Roubini Predicts Much Lower Stock Prices
Here is a Bloomberg interview from yesterday
SPY Hanging Man
SPY has a bearish hanging man candlestick pattern on its daily chart, and the McClellan Oscillator is overbought.
Watch the comments for updates throughout the day.
The odds heavily favor some sort of top just about now IMHO.
The big question is how severe the next pullback will be.
Hello all,
I’ve been sitting on the sidelines, waiting and enjoying reading your informative posts.
Paul F, I thought I would give my thoughts on EW since you raised the topic. I started looking at EW in some depth a few months ago – thought it was very good because the market seemed to show the ‘waves’ projected. BUT, and its a big but, I now concur with you that the theory is such that ANY movement by the market can, in hindsight, be put in to an EW pattern. If it was so accurate for future projections one would simply go long/short at projected points (you will note that most EW targets are not confirmed until the market goes past a certain target after the turning point, hence the validity of that turning point is not taken until future market action proves it to be so). It is useful for the overall bull/bear picture and an idea of where we are in the cycle (even this is rather broad brush, in my opinion).
I actually think that basic technical patterns (e.g. head&shoulders) are much more powerful and provide an IMMEDIATE entry point for position taking. Currently e.g. I can see that S&P 840 is critical support and if broken would expect it to go to at least the 2002 lows. I also think that we may have a descending triangle on S&P since 10 October which targets the area of approx 650 (!!), Rich in his last post also mentioned 640-690. Somebody, I think Junglegirl, already pointed out that this pattern can give a few days headfake before continuing on course and I am looking at the current rally to see if it falls in this catergory. If it falters, I will initiate a 30% short and save the rest for confirmation from a solid break below 840 (based on the projections there is still a fair amount of room below!).
I do not mean to devalue or insult EW by my comments above; it simply has not proved its worth, to me, in providing entry points for trading. I read a quote from Bhudda, maybe it was here, which said something along the lines of: Do not believe anything you read or hear, even if I have said it, if it does not accord with your own understanding of the situation.
Regards
will this be a real halloween/end of month/friday
spooky or will bernanke be dressed in a halloween costume that will stop 2pm crash?
we shall see
Hi Alex;
Good feedback.
Thanks
Matt;
Good video. Sure puts everything into perspective. It’s going to be a rough couple of years coming up.
With regards to the market moving sideways for a long period of time, that will be a trader’s market for sure. The thought of this market lingering at a low for several years is, and will be, catastrophic to retirees and retiree wannabes.
George,a must read…http://www.rickackerman.com/commentary/2008/Hey_Wall_Street_Worst_Yet_to_Hit.html
Momentum
ICE was up over $25 yesterday (not including the last minute, a solid $20). It was telling on the charts and a good study of momentum movement and trend-following using stochastic, MACD and MAs.
Stochastic and MACD began turning up on Tuesday on all time frames. Wednesday’s big move down looked as if the play was over. However, it barely made a blip on the 60 minute stochastic, MACD, and MAs indicating it was may not be a reversal. Additionally, the MAs held their distance on the 15 minute and never crossed the 36MA. Then on Thursday’s bounce up, it continued with stage 2 of the rocket.
One advantage of trading at the bottom of the time frames using stochastic is to be able to catch a trend at or near the beginning with low(er) risk. Then move up each time frame and continue following the trade. During its move up, the 1 and 5 minutes were continually in and out of cycles. Those lower time frames were extremely low-risk trades with such a strong 60 minute.
pooch;
Thanks. Are you a member of Rick’s site?
Gap Study:
I’m logging each gap and opening in several indices and stocks to see if there is a pattern. I’m mainly interested in checking the stochastic with relation to the MACD on various time frames to see if they can have any predictive value for the next day.
I plan on tracking several months to get a good sample. If you have any information concerning this, please let me know and I will add that to my tracking.
Thanks
No George just read hid blog on a dailly basis.I will say he is one of the best I have seen with his price projections
Baltic Dry -3.8% to 825.
Another pancake morning. Please pass the syrup…
Just did a quick scalp on FXP.
Go Charlie!
I think SDS is going to play a sneaky, sneaky, here on us in a bit. Both the 30 and 60 minute MACDs are up to something.
Hey George,
you might be right. Saw the same thing on Oct 20-22 where SDS trended down on the 60 min, but the MACD / Stochs were obviously turning upwards.
Might be worth it to try a short sometime soon. Maybe when SPX hits 958-960 level.. with a stop above.
BTW… Matt.. I noticed that you’re not posting as many comments intraday as you did in the past. Are you concentrating on your charts more right now?
Gold and the broad market ignoring a huge rise in the buck this morning. This is quite bullish IMHO.
We may have to wait a little longer for a meaningful top.
Charlie;
I got SDS at that 1 minute double bottom the first time, then the second time. Still looks promising with 5 minute moving up.
Got a 1.50 on half, now will see what it does with 5 minute 36MA resistance.
Charlie,
I haven’t been day-trading this week, but I was just about to mention that the TRINQ is at 2.62 and has been rising all morning. That indicates selling pressure under the surface on the NASDAQ.
Matt
I won’t dump the other half unless 1 minute stochastic or MACD takes me out.
GO SDS!
HAHA, SMOKIN’!
Thanks Matt.
Got $1 on the second half. No go on a trend right now. But it ain’t over, 5 minute still shows a little promise and TNX is negative.
SDS on 1min 36MA support. If sto turns up, I’m in again.
Did you get out George?
Now, SSOs turn. I was in it before I got out of SDS.
With ranges like this, I use the sto and MACD 1 tic setup where sto bottoms and MACD has 1 histogram tic above zero – usually it’s a small tic. And I absolutely don’t get in unless that condition is met.
I think I see what’s going on. If SDS turns up here with validation, or goes to that 86.50 area, it may snag a trend. Because the higher time frames are bottomed out. Also, this would be a double bottom on the 1 and 5 minute. Maybe a nice counter move up at least.
IWM has been leading this morning, but it may just be on a mission to fill its gap from October 22nd in the $53 area.
SDS blasted through that double bottom to form a divergence on the MACD and Stochastic 1 minute.
SSO was a nice ride.
CNBC says that they are going to show Bernanke’s speech at 2pm in defiance of my “no ‘leaders’ yapping on TV” policy. If we get the same pattern, the market will rally up just before 2pm in expectation that a miracle will be announced, and then fall back once Bernanke goes into the laundry list of problems.
BBT has been slow but solid.
Oh, great… another Fed-Speak.
BDI at 851, not 825.
My gold stock is rallying like mad. I don’t know why. It seems like Wall Street, et al. thinks 50% down is the bottom. I guess we have to short them another 50%. What else can we do, it’s basic economics?
Since 10am, every time the TICK has dropped below zero, it has popped right back above. That’s often an indication that a buy-program is running. On the last day of the month, the big funds usually bid underneath to support the market, but don’t blatantly run it up. So, that’s probably them running the buy program(s).
SKF has been making a move up for the past several minutes.
So Matt.. are you going to short this market @ around 2pm or more like EOD?
Shouldn’t we maintain a rally into the elections next week – isn’t that the norm?
Dax rallied 1% in five minutes before the close and lost it again in five minutes in after market trading – these are the random market moves which do not surprise us.
Hard to say what will happen George. My gut says that this market is going to drop.. which probably means that it will rally and that I should be loading up on SSO.
SSO coming up to double top on 1 minute… is it still looking for $33…
George.. are you in SSO right now?
Charlie;
Just got out.
Prob a good idea. Just went overbought in the 5 & 10 min timeframes.
Charlie;
I’d been swinging it all AM. May be a couple more to go unitl the 33 area. Don’t know. It may try another stab at it. I may wait on SDS to set up now if this looks over for SSO. That last 1min SSO was a doozie from 12:45 until now.
Still going.
watching for entry into SDS then?
Seems intent on that $33 level.. But what happens then? Once it touches, does it plow through or pull back sharply?
We also have a potential LB – SELL SELL SELL signal @ 2pm when Ben’s transcripts are released. (Lizard Brain)
Will enter SDS on 1 minute sto and MACD watching 5 minute for potential trend.
SSO could try to back test 33 and if successful, would go ~34 area because there would be nothing intraday to stop it. On the daily, there is resistance around 34-35 area.
Dressguard, looks like we’re getting there
SSO next stop on the daily is the area I mentioned then the 36MA is above around 39.
The daily is in a move up with sto and MACD moving up. MACD not trending yet though, so anything can happen like a short move up couple of days.
Hey George,
A back test is very likely given we still have 18 mins before 2pm. Things might look very different come that time. I’ll wait for the retest before I enter SDS.
Huh, SSO hit 32.99 – didn’t quite make it. Next time maybe.
Good point Charlie. I play those for .50 or so.. not for everyone. But for every 4 weiners, there’s one big winner.
My ICE machine is out of service, so I haven’t done anything with it today.
9 mins left till 2pm.. lots of time to cycle back to the peak.
Yep…got my sites set on it. Tks… I hardly ever look at the time. LOL
I don’t have the perfect timing you do George so I have to be more conservative.
Retest maybe now?
Sorry… I don’t think it is counted as a retest until price comes down and holds. Spikes don’t count?
I mean sorry I’m late responding.
That SDS trade was a buck. Waiting on another one.
The hedgies must be salavating right now. Itchy trigger fingers.
“Salivating”, not salvation… or could be.
Alex,
Thanks for your response on EW. Perhaps it is better suited to locate strong buy/sell levels (ie, 650) then short-term market directions.
Matt,
Thanks for the TRINQ and TICK cues. I think that we are back near two-sided risk. I think down is the more probable near term direction from here, but I also think the Oct 10 bottom will hold.
Regarding Roubini, traders and investors have to ask an important questions: what’s your time frame? Roubini got negative at least two years ago. The market doesn’t reward people for being early (it went up another 20% before starting downhill). I’ll agree 2009 looks bad, but am bullish-to-neutral for November. Next week will be key.
The market held up while Bernanke spoke. Either he bored traders with mortgage talk, or traders are no longer worried about the economy. I suppose this could be a sign of trader complacency.
Charlie;
It doesn’t take an innate timing thing… I just follow those entry types I have and pull the trigger. They work great – the only thing with respect to timing is how far will they go up. Otherwise, I don’t have any type of “feel” for the market or stock.
I’m a robot without a clock. lol
Hmm.. was that recent move up a failed move? Didn’t make it to the previous 32.99 level.. Charts point lower at this point.
And George,
in reference to the timing.. my broker has been terrible making fills recently so I noticed that they are taking up to 3 mins to do fills.
Right. I’m waiting on the 5 minute 36ma to see if it bounces here to try another move up.
I’m up a buck on SDS again and waiting to see what happens because the 5 minute is looking good like it wants to move up. That’s where the timing or decision making comes in. But, I could sell now and profit and get back in so there’s no difference except for some change.
ok, I hopped on SSO for .20c while I kept SDS because the 5 minute was positive. In the event I was wrong, my SSO would have kept me at least even.
I work too hard!
I’ll be doing this over and over like groundhog day.
I fully expect SSO to pop a wheely because that’s the bias today.
Hmm.. is a base forming for SDS or is this a big daily bear flag?
hmm.. every down move seems to be met with little small moves up. Strange. Buy program in progress perhaps?
CNBC just declared the bear market to be over.
LOL Matt… Ok.. time to short!!
Matt–best news I’ve heard!
How about this: some neg. div. showing up on SPX 5 min. May get a bit of a sell-off into close. Not dramatic, being month-end and all. Then, Mon-Tues for the election, run it up to 1012 give or take, shake out all the weak shorts who have declared they will cover over 986, and then resume the bear.
This rally just feels weird. So many signs are pointing for the market to go lower.. but it keeps on chugging along…
MOAR in the works? Here,,, hedgie, hedgie…
Perhaps.. turn around time about now @ 3pm.
Appears to be lots of buying though. Shorts covering maybe.
SDS hitting 1 min resistance here.
I mean 5 minute
Charlie;
Do you have StockCharts?
yup George..
huge move in SRS over the past 10 mins.. $5 move (that’s ultrashort real estate)
Well, I’ve been long JNJ, and I’m surprised how much the JPM downgrade on Tuesday has nailed this stock. Especially since the analyst said that JNJ is overvalued to its peers YTD. Okay, lets talk about YTD perfromance
JNJ -5% PE 13.8
JPM -8% PE 18.4
So which one do you think is more likely to increase earnings next year and which one will decrease earnings? I just bought March OTM puts…
It looks like the buy program was switched off around 3:10pm. The TICK fell straight down and has been below zero ever since. Now the market has to fend for itself.
Window dressing over then Matt? This market may not have enough strength to keep itself green.
Another rally into the close like yesterday
The Q’s are struggling to stay green.
Only IWM has good rally volume. SPY, QQQQ, and XLF have almost comically light volume on the day. Maybe a lot of traders quit early to get their kids ready for Halloween, but IWM didn’t have any trouble attracting interest…
I’m guessing with all the foreclosures in some neighborhoods, parents might have to pack up their kids to go to a place where it is safe to go out trick and treating.
Last night in the comments, I wrote: “I like the 984 area for a rally top.”
So far, today’s high is 984.38. How’s that for precision?
I got some SDS at $83, and will hold it over the weekend.
Whoa!.. MASSIVE SELLING just took hold.
Is anyone holding anything over the weekend? Shorts? If I’m going to short.. I’m not doing it until 3:58 pm as the closing price the last 2 days has swung violently in the last 5 – 10 mins of the day.
AAPL and GOOG are the red flags here. Phony rally if these two don’t participate. And don’t get me started with half-trillion-in-debt GE.
Does anyone know where do you go to view weekly COT data ? Is this a paid service only ?
Matt,
Good 984 call. I bought also bought some SDS and sold a Nov 100 call against it in case the rally continues.
Anyone else notice that oils spike?
Charlie;
I just switched to stockcharts. Look at the 1 minute on Stockcharts. You’ll see the sto and the first tic on the MACD histogram a little after 3pm then follow the MACD. Then it goes down and sto does it a again shortly before 3:45.
I’m out and ICE pulled a Phoenix.
Charlie;
My settings are sto – slow, 13,3 (default I believe)
MACD 12,26,9.