Market Plays With Fire
By dilly-dallying around 800, the S&P 500 is playing with fire. Pull up a weekly chart and you will see what I mean. The last weekly close under 800 was on April 25, 1997.
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yesterday i called 7 handle by 3pm. that was def contrarian. this time with GE reporting and samsung just reported first quarter loss. those news that were factored in according to many will factor in 7 handle and we’ll jump straight to 6
ok wishful thinking
good luck trading i’ll check in but other than getting out of my long ICE position i wont do any trading
Hopefully this link works….http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spx&time=8&freq=1
take a look at S&P 500 going back to 1971 on a 50 quarter moving avg basis..note:: this is the 1st time it has broken down and through that line , my guess bear will not end until we go back to 1995 levels around 500 same time Greenspan started using the funny money monetary tool along with his Greenspan Put!
If we close under 800 tomorrow look for a compression move down early next week and be prepared for a melt-up back to the line around 1,200 by June ….
Prechter, pg. 51 says the following: “A triangle always occurs in a position prior to the final actionary wave in the pattern of one larger degree, i.e. as wave four in an impulse….” This means we cannot call the triangle a triangle for subwave 2 of 5 down (whether it be 5 of (3) or (5)–and I still favor the former).
Fine. Skip on over to pg. 54 (after an interim discourse on double threes and double zigzags) and it says the following: “A count of 7, 11 or 15 with numerous overlaps is likely corrective.” Well, that DOES seem to fit our current pattern, with 7 waves visible to my tired eyes. As usual, time will tell. In the meantime, I say call it whatever name makes you happy.
This confusion is why I like to examine candlesticks, chart channels, use oscillators, etc. EWT blended in is fine, but solo is extraordinarily difficult, IMHO.
No kidding playing with fire, try this chart:
http://tinyurl.com/csljau
I’m expecting a walk-on-water international action to save the world, I fear it to be a “bad bank” attached to the IMF or whatever institution. This would protect most of the banker’s profits and causes the least immediate pain to anyone. Experts will freak out, but who cares.
Yesterday I mentioned the German efforts falling apart because of inefficient set-up and too much political interference. How’s the US doing?
http://online.wsj.com/article/SB123258284337504295.html
dax flirting with Nov lows… My expectation is drop below 800 on the s&p but no new lows and next leg up. Then down again. Too many calling for the end of days now.
GE report looks OK except this line:
GE said it expects 2009 to be “extremely difficult,” without providing specifics.
Says $1.24 Divy is safe, up a little pre-market, futures are still off almost 2%, apparently GE can’t save the market.
Got to be due some fireworks soon, we have had a fairly sideways week on the daily SPY but amongst that, there’s been a couple of lower volume up-days and now we have had two consecutive inside days.
Sherry, thanks for the cyclepro reminder. Are you planning to go long breweries? The real estate stuff in Forida is fun, too – I just love virtuous cycles. Prices will go to the lower boundary imo. To dampen the decline house construction from 29-34 dropped by 92%, so in the long run it is not a virtuous cycle.
Wonder how they calculate the forward-looking p/e targets when companies refuse to give guidance. Do they use last years’? ;-o
Yerk-
I will just continue trading the S&P 500 Futures.
I talked to my Dad last nite about Dave’s bond
recommendation. He told me that I could not
use the account to trade bonds…guess I will
have to mortgage the house if I want to trade
bonds.
Sherry
Junglegirl-
What do you think of NeoWave???
Sherry
Matt- Last nite I reviewed the so called 25
best financial blogs. NONE of them come up
to the quality of your BLOG.
Give yourself a pat on the back and have a
two martini lunch today.
Sherry
Dr Doom (Nouriel Roubini) has an article in
Forbes.com…”The Worst Is Yet To Come”…
you may not agree with it, but it is worth
reading. I would like to know where he
gets all of his inside information.
Sherry
Thanks Sherry. I’m a pretty good chess player with a few drinks in me, but I don’t know if I would want to try trading while intoxicated.
Matt-
You make a good point about testing support
a number of times. It’s the reverse of when
the market move up and tests resistance
several times…once it breaks thru lookout
on the up side…the same thing can happen here
but to the downside.
ENJOY your two martini lunch.
Sherry
I counted four times in the GE report statements like “+ Deflation accelerating”. They are expecting to benefit from imploding materials and input cost. Uh-oh. Do their supplier also see this as a ‘+’? Almost all reports I looked at so far point towards contraction and cost control. A strategy also known as “shrinking to greatness”. Looks like the govt will have to buy quite a lot of superfluous stuff to get the economy going again. The consumers won’t do it – look at the reported default rates. Would be interesting to compare these accross banks & GE.
Yerk-
I think GE is in trouble and would like
to go over their numbers.
When CNBC goes out of their way to
put a good face on GE, I think the
opposite is probably true.
Sherry
GE is in trouble – initially bid up, now tanking, reality setting in, its about 2009 forward and that doesn’t look good.
A tidbit from Robert McHugh:
The Commerce Department reported that New Home Construction plunged 15.5 percent in December, to an annualized rate of 550,000 for the entire nation! That is the lowest annualized starts figure since records were started in 1959. New Starts in 2008 (not the annualized December figure, but the actual total for the year) were the worst ever since records started. Ah, but help is on the way. Timothy Geithner, the next Treasury Secretary and head of the Internal Revenue Service, failed to pay his 2001 and 2002 taxes until days before the new Prez nominated him, the man who was co-author of the TARP $850 billion bailout plan that has yet to see one dime reach American households, in charge of the government’s fiscal efforts to revive this comatose economy. Good luck with that. Raise cash!
Discount between Mar 09 S&P 500 futures
and cash is increasing so far today.
Sherry
On the 60-minute IWM chart, there is a bullish falling wedge pattern over the past five days. However, it only appears when using closing prices. This may be a sign that the market will not fall further from here for now.
Money flow is mixed so far. A/D points
to a trend day right now.
SPX needs to test 804.30 and fail…
might kick in computer selling.
Sherry
10,000 block trades are buying right now.
Sherry
I finally learned to take some profits $81.0
@ Sherry, The computers will have plenty of company selling at $84
Nice trading newbie.
Buying pressure increasing. Looks
like institutions are putting basket
buys.
Sherry
Hey folks, the Tritton USB 2.0 video hookup works great. This allows an additional monitor to expand the desktop for a laptop or desktop. It doesn’t have a separate power supply, it uses the USB power (has to be USB 2.0).
The performance is better than expected. Good resolution and speed.
I got it at Newegg for $58 including shipping.
newbie-
CONGRATS!!! on your profits.
Sherry
Selling pressure peaked at the market open.
And then institutions put in basket buys
(probably suggested by the Govt.) The
question is…who wins the rest of the day…
institutions or the public???????????????
Sherry
hey george you scalp ice from 51-53?
K, I faded the gap on almost everything today!
Too quiet today… something’s up(?)
Everyone is working on paying their back taxes from 2001-2002.
i wanted to fade ICE and BAC’s gap but i was mobile had to go get registered for the advanced business communications class before more people jumped on it.
at least ICE isnt doing bad for me today. (the $64 position )
K;
Sorry you missed the ICE move – it’s still moving up on the 5 and 15, ready to hit a triple top. I’ve made ~$8 on it since yesterday – two more to go to hit my $10 mark although I wish it would do that in one day.
I’ve been using the TRIX on intraday charts. Has a lot of value. Similar to MACD except filters out more of the noise.
Where’s Charlie? I bet he’s doing that “work” thang again. lol
@ Matt, Sherry, Thanks, beating my desire for 7XX was more valuable than the profit
K;
My business communication = telling my broker to update the trading platform. Plus, no meetings except you you folks, which is a pleasure rather than a drudgery.
BTW, have I told UYG I LUV it today?
yeah i guess he is
(am thinking 56-58 possible 61 extreme 
)
i’ll miss chatting all day but oh well. and i think we’ll get $10 in ICE today
Hey newbie, is that a great feeling, or what?
I’m just sayin’
K, you’re doing the right thing by continuing your education. Top priority IMHO. You need something to fall back on to keep you busy after you make your millions in the market.
Hey, ICE is over that triple top. It hasn’t “cleared” it yet, but a nice move.
5 minute i got 56.50 as a top before it heads back to 54′s
FWIW I think the low is in for this move down. Time will tell!
george use bollinger band 100,3 and see what i mean in 5 minutes
it is the reason i got out at 55 on yesterday’s scalp
K, thanks, will do.
K, I don’t know how to use BBs, but it sure does look useful.
Thanks for the tip.
… and yet another up day for TNX while the market fiddles down – except for COMP.
The market has gapped down at the open for two days in a row now, and overcoming those gaps eats up a lot of buying power. It might seem crazy looking at a daily chart, but the market is nearing a fairly extreme overbought level. If we keep up this pace, at the end of the day the 3-day MA of the TRIN and TRINQ will be on sell signals. The last time the TRINs hit such a level was at the beginning of January, and you know what happened after that, right?
We have month-end mark-up next week where the big funds will try to levitate the market. So, while the market may not plunge just yet, I don’t think it’s a good idea to get too attached to long positions either.
While SPY formed a symmetrical triangle leading up to today, IWM did not because it made a lower low on Wednesday. Small caps are just as important as large caps to investor psychology, so it’s important that both agree with each other when it comes to patterns. In light of this, I’m going to start using the Wilshire 5000 index when evaluating the market as a whole. There seems to be several flavors of this index, but I think the correct one to use is the “Dow Jones Wilshire 5000 Composite Index” which is $WLSH on StockCharts.com and $DWC in TradeStation.
george i also use 100,2 for bb. its just a visual help for me if you use both at the same time you will begin seeing some nice correlations for the most part. like it it passes extremely above 100,3 that selloff is inevitable (although you can’t time when it will come.)
K, I like trying new things. ICE is getting a BB squeeze on 5min right now.
Matt-
You are right. A few are working overtime
to keep this market up. In the end (and
I don’t know when that will be) it will hurt
them big time. It’s like spending a $trillion
to keep a few afloat and getting $5 back.
Folks in D.C. think you can do that forever…
you can’t.
How did you enjoy your two martini lunch???
Sherry
Feels like a bull trap coming on.
Sherry,
I hear people quoting NeoWave, but have zero experience with it myself. Have you tried it, and if so, do you find it useful? TIA.
Junglegirl-
I’m trying NeoWave now…or should say
I studying it now. My Dad was a Wolfe
Wave trader…tried to turn me into one…
but it didn’t take. I’m currently a money
flow/tape trader. Thought I should learn
something new and am currently trying to
understand Neo Wave. NeoWave has a SPX
target of around 500 for this year.
Sherry
Sherry,
I think that you are right. A weekly close under 800 would be a huge blotch on the SPX’s chart that would convert many bulls into bears. They will avoid that for as long as they can.
The jobs reports come out on Friday’s of course, so perhaps the next one on February 6 will be the catalyst that finally wrecks the weekly chart.
Matt
Sherry – on Dr. Doom. Hard to argue with his track record but you’re really asking how and it’s not inside info. It’s comprehensive analysis. He has a great academic background (they don’t appoint members of the unwashed to the NYU faculty) combined with serious real-world experience (IMF staff) combined with a pragmatic approach to the real-world data that academic economists can’t model readily so neglect.
In a simplified nutshell economies cycle around a trend but most people just right now as forever and most of the academic work is static models. There is no good model of dynamics. Hence calling trends, patterns and turning points is beyond hard. If you want to poke into read Ellis, “Ahead of the Curve” and Lehman “Be Your Own Economist”. I stole Ellis’ stuff years ago and have been able to prognosticate well in advance of the headlines readily. Roubini is much better at this though congenitally pessimistic !
Cracks in market foundation are not getting
smaller. New 20 day lows currently outnumber
new 20 day highs by about 8:1.
Sherry
I just posted a chart showing the falling wedge pattern on the IWM.
I turned off the comments on that post so that we won’t have two different conversations going today.
dblwyo-
THANKS!!! for the insight into Roubini.
NYU does not hire off the street.
What do you think of GE”S numbers???
Sherry
SPX resistance at 839.
Sherry, thanks for the response. Let me know if you end up liking NeoWave.
Matt,
I can also get a descending triangle on IWM from Jan. 7 to today.
Of course, longer term patterns (like Matt’s) carry more weight.
I was a small part of that $83.9 resistance.
newbie,
So was I. BTW, your moniker is a misnomer. Your posts show wisdom, not naivete (sorry about no accent mark on the last e).
Junglegirl-
I suggest you go to neowave.com and
click on question of the week…go thru
the archive…it’s free…a lot of good
info.
Sherry
Sherry, thanks. I’ll do that.
realclearmarkets.com lists all of the financial
articles. My Dad’s hero Jim Rogers says
London is finished as a financial center…
the financial center will move East. Sell
the sterling…buy the dollar…don’t hold
profits too long.
Sherry
SPX consolidating here to go higher or lower after hitting resistance?
That’s on the 15min where SSO/SPX is consolidating.
newbie,
Nice SPY short at $83.9.
Matt
Is gold moving higher a sign on inflation or of distrust in the financial system?
newbie,
Inspired by you, Matt, K, and George, I shorted around the same time you did, and just dumped for a tidy little profit. A quick scalp, like George.
Hmmm, I thought the market would back off rather quickly here. It could be waiting on 3:30.
Yerk,
There is talk that the money coming out of bonds is going into gold, which is a good explanation as to why the rising TNX has not translated into a rising SPX.
Matt
Yerk,
Here’s your answer. http://www.decisionpoint.com/ChartSpotliteFiles/090109_gold.html
WTG, newbie. Nice.
Hi JG/Sherry
I tried the 2 week trial offer last year for NeoWave. I liked the service. He does a good job labelling and making things easy to understand and his accuracy has been good so far on most markets. Even though I could not afford to renew as a permanent subscriber, I would recommend you try the 2 week trial and see how it goes. Even though I cancelled after my trial, he still emails me emergency updates and market thoughts if he thinks the market is at a major turning point. Not often but I have recieved about 4 or 5 since i stopped the trial in late summer 08.
JO
junglegirl,
If I remember correctly, Newbie was one of those “201k” people last year, and has since made himself into a winning trader and has regained 401k status.
Matt
Matt,
Shall we shoot for 4010k status this year? LOL. Let’s do try for 801k, though.
Jo,
Thanks for the input.
“one of those “201k” people”: that’s funny.
been busy trading gold AND bonds (took short profits & shorting again at close today or Monday morning)
http://www.reuters.com/article/companyNewsAndPR/idUSN2253462820090122
Hi Jo-
My Dad had the NeoWave S&P trading service.
He plotted his Wolfe Wave targets against
Glenn’s. After Dad left I dropped the trading
service and kept the S&P forecast service
($19/month). I like lt…but want to know it
from the ground up. One trader I consult
with has the other services and likes them
…but I only trade the S&P 500 futures
and could care less where gold is going.
I think she told me Glenn was the number one
gold timer last year.
Sherry
Jim, Matt thanks for the reply – will read & digest
I think we are going through a period of rebalancing. Disconnects are pretty strong – dax today traded at a level like s&p 755… The bond move might still have something to do with the disbanding of year-end positions – betting on higher long-term rates means fighting the fed -, currencies rebalancing around GBP etc. The last magic bullets the bulls have will be fired at the vampires in the banking system. I’m getting nervous that so far nothing has happened (I don’t think anything will happen this weekend) and the system is not recovering.
Stimulous plans are tricky and backfire easily. Should be priced in more or less anyway. My lovely govt pays 2500 Euro if I dump a car older than 10 years and buy a new one. Lots of interest in new cars – but too bad the guys driving in 10 year old trashbins will not go for a new Daimler or BMW for 50K+. Looks like we are subsidising Korean or French manufacturers, hopefully GM and Ford get part of the pie… If people were rational they would realise the govt subsidy is less than the higher depreciation on the new car and keep the old car.
“By 1939 Roosevelt’s own Treasury secretary, Henry Morgenthau, had realized that the New Deal economic policies had failed. “We have tried spending money,” Morgenthau wrote in his diary. “We are spending more than we have ever spent before and it does not work. . . . After eight years of this Administration we have just as much unemployment as when we started. . . . And an enormous debt to boot!”
One difference to the 1930s is we are missing established ideological alternatives to the current system, should make the downswing pretty chaotic.
Hi Dave-
The 52 wk range for TNT was 35.51 to 75.
You are telling me that now is the time for me
to mortgage the house and put all of the
money into TNT…was trading in 40′s
last time I checked.
Sherry
Broad double bottom on SDS 1min coming up.
If SDS crashes below this double bottom, we get green on the DOW.
remember all that stuff about just want “return of principle” ? Well, bond buyers have lost more in principle in two day periods than they would have gotten in interest for an entire year; calculations are worse from top of bonds. They’ve lost several yrs of “interest return”.
It’s holding, so no green. Too many traders selling out.
dave, that’s some bad and sad stuff.
Sherry, have you purchased the EW textbook Glen published years ago? Apprently, he says that anyone who wants to learn his wave method should study that book since it is considered the hybrid/NeoWave textbook for that purpose.
JO
George,
The market turned up at 3:30pm, just like you thought. Nice call.
Matt
Hi Dave-
Keep in mind that the FED thinks you
should pay them to hold your money.
Sherry
Hi Jo-
I have not purchased his book.
I’ve been going thru the question of
the week archive on his site. And
if I go thru it often enough I hope
to gain some insight into NeoWave…
it sort of reminds me of Wolfe Wave…
using wave structure to forecast
future waves.
Sherry
many lemmings have been only too glad to use the Fed as a safety deposit box.
TLT has dropped 12-13% from the top. Anyone buying high quality bonds the past several yrs was lucky to get 3-4% yield. Do the math.
They HAVE to hold the bonds to maturity or eat a loss.
It’s similar to folks who have to stay in bad marriages because they can’t afford to sell the house. There’s plenty of that along with people abandoning pets along with foreclosures. Your local ASPCA or Humane Society will verify that.
Futures flopped at the bell and closed at 823.50, so that’s a little bearish hint for Monday.
Matt-
Several folks at Traders-Talk are calling for
a low on Monday…based on the moon.
I’m not into the moon thing and don’t
have a clue as to wheter thay are right
or not…but I do enjoy reading what
other traders are thinking.
Sherry
Sherry,
There was this family vacationing in Yellowstone. One of the little boys asked the father if that was a full moon on their first night. The father said “I don’t know. We’re not from around here.”