SHORT TERM: market rallies on Citigroup deal, DOW +397
Overnight the US government announced a deal to help stabilize the troubled financial giant Citigroup: http://www.federalreserve.gov/newsevents/press/bcreg/20081123a.htm. The Asian markets were relatively unaffected as they closed mixed. Europe, however, opened higher and closed +10.1% on the day. US index futures were higher overnight and the market gapped up at the open to SPX 818. After a small pullback to 10:00 and SPX 809, the NAR reported existing home sales fell to 4.98Mln v 5.18Mln. The market then resumed its rally. At noon the SPX hit 842, and while president-elect Obama was announcing his recent appointments, the market pulled back to 827 and then resumed its rally. Just past 3:00, the SPX broke through the 848 pivot, hit 866 and then pulled back into the close. The market has now rallied nicely for two days in a row. At the close the SPX/DOW were +5.70%, and the NDX/NAZ were +6.30%. Bonds lost over one point, Crude gained $4.70, Gold rallied $32.00, and the Euro rallied as well. Support for the SPX now pushes up to 848 and then 789, with resistance at 912 and then 935. Short term momentum is extremely overbought. Tomorrow, the first revision to Q3 GDP will be announced at 8:30, then Consumer confidence at 10:00.
The short term wave count we have been following recently, for the 5th wave of this downtrend, ran into trouble today when the SPX rallied above 849. It’s been very difficult to keep on top of the market during this prolonged downtrend. There appeared to be some buy orders at the close, as the SPX/DOW continued to edge higher long after the closing figures would be posted. First time this has occurred in a while. The market seems to be encouraged by the government’s response to the problems at Citigroup, and the positive DOW/NDX/NAZ divergence to the SPX after it broke its02 lows. May be signs of positive things to come. Best to your trading!
MEDIUM TERM: downtrend low at SPX 741
LONG TERM: bear market
Hi Joe,
Yes, noticed that as well.
Players will become scarce starting tomorrow until next week.
Should be light volume and, for now the market can move easily either way.
tony
Hi Tony,Is it possible that all the indices are in some ending diagonal pattern with \’d\’ over as of today (Like in DOW pattern) and the final wave down about to start? It seems people have gone way too bullish with this 2 day rally with P/C ratio registering 2 low values, poor breadth and new lows continuing to soar without any divergences etc. To add, USD (as tracked by ETF UUP) seems consolidating and TLT almost hit fresh highs today. In the past, TLT has been a leading indicator for market rallies/declines…Joe
Serge
If you draw the TL down from 1008, today\’s action successfullly tested this TL from above!
Seems like a struggle today; not uncommon near a turning pont in the market.
XLF up ~ 5%
NDX down 1% with DOW/SPX up a bit.
NYSE A/D ratio closed at the best of the day with NYMO going poitive. Looks like stock buying into the close.
CBOE call buying hgh for two days??
SPX pattern reminds me of 17 Nov (double top with negative divergence)!
NYMO went postive today, however.
CBOE call buying high.
Could be three days up on declining volume.
Smells like a B wave up.
This looks like a complex correction. Out of my leauge. After about 1:00 I\’m fairly lost.
My 2 Cents….SP500.
11/21 completed W3 of 3 Down. 741.
Wave A of 4 up, completed at 868.
Correction Wave B down.
Minor (a) may have completed at 834.
Now, I only see 5 waves completed at 834.
In process is (b) up. Of course should
remain below 868, then a final (c)
decline into Wednesday below 838
816-810. Then Wave B down would be
completed.
Friday 28th, C wave up begins in earnest.
Final High for W4 935-945.
12/1 Market Decline to below 741….
Now, if any of my guessing is correct.
It will be pure luck. As I am way out of my element.
But, just having fun….
Same fractal from last week that kept dropping in a wave down in the afternoons. No longer valid. Possible Wolfe Wave though.
A leading diagonal down could explain it.
maybe we\’ve got a 1, 2
don\’t know yet…..I\’m still thinking the Dow will close at 8500 on Friday but I sorta thought it would have to trade up to that level, setting up the Dow for an uptrend going into Dec
trading is still kinda heavy to be wrapping up the downtick here…..guess the final hour will be the tell.
Anybody frustrated yet!
Yes, potential abcde..
Also, potential ominous H&S measures to about (good ole) 818, ~.38 correction of the advance from ~740.
possible abcde finishing up…
starting to look like a h&s on the 1 minute.
Looks like that same fractal.
EG
Thanks for the input.
Palroy, People who wanted to make money already did, now this market is chop-chop and with low volume.
Don\’t commit yet becuase it\’s gonna have you jump all over and frustrate.
SPX just exceeded the TL down from this morning\’s high.
"so slow maybe we still in b of abc?"
Serg, you still waiting, lol
SPX has corrected ~.23 of the initial advance (from ~740) with what could be a bull flag on reduced volume.
The A/D line is bullish, but not the CBOE call buying. (NYMO up to zero with current A/D data).
Market also holding up (so far) with negative news regarding Q3 GDP.
Cautiously bullish…
Just a double zigzag so far. A new low and there\’s more downside potential.
Seems that VIX is down now, with the market down as well.
A/D still positive.
I don\’t see any major move before holidays. Infact low volume best for bulls to be dragged in.
Maybe we just go back and fill that gap around 802.
Or there might only be 5 remaining (all owned by the gov) and I\’m not kidding.
SPX is backtesting the 1008-918 TL (from above).
Mixed signals….
A/D stubornly positive.
CBOE low yesterday and today (ususally bearish).
XLF positive (finally a bottom?)
NDX outperformed DOW yesaterday, underperforming today.
Looks like 5 down for th eVIX, and headed lower.
Yes Serg, Egold Index – sumbol EGLD – and NOT PAPER/ETF GLD
Serge, you mean like the S&P 5.00?
Bud, when time is right I am planning to buy all stocks less then $5 and 2 year high > 60.
When trade is simple expect the unexpected. So I think market will have something for both
I think after 12:00 It will differently. It will be chop-chop
Palroy, the spike overlap was less than a minute and only a point or so. Won\’t show up on close lines. I\’m looking for 820 – 780 range. Not original but it works for me.
To me it\’s the perfect sign of complacency much like the CPC ratio. Not enough pessimism.
This morning was an easy trade to go short. I out of it now
Made some 2 hr cash:)
I thought VIX down:market down is bullish?
Long SDS? Maybe.
It is possible that yesterday\’s late drop was \’a\’ of an irregular \’abc\’ and we are now in \’c\’. This would be bullish, of course.
A/D remains positive, however, CBOE has much call buying for two days. ISEE closer to neutral.
anybody looking to get long at pivot?
Interesting. The market is down and the VIX is down. Me thinks there is more downside coming today. It\’s testing a trend line right here and if that breaks probably looking at 820 at least.
I still think the key is where the market ends up closing on Friday. If it\’s above the 200mMA, well, then, it\’s bullish, at least in the short term. If it\’s below, bearish. I\’m sticking to day trades until I see the Friday close.
I\’ve got 5 waves up complete with minimal overlap at yesterdays late day spike down for impulsive looking action.
Or not… Man I\’ve been off lately.
Bud
I understand your viewpoint as a result of your lengthy post (thanks for sharing, as they say).
It seems there are a number of new posts this a.m. mentioning a more significant rally this time (incl. EWI).
As to <1000 or 1044, both are consistent with a 4 of C (or 3) rally.
Longer term I am bearish with a bias toward a range boung market vs. a severe drop.
Both would provide a correction.
I lean toward the range bound correcion because of the unprecedented effort to address the financial crises at hand. The open question (for some time) will be what will be the degree of success? I think this ongoing question will influence the market to trade in a range, rather than plummet as it did 80 years agao (the Nasdaq already plummeted a few years ago).
Lastly, the SPX went below 200 month MA recently. the past two time were about 40 and 80 years agao, both terrible tmes for markets and economies. This portends great dificultly for the markets and economies of the world are likely (no surprise after the events of the past few months).
What do I think the range of themarket will be ?
I am not ready to say; 700-1100 seems to narrow, but at this time could easily contain the SPX.
Looks like it may be doing an ending diagonal before retracing towards 800.
Egoldspot…Yeah, you are right..deleting IBM.
GS FLR VMC SSO and UOPIX VWELX are others.
Bud, IBM don\’t buy. They sold their products like 28 billion with credit to them.
. But i might stay away
They not going to pay them back. Other thing that might help though is weeker
dollar
From Neely, through Yelnick….
Neely advised his hourly traders to get in on the party Friday and repeated it before Monday\’s open. He remains bearish, and thinks this rally will be multi-day not multi-month and will not crest SP1000.
Now, in my view. Neely is saying a lot. [1] Trading Long on the 21st. Good work.
[2] He dispells the notion we are going to 1000, on the SP500. [3] in terms
of time he says, short term up only.
So, the Buy I am looking for is not now. But, what I buy has got to be
IBM from 50-30; and GS from 30-12….and a few others….
Catherine. Hi.
Well, when I dislike doing something. I really become
creative in how to avoid do it. Such as taxes.
All my schedule D is done by hand, one at a time.
Software? I wouldn\’t know what to buy, or how to
use it. Scottrade has, something called Gainskeeper.
But, Scottrade does not give much detail on exactly
how to use it. They offer it, but then they say
they are not responsible….
Yeah, 12 is my max.
Alrighty…..short!
Bud, knows this is golden opportunity so he doesn\’t mind waiting game on it
Infact he would have done so much research he would be golden
BudYou keep your total trades to less than 12 a year? Amazing if the case.I sometimes do 120 in a day!
This is amazing while shorting SSO it said not easy to borrow. So people are super bullish on SSO
Serge, these guys aren\’t holding bushels of wheat in their offices. They hold paper futures contracts. There is no difference.
Erick….Yes, we are on the same track. EWI chart
did a good job in depicting the 11/21 Low. And,
for me. It is not a trade, long I prefer to take.
No, I just want to keep my trades to less than 12
a year. I hate doing the schedule D each year.
Yeah, I do it manually, LOL….
Might be a good idea to keep in touch, when we
see changes that will surely form in the next
1-2 weeks…
SERG…thanks for the EWI chart.
Rogers has been very wrong the last while. He may be right about the USD being devalued and that may translate into higher commodity prices but why would you not just short the USD.
Bud,See Serg\’s link – even EWI is going for a higher degree.
Thanks Serge. That should have been 3 of C.
Bud,Now you see it like I do
The lesser degree (if correct – and I think it is) will catch a lot of people off guard. Several have yet to call this truncated too… It\’s too early. I think they\’ll call it late in the game and unfortunately go long looking for the higher degree sometime around 900.Who knows – good luck.
I\’ve heard that EWI thinks wave 4 of C is done. Anyone else hear this? Faber was on Bloomberg this a.m. as well and he thinks we may see a 30% rally which is consistent with around the 1050 level.
Palroy….I have looked at my EW charts. I can now see what you might
be looking at. But….We are not looking at the same wave degree.
I hope I say this correctly. Using the SP500. I believe we are in a Wave 3
decline, still. W2 Crest 8/11/08 @ 1313. Within that decline then, I suggest
we have completed a W3 of 3 down.
What say you?
Serge, appears like you are looking for a leading diagonal. That would make sense if we are still in 5 of 3 and looking for further declines per the timing that has been discussed.
Palroy….How you doing?
1st. I need to say a couple of things. [1] my investment
structure is investing in more longer term time frames.
Certainly 1-2 week would be in effect, a day trade for me.
So I trade the major pivot points. [2] I invest mostly
in stocks that have future positve earnings growth. I
consider the construcion and engineering sector right
now. I tend to believe that while people watch the SP500
index. I prefer to add a careful eye to the XBD, and Brokers.
GS is my choice. A nice run up since the 49 low last Friday.
My wisdom about timing is old fashion, and basic. I follow
the NY advance/decline data carefully each day. I employ
the McClellan oscillator and summation indices also to my
work.
Right now, the a/d line has turned higher as of 11/21 close.
Given this indicator crest in June 2007, and has made a new
low on close 11/21. To early to say how far it will advance.
I do not only follow the SP500 index. I feel to not also follow
the Russell 2000 is unwise. And relative to the SP500, the
Russell 2000 was more Bullish right through the 2001-2002
lows.
My biggest investment mistake, was to allow myself to be
pulled away into following another investment advisors opinion.
I do use price targets. I am not an EW expert, I really know
only the basic patterns. I don\’t know, norr have I studied the
corrective patterns nearly as well as others here.
My view. [1] We have been falling in term so price and time
fairly hard. 1576 to 741. That\’s hard. We are overdue for
a strong countertend rally. [2] I can only count 3 basic movements
from the October 07 SP500 index high. I feel we are
in the early stages of a Bullish pattern, the length of which
I do not know for certain. At the moment, I am working
only in the time frame of the 11/4 high to the 11/21 low.
I think, we will have 3 basic segments to this advance, an
A-B-C. Then we decline hard into a mid-to-late Dec 08 Low.
I am thinking a W5 low will not likely end until February 09
It will be around 500-600. I realize that maybe to Bearish
as well, so that is only a working number.
Reply to your question. I am in cash. So, not paying strict attention
to the altitude of this advance off 11/21. Thinking only 920-940 at
the moment. If what you suggest is correct, and I am not saying
your wrong. Then I should be invested long right now. I accept
your 1044 call. As to the advance being the strongest since 10/10
low. Yeah know it is still to early to make that statement for me.
Yes, the a/d numbers for Monday was great. But, it was only 1 day.
If my key indicator, GS is any example though, you then are
probably correct.
So, I think this W4 up is not maybe the same degree you are
and I are thinking. Maybe, I am thinking in the context that
this W4 up is not the same W4 your thinking.
Let me put it this way. I suspect your seeing this as a larger
degree wave 4 advance. I am seeing this wave up within
a larger declining pattern, still incompleted.
May I put it another way? I see the break to 741 last Friday.
As a Bear Trap….The setup was to break marginally below a
prior low, and then get everyone thinking we are going to 650.
While the actual margin low of 741 then was a Bear Trap.
When everyone was thinking the market could nto go higher,
it did. But, not without leaving a sturdy amount of clues that
it would really reverse up, just most did not know exactly when.
And in that regard, we allow to be trapped into CIT dates,
some more important than others. You follow?
Now, in conclusion. You may very well be correct. My wisdom
though, even in cash. is to follow it, and not allow my mind to
get locked into a specific target price. We can then expect
to see another "trap" being setup in Dec. One which will catch
the Bulls off guard.
I hope I haven\’t board you to death with my comments…
Egoldspot is correct to b watching the VIX ove the nex week
or so. I doubt it will get below 46, maybe 40. But, you see
this is a great measure of then the Bullish sentiment. Or lack
of Bearish sentiment…
No, I think we are entering a good counter trend rally period
of time. To releive the bearish sentiment extreme we have
seen.
What say you?
Hi – your count seems correct until minor 4 at 1007. Then I have minute iii at 818, minute iv at 916, and extended vth concluding at 741 to finish the counts up to primary A.Kind regards
Bud
If we are in a 4 (and if it is 4 of 3 or C), EW \’theory\’ states that it is likely to complete in the range of the 4 of lessor degree.
I believe this goes all the to SPX 1044 (from ~840-1044)?
How do you see this 4? (I view the advance from Friday as the stongest since the one from 10/10).
Regards,
Long from 755.00 Nov 21
I believe this is the expanding triangle pattern that has been discussed today and recently.
I mean it\’s mirror opposite not exactly inverted.
Megaphone pattern is a TOP pattern
Mirror/Inverted Megaphone pattern is bottom pattern. (Probably some to think about).
I don\’t think it will shoot up like rocket, but could start some new bull marker as cycle seems to have ended with mirror
48.5% lost
this time 48.5 left
Here 2008 is inverted pattern so we lost 48.5% from 1576-743 , I mean it\’s inverted so we are left with 48.5% we lost 52.5%
Also
1929 we crashed a total from top 48.5% , Megaphone pattern was TOP pattern
Here 2008 is inverted pattern so we lost 48.5% from 1576-743
holly molly!
Hi All,
Take a look at this chart
http://www.flickr.com/photos/28461248@N03/3057000587/sizes/o/
Inverted megaphone – which is exactly opposite of climax, meaning this setup occurs before crash, I think as this is inverted I think it might mean we can reverse impact of crash but to the upside.
http://www.marketoracle.co.uk/images/2008/Broadening_Stock-Market-Top-Megaphone-Pattern-July08-3.gif
This is exactly opposite of 1929, crash, which make me believe that we completed 1929 cycle with inverted megaphone pattern.
Holly crap! please let me know what y\’ll think!
If we break 900, then it would mean rocket launch to space?
PALROY….my NY a/d line made a new low on the close
of the 21st. SP500 cash, also made an intraday low
that date. Now, the NY McClellan Summation Index
did not confirm the low on 11/21. Making a higher low.
The NYMO was also reflecting bullish divegence….
There were a lot of divergences, and desceending wedge
formations in stocks…
I am in cash since the 11/4 High. Not looking to re-enter
long, but likely go short at the top of this W4.
Like to see GS get below 49 again, though….
10 Oct could have been the yearly low by some measures (e.g. A/D).
Still there can be lower prices with divergences with these measures (e.g. NYMO, New Lows etc.).
Already lower lows were made with the SPX and some other indices.
The lower SPX low seems to have turned many bearish, who had been more optimistic!
VIX calculation
http://flickr.com/photos/28461248@N03/3057710384/sizes/o/
Yenta….we can understand your wish to position yourself,
in a volitale market.
Maybe you can be a bit more specific. What do you want
to be positioned in ?
I should alert you. That position trading/investing is very
hard, in the last 30-45 days. October and November have
see tremendous volatility. This makes position trading
rather difficult using comments from a message board.
With that said. I suggest you read the last several days
of comments, take notes. And you may develope and
understanding of time and price.
Also, understand that we are all sharing information/opinions.
That are subject to change quickly.
Feel free to ask anyone here. I think SERG was offering his
talents.
Top
89.53
A
44.25
B
81.48
Final
B-Fib
58.84
0.5
53.49696
0.618
46.1616
0.78
36.2
1
Hi, I asked on yesterday\’s post but probably got overlooked. Can anyone please help me on positioning? I admire the work done on this blog. Thank you.
SERG….well, I\’d be happy too. I do not have a photo album service.
I can send to you, by using my email dell_t800@yahoo.com request
it as "subject"….is that okay for you?
SERG – yes, that is what my AGET program is suggesting too….
Erick…I follow your thinking. It fits in very well with the comments
I just made to SERG, below. And so, with respect to time
the CIT dates I have align rather well. From 12/4.
But the action on 11/26-28 with be KEY to the change in trend
(CIT) for the end of DEC08. Yes, then the 12/4 date would
relate well with Jan 4th, 09.
Very good Erick…sure you have helped me, and others here.
We have something to think about then.
Good Work…
SERG….I revisited the Tony Chernowski interview on Yorba,
on 11/18. Recall he was talking about an expanding triangle
(which I call a megaphone)…He mentioned a pivot, or
fulcrum of 920 (SP500). He did also mention the lack
of confirmation in the DJI, or intramarket divergence was
apparent too. But, Tony was stressing that above 920
the probability of going much higher, say 950 deminishes
very quickly…
I now believe has called the pattern of an expanding triangle
correctly (11/18)…I can from my own charts that prevelant
was a descending wedge pattern too into last week. Now,
we have – as of late Friday made considerable effort to breakout.
And we have. I do not think we have any problems in going
higher at this point. 920 -940 PO as Erick had so nicely
pointed out on Friday afternoon.
Is this the Legacy Trade. I do not think so. I must agree
with Erick\’s analysis that a retest (750-740) maybe expected
soon after the 920-940 target area is reached. In which case,
that would form the critical bases for a Legacy Trade higher
to 1,000 on the SP500.
It also appears you could be correct, setting up for a crash like
event in the the last half of December. You may have mentioned
12/28. Yeah. that would fit nicely.
One of the confusing, tools ChartsEdge. As you know they
are very bullish into 1st-2nd week of Feb 09.
Now, if I read their chart correctly, then the Legacy Trade
may evolve toward the end of Dec. Wow=La 12/28
comes back into play, or into the 1st week of Jan09.
And a final point. Given the selling and crushing of stock prices
this year. A major market low in the late Dec 08, or into the
first few days of Jan09 – would be a classic Bullish signal.
Granted the fundamentals are horrible, but it is the Obama
time….Just a thought.
The confusing part of what I have said, is it flies right
in the face of comments last Thrusday, by Bost. Ref
significant low 11 26-28, or 12/1…..
Bud,Thanks
The retest of 720 depends on how fast we get to 960. As for timing, I give 2 weeks development to push to 960, today *almost* completes a nice impulsive wave from the lows. So, I\’m expecting some healthy pullback in the coming days. As for 720 I\’m thinking later next month, as a slow and steady decline.The 1000+ rally is what Tony refers to as B – I\’m thinking (at this point) it lasts months (starts in new year)? First things first 
I\’m not familiar with what Tony Chernowski\’s pattern.
EG
Are you suggesting a lower VIX and higher prices before a any major down move?
If so, any price projections?
Thanks
Looking for VIX of 36.2 now, before next
Erick…..By the way. Great call last Friday…
You mentioned a couple of SP levels – correct me if I am wrong.
[1] Rally to 960, but not higher. then…
[2] Retest 750, to 720….
[3] Major rally to 1,000….is that right? Any estimate of time. Dec08 ?
[4] then Crash to 600…
I am wondering is that the Tony Chernowski pattern that has been
talked about ???
Thanks…good work.