Wednesday, December 31, 2008

Ten... Nine... Eight...

Pre-New Year comment cleaner...

Friday, December 26, 2008

Into the oblivion 2

Bubble Studios Presents:

Into the oblivion 2

Starring B.S Bernanke, H. Paulson, C. Cox, GWB

Produced and Directed by Alan G.

Coming to a theater nearest you on Jan 1, 2009


YOU CAN RUN BUT YOU CAN NOT HIDE ! B Stearn, Lemon Bros, AIG, Wamu, Wacho, Citi, Detroit coalition, Madoff gang ....They were just the beginning.

Wednesday, December 24, 2008

taking some profit

As you remember I opened a long position in dug @28.35 about 10 days ago and yesterday took $6.06 p/s divedent. I am still mid-term bullish for dug. But due to the holiday season and low volume in the market, I decided to close that position. I believe it's always better keeping in your pocket than keeping in the market.

Closed at 29.29

((6.06+29.29)-28.35)/28.35 = 24.7% profit

Tuesday, December 23, 2008

Why?

Why these people are still getting bullish as the market falls is out of my understanding but one thing I am glad about is, I wont be paying vacations for the next few years. (I should hold my breath till tomorrows gap up on TZA but it is a given anyway)

Thank you Santa, thank you Ms Market for the epic year, and wish all xTrends family a wonderful Christmas.

Staying massively short ES from 864 , 890 and 917 for the terminal crash possibly in January 09... Ms Market, help me retire next year please!



Have yourself a very.....

Dear all,

Here in Australia it's Christmas Eve already.

Those of you in the USA: now you know why Santa only brings you crappy presents - he already gave the good stuff to the Aussies! Hehe...

Just for laughs, I've thrown in some of what I think are the corniest Christmas songs/videos ever.


Let's kick things off with Barbara Streisand in her crack years:




Oh... and have a Holly Jolly Christmas, on me...




And I just have to let Johnny Cash in on the act...




Leaving on a high (!!??) note, feast your eyes on the Reggae master.... Bryan Adams




You'll all need to go out for a stiff drink after listening to that lineup.

Feel free to post your own top picks for most craptastic Christmas music in the comments section!


Merry Christmas!

JB3

Monday, December 22, 2008

Retail is still getting more bullish as SPX falls...

Just briefly checked some charts before the certain one catches me, looks like retail is still getting bullish as if they insist on giving me the final orgasmic blast to finish the year with an epic end.

BTW, I see LOD is 852.75 on ES... That was the number I mentioned in my previous post and we need to break that level to crater towards sub-800 in coming days. Light holiday trading certainly makes this harder but at the rate retail is getting bullish, odds favor we can do it.

I have included a trade setup for x3 small cap short (TZA). I bought some today around 55 upon future vacation plans were brought to the breakfast table. Hopefully, it will pay our vacations for the next few years. I think if ES opens below 855, TZA will break out of that triangle with a break away gap.






This is for the one who owns my heart and my soul.

About to enter sweet spot... (ST)

After a quick review of the short term charts, I think the next possible short term low is somewhere around 770-780. Important confirmation will be a gap below 853 on ES tomorrow. Staying short from 864 , 890 and 917.

PS: I am on vacation, I'll try to update whenever I can.

Sunday, December 21, 2008

Reconnected

Hi all,

JB3 here.

This is a comment cleaner and a quick update on my active trades.

Was away for Friday's session and had no net connection, so I covered my ES and left some protective stops on my EUR/USD short. 

They didn't get hit. This has turned out to be a very successful trade for me. I closed out a moment ago 1.3925 for a ride of approx 7 US cents. 

It seems most likely that EUR/USD blew out of a triangle on friday. Unless the move extends, 1.427ish should be revisited in the next week or so. As I believe the larger trend is now back down, I'll be on the sidelines watching the character of the move and possibly looking for another short entry if one becomes available.

I still hold a bunch of shorts in XOM, C, WYNN and MA. After a brief look at the charts, it looks like XOM is starting to break down. 

I'll be looking to re-enter my ES shorts, but will be doing so as judiciously as I can because, like some other commenters, the charts indicate potential for an upside shakeout prior to the big move down. 

See you in the comments section...

JB3

Thursday, December 18, 2008

Eeny, meeny, miny, moe... (Rated R for strong blood content)

Eeny, meeny, miny moe,
Catch a tiger by the toe.
If he hollers make him pay,
Fifty dollars every day.....


Wonder why it spends too much time around 903?


Wednesday, December 17, 2008

Suckers got more bullish after todays drop...

You know a bunch of lunatic suckers got hectic here on xTrends yesterday... Which nailed the top... Today they got more bullish despite the drop...

When this is over, not only they will be bearish on everything but they will forget about the stock market as well. Because this is the type of move that requires such fireworks.

Currency whiplash

JB3 here...

The various potential triangles I was watching in various currencies were not to be. The people on the other side of my triangle plays made some money off me these past few days.

What I'm fairly confident about is that these utterly wild moves in various currency pairs are NOT new trends. These recent huge moves have all the earmarks of stops being run all the way up to the top of Mt Everest. 

As I speak I think the EUR/USD may be finishing it's blowoff at around 1.443, but may require one more down-up to exhaust itself. In any event the top isn't far off, IMO. Hat tip to Kemal for alerting me to this.

Another thing is for sure, these violent moves in the currencies.... plus Treasuries rocketing skyward... plus plus plus.... does not, in my view, paint a picture of a healthy, functional market that has found it's legs and is ready to set off on an interim term up leg.

Staying short.

Tuesday, December 16, 2008

Classic Fed day?

Fed day followed by an usual Fed Pattern?

If you were a bear, which one you would prefer. According to the Fed pattern, there were two possibilities today before the decision:
1- Rally on Fed decision and reversal next day to sell off minimum 100 points in coming days
2- Sell off on Fed decision and upside reversal next day that may bring 50-100 points on the upside in a few days

Today was interesting because desperate Bulls who mostly calling for 1000+ for the last few weeks really wanted to see me down despite S&P couldn't even test last weeks high. While they kept telling me why S&P didn't drop 400 points by now and how my calls were wrong, the fact of the matter is S&P couldn't even test last weeks high. Then why this emotional surge? I think the answer is right here:



You see them? They have been bullish like this for weeks now and all S&P did was trading between 820-920. Something wrong? I know exactly what is the heck wrong but it is hard to explain to the masses because the most common and frequent deception , I stress the word "deception" , in a bear market is to think that general conditions can change on one or two interventions. I am afraid you will now watch it crater on all time low interest rates which is near zero. Like the logic? I thought so.

In a bear market, bears always have the upper hand because aside from short term moves and corrections, they continuously accumulate wealth until general conditions change (transition to bull market)

I don't think it is necessary to remind people that I am not a day trader. I will not close this position unless Market tells me otherwise, until the intermediate term conditions I follow met. I did not close it when I was up 50 because it was premature. I will not close it here because it is proven nothing but another fluctuation.

You wanna see something else?



And the day is still not over... that bar will get bigger by 12:00 ET

Edit:

Let me squeeze a quick quiz over here. What happens if the cash index opens below todays break out level shown by the black TL



1- Nothing will happen, we will keep rallying
2- There will be some roasted liver in breakfast but nothing big.
3- It will be like CA2 video... liver and guts spread all over the place

Not covering because:

Because ;

1- S&P500 will close the month below where it opened on December 1, 2008
2- Trend structures imply there will be lower prices this month.
3- Fed pattern suggest we reverse tomorrow
4- And countless number of other reasons I came across in the last few weeks.

Well....

JB3 here...

Thought I might post so that we can clean the comments section.

I'll be very interested to learn what kept Atilla from covering today (as I'm sure many of you will be also). Is there new info that keeps the trend-channel alive, or is the plan busted and he's just waiting to cover at better prices?

Hopefully all will be revealed soon.

This post reads like a whodunnit novel. LOL.


According to the script...

This is where we should initiate the big leg according to the original plan...

Possible Path

Monday, December 15, 2008

Those who danced were thought to be....

“Those who danced were thought to be quite insane by those who could not hear the music.”

Nietzsche


Right on schedule...

The following was my projection posted on Friday



Below is the current chart:

That is why...

That is why I try to stay away from day trading. You make 10 here loose 10 there , if you are really good and focused, you make 10 here loose 5 there... But during the overall move, you make a peanut compared to the whole intermediate term move.

Staying short from 864, 890 and 917 for the big one which should end around SPX 500 in a few weeks.

I think we will gap down tomorrow followed by a range bound action till 2:15. I expect the market to sell off after the Fed, because surprises usually come in the direction of the trend.

Could be ugly in the last 30 mins

I think it is highly likely that market will sell off into the close today

Sunday, December 14, 2008

Impregnated and contradicting!

For the last three weeks the market has been trying to climb trough the resistance layer between 870-920. News flow was quite negative during the time however almost all the gap-downs were bought on the same day. I see this action as a distribution because there has been a lot of buying power wasted to maintain the course. One of these days which can be tomorrow, I expect the market gap down and the gap may not get filled.

As you remember I opened a long position in DUG @ 28.35 last week and the position is still open because I believe we have just entered the downtrend in this sector. I am expecting the other sectors to join to the energy as the selloff becomes broad. My measured target for DUG is around 50 over the next two weeks.

Saturday, December 13, 2008

The hardest thing to learn in trading....

The hardest thing to learn in trading is to be able to understand the importance of the capturing the big moves because only after that, one can be a constant player in the game, with a good track record.

There are 3 types of trends in the market: Up, down and flat (consolidation). Flat is where the most day traders make money because conventional tools like oscillators tend to work in a range bound market. Flats are usually followed by up or down trends and when the market changes, those who are trained to trade the previous trend loose most of the gains they made.

I started trading when I was 20 or so, my first few years had been a disaster because I was a plain unadulterated sucker trading on news, tips, even without charts or any sort of analysis of mine. I was working as a software engineer (graduated early because I went to school when I was 4) and my losses really didn't hurt me that much until I insisted and tried to regain my losses by playing big. The result was same, I lost it all. Einstein's definition of insanity comes to mind doesn't it? "Doing the same thing over and over again and expecting different results"

In late 2001, I stopped trading. Because I lost tremendous amount of money (for an engineer who was making near 100K a year), I couldn't take it anymore. I accepted the result and quit part-time trading. I got the most expensive lesson of my life and the worst thing about it was I didn't even know if I would ever be able to use that lesson to make money in the future.

I quit but I never stopped watching the markets. I started to read books and do a lot of research. As a software engineer, I had an advantage of utilizing computer and mathematics in my research. From neural networks to fuzzy logic to other conditional decision methodologies including simple techniques like MA and oscillator triggers, I went through all. Some produced better results some not, but in the end, they all failed. Everything, every system I could find out about failed as I tested them on more historical data.
The most common thing that makes the most traders and systems fail is the lack of ability to capture change in market characteristics. There is always a x-Sigma move that even makes the most expensive cutting edge systems fail eventually. This is part of the chaotic structure of the market place and that is why one can never be 100% right all the time.
This discovery is exactly what changed my life. I had to find a way to understand changes in the market characteristics to position myself for the next possibility. In 2 years, not only I recovered all of my losses, I made good enough to quit engineering, the game became so pleasant and sweet that the only think I was thinking about was the market.

Now take a look at the following chart.



Did you know where SPX was when Commercial traders shorted the life out of SP? I will tell you. It was under 800. They have been increasing their positions ever since as suckers got more bullish. Commercials are not the main reason for my current bearishness but I know exactly why they got beared up. Not the fundamental reason but it is on the charts, because like I said, I follow a technique to spot impending trend changes and it is exactly how I could have captured 4-sigma moves (crash) in the past few months. And you can see on the chart that during the crash, commercials were not as bearish as they are now.
The reason I am showing SP-COT chart is to show a real life example on how one can truly capitalize on the big moves without less risk. Be right sit tight. I know it is a cliche but I also know almost none of you know the true meaning of it. One can only understand it after practicing it, several times, and seeing the result in your brokerage account.

I have been posting my trades on xTrends real-time with precise price levels since August 2008 and I made about 550-600 SP points since that time, publicly. The reason I was able to make that much is the fact that market strongly trended in the direction of my expectation and in the time frames I traded. I was right about most of the big moves.

I posted this to make one point very clear: Think harder and deeper about the next big move, develop a technique to capture the moves and a money management method to trade them. Because big money is always made in big moves.

Possible path...

Before

After:


Possibly next:

Thursday, December 11, 2008

Incoming - 2

Before

After:

Gold bugs freakin???

Hey all

JB3 here.

Firstly, a bit "WELCOME BACK" to Sol. Good to see you back in the action!

Secondly, here's a chart of SPX and GLD (essentially tracks the gold price), following on from a comment I made earlier today. SPX is black. GLD is blue. Ignore the trendlines.



What's clear from the chart is that Gold is feeling some of the deflationary effects that the broader financial system is reeling under. The trend is clearly DOWN (unless a new trend is just starting, of course).

Checkout the pink boxed areas. The gold price seems to give an early warning signal of a big downmove. It looks to me as though some gold bugs, as they catch the smell something putrid in equities, and start running a strong bid for gold, and once the bottom hits in the indices, the deflationary trend absolutely punishes the gold bugs in a very swift fashion.

And that seems to be happening again right now. If this analysis is correct, it's supportive of Atilla's call for 500 or below.

One day this may change of course, especially if Helicopter Ben comes good with his threat to destroy what's left of the long-term prospects of the US economy by printing enormous quantities of unsterilised paper or electronic cash in a 'it-destroyed-every-other-country-but-don't-worry-that-won't-happen-to-us' fit of emotional panic masquerading as brilliance. Then gold would be given every opportunity to embark on a new bullish trend. Right now though, I think the printing is pissing into a very strong deflationary headwind.

Just my 0.02

Cheers

JB3

long DUG @ 28.35

Hi guys, Sol is here. Lets rock !

Rinse and repeat?

It appears to be the possibility for the overshoot I mentioned yesterday is still in cards today but todays level is somewhere around 915 due to the declining top lines

Below is the updated chart of ESZ8. A spike towards 915 then a pull back below the trend line would leave a classic topping tail and is the most usual action before the real sell off but it doesn't necessarily have to be all the time.

Staying short till 500-550 on SPX

Wednesday, December 10, 2008

Incoming....

Expecting ESZ8 to open below 887 tomorrow

and a test of 855-865 range early in the morning.

Possibility to test 925 today

That will likely print the top before we pull back to 800 minimum.

If we dont make this move today, It will be another sign that SP will likely crash by mid Jan

Tuesday, December 9, 2008

Dow to test 5000-5500 range in two months

Revolution



Tick.... tick.... tick....

JB3 here,

A bit of a comment cleaner, with a side note about the EUR/USD:


That triangle is still a serious possibility. The timing is interesting. We may have had a slight fakeout/throwover in the triangle near the close today, just as the SPX hangs in there just above some pretty important levels. If Atilla's "down big" call that is currently occupying #1 status is correct, then the EUR/USD is certainly set up to move down (quite strongly) with it, as it has done in the past. A triangle in the EUR/USD, for EWavers, also usually indicates a terminal move is imminent before a trend reversal, which has an eery similarity to Atilla's projection of a powerful move down to an IT bottom.

But take the EUR/USD chart with a grain of salt, because:
  1. As some EWavers point out, the EUR/USD might have already completed wave 5 in a truncation and now be in an uptrend - such a notion should be confirmed/denied by the tape pretty soon.
  2. A case supporting the uptrend scenario can be made when looking at the internal structure, however that structure (if it's bullish) will need to move impulsively upward very soon. Falling below 1.27 would make the bullish possibility look quite unlikely.

As some commenters have already noted, a (unfilled) gap down tomorrow (if it were to happen) would leave an island reversal top and some serious bearish potential.

I remain bearishly positioned, but I lightened up a little near the close.

Cheers

JB3

The word revolution comes to mind.

I admit I was deceived today. I think we will crash soon. I just cant guarantee it before the xmas but it is a possibility.

I once again think 740 on SPX will not hold whenever it is tested. From treasuries, to the sentiment among the suckers to the spreads, everything confirms it. As soon as we are done going up on holiday fumes, inevitable will be on your screens. Unemployment and GDP figures are non-event imo.

Now listen to this, you will first hear it from me probably: Watch UK markets. It is the biggest time bomb that is impending to implode in unprecedented proportions. Their real estate and banking sector are where we were in the second half of 2007. I do not know how it will hit US financial markets but it is coming big time.

I believe one can now fine-tune the timing of a few major blow up with confidence that I was expecting for sometime now.... the coming sell off will take Citi and several big banks down in US and Gov will be unable to help.
Citi was trading near $3 two weeks ago , it tested $8+ today or yesterday. It is now going under $5 in my opinion and forever. Also Morgan Stanley, Merill and Bank of America may be on the line. I expect SPX to stabilize around 400-500 sometime in Jan 09.

All confirmed by the trend structures on LT charts.

Monday, December 8, 2008

ES 917

for those day traders expecting a signal.... this is it.

We should start a sell off towards 850 from here.

I opened additional short positions but I do not want them to be recorded as this trade is nothing but a fix to my previous positions. It will be unfair on my performance data as I will make much more than what I would with my previous positions. Trying to be fair for those who cant short more. So no trade alerts were issued on Twitter and Marketguru.com.

Looks like another upward drift is brewing into the xmax

Appears to be a choppy holiday trading with upside bias became the possibility after todays gap up. There will be a sell off early in the week starting with the opening bell today ... I will likely get out of my current positions by Wednesday afternoon.

However, there should be a little surprise this year. I do not expect another Jan 1 dump to initiate the crash. Something is in store for the suckers big time.

Saturday, December 6, 2008

Process of building cause continues...

It appears to be the the system is still not fully unclogged and short covering rallies around the obvious levels are still the norm. Staying massively short from 880+ for the impending terminal crash.

Friday, December 5, 2008

Comment cleaner

Comment cleaner

Thursday, December 4, 2008

Is this another indication for what is yet to come?

The following is a chart of an ETF that can be both long or short depends on the market conditions.

Currently it is inversely correlated with the market (like an inverse ETF) and it looks bullish to me. Looks like it will take a gigantic gap down (a big gap up in the market) to break this pattern. Until then trend is your friend...

On the brink..

JB3 here,

This is just a comment cleaner, but be warned: we're on the brink of a sizeable move.

Market will tip it's hand very soon according to my view of the charts.

Cheers

Wednesday, December 3, 2008

Building a cause for the next leg...

Firstly, I want to thank John for keeping blog neat and busy while I was away.

The current action reminds me the one that took place between 890-950 before S&P sold off to test 740 in the last Opex week. Markets always do the most obvious in the most unobvious ways. In my opinion , it is once again building a cause before the terminal dive to sub-600 on SPX.

I am well aware of the fact that this is one of the most bullish time frames of the year and it is hard to get a sell off, especially with the magnitude I expect. However, long term trend structures and price action around them confirmed last month that the impending move should be the one I expect.

Staying short ES from 880+ average and accumulated longs in TWM and MZZ below 115 and 105 respectively today.

Some of the excellent contributions...

Dear all,

JB3 here again.

I've been scanning through some of the comments (while my wife isn't looking ;-) ) and saw many excellent posts, chock full of useful and valuable information.

Below are three contributions that I think contain excellent content that is well worth y'all focussing some neurons on:

1) Comment by Mr_L:


hey atilla have u seen this presentation on the K-wave cycle, quite impressive

warning tho it will make u want to quit the stock market if your a bull : |

http://www.thelongwaveanalyst.ca/flash_cycle.html

My comment: This presentation is so clear you don't need many neurons at all to get a grasp on it.


2) Comment by indusequities:

Have time to read? Read it ..worth it

Paul Joseph Watson

The man who predicted the 1987 stock market crash and the fall of the Soviet Union is now forecasting revolution in America, food riots and tax rebellions - all within four years, while cautioning that putting food on
the table will be a more pressing concern than buying Christmas gifts by 2012.

Gerald Celente (http://en.wikipedia.org/wiki/Gerald_Celente), the CEO of Trends Research Institute, is renowned for his accuracy in predicting future world and economic events, which will send a chill down your spine considering what he told Fox News this week.

Celente says that by 2012 America will become an undeveloped nation, that there will be a revolution marked by food riots, squatter rebellions, tax revolts and job marches, and that holidays will be more about obtaining
food, not gifts.

"We're going to see the end of the retail Christmas....we're going to see a fundamental shift take place....putting food on the table is going to be more important that putting gifts under the Christmas tree," said Celente, adding that the situation would be "worse than the great depression".

"America's going to go through a transition the likes of which no one is prepared for," said Celente, noting that people's refusal to acknowledge that America was even in a recession highlights how big a problem denial is
in being ready for the true scale of the crisis.

Celente, who successfully predicted the 1997 Asian Currency Crisis, the subprime mortgage collapse and the massive devaluation of the U.S. dollar, told UPI in November last year that the following year would be known as "The Panic of 2008," adding that "giants (would) tumble to their deaths," which is exactly what we have witnessed with the collapse of Lehman Brothers, Bear Stearns and others. He also said that the dollar would
eventually be devalued by as much as 90 percent.

The consequence of what we have seen unfold this year would lead to a lowering in living standards, Celente predicted a year ago, which is also being borne out by plummeting retail sales figures.

The prospect of revolution was a concept echoed by a British Ministry of Defence report last year, which predicted that within 30 years, the growing gap between the super rich and the middle class, along with an urban underclass threatening social order would mean, "The world's middle classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest," and that, "The middle classes could become a revolutionary class."

In a separate recent interview, Celente went further on the subject of revolution in America.
"There will be a revolution in this country," he said. "It's not going to come yet, but it's going to come down the line and we're going to see a third party and this was the catalyst for it: the takeover of Washington, D.
C., in broad daylight by Wall Street in this bloodless coup. And it will happen as conditions continue to worsen."

"The first thing to do is organize with tax revolts. That's going to be the big one because people can't afford to pay more school tax, property tax, any kind of tax. You're going to start seeing those kinds of protests start
to develop."

"It's going to be very bleak. Very sad. And there is going to be a lot of homeless, the likes of which we have never seen before. Tent cities are already sprouting up around the country and we're going to see many more."

"We're going to start seeing huge areas of vacant real estate and squatters living in them as well. It's going to be a picture the likes of which Americans are not going to be used to. It's going to come as a shock and
with it, there's going to be a lot of crime. And the crime is going to be a lot worse than it was before because in the last 1929 Depression, people's minds weren't wrecked on all these modern drugs - over-the-counter drugs, or crystal meth or whatever it might be. So, you have a huge underclass of very desperate people with their minds chemically blown beyond anybody's comprehension."

The George Washington blog has compiled a list of quotes attesting to Celente's accuracy as a trend forecaster.

"When CNN wants to know about the Top Trends, we ask Gerald Celente."
- CNN Headline News

"A network of 25 experts whose range of specialties would rival many university faculties."

- The Economist

"Gerald Celente has a knack for getting the zeitgeist right."

- USA Today

"There's not a better trend forecaster than Gerald Celente. The man knows what he's talking about."

- CNBC

"Those who take their predictions seriously ... consider the Trends Research Institute."

- The Wall Street Journal

"Gerald Celente is always ahead of the curve on trends and uncannily on the mark ... he's one of the most accurate forecasters around."

- The Atlanta Journal-Constitution

"Mr. Celente tracks the world's social, economic and business trends for corporate clients."

- The New York Times

"Mr. Celente is a very intelligent guy. We are able to learn about trends from an authority."

- 48 Hours, CBS News

"Gerald Celente has a solid track record. He has predicted everything from the 1987 stock market crash and the demise of the Soviet Union to green marketing and corporate downsizing."

- The Detroit News

"Gerald Celente forecast the 1987 stock market crash, 'green marketing,' and the boom in gourmet coffees."

- Chicago Tribune

"The Trends Research Institute is the Standard and Poors of Popular
Culture."

- The Los Angeles Times

"If Nostradamus were alive today, he'd have a hard time keeping up with Gerald Celente."

- New York Post
My comment: I'm now a subscriber to Celente's journal! As a policy we don't publish for-profit stuff on xTrends, but you can easily find Gerard's site via Google. I was surprised at how affordable his subscription fees are.


3) And for a change of pace: I've decided to give special mention to MobyDoc for his fantastic avatar. I still smile when I see it!

Ciao,

JB3

Comment cleaner...

Nothing to see here.... move along ;-)

Just a comment-cleaning post for y'all.

Cheers - JB3

Tuesday, December 2, 2008

Compressing currencies

Hi all,

JB3 here with an update on some possibly interesting action in the currencies. I trade them, but also keep an eye on them as they can sometimes tip me off to action developing in the major indices.

And recently in some of the currencies there seems to be a bit of compressing going on.

Checkout the EUR/USD....


The bottom line is that I think there's some brisk moves in store in the near future. Unfortunately the tape is unclear (to my eyes at least) about which direction they will go - there's solid arguments supporting either direction.

Unfortunately there's the potential that an ending diagonal (bullish wedge) ended in a truncated fashion (see circled area), indicating that the EUR/USD could break out to the upside. The channel I've drawn might be further evidence - but I'm not convinced and am hoping the market will tip it's hand somehow before the breakout.

Furthermore, the notion that an ending diagonal (bearish rising wedge) recently terminated in the US dollar index (not shown) is all the rage at the moment - if that's the case, then this would further support a bullish breakout scenario for the EUR/USD.

Uh-oh... I hear my wife screaming my name and it's not for sex.... I'm pushing my luck spending all this time on the markets right now... but before I go, here's a juicy cross rate that has compression in spades - the AUD/CAD. Check it out:

Bye for now....

Sunday, November 30, 2008

Jingle bells, jingle bells Jingle all the way...



Here is how this chart is interpreted ... Note the date on that post, and SPX value.

Edit:
Below is a PNF chart sent by Mosh

Friday, November 28, 2008

Growing hopes for my destruction once again...

I see ES closed at 894.75, rallied only 8 points today. I am currently down 30 handles on this trade after being up 30 handles initially.

Despite I made 145 handles from my previous trade, and 550 handles before that, since August 2008, once again I see growing hopes among my haters that they gonna get me this time :) However I don't see a lot of insanity compared to the past times... especially considering those who killed a worker at Walmart today. Are retail traders loosing interest in stock market? or out of ammo?

Due to the high probability for a large gap down on Monday, I will start shorting Sunday night... will also initiate long position in SRS, TWM and MZZ on Monday.

Back to my turkey carcasses...

Wednesday, November 26, 2008

Expecting a terminal sell off into the new year

Sell off should end around SPX 600-650 in the first half of January.

I will be building intermediate term positions early next week, on top of my current ES short from 864.

I was sort of confident about a test of 810 today, and away from the desk for the most of the day. I see that ES tested 829 early in the morning followed by a rally that lasted almost all day.

This doesn't fit the script well but this is negligible given the suckers' pre-holiday enthusiasm in the absence of whales. If we get a nice pop tomorrow or Friday in Globex session, I will start shorting there.

ES is trading at 877 at the moment. I believe we are about to enter the final leg of this cyclical bear market in the middle of the most bullish season of the year. The terminal should completely wipe out retail investor's interest in the stock market before we take off. I expect S&P to rally 60-70% towards 1000 level after the terminal capitulation.

Again, my best guess right now is a test of 600-650 range on S&P500, by the first half of January 2009 and a rally towards 1000 level (65%) by the mid summer of 2009.


Happy thanksgiving everyone.

Tuesday, November 25, 2008

Crash of 1929




interesting clips...

Part-1


Part-2


Part-3


Part-4


Part-5


George Carlin on "the American Dream"

Expecting a gap down below 845

and a test of ES = 810-790 range before the post-holiday trading begins on globex. Staying short from ES=864.

Maybe we already put the top?

Here you go... Retail traders got all bulled up, in a severe intermediate term downtrend. You know what it means.

Remember last swing high was 882... We hit 866 yesterday.

Monday, November 24, 2008

I think we put a short term top soon




and beware that I am very overbought and due for a correction ... (If I am not forming a blow off top)

one last time

short @ 864

short ES @ 849

stop 856

covered ES @ 843...

looks like it was early

Short ES @ 841

sold C @ 5.73

Liver time !

Sunday, November 23, 2008

Possible post-expiration pullback followed by further rally...

I expect little weakness early next week followed by more rally which should fail later in the week.

I think we have at least 20% or more downside from the next local high.

However there is a slight possibility we may initiate a choppy uptrend lasting for the next couple of months, upto 1050. I am going to need a lot more evidence for it.

An intermediate term move from this point will not change anything in the big picture. SPX will eventually test 650 or lower.

Friday, November 21, 2008

Sold ES @ 766

for 20 handles

I got out early due to my personal schedule...

have a nice weekend everyone.

Thursday, November 20, 2008

Reflecting on what got the markets to this point

This post might rub some of you up the wrong way, but I think now is a good time to encourage you to spare some time thinking about the bigger picture and your place in it.

How do you think the markets got into this predicament? I'm not talking about specific things, such as ABCP, SIV's, TARP, N.I.N.J.A. Loans and all that - these all played their part as the 'means' to a particular end. 

Trade in exotic financial instruments, all-too-willing property 'investors', mortgage brokers putting loan proposals to illegal immigrants - there is a common thread running through these things. They all require a certain state of mind in order to even be considered, let alone acted upon.

I don't know about you but it seems pretty clear that the following ingredients are necessary in the state of mind of participants in order for these things (that in hindsight were clearly extremely imprudent dangerous and/or ventures) to become the 'norm':
  • naive (or blind) euphoric trust in others
  • greed (for more)
  • fear (for missing out on what everyone else is apparently benefitting from)
Now turn to the flipside...

No doubt a great many trading along with Atilla today made some significant profits.

But I would implore you - and I am thinking of some more than others based on some of the comments posted earlier today - to step back and reflect on the bigger picture and how you want to fit in it.

Ask yourself: are you exhibiting those very same characteristics that caused this bubble, just this time in the other direction? 

The state of mind that created this unholy bubble mess can wreak as much, if not more, havoc if employed to the downside. Such an attitude is not productive or helpful to anyone, in my honest opinion.

I am also guilty of this. I rode the fall into Oct 10 with Atilla, and on reflection some things I said at the time revealed my own self-centredness about the large profit margin I was making. 

That kind of thinking is unwise and destructive and will create more long term problems with you and the people around you than your profits will solve. I like to think I've learnt from that lapse in wisdom and balance on my part, and perhaps you can learn from my experience.

I hope this doesn't come across as 'preachy'. I mean to make a legitimate point for your thoughtful consideration. Sleep on it.

long ES @ 746

50% position

Covered everything at ES=755 level

closed all shorts

ES@755 for 125 point ,

TF@386 for 68 points ,

and

YM@7580 for 960 points profit

Another 4-Sigma move may be underway

I am seeing similar characteristics but it is extremely rare to have these type of moves in such a short period of time.

Last time I saw it coming, S&P dropped from 1000 to 830 in an hour.

I want believe that things will get better... I want to believe that we will have better economics , better employment, better social wellness but unfortunately what I am seeing right now tells me otherwise.

SPX may undercut 700 in a few hour or so. Again it is extremely rare to have such a move in a month , back to back but I have to be prepared for what I am seeing. I placed orders between SPX=580-650 to cover my positions in case it happens.

I wish everyone sanity calmness and best of luck in these tough times.

Wednesday, November 19, 2008

Into the oblivion...

Song for the plunge...

Here's the big question for the evening: 

...did John Mayer know he was channelling the future when he wrote this song about Atilla and doing the slow dance of death with Mrs Market???

This one gets my vote for the Official November 08 Plunge Theme Song



Enjoy!

John  ;-)

Holly Cow!

Yesterday was more than double the Oct 10 traffic... Are you shook up are you nervous?

I smell sharks liver again !




Tuesday, November 18, 2008

Tips and tricks regarding the new Disqus comments system

Dear all,

This is johneeboy3, one of your friendly neighbourhood moderators.

Atilla kindly offered for me to publish my thoughts and analysis on his site. It's clear from recent feedback, however, that you are all here mainly for Atilla's calls and analysis, and so please rest assured that I won't be soap-boxing on you any time soon!

But I will try to be at least a half-decent moderator, and it seems that posting a summary of how to fully exploit the new Disqus-based commenting system would be valuable to y'all. So here goes...

A note about speed

Yes, the disqus system is slower than the old blogger comments system, because it uses Java and Javascript to work it's magic. But the gain is worth the pain.

Special note for Mac users: I've found using the Disqus system under the Safari browser is much faster than under Firefox, probably due to the many optimisations Apple incorporated into it's Java subsystem.



Point Scoring System - give credit where it's due

Disqus has a point-scoring system - please make use of it because it provides a number of benefits, including:
  • helping the automated filters to block spammers and a$$holes, and
  • helps you when browsing the disqus system, as higher priority will be given to high-scoring posters in some views (as far as I can remember)

You can vote up (point-up) or vote down (point-down) a particular comment by clicking on the UP or DOWN arrows that are located just beside the commenters avatar. FYI: as your mouse is hovering over an arrow, the text under the posters ID changes to show you how many points the commenter currently has.
Here's a simple set of rules for scoring effectively:
  1. If the comment is spam, anti-social or aggressive, give it a point DOWN.
  2. If the comment is witty genius and made your day a bit lighter, give it a POINT UP
  3. If the comment is not anti-social or aggressive, but adds no real value to this blog, DON'T SCORE IT UP OR DOWN.
  4. If the comment has some great insight or technical analysis (whether it supports Atilla's calls or not) then give it a POINT UP (because all solid TA is welcome at xTrends)

Making best use of the threading mechanism

Please make use of the threading system - by that I mean if you want to reply to a specific comment, then click on the 'reply' link directly below the comment. This will cause your response to be posted as a child of the original post, rather than a new post.

New comment posts should only be made if you are commenting on something that no one else is already discussing. If it's already being discussed, post as a reply to the original commenter. This will keep everything easier to read.

Tip: You can reply via email

If someone posts a response to your comment, you should be notified of the response via email. In case you didn't notice, you can post a comment in reply simply by replying to the email notification, and your reply will be posted to xTrends. Easy!


Following xTrends comments - there's now many ways to skin that cat...

Here are some of the most useful ways to keep up-to-date with comments posted on xTrends:

Option A - Surf the comments as usual in your favourite browser. Here's some tips for surfing:
  • If you hover your mouse over the avatar of a commenter, it will bring up a summary of the most recent comments posted by this person. Note that this includes comments on other sites that use disqus also.
Option B - Monitor comments via your favourite feed/blog reader. Disqus makes all kinds of permutations and combinations of comments available as a standard RSS/blog feed. For example:
  • If you never want to miss another comment again, you can subscribe to a feed of all xTrends site comments, which can be found here: http://disqus.com/forums/xtrends/comments.rss
  • If you want to subscribe to all comments posted by Atilla, you can subscribe to the feed of all his comments, which can be found here: http://disqus.com/people/xtrends/comments.rss
  • If you want to track the comments of another commenter on xTrends, you can find the link to the feed of their comments by going to their "Profile Page" (hover mouse over their avatar, and click on "View Profile" link. On the profile page on the RHS will be a item labelled 'Feeds'. Click on this and some links will appear below it. The 'comments only' link is a link to an RSS-compatible feed of all comments by that person)
  • If you only want to subscribe to all comments for the current main post, you can find that link at the top of the list of comments in the link entitled 'Comments feed'.
Which blog reader should you use? One that seems to be popular for Windoze users is Tristana (Google it). One of the benefits of Tristana is that if can update the feed as quickly as once a minute, for those that want to stay right on top of the action. For those with some programming skills, try rss2email (that's what I use).

Got any other tips?

If anyone else has any speed-improvement tips or other tips and tricks that I've overlooked, please post them in the comments section.

Edit: Comments for this post are closed until I find out how to override the blogger comments system (seems like it has to be done for each post). LOL. Stay tuned.


Roundy roundy it goes...

shorted TF above 454

Testing DISQUIS

No more trolls on xTrends...

Monday, November 17, 2008

I expect SP500 to undercut 800 this week

I dont have a target yet but this could be a climactic week, closing near the lows unlike what I previously thought

I am fully short (intended position) S&P and Dow

50% ES, 50% YM

Short 50% YM @ 8540

Short 50% @ ES 880

Sold all longs at 878

The Silence of Camels

Back in August 2008, I had posted inflation adjusted charts, and predicted a sell off in commodities and commodity stocks before they got cut in half or more.

Here is a follow up.



Friday, November 14, 2008

Who would you want to see on xTrends ?

Please give me your suggestions , I will invite those who you wanna see here. Just name it, even Cramer ...

Your VIX was up again



And as seen from Equity P/C ratio, retail traders don't still believe that was the bottom... suggesting we may get a gap up and rally from the get go.

Thursday, November 13, 2008

Now there is one less shark in the killing zone...

Before


After:



Calling all shy whales to the action.

long SP @ 890-893

Will be buying TF and EMD on any pullback

Sold at 876

will buy back later today

Wednesday, November 12, 2008

This one seeks out his own speciality food....

The following is what some of you call "flux capacitor". Funny name isn't it? I didn't name it. After using it successfully for years, people began to call it "time machine" or "flux capacitor" metaphorically.

I use it to spot intermediate term bottoms, or those that produce minimum 100 S&P points rally. In normal times it worked flawlessly but it had never been tested in a crash like move when I designed it. If you consider the October sell off as a crash , then it worked there too because it helped me to spot Oct 10 and 28 bottoms successfully.

Well, as you can see, we have another signal in place, the most strongest I have ever seen. However there is a method to use this indicator in your trading.

When you have a signal like this, there are two possible scenarios for the next day (tomorrow):

1- If we gap down, we may sell off further in a scary way and market reverses massively to close in positive.

2- If we gap up, we rally little further in the morning then sell off severely until we test some important trend line from which we reverse and close in positive.

Both scenario ends with a reversal that is followed by more upside in near future. The minimum S&P point this setup produces from bottom to top is about 100 ES points.

In short, in both scenario, there will be more pain tomorrow followed by a massive reversal that will take us 100 or more S&P points from the low to top, the move lasts minimum 3 days.

Given the current amplitude of the indicator we have to gap up like 20-30 ES points... But we had too many bad news in AH... I still think we may gap up.




I expect the following price structure to form based on the above scenario. Intraday low is hard to pinpoint but we may as well make a new marginal low before reversing.



Ever tasted shark liver?

Comments enabled

Sorry for the inconvenience today, I had to activate moderation function during the trading hours to prevent trolls and charlatans littering the communication.

I removed the moderation, you can shoot freely now. (Hopefully we get lots of trolling in after hours for a nice gap up)

long TF @ 468

long ES @ 880

Accumulated large position around 880 for a swing trade (target 1050+)

We should print the low today

As I said yesterday, I expect S&P to print the swing low today (Nov, 12 Wednesday) which was the reason I got out of the longs yesterday.

There should be a sharp intraday reversal that should push the indices near the high of the session before the close.

There are two possible reversal areas depending on where we open. If we gap up, I expect 870-875 to be the low. If gap down, then 860 area could be it.

Once we print the low today, I expect a rally till option expiration next week.

Tuesday, November 11, 2008

The setup is intact.

The opening was a small breakdown that produced some sell off into the afternoon, but RUT performed much better as expected. The index bottomed out quickly in the morning and led the afternoon rally later.

The rally was a high probability event, so I positioned in RUT accordingly... we tested the breakdown , I closed all my positions near the high of the day. We then sold off into the close which was also obvious from the trend structures.

The bigger setup which supports higher prices over 1050+ on SPX is still intact. I will be looking to initiate longs in YM (Dow emini futures) and TF (Russell 2K emini futures) going forward.

Sold ES and TF at 913 and 495 respectively

for 23 point loss and 14 point gain

Friday, November 7, 2008

Looking good...

We have formed a compression-day today, as we expected yesterday.

Moreover, all major indices, namely, DJI, COMPQ, NDX and SPX formed inside-day pattern with proper volume readings. In other words, these indices saw higher volume yesterday implying yesterday was the low.

Yesterday was also closed with Equity Put/Call reading over 1 indicating that retail traders who I consider fadeable under certain conditions were leaning too hard to the downside.

Another interesting option event happened today around 10:00 AM. OEX put/call reading unusually surged. From what I saw, big blocks of out-of-money put options were sold by large traders who I consider smart money. These transactions also coincided with upside surge across the market. When volatility and premiums are this high, whales prefer to sell options against the market direction instead of purchasing in the direction of the market. So they sold puts instead of buying calls.

From COT data however, I am seeing bearish configuration among different groups of traders. But you should note that COT is reported at the close of every Tuesday. We were near SPX=1000 level on Tuesday and since then we dropped about 100 SPX points. This means this bearish COT configuration may already have played out. In other words, we do not know what the current positions of the traders are after the sell off.

Lastly and most importantly is the internal setup we have had earlier. McClellan Oscillator indicated that an internal initiation occurred early this week. This kind of power spikes on McO usually followed by a price correction which we already had and the correction leads to new price highs. In other words, S&P will likely make new swing highs over 1010 level in coming days/weeks. In this context, we should have looked for a short term low after the sell off.

Considering all these factors, I tent to ignore lagging COT data and I keep my bullish stand going forward.

This week was tough for me because I made my first bad trade over the last 4 months. Relying on the fact that the market would eventually print new swing highs in a few days (McO setup), I added to my positions on the downside instead of getting out of the trade. My average based on ES contract is 936 :
(5c*910 + 3c*937 + 2c*975 + c*991) / 11c = 936, turned out to be fairly large position. I expect S&P500 to test 1020-1050 range in a few days.

I am a student of the market and I got an important lesson from this experience. Overbought McO readings produce sharper and deeper sell offs in intermediate term downtrends unlike those overbought McO readings in intermediate term uptrend.

If the intermediate term trend was up, overbought McO would led to a consolidation or shallow pullback. I thought this was the case but we were in an intermediate term downtrend as evident from weekly MACDs and the pullback came stronger than I expected. Nevertheless, I expect this trade to work out just beautifully in a few days.

Atilla Demiray

Thursday, November 6, 2008

Expecting new swing highs on S&P in a week or two

I believe ES 910 level is an important low that should eventually lead to new swing highs on S&P500

As you can see in my previous post, overbought McClellan Oscillator was expected to gave a way to price correction which already happened and that new historical high on McClellan will likely lead to new price highs on S&P

Sunday, November 2, 2008

Internal initiation ?

I think this is a small internal initiation that will be followed by shallow price correction which should eventually lead to new swing highs in prices.

Friday, October 31, 2008

Dare to short this?

Closed at all time highs again.




The highest site traffic of week always coincided with local tops and bottoms so far.



Tuesday, October 28, 2008

Congestion between 1050 - 850 continues ...

Market rallied strongly and closed at ES=940 as I expected....From intraday and daily charts, S&P appears to be trading through the setup I saw yesterday.

If this will still be the case for tomorrow, we should gap up above 950 and sharply rally towards 970-980 before any pulling back.

I am planning to take some profits before the FED but I expect more upside after the FED till Thursday. I do the selling because of the increasing risk due to the FED.

I am currently up about 85 points on ESz / SPz and about 700 on YMz. I will get rid of 50% of each tomorrow.

Edit on October 29, 2008:



Sunday, October 26, 2008

Collapse of Market Fundamentalism

Most of the investment methodologies are built on a theory called market fundamentalism. Market fundamentalism suggests that markets are self-correcting and eventually revert to the mean.

Mathematical definition of the theory is based on a simple statistical assumption that deviations from the mean occur in a random fashion and you can calculate a distribution and expect the market to return to the mean over the time. In other words, overshoots from the mean in both directions always offer investment opportunities over a long time.

This theory is wrong. Markets do not revert to the mean always, because the markets are reinforcing. Markets are not perfect and under the right circumstances, trends can feed on themselves.

Under the right macro circumstances like political, economic and social, market fundamentalism appears to work for decades / centuries. But when those major conditions change or no longer exist, your statistical model is refuted in time.

"Buy American, I am", by Warren Buffet. I think the markets are about to make a historical example out of this man who used market fundamentalism successfully for all his life. Survival of the fittest in finance is based on adaptation to the trend created by underlying factors. I do not think he will live long enough to realize it.

Now what all this means for an investor? I think it means this may not be a time to find the next GE to invest for the next 50 years. I think as soon as the market hits a reasonably low P/E, like 8 to 10, it will trade in a 30-50% range until P/E once again justifies further sell off... That is, S&P may rally 30-50% off the lows, this doesn't mean we are getting back to the mean. From an analytical perspective, I know exactly where the mean is and it is impossible to achieve any longer. While we trade in a range, corporate earnings will further decline, this will eventually blossom into another cyclical sell off in coming years.

However, I am thinking this is the time to apply that false market theory to China. I think market fundamentalism will work for China for the next few decades. I am waiting for the right moment to enter that market for the long run.

Saturday, October 25, 2008

Example to a parabolic curve

I received this email from a reader:

<-------------------------------------->
Sol & Attilla

You have a great blog! I have observed Attilla's trading skills for at least four years mostly through his postings on TT. When you opened the blog this summer, I decided to simulate Attilla's trades in a trade competition.

I executed his market calls using index ETFs and I have been over the top among thousands of participants for at least two months now. However, I achieved better results in my personal brokerage account because the trades I place get executed immediately unlike the competition web site which has 15-20 minutes delay. I believe Attilla would love to see my results: http://www.marketguru.com/Atilla

Please accept my gratitude for everything you have done so far.

Sincerely,
Randy

<-------------------------------------->

Friday, October 24, 2008

S&P500 may drop additional 20 - 25% next week

My EOD and EOW data indicates that there is more than 50% chance for such a move. If it happens, I think it will complete the bear market.

Monday's open will be very important indication. I am partially positioned for the move however I will decisively initiate new positions based on Monday's opening.

Sold ES at 873 - 875

Thursday, October 23, 2008

Tuesday, October 21, 2008

This is where any IT rally will end

Do you remember the following chart? It is the normalized index chart I have been posting a while ago. Here is what this chart was like two months ago or so. Well it is now unrecognizable because we crashed so deep that the H&S formation now looks small overall. H&S target was broken and now acts like resistance. This resistance is where any IT rally will end.






And following is a daily PC ratio indicating that OEX folks bought puts yesterday getting ready for a sell off but read the explanations on the chart. Devil is in details.


Following is 10DMA charts of the PC ratios. 10MA of CBOE indicates we hit the spot again.