Red Dragon Leo

On Friday I overlooked the 60 minute chart, which threw the Black Monday off by a day (that’s assuming it falls hard tomorrow, as I’m expecting it too?).  Yes, it did go down today, but the larger down day should be tomorrow.  It took most of the morning for the 60 minute chart to rise back up and then start to roll back over to the down side.

This formed our minor wave 2 up, inside larger/intermediate wave 3 down.  For tomorrow we have the Monthly, Weekly, Daily, 60 Minute, and 15 Minute charts ALL Point Down!  If this market doesn’t sell off at least 200 points on the Dow… I’d be shocked!  I’m really expecting a 300-400 point sell off… a Black Tuesday instead!  I should have seen that on Friday, but I review so much material that I just missed it.  Arrrggh!

So, I got in a little early, but I’ll still profit handsomely as the next move down occurs.   Here’s a chart of where we are now, and what I’m expecting…

It looks like we just completed minor wave 2 up, inside larger/intermediate wave 3, and are ready to start going down hard tomorrow.  While it is possible that minor wave 2 up isn’t done yet, as it could make an ABC move up to 1080 or so, I don’t believe it will.

The only thing that could delay the move down is that the market could be waiting for the job’s number on Thursday.  But, I really doubt that they are going to rally up into Thursday number’s.  Instead, they fear bad numbers, so they would sell off before hand.

The charts are saying that we have a 300-400 point drop tomorrow, but I don’t like to call out number’s… only that the odds of a big down day is quite high.  Doing the charts, and looking at the wave count, it goes like this…

• We are most likely in Primary Wave 3 down with 1150 being the final high from the March, 2009 low of 666.
• We are also in Major Wave 1 down from the 1150 high, and it should end at the fore-casted low around 980 this week.  (This assumes that Major Wave 1 will only have 3 intermediate wave in it, not 5 waves… which it could have?).
• We are still in intermediate wave 3 that started at 1105 and should again complete around 980 (that’s a forecast-ed projection level, and it could be wrong?)
• Finally, we just completed Minor Wave 2 up, inside intermediate wave 3 down… or we are still in Minor Wave 2 up, and it’s going to make an ABC move up to 1080.  NOT Likely, but possible.  If so, then we will have to defy gravity and roll the 60 minute, and 15 minutes charts back up quickly tomorrow morning.  I don’t see it happening.

So, from looking at the charts, counting EW’s, finding support and resistance levels, and tracking the MACD’s on all the charts… they all point to a large down day tomorrow!  Could it be “Black Tuesday”, instead of Monday?  Possible I guess?

Let’s look for news that can cause the event to happen.  MobyDoc just posted this link on my weekend post.  It’s talks of another terrorist attack on the 11th, or something bad?  When the market reads this news, are they going to rally until Thursday to see if it happens, or sell like a bat outta hell before they get caught long?  I think you know the answer to that…

http://www.foxnews.com/story/0,2933,585143,00.html?test=latestnews

http://english.aljazeera.net/news/middleeast/2010/02/20102905431956447.html

I’ve spoken about the “False Flag” events on my weekend post…. in the comment sections.  I’m going to post a video here for you to watch.  It’s a long video, but well worth your time…. as we don’t have a lot left.  I know that some of you might find it hard to believe in Aliens and stuff… but it’s all real, and what happens affect the stock market.

There is now hundred of ships off the coast of Yeman.  They are from every nation in the world that has a Navy.  What are they doing there you ask?  There is a Huge Stargate (yes, like on the TV show) under the sea that is opening and the world elite is worried about it, and are most likely trying to stop it.  Supposedly it is going to render all the world’s weapons worthless, and not able to work anymore.

Of course the world elite don’t want that to happen as that would make everyone in the world equal, and they couldn’t use us as their personal slaves anymore.  No more money needed, as the world goes through a positive transformation.  This is a good thing… for everyone who is honest and good, but a bad thing for the evil people who run the planet.

We are about to go through a wonderful transformation on, or around December 21st, 2012.  Call it Heaven for us good people, and Hell for those bad people.  Your religion isn’t important, only what kind of person you really are “on the inside” is what’s really important.

So, how do you keep the people away from the Gulf of Aden, (which is right off the coast of Yeman)… you stage another terrorist attack, which are better known as “False Flags”. Read this…

http://www.reuters.com/article/idUSTRE6173II20100208

It keeps every one away while you all work to stop the Stargate from opening, or try to control it some how?  What they don’t understand, is that the ending story was already written in the Bible… and the good guys win, the crooked banksters, gangsters, thugs, Illuminati, or whatever you what to call them… LOSE!

Of course they need to pay for the next staged war that we are going into, and how do you do that?  Crash the stock market of course.  Still think I’m nuts?  Again, when is a conspiracy NOT a conspiracy?  When it’s true of course…

Here’s on more interesting video for you… (by the way Goldman Sachs and the Carlyle group are co-owners of Kinder Morgan)

Are you starting to put the pieces together yet?

Red

Wall Street is Coming under attack!  Job losses, fake earnings, corporations defaulting on debt, bailout’s for the rich, housing markets underwater… all spell a CRASH Coming!  After all, how else can you paid off your debt… just wipe them out instead…”That’s How”!

If you think that this is just another 10% correction, and that it’s now over… you’re dead wrong!  It hasn’t even started yet!  Want the evidence?  I’ll direct you to the 3 charts below (found on Shanky’s Charts… link on my Blogroll)…

Daily Chart

Weekly Chart

Monthly Chart

So, could Monday be a “Black Monday”?  I don’t know?  But the rest of the week isn’t looking good.  Wherever we peak on Monday (1070-1080… or maybe we already completed minor wave 2 up?), the selling to come after that will be huge.  It will be a minor wave 3 inside a larger wave 3… both inside Primary wave 3 (or C).  It’s going to be scary from here on out.  At some point there will be “Panic Selling”… and I might not even want to make a daily post during those times?

Although I didn’t create this bubble, I really don’t want to be the center of an attention.  As a matter of fact, I never created this blog to gain a following… only to post my thoughts.  I don’t use any type of marketing or even any other type of blog optimization technique’s.  I really don’t want any traffic to the site.  But apparently I have quite a few people reading it daily… that don’t comment (which is fine).

I’m just looking to make enough money to retire on, and then relax and enjoy life a little.  So, if my daily posts become weekly posts… you’ll know why.  (Not saying that I’ll stop posting… only that I might take some time off at some point).

Moving on…

Here’s what I see for next week… Monday should have the continuation of minor wave 2 up, inside of larger wave 3 down.  When that ends, probably by midday Monday (but it could go into Tuesday?), the minor wave 3 down inside of larger wave 3 down will start.  I think we will bounce on the 200dma (daily chart) around 1020, and come back up for minor wave 4 (still inside larger wave 3 down), and have another push down later in the week for minor wave 5 down (possible target… the 50ma on the weekly charts, about 980).

Remember, the 1000 level is important to the bulls, and a break of it would have the bears jumping on the short side faster then you can blink an eye!  Then once all the bulls have sold out and the bears are on the short side… Bam!  …here come the buy programs to rally us back up for Larger Wave 4!  How high?  I don’t know?  But, it will probably be in line with option expiration on the 19th.

That’s what I’d do if I were them

Red

P.S.  Keep in mind folks… nothing is written in stone.  This is only a forecast of the possible moves coming.  If the government comes into the market again, with a “Stimulus Package Number Two”… it all changes.  But for now, I believe they won’t do that.  Not until the banks get done unloading their shares (a few months?).  Then they will come to the rescue again.

“Lather, Rinse… and Repeat”

Look out for next week… we’re about to start a large wave 3 move down!  Destination… Unknown?  Monday is an “iffy” day, as we are now in a smaller wave 2 up inside of a larger wave 3 down.  So, it might not rollover until Tuesday, (but I created the image above just in case it does… as I thought it was cool looking).  I’ll have more on my weekend update, but for now we bears might have to endure a small amount of pain while the tape pushes up to 1080 or so Monday morning.

That’s about as high as I can possibly see it getting.  Honestly though… I don’t think it will even come close.  We very well could drop Monday afternoon and not stop until we hit 1020 or so.  I waited all day for a chance to get in short and the tape looked so weak that I didn’t think I’d have a chance to.  So, I got in around 1pm and the rally in the afternoon (unexpected… of course) put me a little in the negative on the position.

But, I’d already planned to hold it until OPX if necessary.  It’s a 106/101 SPY put spread.  That means I bought the 106 and sold the 101.  When we hit the 102 area (not “IF”, but “WHEN”), I’ll get out and wait for a bounce to occur.  About 102.50 is where the 200dma is on the daily charts.  That should give the market a couple of days of a bounce, before more selling happens.  We could hit that level Monday if people start to panic in the afternoon?  Who knows?  It should be there before the week ends though… so don’t panic!  Stay short!  We have lots more downside to come.

As for the bounce from the 102 area, I don’t know yet if I’ll play it back up or not, as it’s too dangerous to go long right now.  I might take a small position, or just wait for it to peak and go short again.  We’ll see when will cross that road.

Red

P.S. I know that it might seem like you have missed the big move and it’s going to rally back on you… well stop thinking like that and relax!  The Monthly, Weekly, and Daily chart’s are all rolling over.  Were going down to the low 900’s… before the March expiration most likely.  Hang tight, the drop hasn’t started yet!

Holy Cow!  Did Wall Street hit the panic button today?  They sure fooled me on this one, as I didn’t see such a huge sell off coming so soon.  I was stuck sitting in cash on this move.  Bummer!  This changes the game plan completely of course.  Yes, the turn date for Monday or Tuesday is still valid, but it looks like it started early.

If you are all ready short… stay!  If this caught you by surprise like it did me… pray for a bounce!  I was looking for a little bit of selling today, but mainly a flat day before one final move higher.  But, at least I wasn’t long the market… man that would be painful.

Ok, moving on…

I see 2 different possibilities for tomorrow.  One is… A little more selling in the morning as the late-comers’ sell on the news.  Then the big boys should step up and rally the rest of the day.  I don’t mean a big rally by any means… only a small up to close the day positive.Two is… The numbers tomorrow isn’t as bad as the market thought (government gets out their erasers), and we gap up a little and rally early on, and sell off into the afternoon.  Either way, I’m looking to get short.  The consolidation area that formed today was in the 107.25-107.50 spy level.  That will be hard to go through, and I might go short there?  The next level of resistance is around 108.30-108.35, as should be about as high as I can see the market getting.  I’ll definitely be going short there.

Either way it plays out, this would produce a smaller wave 2 up inside a larger wave 3 down.  That means that Monday (or possibly Tuesday) would have a smaller wave 3 inside a larger wave 3 coming!

If that happens… look out below!  We are going down hard and fast!  Wave 3’s are the most powerful waves and when you have one wave 3 inside another wave 3… you’ve got a hurricane coming!  Now understand that we might not get a bounce tomorrow?  You know how they kept all the bears (and late bulls) from going long during the rally from last March.  It was almost straight up with no pullbacks to go long on.

Well, don’t you think they will do the same thing on the way down?  Of course they will!  Any bounces are going to be small and won’t last long.  I’d be shocked to see a 38.2% retrace from today’s sell off.  I think we’ll be lucky to get 23.2%.

Regardless of how high the bounce is (if there is one?) I’ll go short tomorrow into next week.  I really expect it to be ugly.  All of next week should be down, with very little chances of getting short again.  We are rolling down on the daily charts now, the weekly charts, and the monthly charts.  It’s not looking good for the bulls.  We will have some bounces along the way, but I’m expecting selling into March.

What I’m doing is simple… I getting short tomorrow on any bounce higher (with those targets mentioned above in mind).  Whether it coming in the morning, (which is possible), or in the evening, I’ll be getting short and holding through all of next week, and maybe into option expiration?  It depends on how fast it falls and the key support levels it hits.  When it hits heavy support, I’ll go to cash, wait for the bounce, and re-enter short for a continued fall into March.

Some of you might want to ride it out, but I swing trade and will be getting in and out when support levels are tagged.  This huge down day certainly has come as a big surprise to me, and to many others too.  That’s exactly how they like to play it… catch everyone off guard!

Good Luck Everyone…

Red

The market went basically flat today, closing slightly lower.  This was the consolidation day that I was looking for yesterday.  So, I was off a day… nobody’s perfect I guess.  Regardless, I’m looking for the swing trade play, and I’m just sitting in cash for now.

I think tomorrow could be another consolidation day, just like today.  Slightly up or down, but no big move yet.  Everyone seems to be waiting on the jobs numbers on Friday.  I think it will fool everyone and be viewed as positive… which will push the market higher again.

I’m really looking for a move to 112.00 spy or better.  I’d love for it to reach 113.00, which was the major lower level of support during the 2 week battle between the bulls and bears, while inside a sideways channel.  The 115.14 was the high, and the low was just a hair above 113.00 (spy).

The ideal plan to happen is for the market to pullback a little tomorrow and then rally one more time on the fake jobs numbers Friday, as you know the government is going to lie again.  Let’s just hope they do a good job of it this time.

Here a chart of what I’m looking for…

The trades you decide to take shouldn’t be based on what I’m taking.  I’m very confident of this wave 3 down coming, and that’s why my risk tolerance is high.  Buying short term February puts could make you a ton of money or you could lose it all too?  My indicators tell me it’s going to fall, so I’ll be taking higher risks.  Choose wisely….

Red

Look out bears, the bulls are back!  NOT!  I don’t believe that for one minute.  This is simply the larger wave 2 up that follows the wave 1.  We are still on track for larger wave 3 to start down next Monday or Tuesday.  I was wrong about today being a flat consolidation day, as the bulls just kept on charging.  That’s fine with me as I’m not short anything right now.  (Still in my USO long though).

I can’t really see tomorrow continuing to rally without a pause day, but it could.  A slight pullback, and then another move higher on Thursday or Friday is the logical thing to do… but who’s says the market is logical?  Regardless, I swing trade, so I’m just waiting for the short term indicators to start too rollover again.

I’m still thinking that they will surprise everyone on the job’s numbers Friday.  Of course I could be wrong, and they start to sell off after they are released, but my gut tells me that every trader already knows that the numbers are horrible.  With low expectations like that, it wouldn’t be too hard to beat them.  Plus, they have a habit of tricking the bears a lot too.  Never under estimate the government.  They will fool you every time.

So hang tight everyone… our time is close now!

Red

P.S. I’ll be buying straight puts on the SPY on Friday or Monday.  It depends on how high we go, as to which strike price I’m going to buy.  I’ll be looking to buy February puts, as the move down should fall into this coming expiration on the 19th.  Everyones’ risk tolerance is different (mine is quite high), but I’m looking for a strike price that is “out of the money” by about 2 points from the high.

So, for example… if we hit 112.00 on the spy by Friday, then I’ll be buying the 110.00 strike price.  If we are lucky enough to hit 114.00, then I’ll be buying the 112.00 strike price.  Remember, I’m looking for about a 100 point move down before option expiration.  That’s a 10 point move on the SPY.  That’s a HUGE move folks!  You could make 5 times your money in a 2 week period… or you could lose it all?  It all depends on what the market does, and I believe it’s going to crash.  What do you believe?

Sorry for the late post today folks.  The market went up as expected, and should continue throughout the week.  Tomorrow should be a consolation day, before another move higher.  Again, I’m staying long my USO calls until Friday or the 38 level.

I don’t know how high the market will reach by Friday, but the 1120 area isn’t out of of the question.  Regardless of where it is, I’ll be going short on Friday, as it could start the larger wave 3 down on the following Monday.  Now keep in mind that Monday could go up a little and the down move wouldn’t come until Tuesday the 9th.  That’s my actual projected turn date… but, it might come early, and I don’t want to miss it.

I would rather ride out a little pain to the upside on Monday, then to see Monday crash and I’m not short yet.  Anyway, I’m tired, and haven’t had a chance to do anything today.  I got home really late and now I’m posting late.  So, I’ll end here.  Just stay patient, as the big one is coming soon!

Red

What a wonderful time it is to be a bear!  The market just keep on selling into Friday, closing around 1071, surprising even me.  I said in last weeks post that I believed we would pierce the 1080 level intraday to trick the bears into believing the level has broken, and pierce did we ever!  We went straight through it, and continued on down to a low of 1071.59, which probably had the bears jumping up and down thinking the next level is 1030-1040 area.

Not so fast Mr. Bear (I am one… by the way).  Every down move will have a bounce back up from time to time… and that’s exactly what I’m looking for next week.  A rally back up to at least 1100, or maybe as high as 1120 is overdue, and should occur next week.

Looking back at the chart I posted on last weeks “Weekend Update“, I see that it played out fairly well.  I was off on the 1080 level holding, but other then that… it’s pretty accurate.  I believe the breaking of 1080 is a bear trap, as it requires 2 days below the level to confirm the break, which would allow the market to fall to the next level around 1030-1040 (I don’t see that happening).

Last Weeks’ Chart….

So, looking ahead to Monday, I believe we might have a gap down in the morning, followed by a rally up to close the day positive.  If the gap down doesn’t occur, then it might just rally up and sell off a little in the evening… but I still expect a positive (or flat) close on Monday.  I don’t think it will close down big again, like Friday.  It should be a flat to up day, for the market to consolidate before a move higher to 1100-1120 by Friday the 5th, (or Monday the 8th at the latest), as the finally high before wave 3 down starts.

To be on the safe side, I will most likely be going short on Friday the 5th, not Monday, as I don’t want to miss out if it crashes Monday instead of Tuesday.  Since the first larger wave 1 down from 1150 to 1071 is 79 points, wave 3 down should be well over a 100 points before it’s finished.  Whatever you do… don’t go long on anything!  No dip buying, only ”sell the rips”!  You will get killed if you go long in this market once larger wave 3 starts!

This Weeks’ Updated Chart…

Once the larger wave 2 up is finished by next Friday (or Monday), you should get short and stay short until options expiration on Friday the 19th.  This larger wave 3 is probably going to last until then (or longer).  This second cut through of 1080, on the down move from whatever high we reach this Friday, should pierce it quickly and not look back.  The first decent bounce level is at 1030, and should cause a pause day to occur, before the selling continues.

Once it breaks… hold on to your hat Nellie, as this is going to be one hell’uva ride down!  The 1000 level should also be heavily protected by the bulls, but when it breaks… look out!  We’re going to 910-920!  This is a rare opportunity to make a ton of cash as this thing falls.  I will be holding on for dear life, as it’s going to be scary as hell!

Best of luck to all of you…

Red

Is the selling every going to stop?  Yes… at least for a short while I believe.  I’ll make this brief, as I’ll do more research and post it on my weekend update.  I believe that we may gap down on Monday and rally back to close positive, or simply open up positive, sell off a little and rally back to close positive.

Either way, I think Monday will close positive or flat.  I think this move below the major support level at 1080 is to trap shorts.  I still see next week as a positive week, most likely creating our larger wave 2 as I posted on last weeks’ Weekend Post.

I’ve said throughout the week on different blogs with my comments that it should go back up to 112.00 area.  Since the sell off went so low, I’m not sure if it will make it that high?  Maybe, but 110 is more likely now.  We’ll see.  But for now, I’m still long on the USO, and don’t have any shorts right now.  I’ll reload next Friday most likely in anticipation of wave 3 down coming the following week.

Red

Gap UP, then Sell off hard… back up, down, up, and down!  Whew… what a day!  We did go lower intra-day to tag the 107.91 spy level, which should complete the 5 wave move down, of the larger wave 1 down.  It was possible that yesterday’s 1083 was the end, but it turned out to go lower today to 1079… which hit the lower channel perfectly.

Are we finished with the larger wave 1 now?  I’m not sure yet… but we’re close.  I could see another little push down tomorrow morning, and then a move back up to close around flat.  Then a move up all next week, just as forecasted on my weekend update.  I think that the support will hold this week around 1080, and the traders will calm down over the weekend and start buying again next week.

How high we go is unknown, but the ideal place would be 112.00 spy by the end of next week.  I did not go long on the SPY as I don’t trust the up move next week.  We could just go sideways next week, and either end the week flat or only up a couple of points.  It not worth the risk for only 1-2 points on the SPY.  So, I decided to go long on the USO, buying the 35 call for $1.60 today.  I’m looking for a move to around 38 by the end of next week.

So, for tomorrow… I don’t expect much more selling.  A flat day is my forecast.  Then a small retracement rally all next week.  It’s risky right now to go long on anything… but I think I’ll be fine with the oil trade.  I just wouldn’t touch the spy right now, as it’s in good support now which could break or bounce?  It’s safer to sit and wait for now.

Red