Hey all,
Long time no post. Haven't had much to add. Till now...
You heard it.... I've gone to 'buy and hold' mode.
Buy and hold long VIX futures, that is.
Extreme complacency in this market and the indexes are throwing people off the bus like it's some kind of meat grinder.
I say, "blow me".
The market itself stinks to high hell. But the structural condition of the world's major economies makes that smell like roses by comparison.
We are in historic times where ignorance and outright theft by governments and the political influencer class as they continue to derail and dismantle economies and markets in the name of repairing them.
I'll save the rest of my rant for another time.
I'm positioned conservatively, in that I can handle a 50% fall in VIX without a margin call.
I'm holding this position as long as it takes.... months or a year or more... I don't care, and will only micro-manage no more than half of the position if bouts of volatility provide an enticing chance to sell and re-enter lower.
See you on the flipside.
JB3
Friday, March 5, 2010
Wednesday, March 3, 2010
Time element
My previous remarks on using this short term bounce to GET OUT OF THE LONG POSITIONS, I believe, will come to fruition this week. Masses who couldnt touch this thing around 1050 are now bulled up, waiting for 1130+ levels or double top for their own convenience but remember that, on Jan 21, SP was ST broken around low 1120s right under X3 where it was shorted by large institutions despite it was already down quite a bit.
On multi-decade very long term charts, using xTrends, we can only identify the approximate reversal regions, like SPX 670 area which created this bear market rally and 1130 area which terminated it.
To understand the characteristics and developments in smaller time frames, we must focus on appropriate time frames. Since the summer of 2009, it has been pretty clear to me that the entire move would eventually form a rounding top.
The fact of the matter is that this rounding top appears to be very large scale, it flattened longer term momentum which suggests we are probably going to get another IT rally after the current IT pull back started in Jan 2010. The IT low will likely come from somewhere between the major swing low of July 2009 and the first minor low of Aug 2009.
On multi-decade very long term charts, using xTrends, we can only identify the approximate reversal regions, like SPX 670 area which created this bear market rally and 1130 area which terminated it.
To understand the characteristics and developments in smaller time frames, we must focus on appropriate time frames. Since the summer of 2009, it has been pretty clear to me that the entire move would eventually form a rounding top.
The fact of the matter is that this rounding top appears to be very large scale, it flattened longer term momentum which suggests we are probably going to get another IT rally after the current IT pull back started in Jan 2010. The IT low will likely come from somewhere between the major swing low of July 2009 and the first minor low of Aug 2009.
Friday, February 26, 2010
There is a train on the other end of the tunnel: GET OUT
We are in the very final stages of the congestive corrective action that will soon blossom into something very strong that will make Jan/Feb sell off look like a picnic.
Make no mistake, when it rains it pours.
Trillions have been spent to pull the markets back from their abyss and this mindless, useless workmanship to borrow more time at the expense of our future has completely played its course, lost its momentum. The life juice went to the sewer through investment banks and dealer desks.
Fed panicked after the last auction failure and raised the rates little bit, regardless, the inevitable super-cycle bear market in long and mid term T-bonds will soon begin and will be the most obvious driver of coming financial tsunami. No one will want to lend USA for 30 , 20 even 10 years. It will eventually trigger an Armageddon in derivatives, real-estate... a mass liquidation of US assets including currency, possibly leading to a dramatic closure of Federal Reserve Bank. When the financial markets begin falling on their own weight, make no mistake, you will have flashbacks from 2008/2009.
The breakdown, which already happened in various segments of the market, will soon spread across the financial markets , triggering a serious panic that will push S&P500 under 1000 level before you can adjust your rationale for the renewed behavior of your oscillators.
I am not after whys and causes here. All reasons come after what I see on the charts. Long term charts show that the larger part of this bear market is yet to come and it will be epic. From what I see, we are forming a gigantic round top which I believe is a perfect representative of the coming end of many western economies, financial markets. When this rounding top completes, which may take another year or so, downfall should be proportional.
Within the grand picture, we are currently in the first intermediate term downtrend that began in Jan 2010. This will likely end somewhere around low 900s, high 800s. And within this IT downtrend, we are about to complete the first corrective rally and about to start the next downleg which will be much powerful.
Yesterday's sudden surge in fact was not normal, it was neither a sort of buying nor something that can be considered healthy. To me, the market started purging. I call it "Cause Building", shaking the weak out. We have seen such actions in late Dec repeatedly before the market cratered. I am not sure if we will have more of these between 1090-1110 but I can tell you that this one will not last like December top because this is corrective top.
I am short, I am shorting big time, I will lean so hard if it pushes higher. Every single day since Feb 5th lows, I have seen nothing but confirmation of my visions. On the up days, which I traded gladly, the market did nothing but spread the buying power through sectors that formed bearish patterns / contained within the bearish patterns. On the downdays, it created more breakdowns, more money left leadership names / sectors.
Just a little example of what is happening under the surface:
Below is Modified "P" index that we used over a year now. This index is composed of bear market leadership sectors like banks, brokers real estate ... etc
When SPX tested 1045 on Feb 5th, the index tested its blue intermediate term trend line which will soon crack wide open. When it does, I have a pretty strong feeling that SPX will go through all your nimble targets between 1050-1000 like a hot stone, trapping a mass crowd above 1000 level till they capitulate around 900.
What is more interesting is that, there are some sectors that are already broken within the same price structure. These sectors will sure play the leadership role on the downside, pull financial markets lower.
Here is one, XBD:brokers/dealers. This index is an important part of Modified "P" and it appears to be the bearish leadership of the leadership sectors. So watch it, watch how those investment banks utilized your hard earned tax money.
This is all I have to say for now. You know where I stand. If this goes higher, so does the size of my short positions. If it cracks lower, I will be waiting for corrective rallies to pyramid up. This will go on until we reach important IT pivots like the one below:
Make no mistake, when it rains it pours.
Trillions have been spent to pull the markets back from their abyss and this mindless, useless workmanship to borrow more time at the expense of our future has completely played its course, lost its momentum. The life juice went to the sewer through investment banks and dealer desks.
Fed panicked after the last auction failure and raised the rates little bit, regardless, the inevitable super-cycle bear market in long and mid term T-bonds will soon begin and will be the most obvious driver of coming financial tsunami. No one will want to lend USA for 30 , 20 even 10 years. It will eventually trigger an Armageddon in derivatives, real-estate... a mass liquidation of US assets including currency, possibly leading to a dramatic closure of Federal Reserve Bank. When the financial markets begin falling on their own weight, make no mistake, you will have flashbacks from 2008/2009.
The breakdown, which already happened in various segments of the market, will soon spread across the financial markets , triggering a serious panic that will push S&P500 under 1000 level before you can adjust your rationale for the renewed behavior of your oscillators.
I am not after whys and causes here. All reasons come after what I see on the charts. Long term charts show that the larger part of this bear market is yet to come and it will be epic. From what I see, we are forming a gigantic round top which I believe is a perfect representative of the coming end of many western economies, financial markets. When this rounding top completes, which may take another year or so, downfall should be proportional.
Within the grand picture, we are currently in the first intermediate term downtrend that began in Jan 2010. This will likely end somewhere around low 900s, high 800s. And within this IT downtrend, we are about to complete the first corrective rally and about to start the next downleg which will be much powerful.
Yesterday's sudden surge in fact was not normal, it was neither a sort of buying nor something that can be considered healthy. To me, the market started purging. I call it "Cause Building", shaking the weak out. We have seen such actions in late Dec repeatedly before the market cratered. I am not sure if we will have more of these between 1090-1110 but I can tell you that this one will not last like December top because this is corrective top.
I am short, I am shorting big time, I will lean so hard if it pushes higher. Every single day since Feb 5th lows, I have seen nothing but confirmation of my visions. On the up days, which I traded gladly, the market did nothing but spread the buying power through sectors that formed bearish patterns / contained within the bearish patterns. On the downdays, it created more breakdowns, more money left leadership names / sectors.
Just a little example of what is happening under the surface:
Below is Modified "P" index that we used over a year now. This index is composed of bear market leadership sectors like banks, brokers real estate ... etc
When SPX tested 1045 on Feb 5th, the index tested its blue intermediate term trend line which will soon crack wide open. When it does, I have a pretty strong feeling that SPX will go through all your nimble targets between 1050-1000 like a hot stone, trapping a mass crowd above 1000 level till they capitulate around 900.
What is more interesting is that, there are some sectors that are already broken within the same price structure. These sectors will sure play the leadership role on the downside, pull financial markets lower.
Here is one, XBD:brokers/dealers. This index is an important part of Modified "P" and it appears to be the bearish leadership of the leadership sectors. So watch it, watch how those investment banks utilized your hard earned tax money.
This is all I have to say for now. You know where I stand. If this goes higher, so does the size of my short positions. If it cracks lower, I will be waiting for corrective rallies to pyramid up. This will go on until we reach important IT pivots like the one below:
Thursday, February 25, 2010
It is a "GO"
We have a selling power that broke the market today. This was the confirmation I was looking for. Feb 5th lows will be taken out in a reasonable time frame.
Enjoy the ride
Enjoy the ride
Tuesday, February 23, 2010
Update
Just a quick update on where we are...
S&P500 will likely test the corrective rally high OR exceed soon because we have not received a terminal selling today. But still any further upside should be perceived as corrective within the grand schema. Also I am not expecting much higher prices, this should be over near this week's highs or little higher.
Just want to let you know that I am not completely bearish to go all in at this point... thats all.
S&P500 will likely test the corrective rally high OR exceed soon because we have not received a terminal selling today. But still any further upside should be perceived as corrective within the grand schema. Also I am not expecting much higher prices, this should be over near this week's highs or little higher.
Just want to let you know that I am not completely bearish to go all in at this point... thats all.
Tuesday, February 16, 2010
Corrective rally is likely over
ES rallied 50+ points since Feb 5, 2010 low of 1040. My minimum target for the rally was ES=1080 which was fully achieved. ES is currently trading around 1095.
Today we received early signs of termination. This means SPX will likely reverse soon, within a reasonable price range from where it closed today. There may be higher prices in very short term but it can't be sustained.
HOWEVER at the moment I do not know how far the coming sell off may last. I have no data regarding the selling power left in the market, It will be more clear in the first two days of the sell off. It could be an approximate test of the Feb 5, 2010 lows or complete breakdown.
My educated GUESS is it will be a successful test of the lows around X2, meaning it will be either a marginal new low on lower volume or a higher low with no volume consideration.
Today we received early signs of termination. This means SPX will likely reverse soon, within a reasonable price range from where it closed today. There may be higher prices in very short term but it can't be sustained.
HOWEVER at the moment I do not know how far the coming sell off may last. I have no data regarding the selling power left in the market, It will be more clear in the first two days of the sell off. It could be an approximate test of the Feb 5, 2010 lows or complete breakdown.
My educated GUESS is it will be a successful test of the lows around X2, meaning it will be either a marginal new low on lower volume or a higher low with no volume consideration.
Wednesday, February 10, 2010
Why was I bullish since Friday, Feb 5 ?
I have been reading your comments, noticed that curious minds want to know why I trade on the long side lately.
Because the market has been in an uptrend since Friday Feb 5, climax lows, although my definition of trend is not probably the same as yours, I believe your oscillators and moving averages will soon agree.
As you remember, I called for a ST bottom last Friday when SPX was around 1045. Below chart, which was available to all readers for months, was the fundamental reason for my call. SPX was testing "X2" from the above and I knew this first test would have changed the short term trend.
Not only this but there seems to be other important trader groups getting bullish while public and retail traders are getting more bearish.
10 day moving average of Equity PC and OEX PC ratios have been one of the best intermediate term indicators for years. These averages, once again, are moving in the opposite directions, indicating that smart money crowd is gradually getting bullish while retail traders are taking the opposite side, with the help of flashbacks from 2008 they are having.
This divergence usually leads to an upside reversal that may possibly last for weeks.
Meanwhile the recent commercial activity suggests that they are less bearish than any other time since the March 2009 lows.
Please note that only the big changes in COT data is what really matters, not gradual or steady positions. So their recent short covering in size can be considered as a bullish sign , at least for the ST.
Not only these but there are other compelling factors suggesting at least an upside move.
To put all in perspective, I still see this rally as a short term correction within the larger intermediate term move that was initiated by "X3" which also terminated the rally off the March 2009 lows.
However, given the overall formation of the mega round top, it is possible that this rally can extend all the way to the highs. In my personal opinion, it will not. We will have more clues in coming days.
Once again, the bear market correction started in March 2009, or some call a cyclical bull market has been terminated at "X3". The test of X3, if it happens, will produce a stronger intermediate term move but I don't think it will get all the way up there. We are in an intermediate term downtrend which will likely take SPX to low 900s to test X1 but the current rally, although theoretically can extend to X3, is a tradable swing move and it will likely last until the public gives up bearishness.
Because the market has been in an uptrend since Friday Feb 5, climax lows, although my definition of trend is not probably the same as yours, I believe your oscillators and moving averages will soon agree.
As you remember, I called for a ST bottom last Friday when SPX was around 1045. Below chart, which was available to all readers for months, was the fundamental reason for my call. SPX was testing "X2" from the above and I knew this first test would have changed the short term trend.
Not only this but there seems to be other important trader groups getting bullish while public and retail traders are getting more bearish.
10 day moving average of Equity PC and OEX PC ratios have been one of the best intermediate term indicators for years. These averages, once again, are moving in the opposite directions, indicating that smart money crowd is gradually getting bullish while retail traders are taking the opposite side, with the help of flashbacks from 2008 they are having.
This divergence usually leads to an upside reversal that may possibly last for weeks.
Meanwhile the recent commercial activity suggests that they are less bearish than any other time since the March 2009 lows.
Please note that only the big changes in COT data is what really matters, not gradual or steady positions. So their recent short covering in size can be considered as a bullish sign , at least for the ST.
Not only these but there are other compelling factors suggesting at least an upside move.
To put all in perspective, I still see this rally as a short term correction within the larger intermediate term move that was initiated by "X3" which also terminated the rally off the March 2009 lows.
However, given the overall formation of the mega round top, it is possible that this rally can extend all the way to the highs. In my personal opinion, it will not. We will have more clues in coming days.
Once again, the bear market correction started in March 2009, or some call a cyclical bull market has been terminated at "X3". The test of X3, if it happens, will produce a stronger intermediate term move but I don't think it will get all the way up there. We are in an intermediate term downtrend which will likely take SPX to low 900s to test X1 but the current rally, although theoretically can extend to X3, is a tradable swing move and it will likely last until the public gives up bearishness.
Monday, February 8, 2010
Stay on your toes...
Hey all,
I've got mixed feelings about tomorrows tape.
I'm excited because I'm going on a holiday, but I'll be peeved if a severe decline unfolds during the session because I'll be on a plane and unable to trade it.
Stay on your toes. Although it's not totally clear (when is it ever?), there is a very real possibility for the arse to fall right right out of the markets tomorrow. If so, it will be the famed "3rd of a 3rd" and it will be vicious.
For my own sake ;-) I hope we get more bounce tomorrow.
Good luck all.
JB3
I've got mixed feelings about tomorrows tape.
I'm excited because I'm going on a holiday, but I'll be peeved if a severe decline unfolds during the session because I'll be on a plane and unable to trade it.
Stay on your toes. Although it's not totally clear (when is it ever?), there is a very real possibility for the arse to fall right right out of the markets tomorrow. If so, it will be the famed "3rd of a 3rd" and it will be vicious.
For my own sake ;-) I hope we get more bounce tomorrow.
Good luck all.
JB3
Friday, February 5, 2010
Another corrective rally is underway
I believe SPX is putting a ST bottom in mid 1040s. This IT downtrend will likely continue until my projected target of 900s on SPX but you know it wont be a straight move. Both bulls and bears will have their moments within.
Tomorrow is my birthday, the market usually gives the bears the moment of joy on or right before my birthday. A lot of instruments hit projected targets, get ready for another corrective rally upto 1080is or higher levels.
Keep in mind that we will still be in an IT downtrend.
Enjoy your weekend
Tomorrow is my birthday, the market usually gives the bears the moment of joy on or right before my birthday. A lot of instruments hit projected targets, get ready for another corrective rally upto 1080is or higher levels.
Keep in mind that we will still be in an IT downtrend.
Enjoy your weekend
Thursday, February 4, 2010
With all that mince flying around...
...I hope you didn't accidentally get your fingers caught in the grinder.
Brutal day, if you were long. Big downside breadth. The complete lack of buying interest on all the little bounces today was just screaming 'look out below'.
In a comment posted about 10 mins before the close I noted what I thought was a small triangle developing on the 1min SPX chart. Looks like it was indeed a triangle.
Probably caused a few more long to brown their pants into the close.
Based on the small triangle scenario, I think a small bounce is in order, possibly even with a gap-up opening.
After a quick squiz at the charts, the best fit pattern I can come up with says that the bounce won't last long. I'm thinking the resistances in the 1070-1080 range should cap it. Sol seems to think so too, last time I checked, which is comforting. Thing is, under this pattern the arse is gonna fall out of it tomorrow (or perhaps monday at the latest).
The next most likely pattern match, IMV, calls for a bigger bounce (a larger 'flat') up to the 1100 - 1115 range on SPX, then big downside.
Gotta run. Supposed to be working.
Edit: Anyone still riding shorts on Hungarian Forints and Polish Zloty's with me? These things have gone vertical. Big trouble brewing in the outlying European countries, dear readers. These are just the weakest links of all in an overall very weak chain. The cancer will spread.
JB3
Brutal day, if you were long. Big downside breadth. The complete lack of buying interest on all the little bounces today was just screaming 'look out below'.
In a comment posted about 10 mins before the close I noted what I thought was a small triangle developing on the 1min SPX chart. Looks like it was indeed a triangle.
Probably caused a few more long to brown their pants into the close.
Based on the small triangle scenario, I think a small bounce is in order, possibly even with a gap-up opening.
After a quick squiz at the charts, the best fit pattern I can come up with says that the bounce won't last long. I'm thinking the resistances in the 1070-1080 range should cap it. Sol seems to think so too, last time I checked, which is comforting. Thing is, under this pattern the arse is gonna fall out of it tomorrow (or perhaps monday at the latest).
The next most likely pattern match, IMV, calls for a bigger bounce (a larger 'flat') up to the 1100 - 1115 range on SPX, then big downside.
Gotta run. Supposed to be working.
Edit: Anyone still riding shorts on Hungarian Forints and Polish Zloty's with me? These things have gone vertical. Big trouble brewing in the outlying European countries, dear readers. These are just the weakest links of all in an overall very weak chain. The cancer will spread.
JB3
Cow may become hamburgers today
Quick JB3 midnight post.
EW 3rd-of-a-3rd breakdown *may* be underway. Tricky spot here at the open. If it is, we plunge and hamburgers will start flying out the grinder.
Watching breadth for confirmation.
Good luck to all.
JB3
EW 3rd-of-a-3rd breakdown *may* be underway. Tricky spot here at the open. If it is, we plunge and hamburgers will start flying out the grinder.
Watching breadth for confirmation.
Good luck to all.
JB3
Sunday, January 31, 2010
Recognition phase...
Beginning of the recognition phase always slows things down. Retail is now aware of the plunge, complaining about bounce wishers... forgetting about the fact that some of these wishers were the ones calling for a top around 1140. Ohh yes SPX spent two months around 1140 but this doesnt change the fact that they were bullish at the top and missed most of the down move recently. The market once again did excellent job by deceiving masses before changing direction.
But now, time to get cautious on the downside.
Yes there is massive down volume, all your oscillators are pointing to down, DMAs are turning but the only thing that matters is controlling trends.
Market will likely reverse to higher on Monday or early Tuesday from approximately where it closed on Friday. There are intermediate and short term TLs being tested across the indices.
This doesn't mean we may not see lower prices or some sort of flush. We possibly will but it will be tricky.
The recent 75 points plunge from SPX 1150 to 1075 was driven by heavy institutional selling, it was sharp and quick and the retail traders missed most of the move below 1125. Now they are recognizing the move. Therefore 1125 is a natural target for the bounce, this number also shows up on several index charts.
However keep in mind that, this bounce which may extend all the way to the highs into March-April 2010, will not change the big picture. The bull is terminated at X3 and the intermediate term downtrend has been initiated.
Anyway, one of the quantitative evidences come from currency markets. Expect Dollar to reverse lower soon, this will fuel things up. Below is the custom index I introduced in mid December. It is composed of USD and GOLD. The index is currently testing the controlling channels bottom first time and will bounce from this point or little lower. This means GOLD will rally while USD sells off, which will support equity prices.
Tuesday, January 26, 2010
Reliable pattern in AUD/USD
Hi all,
JB3 here.
For what it's worth, the AUD/USD 10min chart pattern, shown below, caught my interest:
It caught my interest because it is, in my experience, a fairly reliable pattern.
What I see is a fairly textbook EW impulse, with a triangle in the fourth wave position to boot (see purple lines).
The thrust out of the triangle so far is also textbook, and it was a good shorting opportunity. I hope you rode it with me. I'm out already.
Based on this interpretation, I expect the thrust to complete at levels not much lower than current, and a rebound up to at least the price area shown by the red box.
The type of patterns embedded in the rebound should be informative. What I'm expecting as the most likely pattern is a upward-moving pattern that is ultimately corrective. If that turns out to be the case, I'll be looking for a short entry.
There are similar-looking patterns in other pairs, which helps with getting a good handle on the probabilities.
Cheers
JB3
JB3 here.
For what it's worth, the AUD/USD 10min chart pattern, shown below, caught my interest:
It caught my interest because it is, in my experience, a fairly reliable pattern.
What I see is a fairly textbook EW impulse, with a triangle in the fourth wave position to boot (see purple lines).
The thrust out of the triangle so far is also textbook, and it was a good shorting opportunity. I hope you rode it with me. I'm out already.
Based on this interpretation, I expect the thrust to complete at levels not much lower than current, and a rebound up to at least the price area shown by the red box.
The type of patterns embedded in the rebound should be informative. What I'm expecting as the most likely pattern is a upward-moving pattern that is ultimately corrective. If that turns out to be the case, I'll be looking for a short entry.
There are similar-looking patterns in other pairs, which helps with getting a good handle on the probabilities.
Cheers
JB3
Sunday, January 24, 2010
Bear market rally is being terminated
This is basically a review of my previous posts on Long and Intermediate term.
As projected in my last post, the bear market correction started in March 2009 is in the process of termination at X3 on S&P500.
The process can take a shape in two possible forms:
1- SPX quickly dives to test 870-930 range then rally to test the highs between 1100-1170
2- SPX will bend at X3, forming an intermediate term rounding top right under X3 between 1050 - 1150. If this is the case, the highs will not be seen again, there will be no test.
My preferred pattern is #1 because most of the rounding-top-shaped bear market rallies were terminated with this type of double tops at the highs. The test of the highs will mostly be based on momentum with no reason, as all the monetary and economic fundamentals for higher equity prices will diminish. (They are actually gone already)
Also note that the corporate earnings topped out this quarter, and will gradually plunge in coming quarters but this is not very important as the rally off the March lows mostly created by government intervention of the credit and futures market, not healthy economic and earnings improvement. Therefore the market will continue to sell good earnings and severely punish bad ones in coming days.
In short, X3 on SPX terminated the rally off the March 2009 but we will likely have some sort of sharp intermediate term zigzag between 900-1150 before the death body starts sinking towards the bottom of the ocean where it will possibly find a bottom between SPX=270-350
My other prediction was decopling between equities and other major markets. This also is happening. During this transition period (double top), Equities will completely lose correlation with bonds and currencies. This process in fact already began. Decoupling between Equities and Currencies as well as Bonds and Equities became quite visible in the last few weeks. I believe Commodities will also be a part of the dissolution. In other words, Commodities may diverge from bearish equity trends, may even rally or stay range bound during the "C" wave plunge in Equities. By the time the entire topping process is complete, Equities should no longer move in tandem and this will be the most obvious confirmation for the beginning of C-Wave.
Dow monthly terminated at the TL equivalent of X3 on SPX
Weekly Close-up
As projected in my last post, the bear market correction started in March 2009 is in the process of termination at X3 on S&P500.
The process can take a shape in two possible forms:
1- SPX quickly dives to test 870-930 range then rally to test the highs between 1100-1170
2- SPX will bend at X3, forming an intermediate term rounding top right under X3 between 1050 - 1150. If this is the case, the highs will not be seen again, there will be no test.
My preferred pattern is #1 because most of the rounding-top-shaped bear market rallies were terminated with this type of double tops at the highs. The test of the highs will mostly be based on momentum with no reason, as all the monetary and economic fundamentals for higher equity prices will diminish. (They are actually gone already)
Also note that the corporate earnings topped out this quarter, and will gradually plunge in coming quarters but this is not very important as the rally off the March lows mostly created by government intervention of the credit and futures market, not healthy economic and earnings improvement. Therefore the market will continue to sell good earnings and severely punish bad ones in coming days.
In short, X3 on SPX terminated the rally off the March 2009 but we will likely have some sort of sharp intermediate term zigzag between 900-1150 before the death body starts sinking towards the bottom of the ocean where it will possibly find a bottom between SPX=270-350
My other prediction was decopling between equities and other major markets. This also is happening. During this transition period (double top), Equities will completely lose correlation with bonds and currencies. This process in fact already began. Decoupling between Equities and Currencies as well as Bonds and Equities became quite visible in the last few weeks. I believe Commodities will also be a part of the dissolution. In other words, Commodities may diverge from bearish equity trends, may even rally or stay range bound during the "C" wave plunge in Equities. By the time the entire topping process is complete, Equities should no longer move in tandem and this will be the most obvious confirmation for the beginning of C-Wave.
Dow monthly terminated at the TL equivalent of X3 on SPX
Weekly Close-up
Friday, January 22, 2010
My take on the big picture
As the IT trend turns down, here is my take.
This is from Jan 21, my morning comments at xSetups, SPX @ 1040-1045
--------------------------------------------
This post is not just about today. I want to get your attention for something that may make a difference in your life and it is the same reason I have doubted every little pop within this trading range.
Internals lead externals. What this means is, the internals composed of the market breath and underlying data eventually leads price action.
What has been happening is that internals created a type of divergence in both intermediate (Summation) and short term (McClellan Osc) time frames that I have never seen, even in 2007.
This type of divergence will lead a very powerful and very sharp sell off that even I may not be able to fully profit from it, despite the fact that I am the one seeing it, living it, breathing it right now. It will start in such a way that will trap the maximum number of traders on the wrong side and leave bears out of the move.
It will start in a way that the initiating move will erase all the cumulative gains one can possibly make trading this silly range during the last 2 months.
I am very confident about all these, but what I am not confident about is the sit tight part I have to do. Once this thing begins, believe me, the best way to profit from it is to shut down your computer and let your short positions stay for 5-10 days because the move will be perpendicular.
Like I said before, I dont know the exact time or place it will start but I know it will start in a week or so and it will be initiated somewhere within this range. The fact that it will begin in an unusual way, and the time and price of it is very close, I prefer to stay short during this range action. One may try to improve portfolio averages which involves risk of missing the big one unless position management is used.
Looking at the overnight action, ES once again came to test 1137-1138 that should be the maximum if we are in the larger degree move
This is from Jan 21, my morning comments at xSetups, SPX @ 1040-1045
--------------------------------------------
This post is not just about today. I want to get your attention for something that may make a difference in your life and it is the same reason I have doubted every little pop within this trading range.
Internals lead externals. What this means is, the internals composed of the market breath and underlying data eventually leads price action.
What has been happening is that internals created a type of divergence in both intermediate (Summation) and short term (McClellan Osc) time frames that I have never seen, even in 2007.
This type of divergence will lead a very powerful and very sharp sell off that even I may not be able to fully profit from it, despite the fact that I am the one seeing it, living it, breathing it right now. It will start in such a way that will trap the maximum number of traders on the wrong side and leave bears out of the move.
It will start in a way that the initiating move will erase all the cumulative gains one can possibly make trading this silly range during the last 2 months.
I am very confident about all these, but what I am not confident about is the sit tight part I have to do. Once this thing begins, believe me, the best way to profit from it is to shut down your computer and let your short positions stay for 5-10 days because the move will be perpendicular.
Like I said before, I dont know the exact time or place it will start but I know it will start in a week or so and it will be initiated somewhere within this range. The fact that it will begin in an unusual way, and the time and price of it is very close, I prefer to stay short during this range action. One may try to improve portfolio averages which involves risk of missing the big one unless position management is used.
Looking at the overnight action, ES once again came to test 1137-1138 that should be the maximum if we are in the larger degree move
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