Red Dragon Leo

The market keeps on grinding it’s way higher, as all the bears are gone (or dead), and the bulls aren’t selling yet.  When will they dump the market?  When the last retail trader boards the bull train I guess?  Could we go higher?  Yes, of course we can.  Wouldn’t it be poetic to top out at 116.66 spy, just like we bottomed at 666 spx.  Games people play… you got to love the irony.

Here’s something that’s funny.  Notice in the chart below that we actually bottomed out at 104.58 the same day the 20ma (blue line) crossed down over the 50ma (red line).  Now we are about to see the 20ma cross back above the 50ma… which is considered bullish, just like the cross down was bearish.  Yet, it seems to be too late when it crosses, as the down move was over by then.  Will the up move met the same fate?

Of course I don’t know the answer, but it seems too me that all this light volume slow grind higher, is designed to wear everyone out.  Let me tell you… it’s working!  I’m worn out with all this crap.  And, I’m tired of writing about doom and gloom too.

I’d write about something positive if I could find some, but all the news on the economy is still bad. Cisco is coming out with a router that’s supposed too be 12 times faster then standard routers.  Now that’s exciting news!  Maybe I should go long on the stock now?  Yeah, and I’ll long on BIDU too!  This market is so overbought that it looks like a 1,000 pound fat man.  How long can this last?  Not too much longer, as the damn is cracking.

Notice how the dollar was down today and so was gold.  Why?  Don’t they usually trade the opposite direction of each other?  Yes, they do.  But, gold is a safety play too.  And when the people think that the market is safe now, and that they can make more money in stocks, they will sell gold and buy stocks… regardless of what the dollar is doing.  Now that tells me that we are so close to a top, that it’s not even funny.

Add the large VIX buy on Monday, with the large sell block of Goldman on Tuesday, and today’s gold action… and you have many clues that the top is in, or just a hair away from it.  Is it the final top?  I doubt it, but it should be good for a nice 5-10% correction before moving higher.  After that we could go up and tag the 50ma on the weekly chart.  Summer time is slow in the market, and that’s when I’d expect a move up to that level… if it happens?

Ok, that all I can think of to say.  I’d complain some more about Goldman or how the market is extremely manipulated, but it wouldn’t do any good.  Plus, Goldman isn’t doing anything right now.  It’s all the little retail traders that are pushing it up one dollar at a time.  And since the bears are all hibernating (or dead), the only way the market is going to fall is if the institutional bulls decide to dump their longs.  That’s really what we are waiting for now. We need to see the first one sell, and then the others will join in too.

Unfortunately, we need some more bad news… really bad news, to get the selling started.  It would be easy to start a fight between all the big boys if we were in school.  We could just start a rumor about each of the baddest boys, and tell each of them that the other one said it.  They would all turn on each other, and the fighting would begin.  I remember girl’s that used too do that all the time.  They did it to make the boys jealous.  Too funny it was, (and many year’s ago).  If life were only that simple today…

Red

P.S.  Just for you Bear’s out there…

Another light day as the market rose up slowly to reach 114.99… just shy of a double top at 115.14 (spy).  Will they get there, or will they start a sell off from this level?  Seems to obvious too me that everyone and their brother is waiting to sell their longs at 115.14, and go short… which is why it’s unlikely too happen.

I think we will either start the selling from this level, or pierce through the top about another .50 cents to 1.00 (5-10 points SPX).  It makes perfect sense when you think about it.  If you sell at this level, the retail traders will be stuck in their longs, still waiting for the double top to get out.  They will also miss the chance to go short.

If on the other hand, the big institutions decide to take it to a double top, and allow the longs to get out and go short, I suspect that they will squeeze those new shorts by rallying higher to 116.00 or so.  Then, they will sell off the market… after the retail trader bails on his shorts and go long again.  Trapped again… that’s how the big boys play the game.

So, tomorrow could either rally on through the 115.14 level, to put in a higher top (and then sell off), or just start selling off tomorrow.  We really need some news event to come out, so they can have something to blame it on.

Yesterday there was a large block of 3 million shares bought on the VIX, and today another large block (1.5 million) of shares sold on Goldman Sachs.  Someone knows something… that’s for sure!  Since Goldman basically “is the market”, the large sell order there is something worth paying attention too.  If they had an average price of $170 per share, that’s $255 Million Dollars worth in one 10 minute period.

Combine that news with the VIX buy on Monday, and I think it’s clear which direction they plan on taking the market.  When is the real question?  Will it happen tomorrow, or will they wait for the jobs info on Thursday or Friday?  I don’t know, but the pressure is building up… that’s for sure.

Do they have enough steam left for a quick head fake to 116.00 area, before the selling starts, or will it be from today’s 114.99 high?  We’ll see tomorrow I guess…

Red

Is it over?  Is it finally over?  I mean the slaughtering of the bears last week of course.  Not quite yet, as the bulls are just too close to 1150 to stop now.  It would shock me if they didn’t push up a little more and put in a double top.  After that, well that another story…

It should be quite obvious to everyone by now that the big institutions haven’t been buying or selling while this light volume market floats up to the clouds everyday.  Why?  Because they already bought at the low last February the 5th.  They are now waiting for a final top to be put in before they unload again… to the unsuspecting public of course.

Look at this chart below (from Cobra’s website) that shows where all the gaps are on the way up from that 104.58 spy low.  (He drew rectangle boxes to point them out).   Notice that there were also gaps on the way down from 115 to 104, and that all of those gaps have now been filled… except for one.  That area between 114.50 and the 115.14 high still hasn’t been filled.  That’s why the market will continue up on Monday or Tuesday most likely, and fill that gap.

In the chart above, note that the closing price on January the 29th was 107.39 spy.  Remember that I was able to catch a fake print on February the 17th, showing 107.38 as the low of that print.  Odd huh?  Is that where we are heading next?  Or possibly a newer fake print I caught today (March 6th, 2010) of 105.47 spy.  Something is weird here.

Maybe that print was always there, and I just missed it?  I don’t know?  It’s an old print now, as the date is from December 14th, 2009.  Here’s another one when I go back 6 months on the chart (I only went back 3 months in the chart above).

The low on November 18th, 2009 was 103.78 spy (that’s the fake print number, not the real low for the day).  Again, maybe these prints were already there, and maybe they don’t mean anything.  But, you should still keep those numbers in the back of your mind, as the previous major fake print of 1047.28 SPX did play out as the market dropped to 1044.50 just a month later on February the 5th, 2010.  Of course it pierced the fake print level a little, but the hard reversal back up… with very large volume, was a clear sign that the fake print was accurate.

Back to next week…

What will cause a sell off to happen, you ask?  How about some more bad news too be realized, so that the media will have something to blame the sell off on.  The big institutions are going to start unloading those shares soon.  When is still unknown?  Since they haven’t participated in buying on the way up, it’s unlikely that they will start buying now, so that the market can push though the double top resistance and start a new bull rally.

I guess it’s possible, but highly unlikely at this point.  They have had plenty of bad news released in the last month to give them a reason to sell and take profits.  I think we are going down to the 104 level for a double bottom.  The 200dma is about there now, and probably will be at 104 by the time we get back down there.

How fast it gets there is really based on what level they want to close the SPY on by option expiration.  I’m not sure if they will take one week, two weeks, or the rest of the month?  Regardless, once they take it down to the level that have targeted (I’m only forecasting the double bottom area.  It could only go down to put in a higher low), I do believe it will bounce back hard.

From that point… I don’t know?  Will the possible double bottom put in a solid support and allow a rally to go up and break the 1150 top?  Or, will we only bounce to some Fib level, and then fall back again… taking out the 104 level on that trip?

The weekly chart still hasn’t had a cross back down on the moving averages.  The 20ma is still above the 40ma, which tells me that the trend is still up.  Also, the MACD is still putting in lower Histogram bars and they are still smaller, and rising to the zero mark.  Will they cross and and go positive, putting in a lower tower then from the March 2009 area?

That will really depend on how much money the Fed’s decide to pump back into the market.  Right now, they are trying to pull back the quantitative easing.   The average Joe trader doesn’t have any money to put in this market, as they are probably trying to draw unemployment right now.  The crooked banks aren’t going to use their stolen profits to pump the market up more.  So, that leaves the government.

At this point, the government is getting a lot of heat from other governments around the world, about the massive printing of the dollar.  That of course devalues it, and since other countries hold dollar denominated notes of some kind, they stand to lose billions as the dollar goes down.

Which leads me to believe that the government can’t afford to put too much more money into the market.  That will put a topside limit on how high the market can go during the summer months.  How high you ask?  I can’t answer that, as the top could already be in, or more stimulus money could push it up higher to 1300 or higher?  The 200 week moving average is at 1227.67 today, and then there is the peak in May of 2008 around 1320 area.  That would be the next level of resistance.  It’s too hard too tell right now.

My personal feeling is that they will go down to sideways throughout the summer, not taking out the 1150 high, but not totally crashing below 900 either.  Then later this year, a big sell off.  The in-between area from Spring to Summer could go either way?

Ok, enough of the longer term picture…

Let’s move on to next week.  Since there will probably be a ton of people waiting to go short at 1150, I don’t think it will happen.  Instead, I see two possibly scenario’s.  One, we go just shy of 1150, maybe to gap window on the 60 minute chart… which is about 114.50 spy, just a hair above where we closed on Friday.  Then the sell off starts, not allowing the retail trader to get in on a short position.  Or two, we go up to the 1150 level and pierce it by going a little higher.  Anyone who went short would get squeezed, which would be the fuel needed to push up another 10 points or so.

Either way, a sell off is likely to occur afterwards.  I really don’t see the market getting through the double top, as a lot of bears are going to jump on at that level.  I think they will continue adding short positions on any pierce of that level too.  With that much selling pressure, and institutions wanting out of their long positions too, where is the money going to come from to rally higher?  Will Goldman buy at 1150?  I think not…

Most likely Goldman will be selling on every touch of 115, providing even more resistance to the unsuspecting retail bulls.  We could trade flat for a few days, bouncing up to 115, and down to 112.50 while the big boys unload their shares.  The problem with that idea is that they have very large positions, and when they really decide to sell their shares, the market will sell off hard.

However, it won’t be the bears pushing the market down, it will be the big institutional bulls.  So, I can see some light at the end of the tunnel now, as I believe this bull train is coming to a stop.  Get your boarding tickets out bears, and be ready to climb aboard.  Next stop… Dark Territory.

Red

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Update for Monday…

No point making a special post for Monday as this was about the flattest day of trading I’ve seen in a long time, and nothing has changed.  The volume was the lowest all year, with only 106 million shares traded on the SPY.  Since Monday’s are usually the most bullish day of the week, and the spy only moved up .01 cents, not making a double top as many people expected… I’d say that’s pretty bearish.

A big move is coming… up or down, who knows?  I suspect down, but the market seems to fool me every time I say that.  So, I’ll only forecast a big move  (I’ve ate enough crow to fill my belly for many weeks).

Red

Friday Update…

We got our POP, now let’s see if we get our drop over the next couple of weeks?  More on the weekend update.  Enjoy your weekend, as it seems the snow is starting to go away and warmer weather is coming back.  (Just be sure you show up to work for at least one hour per week, if it snows again… that way you will still be counted as employed, as far as the government numbers go).

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I’m looking for a pop and drop tomorrow, as the market needs to shake out the last bear standing.  Some better then expected, or not really so bad, jobs report should just do the trick.  Let’s rally up to the 113.00-113.50 spy level, and close that 1127 spx gap, and be done with this stupid bull manipulated rally.  I’m over it!  Get it done, so the fun can begin!

Once the selling starts, I don’t see another rally like this until we tag the 200mda… which should be at about 104 (spy) by now.  That would also be a double bottom.  It might take a few weeks to get there, but I fully expect a sell off to start next week.

That’s it… no long drawn out post tonight.  Just a call for a top to be put in tomorrow, and then a sell off through all of next week.  That’s what my crystal ball tells me, and that’s what I’m expecting to happen.  Of course if I’m wrong, I’ll just eat some more crow.  I’m actually getting used too eating crow, and it doesn’t taste too bad anymore. (LOL)

Red  :-)

The dollar sold off today pretty nicely, but the market didn’t rally by the same proportion.  Does this mean that the dollar and the market are finally starting to disconnect?  I not going to say that, but it does tell me that the selling of the dollar isn’t causing the market to rally as much as it used too.

That’s a clear indication that the market is exhausted, and ready to roll over.  Look at the selling in the afternoon when the dollar was still flat (after selling off in hard in the first hour of the day), and look at the market. You will notice that the dollar never really moved much the rest of the day, but the market sold off.

Even with the light volume that the market has had recently, it is barely able to stay positive today.  Meanwhile, the Nasdaq and the Dow actually closed lower.  However, I do believe it will go up to that 1127 level first, before any selling is going to happen.  That gap needs closed, and who knows if the market will ever get back this close to it or not?

Of course after a 10-20%, we could rally back up in the summer and make new highs… as anything is possible when you can print all the money you want, and fudge any economic reports.  But, that might not happen, as this market could continue down for the next few years.

Or, they really can stop “the great depression two” from happening… and I think I saw a pig fly by my window!  Never mind, that was just a dream… just like the government’s plan to save the economy.  The only thing I see them saving is their retirement accounts, as they are making sure those get inflated by lobbyist donations before they leave office to go to work for Goldman Sachs.

Anyway, I’m drifting off subject, as I don’t know what to tell you about tomorrow?  Probably another choppy day ending flat to down, while we wait for Friday’s job’s data.  That should produce a sell off if they are really bad.  Of course you can’t really expect the government to release bad numbers, as they are quite easy to fudge (aka… Lie!).  On the other hand… what if they want the market to sell off, as they are already positioned short.  Just food for thought.

Red

What do Black Candles on a chart mean?  Look at the chart below, and you tell me.  Look at what happened after each black candle occurred.  I can only find one time that a black candle occurred and the market continued in the same direction the next day.  That was the first week of November.  Notice that a black candle occurred after an up day, and the next day continued up too.  Other then that, every black candle produced a move in the opposite direction the next day.

So, does that mean the top is finally in now?  Maybe?  Or maybe we just pull back for one day and then rally some more on Thursday and Friday.  There is some heavy resistance at 113.00-113.50 spy, and that might be the finally high, before a nice sell off.  Or, today could have been the high?  I think it’s all about the ADP numbers out tomorrow morning.

And since they already released some rumors that the numbers aren’t good, in an attempt to lower the market expectations, I think we are nearing an end of the crack driven rally these bulls have been on.  A turn is coming soon… if not tomorrow, then Thursday or Friday should produce a final top, and begin some selling.  Nothing goes up forever… not even bulls with unlimited funds.

Red

And here is a special song for the bulls (aka Johnny), entitled “Shooting Star” (Black Candle)…

Well, it comes as no surprise that today up again.  After all, every Monday is now bullish… a new rule created by the people who control the market.  Of course we all know who that is… but I won’t rant on them in this paragraph, I’ll save it for another.

Did you notice that the dollar barely sold off any today?  With a strong dollar, and the market and the dollar still being on opposite sides of the coin, you would think that the market would have been held back from rallying… but the extremely light volume (147 million) allowed the market to float higher (despite the flat dollar).

It seems quite clear that the big institutions aren’t selling or buying right now.  They are simply sitting on the sidelines and waiting for the retail traders to push it up to the magic level before they dump their stocks.  What is that magic level?  I don’t know?  It could go back up to the 1150 area for a double top, before selling off.

Since all the bears are broke, and the institutions aren’t selling, the only person left in the game is the retail bulls.  They will continue to buy, pushing up this market, until the big boys want to dump it on them.  If the retails get weak, the buy programs will come back in and bait the retails into buying some more.  Almost like a horse on a race track, with a carrot dangling just out of reach, in front of his nose.

Of course the bears can’t even be found in this picture, as they are horses that have broken, bruised, or worn out body parts, locked up in the stall… trying to mend their injuries.  That’s me of course… beaten, bruised, not quite broken yet, but trying hang on and get ready for next race.

So, what about tomorrow you ask?  I think we are going higher.  Yes, I know… why am I bullish now?  I’m not… but the charts are looking bullish too me.  I like being a bear, but the market is looking more and more bullish everyday now, and as much as I’d like to see a nice sell off, I think we have to go higher first.

Looking at the 60 minute chart below, I see that the RSI is now 66.63, which means that there is now “2 buys to every 1 sell” in the market.  Or 33 sellers to every 66 buyers.  That’s a bullish sign on the 60 minute chart.  Notice also that the positive DI line is now on top, which means we are in a bullish mode.  The ADX line is still quite low, which means that there isn’t much strength in this bullish mode.  But, as long as the market still has light volume, they can push it higher… at least for the short term.

Now, looking at the daily chart below, you can see that the RSI is only at 57.45… which means that it leaning bullish, but still could go either way.  The ADX line is now under 20, which tells me that a big move is coming soon, as it should curl back up and giving a lot of strength to whichever line is on top.  I believe that will be the negative DI line, as whichever one gets on top should stay there for a few weeks… and I don’t see the bulls rallying up for another month.

The monthly and weekly charts don’t support a rally up to 1250-1300, which is where we should head if the positive DI line is on top when the ADX line starts to rally up (on the daily chart).  Those charts don’t turn on a dime folks.  That’s why I don’t see this month closing higher.  Just look at that ADX line on the daily chart above, and notice how long the line spent above the mid-point level of 25.  I count about 4 weeks… which is about what I’d expect to happen again, once it breaks above that level.

So again, we could go up a little more tomorrow, as they control this market until big volume comes back in.  When will that happen?  Probably this Wednesday through Friday, as the economic news shouldn’t be viewed too positively, but no one except those “on the inside” can really answer that question.

Red

I see no point in trying to forecast intraday, or even daily moves in this extremely manipulated stock market.  So, I’m going to focus on the weekly instead.  Let’s look at the weekly chart below…

We are clearly forming a nice bear flag on it, as we have now completed 3 weeks of a down move, and 3 weeks of an up to sideways move.  Notice that last week was basically flat (down a little), putting in a bearish hammer candle.  If this bear flag plays out, then we should head down to the 104 spy double bottom area by the end of next week.

I suspect that the jobs numbers will be really bad this week, and will be blamed for the sell off coming.  But that doesn’t come until later in the week.  So just remember, most Monday’s are bullish, and I’ve rarely seen a big down day on Monday.  That doesn’t mean it won’t happen, only that it’s not likely.  If Monday does push up a little more, then I think the target will be the 112.00-112.50 area, as it’s provided great resistance in the past, and should continue to do so.

If that gets broken, then we are heading for a double top at 1115 spx.  I really don’t see that happening with all the news out next week.  The bulls seem to be just about done now, as it’s going to be extremely hard to push up very much further.  From the Monthly to Weekly charts putting huge downward pressure on the market, to the seasonality of March, and multiple turn dates coming up… it’s not looking good for the bulls.

But… and this is a big butt, the bulls still have GOD on there side!  Yes, Goldman Sachs (aka God… at least in their sick minds) still has your money, and your children’s money, and your children’s children’s money too use to buy up the worthless stocks in this doomed market.  (Personally, I thought God was a giving and caring person… not a THIEF!  That tells me they are doing the Devil’s work… not God’s).

Anyway, that simply means that NO about of Technical Analysis I do is going to be accurate with all the free money still manipulating the system.  If you have unlimited funds to keep the market up, then no about of selling will ever stick.  Anna seems to think that we won’t get any significant downside until Obama pushes his worthless Heathcare system through.  That very well could be right?

Remember this… from the creation of the stock market, until the present, there has always been manipulation in the system.  However, the control that they have had, was limited by the amount of cash they had to work with.  When the PPT (Plunge Protection Team, created by Ronald Regan after the 1987 crash… which was originally designed to simply prevent further crashes, not manipulate the market) was created, the crooks seen that as an opportunity to have free funds from the government, instead of using just their own.

In the beginning, the amount of funding to the PPT was not nearly enough to fully control the market with the normal volume that occurs throughout the year.  But with light volume during holiday’s and certain times of the year, the PPT soon discovered that they could fully control the market and push it in whichever direction they wanted.

Then along came March 6th, 2009… which forced Obama to turn the money flow on full blast, giving unlimited funds to the PPT (aka Goldman Sachs).  Their humble leader Lloyd Blankfein (aka GOD), does just what any good crook would do… buy up his own stock, almost tripling it in value over the next year.  Then, pay himself and other bankster pals huge bonuses with all the money that he had stolen from the unsuspecting American public.

What does all this mean?  Simple really… it means that you can’t really use TA’s anymore to forecast the possible direction with any kind of real accuracy.  I do believe that technical analysis still works on most individual stocks and some commodities… but not the overall market right now.

If it sounds like I’m bitching and complaining again… you’re right, I am!  What good does it do to study charts, learn Elliottwave, Technical Analysis, Fibonacci Retracement levels, Astrology, Gann or Bradley turn dates, and any other forecasting method, if none of them work anymore.

I’ve always known that trading was very difficult, and not very easy to become successful at.  I’ve been through the “school of hard knocks”, and I’ve put in my time in studying and learning the techniques that are available t0o be learned.  Obviously, the “real techniques” and secrets are buried inside Goldman Sachs, as I can’t find anyone else who can figure out where this market is going next… can you?

Red

NO POST FRIDAY… NOTHING CHANGED!

NEXT POST SUNDAY NIGHT.

This is How I feel… Clueless!

More bears were shook out the tree today as buy programs come to the bulls rescue once again.  Yes folks, we should have tanked again today, but the crooks at Goldman and the Government stopped the sell off with their computer program algorithm machines.

It’s just another way of shaking more shorts out of their positions.  You sell off one day, get the bears to go short at the low, rally back up the rest of the day to squeeze them out.  Then sell off again the next day, get a second round of bears to go short at the low, and rally back up again… squeezing once again.  Is tomorrow is the third time?  Or, will it sell off for real this time?  I doubt it.  If it sells off tomorrow, I’d expect at least one more rally back up to shake the last bear out the tree.

Then, release some bad news over the weekend and gap down on Monday with no bears in the market.  Wouldn’t that be UN-expected?  When is the last time you seen a negative Monday?  It’s been too long to remember, so I’m certainly not going to predict that “this time will be different”, and Monday will be a big down day.  I don’t have a clue as to what will happen on Monday.

I can say that by all Technical Analysis, we should sell off again… but you know that’s not going to happen as long as Goldman runs the country.  On an even funnier note… Goldman is now to be investigated over the Greece issue.  And guess who they want to investigate them?  You guessed it… Ben Bernanke!  Yes folks, it’s time to appoint Al Capone as lead investigator into Mob Crime.  (ROFLMAO).

What a fraking joke?  Just line them all up and give me a high powered rifle.  I’ll put an end to it… once and for all!  That’s about the stupidest thing I’ve read today.  When will Americans wake up and go hang these crooks?  Let’s get a lynch gang, find the tallest tree, tie some electric cable too it, and hang and fry ‘em at the same time!

Anyway…

I’ve been around a lot lately, as I haven’t been working for the last few weeks.  As most of you know, I try… and the key word there is “try”, to swing trade, not day trade.  But, that’s been almost impossible lately with all the huge intraday moves back and forth.  Luckily, I’ve been around to save my bad trades (some of them at least).  But, next week, I’m back to work, and will be dropping in less as I get too busy to chat all day.  (But, feel free to continue chatting without me, as I post everyday on this blog for you guys and gals… and also as an outlet to “air out” my frustrations).

Now, as for tomorrow… well, most Friday’s are flat to up, with light volume as the traders leave early for the weekend.  That means we could drift up a little all day and end up closing flat.  Of course I posted yesterday that I thought today would be flat to up… and was dead wrong, so don’t expect Friday’s forecast too be any more accurate.  I guess I was right on the fact that we ended about flat for the day, but the way off on the intraday swings.

If I do start getting every call accurate, then you can assume that I just got a new job at Goldman Sachs… as they are the only ones’ that know where this market is going tomorrow.  Don’t worry though, I’ve bad mouthed them enough that they would never hire me anyway.

From a technical point of view (not that technicals actually work anymore), I’ll refer you to this chart by Cobra.  As you can see, today we had what is normally called a Hollow Reversal Candle.  In this case, it would be called a Bullish Reversal Candle… but, as Cobra points out, we are too close to the top, to reverse back up.  That means it could go either direction.

Hollow Reversal Candles work pretty well when they are at a top, or bottom… but not in the middle of a trend move.  You will also notice in the chart that we are still below the 50 dma, which is currently still holding the bulls back.  Unfortunately, the 20 dma also stopped the bears on today’s move down.

So, that leaves us with no clue about tomorrow… except the fake print at the close today, that showed the 109.20 spy area as a possible target for any sell off tomorrow.  But, it doesn’t have too go there tomorrow… it could be Monday, or never?  They have been quite accurate lately, but you never know when they will decide to stop it.

Anyway, I did take a small short position around 110.40, with a 109/104 put spread.  If we go down to that 109 area again tomorrow, I will close them out, as I’m not holding over the weekend into Bullish Monday (and that will of course be the day they gap down huge on, as that’s just my luck).

Red

Some wild swings in the morning, and then some sideways chop until the close…  but we’re still in the rising channel on the 60 minute chart below.  I didn’t think the move down yesterday was going to stick, as the volume was just too light.  The 1092 level that held yesterday, will move up tomorrow to about 1097 on the lower trend line on the rising channel.  Will it hold again tomorrow?  As long as the volume stays low, then the answer is most likely YES.

Today’s volume was only about 175 million on the SPY.  That’s just too light for any sell off to happen.  The markets are still being held up for now.  My feeling on tomorrow is that they already know that the Initial Claims and Continuing Claims numbers are worst then expected.  So, how do you keep the market from selling off huge on the numbers?  You release other bad news like the Consumer Confidence numbers, and New Home Sales 2 days ahead of that.

The expectations will be lowered in the minds of the traders, so when the numbers are released, it won’t have as big an impact.  Smart crooks, these Fed’s are…  You have to give them credit for that.

Next, what I would do is to rally the dollar over night, then sell it hard at 8:30 am when the Claims numbers are released.  That should keep the market from selling off too hard.  Crooked isn’t it?  Of course it is… but a year ago only 1 out 20 people asked would say that the market is manipulated.  Now, I’d bet 1 out 2 would say it is…

Clearly, without the stimulus money, the market would probably be below the March 6th, 2009 low by now.  All this manipulating is really going to hurt the economy long term.  It’s like they are slowly pulling the bandaid off from the big cut or sore on your body… pulling one hair at a time.  It would be a whole lot less painful to just jerk it off quickly and be done with it.  Sheesh… every parent knows that.

But, I guess we don’t have adults running the government… we have children.  They cry when things don’t go their way, throw temper tantrums, and fight among each other.  Yep… sounds like to children too me!

Move on…

Looking at the chart above again, I’d say we could chop a little higher until the end of the week, as the MACD is rising up into positive territory, and the ADX line is still pointing down.  The ADX could bottom on Friday or Monday, and then start to curl back up, giving strength and momentum to whichever DI line is on top.  My thoughts are that the negative DI line will start to rise at that time, and nice little sell off would occur.

This will line up nicely with the weekly chart putting in a nice bear flag too.  Just keep in mind that during light volume periods, the market rarely sells off.  It usually goes up, or sideways.  So, I’m looking for the ADX to find a bottom and start to turn back up while the spy is also hitting major resistance level.

Those levels are 111.50 spy (about 1110-1112 spx), and the best level is 112.00-112.50 spy (about 1115-1120 spx).  I would love to see 112.00-112.50 by the close on Friday, as that would be an ideal place to go short over the weekend with a put spread.  It may not happen though, as that target might not be hit until the usually bullish Monday next week… but, what if Monday starts a nice sell off?  Would that catch the bears by surprise?

Hmmm, bear flag on the weekly charts, major resistance at 112.00 area, February closes out positive, new month to start next week, and maybe some bad news released over the weekend?  That sounds like the perfect setup to fool a lot of bears… and bulls too!  Will it happen?  Who knows?  I’m just throwing it out there for you to decide.

Red