Weekend Update…

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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...

The-Chart-Pattern-Trader-spy-weekly-chart-02-28-2010

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.

lloyd-blankfein-testifing-god's-work

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

429 COMMENTS

  1. Yes Red, it's frustrating but it can't last forever. In the meantime I guess maybe it would be better to stand on the sidelines.

  2. Red,

    Nice Post. I believe the government considers stock market upside to be a national security issue. Preservation of the nation, and all that.

    They will do what they think is best. I need to hitch a ride with them.

    • I wish I could believe that, but if that were true, then they would simply Bankrupt about 5-6 big banks, and shut down the Federal Reserve. That would put so much money back into the system that we'd all feel rich.

  3. have you watched the move “Capitalism, a love story”? I don't think the God is on the capitalism bull's side..

  4. SPY 60 Min Chart
    http://www.flickr.com/photos/47091634@N04/43975

    I haven't been around since last thursday. We got our successful backtest of max support on the 60 min. The opening level to watch on the SPY is @ 111.00 as you'll notice the brick wall sitting there on the 60 min chart.

    On friday the high of day on the $SPX was 1107.24 which also happened to coincide with a gap fill @ 1107.03.

    Open $SPX gaps
    1109.52
    1127.38

    If your a long term bear your patience is going to be tested for another month. I'll post some monthly charts later.

  5. Carl just now;

    March S&P E-mini Futures: Today's range estimate is 1103-1116. The 1130 level is the short term target and I expect the market to reach 1200 over the next three months.

    Note:
    1103-1116 Todays estimate
    1095-1110 Fridays estimate
    1106 right now

    Owns one unit of /ES since last Friday

      • Yeah, Carl is an optimist.

        I haven't watched him long enough to see if he remains bullish during large market tumbles, or if he tends to see them coming.

        • His archives are all there, if you want to look. My opinion on Carl is that if the underlying trend is bullish, he's really good. He did see things start to fall apart, and was within 10 SPX points of the nailing the February bottom, and nailed the trend change day correctly. My recollection is that he got clobbered by the relentless parade of bad news in fall 2008. He does occasionally short the market, too.

      • Lots of reasons to like Carl here.

        He does get hurt when bad news strikes, but seems to bounce back.

    • update 4:01
      Operators closed IWM right on the red line in the above chart, to the penny @ 64.24.

      Daily algos are net neutral with the close, an opening above 64.24 will trigger a whole new round of buying

  6. for those looking for a monthly trend/direction for the month of march

    $SPX/SPY currently has a bullish setup with no bearish offset given the close below SPX 1115.10

    Past monthly setups that we are in currently in during the month of march:
    11/2003
    12/2004
    11/2006
    5/2007
    10/2007

      • HI Dread, I am getting killed in TZA at cost of 10.62. I am considering adding but will wait for the BB.

        • Yeouch! Here's a thought you might consider. Instead of buying large amounts of TZA and holding (which is what I assume you are doing) think about this:

          What is the maximum amount of $$$ you are willing to lose on this trade?

          Use that $$$ (or $$$$ or maybe $$$$$ if you're totally loaded) and buy calls on TZA / puts on TNA / puts on IWM (depending on your tolerance for leverage). Wait until we get a close of $RUT above the BB, buy at the end of the day, sell in one or two days. Or if you're stubborn like I can be, wait until either the options become profitable or opex makes them worthless. Either way, the maximum you have lost is what you committed to up front. And it will be a smaller %age of your overall trading capital.

  7. Carl at days end:

    1103-1116 Todays estimate range for /ES
    1004.25-1115.50 Todays actual range
    Today stayed in Carls range, but within a point or so.

    Carl owns one unit of /ES at 1098.50 since last Friday
    It's up 16 at the moment.

    All in all a good day for Carl. Grade: A

  8. TNA gapped up and closed up 6.3%.

    Today was day one of the Full Moon Trade, which favors TNA.
    After one day, this trade is up 5.3%. (Not up 6.3% as the buy was not at the closing price.)

    Volume today for TNA was a bit higher than normal for these past 11 days.

    $RVX (VIX for $RUT) closed 2.8% lower, favoring TNA.

    TNA has been up 12 of the past 14 days.

    Ultimate Oscillator for TNA peaked at 78 six trading days ago and has generally fallen since then but has remained above 50 and is currently 68. Indicating continued strength for TNA.

    However, TNA today closed 5% higher than that day with the peak Ultimate Oscillator value. A higher close with a lower Ultimate Oscillator value might be seen as negative divergence indicating that TNA is due to fall.

    Bollinger Bands for $RVX (VIX for $RUT): today’s red candle moved closed to the lower Bollinger band, but that lower band dropped today, indicating that $RVX could continue to drop tomorrow, favorable for TNA.

    Bollinger Bands for $RUT: $RUT rose to near the upper Bollinger Band, but that upper band rose today, indicating that $RUT could rise again tomorrow, favoring TNA.

    http://www.americanbulls.com had TNA as a BUY on Feb 9th, and a possible sell today if TNA had dropped. With the big gain in TNA today, TNA remains a hold for tomorrow.

    Overall, it looks like TNA broke out above an area of congestion and is likely to continue rising tomorrow.

    • The divergence you are referring to might be a sign that TNA is in the last wave of this move up. If it continues to play out, the divergences will get pretty apparent.

      Looking at $RUT, I see either 3 waves up (this would be the 3rd) or 5 waves up (this would be 5). It would make sense if this is the 5th wave and apparent divergences show up. I'm not an EW guy by any means, though.

      I also expect TNA to go up. Watch closely to see if IWM/$RUT respect the upper BB (they should). I think there will be a tradeable move coming soon.

  9. http://www.americanbulls.com reports for today:

    TNA: possible sell from last Friday is not confirmed. TNA is a hold for tomorrow. (I figured this much)

    TZA: todays candlestick is a (wait for it, wait for it) Black Opening Marubozu !

    Frankly, I think they made this one up. None the less, they claim the possible buy from last Friday is not a dead issue.

    They claim tomorrow could see either a continuation (more down side for TZA) or a reversal (up side for TZA). A white candle for TZA tomorrow would be a buy signal.

  10. Chart of IWM:

    http://www.screencast.com/users/dreadwin/folder

    For this recent rally over the last few weeks, IWM has set higher prices, but today we saw an interesting divergence. The Slow STO did not set a new high, but price did. I'm no EW guy, but I think that means “wave 5” (i.e. last of the upthrust) is upon us. Anyway, I'm not hung up on that.

    The November fractal makes a possible reappearance. If so, we saw the high of the week today. New highs over the next few days takes it off the table. One thing is different: In Nov. the bollinger bands were headed “down”, while today they are headed “up”. I think this was due to the notion that a weaker dollar is better for DOW, and a stronger dollar is better for $RUT.

    Why did I choose IWM instead of $RUT? (go on, ask me). Okay, here's why: Intra-day price squiggles seem keyed off of IWM instead of $RUT. For example, the closing price on Thursday was right on IWM's 50 day MA (where as on $RUT it was well above). This was a bear trap — people who analyzed $RUT based on just IWM might think “it barely closed above 50 day support that's so bearish!” whereas $RUT was clearly above the 50. Always good to check both to look for fake moves.

    What if…?

    What if $RUT is going to set a new 52 week high? We are less than 2% away, maybe 1% and some change. What will that do to bearish sentiment? Bears will (reasonably) wonder if maybe they jumped the gun on shorting. Quants and HFTs will try to pump the other indexes to new highs. What if $RUT makes a new high but others do not confirm? I don't know what that means but that's why I've stayed on the sidelines. Take a few minutes and adjust your trading plan accordingly.

  11. His archives are all there, if you want to look. My opinion on Carl is that if the underlying trend is bullish, he's really good. He did see things start to fall apart, and was within 10 SPX points of the nailing the February bottom, and nailed the trend change day correctly. My recollection is that he got clobbered by the relentless parade of bad news in fall 2008. He does occasionally short the market, too.

  12. HI Dread, I am getting killed in TZA at cost of 10.62. I am considering adding but will wait for the BB.

  13. Yeouch! Here's a thought you might consider. Instead of buying large amounts of TZA and holding (which is what I assume you are doing) think about this:

    What is the maximum amount of $$$ you are willing to lose on this trade?

    Use that $$$ (or $$$$ or maybe $$$$$ if you're totally loaded) and buy calls on TZA / puts on TNA / puts on IWM (depending on your tolerance for leverage). Wait until we get a close of $RUT above the BB, buy at the end of the day, sell in one or two days. Or if you're stubborn like I can be, wait until either the options become profitable or opex makes them worthless. Either way, the maximum you have lost is what you committed to up front. And it will be a smaller %age of your overall trading capital.

  14. For all the gyrations, we're (still) in a 20 point SPX trading range, right? Not much profit opportunity for either side, I think. Unless you're really good, and I'm probably not that good. Remember my $RVX trendline chart?

    http://www.screencast.com/users/dreadwin/folder

    We're still on the trendline. Hopefully when I update it, I'll spell things better 🙂 My prediction for tomorrow is more sideways. There will be a chart later. Probably.

  15. Dreadwin,

    I'm not exactly down 1%.

    I was underwater at the time when I sold my TZA a week ago. Now I have much of it back 43 cents cheaper.

    I lost track of my cost basis. If anything, I have the luxury of being nervous 🙂

  16. update 4:01
    Operators closed IWM right on the red line in the above chart, to the penny @ 64.24.

    Daily algos are net neutral with the close, an opening above 64.24 will trigger a whole new round of buying

  17. Carl at days end:

    1103-1116 Todays estimate range for /ES
    1004.25-1115.50 Todays actual range
    Today stayed in Carls range, but within a point or so.

    Carl owns one unit of /ES at 1098.50 since last Friday
    It's up 16 at the moment.

    All in all a good day for Carl. Grade: A

  18. TNA gapped up and closed up 6.3%.

    Today was day one of the Full Moon Trade, which favors TNA.
    After one day, this trade is up 5.3%. (Not up 6.3% as the buy was not at the closing price.)

    Volume today for TNA was a bit higher than normal for these past 11 days.

    $RVX (VIX for $RUT) closed 2.8% lower, favoring TNA.

    TNA has been up 12 of the past 14 days.

    Ultimate Oscillator for TNA peaked at 78 six trading days ago and has generally fallen since then but has remained above 50 and is currently 68. Indicating continued strength for TNA.

    However, TNA today closed 5% higher than that day with the peak Ultimate Oscillator value. A higher close with a lower Ultimate Oscillator value might be seen as negative divergence indicating that TNA is due to fall.

    Bollinger Bands for $RVX (VIX for $RUT): today’s red candle moved closed to the lower Bollinger band, but that lower band dropped today, indicating that $RVX could continue to drop tomorrow, favorable for TNA.

    Bollinger Bands for $RUT: $RUT rose to near the upper Bollinger Band, but that upper band rose today, indicating that $RUT could rise again tomorrow, favoring TNA.

    http://www.americanbulls.com had TNA as a BUY on Feb 9th, and a possible sell today if TNA had dropped. With the big gain in TNA today, TNA remains a hold for tomorrow.

    Overall, it looks like TNA broke out above an area of congestion and is likely to continue rising tomorrow.

  19. The divergence you are referring to might be a sign that TNA is in the last wave of this move up. If it continues to play out, the divergences will get pretty apparent.

    Looking at $RUT, I see either 3 waves up (this would be the 3rd) or 5 waves up (this would be 5). It would make sense if this is the 5th wave and apparent divergences show up. I'm not an EW guy by any means, though.

    I also expect TNA to go up. Watch closely to see if IWM/$RUT respect the upper BB (they should). I think there will be a tradeable move coming soon.

  20. http://www.americanbulls.com reports for today:

    TNA: possible sell from last Friday is not confirmed. TNA is a hold for tomorrow. (I figured this much)

    TZA: todays candlestick is a (wait for it, wait for it) Black Opening Marubozu !

    Frankly, I think they made this one up. None the less, they claim the possible buy from last Friday is not a dead issue.

    They claim tomorrow could see either a continuation (more down side for TZA) or a reversal (up side for TZA). A white candle for TZA tomorrow would be a buy signal.

  21. Chart of IWM:

    http://www.screencast.com/users/dreadwin/folder

    For this recent rally over the last few weeks, IWM has set higher prices, but today we saw an interesting divergence. The Slow STO did not set a new high, but price did. I'm no EW guy, but I think that means “wave 5” (i.e. last of the upthrust) is upon us. Anyway, I'm not hung up on that.

    The November fractal makes a possible reappearance. If so, we saw the high of the week today. New highs over the next few days takes it off the table. One thing is different: In Nov. the bollinger bands were headed “down”, while today they are headed “up”. I think this was due to the notion that a weaker dollar is better for DOW, and a stronger dollar is better for $RUT.

    Why did I choose IWM instead of $RUT? (go on, ask me). Okay, here's why: Intra-day price squiggles seem keyed off of IWM instead of $RUT. For example, the closing price on Thursday was right on IWM's 50 day MA (where as on $RUT it was well above). This was a bear trap — people who analyzed $RUT based on just IWM might think “it barely closed above 50 day support that's so bearish!” whereas $RUT was clearly above the 50. Always good to check both to look for fake moves.

    What if…?

    What if $RUT is going to set a new 52 week high? We are less than 2% away, maybe 1% and some change. What will that do to bearish sentiment? Bears will (reasonably) wonder if maybe they jumped the gun on shorting. Quants and HFTs will try to pump the other indexes to new highs. What if $RUT makes a new high but others do not confirm? I don't know what that means but that's why I've stayed on the sidelines. Take a few minutes and adjust your trading plan accordingly.

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