGM), Edelman (Las Vegas Sands) and Steve Wynn will not only loose half of their customer base…That is in part the fundamental basis of the looming melt-down. In addition, expect to hear from additional casualties of the recent currency fluctuations. We just know the tip of the iceberg. China\’s Citic Pacific lost 2 billions. Two Chinese railroads (!) each lost between USD200 – 300 millions. Why do you think the Treasury rushed onto the scene on Friday to shore up the insurers? These guys lost on their stock and foreign bond portfolios in a way that you cannot imagine. The Brazilian Real is down 30% in October. The Euro 20% since August (currency appreciation and higher interest rates than in the US drove all of them to Europe). These guys are repatriating of what is left at ligthning speed. It cannot go fast enough. That is also true for Buffett\’s insurers.Hope you are all in your (financial) shelters and bunkers. We ain\’t see nothing yet. Everyone running to the exits.
Atilla
who\’s Atilla?
>. Even during US pre-market trading (8am – 9:30am) the futures remained at 855. Solid as a rock
Was that the time futures were locked?
RE, Atilla is calling for a 20-25% drop in ES next week.
Erik, you\’re assuming those guys who bought at 855 were still confidently holding on as the S&P moved up near 900. That is a lot of pain to endure and I suspect they had swallowed their losses by that point.RE, anytime a stock market moves down 10%, it\’s a panic. There is nothing going on in the world at the moment that justifies a 10% overnight selloff. What\’s going on is that the hedge funds are getting wiped out with margin calls and none of them want to be the last to sell for obvious reasons. They\’re not smart. They\’re leveraged up to their eyeballs, most of them have lost their shirts this year and they\’re selling in a panic. 80% of the hedge funds will soon join the investment banks in the trash heap. And by the way, I watched Atilla\’s comeuppance as well. The kid seems to be a good trader, but his over-confidence got the best of him.Frank, Buffett will eat the lunch of the hedge fund managers. He has cash, he knows they\’re in a bind and he\’s cleaning up – so long as he sells for a quick 10 to 20% profit. However, if he holds longer term, I don\’t disagree that he may be wrong to be buying. Stock market crashes caused by credit collapses are usually long-term. However, Buffett\’s time-frame is measured in decades rather than years so who knows how it will play out for him (or Berkshire after he dies)…
Jeff, 2 thing:
1. Divergence do get wiped… divergence indicator are more for the "AFTER THE FACT"… Tony\’s RSI divergence were all draw (the once left on there) are after the fact. If you follow his blog long enough, you know that Tony has erase few of the divergence line once they get taken out. Simply look at Friday\’s 1 minute chart (RSI) action and you see alot of the divergence get taken out. I\’ve posted on Friday also that there was a negative divergence on RSI 1 minutes (SPY) and that the bull run was about to be over, but then it gotten taken out and the market kept going up and "erased" the negative divergence.
2. What make you so sure W.B. will win? I\’m not saying he won\’t and I\’m not taking side, but WHAT IF W.B. go BK too? What if GS goes down to the toilet and he loses his 5 Billion and also all his insurance company and then some. And that stock market drop so much that his own stock take a heavy hit. Maybe once W.B. goes BK that will mark the end of the bear cycle?
Jeff, that was NOT panic selling. It was very systematic, orchestrated selling originating in Japan and Australia, going all the way around the globe. Just think about it. Even during US pre-market trading (8am – 9:30am) the futures remained at 855. Solid as a rock. Not a move. Typically, future traders are well informed and not prone to panicking. These are the guys working in Greenwich, CT and Manhattan. These managed future funds, proprietary trading desks and hedge funds all have their targets and stops in the system the second they place their orders. If someone is panicking, it is a retail ES mini future guy….advised by Attila to look for the rally to SPX 1050 or 1150;-)Really entertaining…I am posting my info to warn S2. I don\’t want to see him losing his shirt. The 760 – 780 area will see a bounce (wave iv). But wave v to 625 will follow very soon.
People that sold Friday morning didn\’t lose their shirts. The market only closed about 30 points from the low. There was no rally.
Fractal guy Lammert also notices similar fractal from 1929
The decay fractal series in 1929 was 11/26/27 days. Could the quantum laws of saturation macroeconomics produce a replica 11/26/11 of 27 day decay fractal for the FTSE, Nikkei, and Wilshire – identical to 1929.?
Another blog
http://www.financialfuturesandequitymarketanalysis.com/
The initial confirmation that we are deviating from the 1929 crash map will be a breach of the bear gap down high at 981, not far from here. So, we want to see a two day follow through of higher daily closes in the SP500 and a breach of 981.http://4.bp.blogspot.com/_g8hLORbXap4/SPfRrDwe_vI/AAAAAAAAAYk/msMx9K3tJ_U/s1600-h/1929+map.png
Oh, sorry I didn\’t realize you needed an account there to see it. That isn\’t the same chart, but it tells the same story so it\’s close enough.So
some people sold at a price (855) significantly lower than all of
Friday\’s market action. They would only do that if they are absolutely
convinced that the market is headed way lower than Thursday\’s close. But the problem, no name, is that those folks were selling in a panic and lost their shirts as panicked people typically do. I have no clue which way the market is headed but I do know that a lot of fools can absolutely convinced that the market is going way up or way down so I would rather sit back and wait…
Sorry, I had not specified a profile name. I posted at 10:18 pm.To clarify, Thursday\’s action activated the bearish pennants in all major indexes. Those pennants are very rare. That is why most misinterpret them as simple triangle or consolidation formation.Note that Tony changed the count on the 60min S&P 500 chart.
Jeff
I agree with ya, we\’re due for 25%-30% Elections rally
Jeff,
is that the same chart as this guy describes?
I don\’t have account at ticker forum
http://yorbatv.ning.com/profiles/blog/show?id=2014856%3ABlogPost%3A10722
The key to knowing where the stock markets are headed is to understand why the futures were limit down on Friday morning. There must have been some VERY HEAVY selling since the futures stayed down all the way until the market opened. So some people sold at a price (855) significantly lower than all of Friday\’s market action. They would only do that if they are absolutely convinced that the market is headed way lower than Thursday\’s close. So to understand what is behind this conviction, we need to look at what happened on Thursday. The market initially dropped and rallied into the close. It rallied exactly up to the lower side of the well known triangle. This triangle formed at the end of a steep drop from the 1106 level in the S&P 500. Thus it is not an ordinary triangle but rather a very bearish pennant. The target is 625.The bearish pennant is also present in the Russell 2000 (target 303) and the Dow Jones. The Nasdaq, the leading index, has already hit new lows. Gold, the ultimate safe haven, has started to move up, despite the USD rallying. People, this constellation could not be any more bearish.Fundamentally, you have to understand that the world economy slowed down as rapidly as never before. Compare it to a fully loaded passenger bus driving at top speed on a highway when the driver needs to hit the breaks as strongly as he can to avoid a collision. Most passengers will be catapulted out of their seats. Some might end up at the wind shield…Now replace the term \’passenger\’ with \’commercial entity\’ (aka company) or \’country\’ (Argentina, Hungary, Iceland, Pakistan….) and you get the current picture. Mohamed El-Erian\’s (PIMCO Co-CEO) recent book is entitled "When Markets Collide\’ .Good luck to everyone.
Very interesting post on the Ticker Forum below. One thing I\’ve been watching the last couple of weeks is how closely the market is corresponding to the October, 1929 crash. Someone posted the charts at the link below comparing the 1929 Dow to the 2008 Nasdaq and the similarity is remarkable. The reason that the current Nasdaq may be a better comparison to the 1929 Dow is that the PPT may have stepped in and bought the large-caps yesterday morning in order to stop the crash that Asia and Europe had gotten. It certainly looked that way to me and it\’s just possible that they truncated Wave 5 on the Dow and S&P but not on the small-cap indexes.I\’m not trying to convince people that we\’re about to surge upward like the 1929 market did, but I do want folks to be aware of the huge risks involved in this market right now. You have big money like Warren Buffett stepping in and buying hard at the same time you have hedge funds still trying to cash out which is causing the wild gyrations we\’re seeing. At some point, Buffett is going to win and this market will surge upward as the shorts scramble to cover. I\’m just saying – don\’t get caught with your pants down and your shorts getting blown away.Ticker Forum post
I think I miscalculated 7-28 Lunar Day
I used Universal Lunar calendar set for Los Angeles and added 3 hourshttp://lunarium.co.uk/calendar.php
I should’ve used New York instead
I live in kinda asian neighborhood.
I like asian gals but projecting into the future I don\’t like as old asians look like so I don\’t think I\’d like to have old asian wife when I\’ll be old.
And I noticed asians are so competitive.
Looks like no weekend update till Sunday. Lot of crossroads here. Most of the paths seem to be around 770.
And let me guess – do you drive a GM, Ford or Chrysler? You know, I\’ve heard that unlike your ex-wife, the right Chinese girl can be very subservient. Have you ever thought about making a home on the banks of the beautiful Yangtze River?
btw have u mentioned my last name rimes with "Putin"
) Antichrist
lol
yep, California, Ameriquest, my ex wife .. you can continue indefinitelly
) lol
Rich P,
I\’m with you on 5 part
and whatever it\’s 5-3-5 or 3-3-5 financial historians can decide
And don\’t you live in California?
> up until the last couple of weeks (when you subscribed and ruined everything), his accuracy has often been uncanny
)
I notices that too – USSR collapsed, US collpsing, Neely … I\’m starting to wonder if something is wrong with me
lol
Serg, just FYI, I\’ve subscribed to both Neely and McHugh for most of this year and while I like both, I\’ve made more money following Neely than McHugh. Neely\’s market predictions are much more specific than McHugh\’s and up until the last couple of weeks (when you subscribed and ruined everything), his accuracy has often been uncanny. He also agrees with my own deflationist view of the world while McHugh subscribes to a hyperinflationist view and has been calling "bottom" on Gold now for 2 months. Ooops.Neely has been dead wrong on his S&P bottom calls the last couple of weeks and I\’m sure he has lost a lot of money for his daytrader clients. I wasn\’t convinced he was right so I opened an option strangle which is what I always do when I\’m uncertain. However, even though I\’m now prepared for McHugh\’s 2,000 point market collapse, I don\’t think he\’s right. I agree with Neely that we\’re near a bottom. His timing is just off and while that destroys the daytraders, I can adjust and patiently wait.
MPT Chart via Decision Point….maybe worth looking at.
http://www.decisionpoint.com/TAC/PAULENOFF.html
Chrys, I like the 1932 retrace numbers. The 50% Dow retrace to 71xx would require about a 13% drop which would drop SPX to 760-770. Good confirmation of my recent number analysis arriving at 770-780 +/-. Of course, your particular numbers also support a bottom being done, so it\’s likely a new DOW/SPX low will drop to 7100-7200 and 760-770 respectively.
Serg,
.
The size of this wave C definitely leaves open the possibility for a 5 wave structure for wave A. As for wave C, EW requires a 5 wave structure for wave C (not sure about OEW). If it is not a 5 wave structure, than Elliott has labeled it W-X-Y with the smaller degree being labeled abc-x-abc so that each of the c waves is made up of 5 smaller waves. Since the Y wave didn\’t make up 5 waves but only three it could not technically be labeled a C wave.
Anyway, basically I\’m saying that at a minimum I\’m expecting a 3-3-5 and not a 3-3-3, but that doesn\’t mean I\’m right
LOL…well I am hoping for a down day on Monday to get out of my short.
I wonder why we havent seen a weekend update yet?
Michelle
SERG…….ditto….exwife, hehehe
>worst $39 waste of money in my life
I should correct myself
it\’ was SECOND worst,
1st was my ex wife
mw52598
It\’s better than Neely\’s in my opinion.
Neely\’s $39 (2 weeks trial) was the worst $39 waste of money in my life! I even demanded 100% refund.
I think McHugh is in the same camp as Tony, which I disagree with both.
I think this Bear structure is 5-3-5, and not 3-3-3
McHugh also waits for wave B up soon
I think we\’ll see one more set of 4-5s
http://forkoholic.com/images/Bear0708535.jpg
BTW McHugh also has NO REFUND policy and I personally don\’t like his Times Roman Font he uses in his newsletter. It is good for printing but not for monitor reading IMHO.
Serg, do you find his newsletter useful?
Speaking about computer programs. The interesting topic for me is DARK POOL, where demand and supply both are hidden like many exchanges. And this is growing every year!
So don\’t blink!
http://www.ft.com/cms/s/0/43979554-9bde-11dd-ae76-000077b07658.html
Thanks Serg…
I am short (SDS) going into Monday and a bit concerned that we will get a hugh bounce on Monday.
Erik, I do agree with your observations on trading machines. Those computers are programmed by humans so nothing is going to fundamentally change other than the fact that they can analyze and react ten thousand times faster than humans. That is the biggest reason I don\’t day trade. I have never been able to make much money at it and it\’s just too easy for me to blame those #(**$ computers.
https://www.technicalindicatorindex.com/newsletter/bpdf/TII_Newsletter_943B_10.24.08_7055475115.pdf
Does anyone have a link to McHughes TA for the weekend?
Monday fractal
http://www.elliottfractals.com/ESZ8_10_25_08.jpg
In a fractal world it\’s only 2 strikes or as I say "Two fractals and you\’re out"
It usually means if you see 2 identical fractals in the same direction, the direction will change
as soon as 2nd fractal is complete. Direction from 1930s to 2007 was UP. Hopefully we won\’t change direction to Down. But it is spooky
http://www.elliottfractals.com/Spooky_Fractal_2008.jpg
Erik, I listen and learn from everybody no matter what age so I
appreciate your input. I\’ve also used both technical and fundamental
analysis for years. Fundamental analysis is what led me to Elliott
Wave this year when my past experience as a CPA told me that our
largest banks were likely insolvent and history told me that credit
collapses are not good news for stock markets (US 1929, Japan 1989).
I noticed early this year that many Elliott wavers were also predicting
a savage market decline based on chart analysis and that caught my
attention since it agreed with my fundamental view so I started paying
attention to Tony, Neely, EWI and others. I\’ve profited from this
decline just as you have and it has totally busted many of the
technical charts I\’ve used for years but I don\’t subscribe to "this
time it\’s different" thinking. The 1987 collapse busted my technical
charts too but nothing fundamentally changed.
Serg, that is an interesting observation. If the PPT did intervene,
they would only have bought the large cap NYSE stocks that make up the
Dow and S&P because that\’s what everyone follows. I\’ve seen others
note that buying seemed oddly isolated to the large-caps. It is quite
possible that they caused wave 5 to be truncated. I guess we\’ll find
out this week…
GS – we\’re all kool here. I\’ve got my popcorn ready for Monday
Serg – nice thing about EW is that the majority of traders don\’t use or like it… it takes too much WORK. Hehe… imagine that… WORKING for money. Now when the golden rule stops working I\’ll be angry!
Erik….
Noted. Your a fundamentals analyst of the stock market.
Okay. You\’d like Bob Brinker then….Good Luck to ya.
>Everyone doing TA is looking at the same systems. What happens when the market starts to do the unexpected?
Erik, you almost reading my mind.
I think current trading systems are designed to follow the crowd.
Interesting if "controll the crowd" systems could be implemented.
And a more philosophical question – can we build/find worlds based on something different from, PI, Phi, golden ratios ets
Coincidence or what….. the .38 RT from the 1932 low to the top in INDU is 8778. Wave e of the triangle was 8795. The .50 RT will be 7110 which could be the next low next week. 7110 is a little lower than the 2002 low. Some say what if the 2002 low is taken out a big sell off would occur; but, maybe not. The 1932 to 2007 fibs in INDU show some interesting support and resistance levels.
Unless anyone is here to sell is theory/system for some monthly subscription, like Neely The Plumber.
Be Kool guys, The only thing that count is Money, if you are doing good! and making good trade! it shouldn\’t matter what others tell you. Read all and enjoy all and do what\’s working for you!
So enjoy & fasten your belt! Get Life! get some popcorn!
Some interesting onservations
Russell 10/10 – late day lower lowWilshire 10/10 – late day lower lowRussell 10/24 – new lower low
Do you guys think we had a couple of failed wave 5s on SPX based on lower lows in Russell and Wilshire ??
Jeff,Granted *many* others have been trading much LONGER than I have. Sometimes it takes a fresh view from a *new* guy to help those that are ingrained in their line of thinking and practices.I\’ve long thought that computerized trading would get to a point where the market is run by automated programming. That there will be so many automated platforms each using the same system – that it\’ll become about useless. The more people use the same system, the less effective it is. I don\’t think we\’re to that point.Think about it a sec… if all traders used MACD, RSI, and divergences to do all their trading, they would all be in sync with each other. Clearly we are approaching the point where everyone trading has a platform setup to track these things. Everyone doing TA is looking at the same systems. What happens when the market starts to do the unexpected? I imagine a time where the balance will shift back to FUNDAMENTALS instead of TA. I think we\’re starting to see this, albeit I cannot prove such a thing, nor do I care to. Again a perfect example is that during this decline everyone bought when VIX went above 30… it was what was *taught*. But we went so high as 90 already? What I am seeing and hearing in this decline is that traditional targets (VIX), divergences, are simply not *working* like they used to. Interesting. Divergences get erased if the trend continues – if given enough time. BTW – people *remove* divergences from their charts once they\’re nullifed…. it happens more than people like to admit.The market always decides to do what it does… it\’s in control, not me. I\’m not stubborn enough to realize it can\’t turn on a dime and start a new bull market – I\’m not nieve.I\’m going to mention this once more. In a bull market people LONG. Shorts in a bull get pounded, relentlessly – they\’re going against the trend. But, we\’re in a BEAR… as everyone probably has to admit by now. Since we\’re still in a bear, as far as I can tell, it makes sense to continue shorting until a reversal is in place.While no market can stay in the same state forever, it pays to go with the trend.In summary, I\’m not suggesting people stop using TA. I am suggesting that those who rely solely on TA might have a better trading experience if they start to balance fundamentals in their trading strategy.Again, good luck everyone. Keep your eyes open.
What an eye Stu! Thanks so much. And I just got set up with futures and fx also. If you guys haven\’t seen thinkorswim program, you should. They have every market I could dream of and the program is a jewel. All this and $5 stocks and $3.50 futures!
Elam,that might be the best leading indicator i\’ve heard of yet. and when he eats it, s#itty bank takes the hit. its the perfect set up…
Does it bother anyone that the entire mass including Joe the Plumber is short expecting a 100 point drop next week. Can it be that easy?My friend called me today and asked me if he should cash out his 0% credit card for 10k and buy all the SDS so he can make a 50% return in a few days. I told him yes. No kidding. Now he is praying market bounces Monday so he can go all in with th 10k he got from Citibank. LOL
Erik….Your not confrontational at all. I completely understand where
your coming from. I agree, to a great extent on your basic premiss (sp?).
1974 to 2007 in my veiw was a secular Bull market. And your right T/A was
born decades ago. My theory is that T/A evolved in large part due to the
fact fundamental anaylysis was not workling.
Clearly - I have great respect for the longer term cycles, albeit astro or
other. It playing it\’s swan song now. Down from late 2007. I agree
on lows of 2010, 2012, and especially 2014 to be major bottom.
But to suggest T/A is less so valued. Might be a stretch.
Qoute from movie MATRIX. Some things change, and some things
stay the same. In this light we have made a dramatic change. Yet,
the NY advance/decline line crest in July 2007. Nothing new at all
about this pattern of events. The Unweighted SP500 ETF..RSP also
crest in July 2007.
What works for you Erik is cool with me.
I am merely expressing my views. Suggesting, T/A does work. Just
depends on which T/A tool your looking at thats all…..
Fundamentally I believe, based on my life experiences, that this economy has stepped off a cliff.
I
wish that Tony would align his forecasting with the main trend. He\’s
been bullish the entire decline and this clouds his judgement. The
trend is down, therefor counts to the DOWNSIDE are more likey. It\’s
simple.
Erik, I\’ve been trading as long as your parents have and I suspect
Tony has been trading longer than that. One of the biggest mistakes an
investor can make is "buying into a thesis." One of the signs of that
is when you come to an extreme conclusion, convince yourself that "this
time it\’s different" and then get frustrated that other people don\’t
see what you see.
While I think our economy is in for a long decline brought on by excess
credit, it has NOT stepped off a cliff. Earnings are coming in lower
than last year but pretty much in line with lowered expectations. The
market has dropped 44% in 12 months which is one of the sharpest
declines in American history. When you consider that the 1929 and 2001
markets were vastly over-valued in terms of book value and earnings and
it wasn\’t in 2007, that puts this drop in even sharper focus.
If you continue to follow your thesis that this market is going nowhere
but down, you\’re going to have your profits wiped out when one of the
rallys you short into continues to surge upward. Right now, there is a
huge struggle going on between the bulls and the bears for control of
the market which is not untypical at times like this.
I don\’t know who will win and I don\’t care. The best strategy for a
situation like this is an option strangle which I opened last Monday.
So far, I\’m up $71,000 (puts are way up) and if one side wins and we
get a 200 point surge in either direction, I will make several times
that.
Option strangles are a cold-blooded strategy that removes emotion and
opinion from the calculation as you just sit back and wait for one side
to win. Your only enemy is time so I\’ll have to close it out if this
struggle continues for too long.
And Erik, the reason everyone watches divergences? They still work
just fine. Click on Tony\’s chart link above and look at the RSI
divergences he\’s marked. See any times during this decline they didn\’t
work? Maybe "this time is different" but that\’s not a thesis I\’ll ever
risk my money on and I\’ve risked my money for many years…
I made an interesting set of related discoveries and I\’d like Tony\’s feedback.
1. Oil has made a near perfect .618 retrace of its bull market from late 1998 ($WTIC 10.35–>147.90–>62.65=.6198)
2. Gold has retraced nearly 50% of its bull market ($GOLD 252.50–>1033.90–>681.00=.452)
3. Silver has nearly retraced .764 of its bull market from the 1997/2001 double bottom ($SILVER 4.01–>21.44–>8.65=.733)
4. USD has nearly retraced .764 of its downleg from 2005 ($USD 92.63–>70.70–>86.96=.7415)
Perfect Fib retraces are not to be expected for anything traded but especially for any particular commodity or currency vehicle. So, the above near-perfect Fib numbers are very significant. Gold is the one that has done the best and is furthest from its next Fib number, but maybe that\’s a tell of strength under economic turmoil and monetary stimulus. And, it\’s worth noting that most hourly, daily and even many weekly indicators are extremely oversold/overbought historically. Even the weekly USD chart looks like a blowoff top, but it also looks like 5 waves meaning a larger ABC could form.
All of these markets could have started a turn on Friday which makes you wonder if SPX did as well, but I consider that all markets won\’t turn on the exact same day and that commodities and currencies could have one final shake. And, I must consider my EW counts as well as sentiment indicators, my gut feeling about capitulation, divergences, cycle/Fib/phi dates and other indicators. Those things suggest one more SPX low to me likely below 800.
So, putting it all together, SPX should fall Monday and/or Tuesday and USD, gold, oil and silver will turn with SPX if they haven\’t already done so as of Friday. SPX to 770-780 +/- as I\’ve projected would be near a 100% retrace of the last bull market and a 50% price drop which would be a nice bookend to the Fib numbers I gave above for other markets.
Since the USD up move looked like an impulsive 5-wave move off 70.70, the odds are high it will merely correct in 3 waves in the next couple months corresponding with wave 1 up for gold and then USD would follow-up with another 5-wave C up to finish an ABC corresponding to a wave 2 down in gold. Then, USD would collapse to fulfill its H&S pattern to the $40s while gold skyrockets in waves 3-5. To me, this supports a little bit shorter SPX bounce in terms of time than most are expecting…maybe 2-4 months instead of 4-6+ months. Good luck.
Here\’s a interesting article, I\’m sure alot of you probably read it. BUT if this is the case (which I feel also) that PE is no where near "CHEAP" as CNBC and lot of idiotic pundits point out, then we are in a secular bear market and Tony\’s original thinking of Super Cycle 2 is incorrect? We actually finished all the cycle and we are now in a secular bear market and not a secular bull market anymore…
http://www.marketwatch.com/news/story/valuations-low-only-if-you/story.aspx?guid=%7B6071ABC4%2D8568%2D4529%2D8A87%2DE182268CE13E%7D
Eric, just wondering, why your account take 3 day to clear? Are you using Cash account? If that\’s the case, you should change to margin account so no wait time for clearing…
Erik, I agree in short,
When I say can ignore I mean from larger perspective one day move can be ignored, I am looking at bigger time-frame. You might be right in smaller time frame.
5-3 is not complete it can on Monday or Tuesday around 12:00,then 5-4 can bounce 40% of 5-3 on later Tuesday etc and then final 5 OF 5 going to end of month.
Bounce becuase of FED cut or Neely the plumber election crap!
At the moment I wish I had
I went short at 905 on Thursday near close. Bought SDS and QID. I had my mental stop a bit close in the rally near 885… About .618. It was triggered. Friday was a bit hairy.My funds do not clear for 3 days, though some may from another sale last week.I wanted to buy at 870 again after seeing the abc complete… But I\’m waiting for funds.For the record, I\’d be in Sds and Qid at Friday close if I was able… Stop would be back to 920.Let\’s see how it goes.
Erik, do you have any current position in the market? Please post that also. All of us did appreciate it, as to where you stand then!
Friday\’s move look and feel valid to me. It seems to me as if we had a wake-up call… a new w1,w2 in the same day. Notice on the 5/15 minute is was completely corrective after the plunge…. and broke the downside trendlines to form a textbook ABC combination with A=C in length.I very manipulated moves as corrective… and smart money realizes it and chooses not to participate… hence the corrective nature of the move.With the *fed* in the immediate short term (Tuesday), I can see either case for bulls/bears Monday. I feel Monday and Tuesday will cancel each other out and we resume the plung by at least Wednesday after testing this upper support trendline we fell through Thurday, Friday.I suggest anyone trying to follow counts zoom in on the 10/15 minute moves of a move… that\’s where the real details are for the day.Good luck all
We can safely, remove the Friday\’s move from Elliot Wave, as it looks manuplated. We have to have a lower Low below OCT 10.
Two things
Bulls, Mrket with range in 0.26-0.78 of WAVE 1-5 and WAVE 4. for coming weeks. At one point will clear lower low, although
Bears: SLOPE of 5-3 is steeper then 3-3. So If we have a fake move Friday, then Monday should be devasting.
Look out for USD/YEN/GLD, those are key leading indicator to any futher crash alert!
As I had moved out Friday, I still have some shorts, but none bulls!. Trade Lite!
Bud,Didn\’t mean to come off confrontational. I appreciate the response.Just a follow-up. Logic says SHORT in a bear market and hold, and LONG in a bull market and hold. This is somehow absent from trading for some reason. This gives me pause that folks are still not in line with where we are. People are still hopeful that the bottom is in, and going long…. fighting the tape.I wish that Tony would align his forecasting with the main trend. He\’s been bullish the entire decline and this clouds his judgement. The trend is down, therefor counts to the DOWNSIDE are more likey. It\’s simple.Good luck all
Bud,From a traders perspective, I understand why people NEED to use their indicators…. it\’s what they KNOW.Fundamentally I believe, based on my life experiences, that this economy has stepped off a cliff. I don\’t need to subscribe to the EWI / Neeley etc… views to see this. I see serious signs that our economy and this market is truely in a historic decline, and I fear it may not recover for a very long time.My point is that the environment for trading the market changes. Every reversal in the market has it\’s own life, it\’s own mood, and it\’s own RULES. To apply the rules that we have developed since the last BULL market to a BEAR market simply don\’t relate. Again, take a look at the B up call based on MACD, RSI, VIX signals at 1170. If anyone went long based on what they\’ve been TAUGHT to look for they were introduced to pain.It wasn\’t long ago when people traded the market WITHOUT indicators. Yes, imagine my parents in the 1980s playing the market – buying and selling based on intuition. I don\’t know how many stories I need to hear about my folks trying to convince their broker to sell – only to have the broker talk them out of it – right into a massive decline.It doesn\’t take a lot to realize the market is toast – that people now waking to the real problems in the world. From what I\’m seeing if deflation kicks in – and it looks like it has – the market is NOT where your money should be.1) The trend is DOWN2) EW helps to label the decline. It\’s peoples reaction to news that signals where we are.3) Past and trailing indicators only reinforce where you\’ve been. EW is based on this, but is PREDICTIONS are the only forward looking mechanism out there.4) People are still too BULLISH… yes… when folks KNOW the market will rebound they\’ll be wrong5) I\’d rather be with the trend IN/OUT as profits are available than go AGAINST the trend at allTraders have made the market too technical and complicate the process.By the way, "everyone" looks for divergences now.
I\’ve experiment with cheating on origin of forks to fit it to the action down the tines. I have the same cheating fork and I like the way candle tails sit on the middle tine. Great place for a bear to cover like on the open Friday.
Erik….Hello.
You present and interesting idea/concept.
Lots are looking dangerously at the RSI, vix, MACD signals. I\’m going out on a limb here and am going to suggest that they don\’t matter. People can trade combination of logic and wave count.
Erik. I would respectfully disagree with that suggestion. In fact, wave counts are great if your
Stu, Tony, or yourself. I would suggest, the my charts of the macd pattern
of 2002 low, or the 2007 highs. Do indeed reflect divergencs that were visible to the
average user. If you like email me at: dell_t800@yahoo.com and I \’\'d be happy to send
them to you. And, to further show you that the NY a.dvance/decline chart crest in
July 2007 – months before the actual top. So did the RSP and Russell 2 Thousand index.
I do not actaully know Elliott wave very well at all. But, from the basic patterns
I lave learned to use the AGET software pivots, Primary , Major and sometimes
Intermediate to form bascially the same thing.
The "trick" or "Key" in divergence signals is not that one does not see them.
It is, in fact that they act on what is forming that they are seeing, in realtime.
But, it boils down to what works for you.
Let\’s share another mindset for a moment. Example, Neelly has done rather
poorly at realtime trading recently. Why is that? Well, if he had employed
your wisdom – sounds more like your a swing trader – Neely would have held
his short positions from early 2008. Unfortunately, he made the market call.
But, did not hold is initial short position. Sad story in my view. And had he
shorted at 1040-1045 – like you, he\’d still be short. Not playing games with
840-940 range. Work less, and enjoy life more.
Not many people seem to realize that. The RSP, NDX, NY A/D and Russell
are now making fresh new lows.
Yes, I agree with your basic concepts, and planning. Your methods work
and only that is important….Your right, the decline is hardly finished in my
work too.
This is offered, only as an alternae view…..
I\’ve ridden most of this cycle from 1050 as a short. I\’ve been making loads of cash. For the first time in four years trading I\’m about 20/20 on my trades. Maybe this will continue, maybe it won\’t.However, what I\’ve found is that all you really need is the waves and a good feel for the *emotional* tug that is going on. Ewt suggests that the waves are driven short term and long term by the herd. There are definiting traits for each wave type with respect to fear, greed. Plug these into support and resistance levels and you should stay on the right side of the trend.Those that step in front of an uncompleted wave sequence will get run over.I\’ve also found that in this environment everyone \’knows\’ the bottom… Lots are looking dangerously at the RSI, vix, MACD signals. I\’m going out on a limb here and am going to suggest that they don\’t matter. People can trade combination of logic and wave count. I\’ve been saying prior to minor w1 months ago, that this event is too big for our existing trading methods to fumction. Take a look at how many traders were looped into buying at vix 35… Take this to heart.My count is dire still. Minor w5 down is not done. Based on minor w1 from 1050 my tragets are still 805 then 575 for the finishing move *minimum*.Smart folks will sit out any rally put in place, wait for the correctives to finish. Then short.
EWI\’s CREDIT CRISIS SURVIVAL KIThttp://www.elliottwave.com/club/eb_test/3065ccc/default.aspx
Crash Course Chapter 20: What Should I Do?http://www.chrismartenson.com/crash-course/chapter-20-what-should-i-do
Chrys
10月24日 12:32
(http://cid-0e70a13bed354007.spaces.live.com/)
I\’m looking at 1 of 5 down with the minor 5 as an EDT:1 985 – 9542 954 -9833 983 – 9194 919 – 9315 941 – 840a 931 – -897b 897 – 852c 910 – 852 (abc)d 852 – 888e in progress to 840What do you think?
———————————below is mine
1 985 – 9542 954 – 9833 983 – 9134 913 – 9315 931 – 876
above 1-5 forms a
b 876 – 923
c 923 – 858
d 858 – 910
e 910 – 854
above a-e forms LDT,5-3-1,and then now in 5-3-2 from 1044;
a 854 – 889
c 889 – 860
c 860 – now a 3-3-5 or a-b-c-x-a-b-c to form 5-3-2?
(no name), shame on you!
Forkology is an art, you can\’t just draw a channel where you like it.
Your channel is defined by waves
http://forkoholic.com/images/spx1987forking.jpg
The relationship to 1986 is interesting:
http://stockcharts.com/h-sc/ui?s=$SPX&p=M&st=1986-10-22&id=p31011582292&a=153650001
http://stockcharts.com/h-sc/ui?s=$INDU&p=M&st=1986-10-09&id=p29352969904&a=152679894
And THIS IS WHAT PISS ME OFF…
http://market-ticker.denninger.net/archives/627-One-Sentence-This-Morning.html
Our crooked elected fu**ing officials… Pardon my language…
HD,Putty, I don\’t HATE America/American… I\’m worried for my next generation that\’s all… This guys hits right on the target every time… This is exactly how I feel…
http://www.safehaven.com/article-11661.htm
America/American need to wake up and stop taking drug from government… American is like a drug addict and the government is the supplier…
Puddy, but have you ever think that most trader know about that everyone think this is bottoming process and therefore this is not the bottoming process so every trader trade like as if this is not the bottoming process so the correct thinking is that THIS IS THE bottoming process? Contrarian of contrarian? Ha Ha just putting some thoughts…
Halloween 2007 – stocks rally on rate cut and top next day. Many call it the effective nail in the coffin of the bull market. Using EW, can any time relationship be derived for Halloween 2008?
Between the triangle thesis and a variety of other prognostications it seems like the whole world is looking for a bottoming event this coming week. There are contrarian indicators starting to abound on headlines and even Joe the Plumber knows we are crashing but near a bottom. All this suggests that the bottom will be at least somewhat different than any of us are anticipating. I\’m not coming up with anything that satisfies the counts off the top of my head but we should be aware of alternate counts that would allow a \’surprise\’ ending.
Given a timeframe of days or weeks and the likelyhood that large numbers of people will be looking around the 2002 lows I plan to look for higher and lower bottoms or alternatively a count that would allow a larger than expected 4 which would allow for a more surprising climactic low.
The other possibility to consider is that once the hedge funds have dumped their load it will be pretty much done. Not sure at this point how many weak holders (leveraged) there still are. There has been a lot of distribution though. Lots of shares already absorbed. Unless those buying under SPX 1000 are weaker holders than I suspect them to be the bottom may be harder to notice and happen over a few relatively tame days by the last week\’s standards.
Throwing out ideas. Something to work on this weekend.
If I cheat a bit and move my 3-4 fork\’s origin I get next week\’s energy point
http://forkoholic.com/images/spx102708energy.jpg
Puddy,
I think it\’s possible but I prefer another 0 cross
coz I think we have 1 more 4-5 set into December
Sorry guys I had been out for emergency, So was away for much of the action after 2:00. I guess nothin really happened
Will update once review the charts!
Serg, If the oscillator finishes crossing and crosses back on monday/tuesday then a third cross at lower point than -50 would be the same as what happened from 3 to 4, no? Just asking.
S2 - ROFL…..ok….that\’s cool….
SPX 120 min
unless we get a new low early next week we maybe setting up for failed 5
based on Elliott Oscillator
http://forkoholic.com/images/spxfailedwave5.jpg
I hope everybody remembers this morning. The crashy calls were prevalent but waves and Fib retraces usually play out (even if we don\’t always have the right pattern) and there was once again money to be made on both sides of the coin even in this crappy market. The crash-type calls usually only work a few times a year or decade and often lead to violent reversals anyway. I hope everybody stayed sane. Having said that, my EW count still calls for 3 of 5 of C/3 down targeting 750-800 ultimately, but it may not stay down there long so I\’ll be loading up the 401K/IRAs on the day I feel the current wave 3 has neared completion. I had little time this afternoon, but I\’ll be looking for alternate EW patterns in preparation for next week and post them Sunday night. I am particularly looking for EDTs that could truncate and chop things a bit even though I don\’t prefer that now. Chrys posted a potential EDT count that I noticed this morning from 931. I don\’t know if it is still valid but will be looking for those sorts of possibilities just so I don\’t get caught off-guard. Another possible EDT would have "a" as 1044–>866 with "c" at 853 and "e" next week just below 840 with slight overthrow. However, my number estimates don\’t support that and many wavers do not allow an LDT and EDT at the same EW degree which would be the case in my book as 1303–>1134 is the corresponding wave 1 charted by me as an LDT. CPC was only slightly bearish today and ISE was neutral, and it would be nice to see Joe the Plumber get very bearish for a bottom to finally work. (sorry, had to sneak in a political reference for you Bud) Good luck and good weekend!