Archive for February, 2010
Weekend Update…
Feb 6th
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”
Black Monday?
Feb 5th
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!
Did Someone Press The Panic Button?
Feb 4th
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
Waiting For The Jobs Numbers…
Feb 3rd
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
The Bulls Are Running Again…
Feb 2nd
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?
