Is The Dam Overflowing?

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1081

damn

Signs are clearly pointing to a top being in within a few days at most.  The high today of 118.17 could very well be it?  The Dam is overflowing now and will soon explode, as the water of worry will spillover into the happy little town of the bulls below.

When that happens, you will see a stampede of bulls as they run for the exits... but fortunately the bears can swim.  The news out today wasn't actually bad, and some of it was good... at least on the earnings of some companies.  That sparked the early gap up and rally, as some good earnings and a small relief of debt worries of Greece eased fears.

But, it was short lived as the dollar didn't sell off as expected when Germany said it would help Greece out as a last resort.  That scared those bulls who went long before the open.  They were expecting the usual sell off in the dollar to occur, as Bernanke and gang are so punctual in doing it all the time.

It scared them I believe, and so the bulls sold off hard into to close.  Of course that doesn't necessarily mean that tomorrow will bring more selling, as Friday's are rarely bearish.  Another flat day with light volume is more likely.  If however, we do get a close below today's close... then Monday should bring some selling.

That channel must be broken first of course, and it could happen tomorrow?  I would be shocked if it did though, as this market has been so heavily control the last year that a failure tomorrow could indicate that they are losing that control... and that would be really bad for the market.

I would like for it to be another controlled sell off to either the 1115 spx area, or preferably to the 107 spy area where those fake prints are.  Then a slow grind higher in the summer months to form a nice rounded top on the market, with a really large sell off in the fall.

It's really what I expect to happen... which means it won't occur of course.  Hold on... let me call my friends at Goldman Sachs.  Opps... I don't have any friends there.  Well I guess we'll just have to play it day by day, and not worry about next month, or year.

So, for tomorrow I expect the market to remain in the channel.  If it doesn't by some odd reason, and it closes below the channel, then we will need another conforming close below it on Monday before I'd be comfortable saying "the bear is back".  Remember, Monday's are almost always bullish... so don't fall into a bear trap on Friday.

What we need is a large down day with large volume.  We barely went over 200 million shares today on the spy.  I'd like to see 300 million, as that's a clear sign that the big institutions are selling... which means they plan on taking it down further.  That's when I'll believe that "the bear is back"

Regardless of whether it happens tomorrow or not... we are close, as the dam is hemorrhaging now.

Red

68 COMMENTS

  1. $SPX is going to print 1178.60
    $VIX 16.90
    XLF 16.21

    the $DJI has an interesting setup on the daily with it's containment pts.
    http://www.flickr.com/photos/47091634@N04/44639

    it's been rejected by it's red containment pt. 2 straight days
    yesterday the red line was @ 10,842.07 & the $DJI closed @ 10,841.21

    the next containment pt. is @ ~11,024

    • A pierce above 11k to lure in more retail bulls, and kill the last bear makes perfect sense. Maybe a flat to slightly up day today, and one more bullish Monday to hit those targets…

    • Well, if we close higher than the DJIA containment point, there is no reason that the operators won't continue to take it to the next level higher and the next level after that. Indicators no longer seem to be working.

      • bull markets wear people out, bear markets scare people out

        the TA enthusiasts are experiencing the bermuda triangle effect as their handy dandy oscillators have gone hay wire

        the EWavers are in their 100th different count

        the cycle gurus are chasing their tail trying to figure out why their 5,6,7,8,9,10,11,12,13,14,15,16,17,18,19,20 day cycles are not working

        mass confusion is one of many ingredients for the perfect storm

        • I wasn't trading on my own (or rather holding endlessly) during the last tops and bottoms so I don't know what it feels like so I'll trust you.

        • I think TA stopping working so accurately when it became too widely available on the internet and with computer charting programs.

          Not to say that it stopped working completely, but it seems to go in and out of sync.

          • Red,

            Don't forget all the government sponsored buying when the indicators point down. That really defeats TA, and everything else as well.

          • There is a solution. Just takes balls of steel. When all the indicators point down and it's clear, not some secret wacky theory we all have, but clear to God and everybody that we are going down, buy.

            Don't tell anyone you did it, so you won't be branded an idiot. But get long. Because we are going up.

  2. Carl’s morning call:

    June S&P E-mini Futures: Today's range estimate is 1156 – 1169. I think another day or two of trading sideways or a bit downward is likely here. But I also think a strong move upward will begin next week. The ES should reach 1200 in April on its way to 1225 or so.

    1160.25 -1176.50 actual yesterday (16.25 points)
    1158.25 – 1168.25 last night's range (10 points)
    1156-1169 estimate for today (13 points)
    1164.25 currently, so estimate is -8.25 to +4.75 from here (bearish)

  3. We are in a short term topping process. Expected decline is -2% to -10% over the coming weeks. A strong rally seldom ends with an accute reversal, unless it is produced by external events. Topping process is typically a prolonged process.

    Money flowing out since yesterday noon. Bears don't get despaired.

    P.S. This is just a minor top. Don't bet the farm on front month options. If we get a -200 dow day, that signals the end of it, not the beginning.

    • SC, do you put much credence in the notion of “window dressing”? It has been said that today is the last day to make sure that transactions show up in “quarterly reports”.

      • Yes it is a common practice. It is not a pleasant thing to have to explain to your clients why you are still owning a piece of junk in their portfolio. Clients don't ask you questions about stocks that have done well. They grill you on the losers. Bad enough that it has gone down. Worse yet to have to explain why you are holding it. If you get rid of it, then it isnt your fault. You can always say the stock is crap b/c the management is crooked or something bad has happened to their business prospect, which of course = “it is not my damn fault”. If you keep holding onto it, then your ass is on the chopping block. The clients are smarty asses who think they know soooo much when they really don't know jack when it comes to investing, but try to act that way and love to pick bones with you b/c they are PAYING you, and they think you dont deserve it, or they are institution clients whose consultants are always trying to justify their pay by finding fault with YOUR work. Plus, you dont get paid more by sticking your neck out. So screw it, sell the losers.

      • those that are long term bullish better hope the market sells off from here

        those that are long term bearish better hope the market continues it's uni-directional move

        sounds backwards, but it's what the odds say

        April is going to be a very very volatile month

          • I would really like to see a high next wednesday for AAPL as the AAPLPi ritual comes next thursday

    • Selling some of my positions now then. Seems like we still have quite a bit of room to the upside. I can re-enter later. We should have had a decent sell of today already based on indicators so there isn't much more downside room left, IMO.

      • The decline hasn't even gotten started in full force yet. Nothing to be alarmed for any bearish position today. Back and forth rocking is typical at turning point.

        Nothing has changed today. Short term correction warning is still in full force. If anything, the warning has gotten stronger today.

        If it makes you feel any better, I bought TZA today. 🙂

        Sell to close short positions after we have a -200 dow day. Praise Buddha, Allah, Jesus and Odin! lol

        • You are right SC. Just sort of in panic mode at the moment. I didn't sell. The McClellan is really reliable – based on it, we should have seen more downward movement today. I have to look at where it is when it updates at 5:00PM. For the bear short term pull back to happen, the market basically has to go down on Monday. So if it doesn't I will have to reassess.

          • There is nothing sacred about Monday, except that this one has a high probability of having a big move. The McClellan oscillators for both NYSE and NASDAQ registered very small change today. Let it be a down move and sets off a much anticipated avalanche.. 😀 It is past due for one.

          • No need for panic, Monica. My systems are detecting topping signs now. We may chop around for a few sessions or Monday would mark the beginning of a nice slide, if the Goddess Fortuna smiles upon us.

    • the operators had the $SPX @ 1166.6 @4:01 then knocked it down a penny to 1166.59 @ 4:03

      the SUN sacrifice is 7 days away, Pi ritual is 6 days away

      I'll never forget last years Pi ritual, they ramped the XLF 15% on the Thursday

  4. Carl at day’s end:

    1156-1169 estimate for today (13 points)
    1156.50 -1169.75 actual today (13.25 points)
    Nailed it.

    Trades:
    No trades today

    Grade B

  5. TZA opened down 1.1%. Gap was filled. TZA was up 1.4% at the high, and closed up 0.1%.

    We are in a New Moon Trade, which favors TZA.
    After eight days, this trade is down 2.3%, and owns TZA over night.

    Volume for TZA was fairly high overall, and the 2nd highest volume for an up day in 35 days. Good for TZA.

    $RVX (VIX for $RUT) was up 6% two days in a row but closed down 0.9% today with TZA up 0.1%. Very mild divergence.

    TZA has now been up 3 days in a row. Good for TZA.

    The low for TZA yesterday was $6.70, the lowest TZA price ever. The low today was $6.94, 3.4% above that low. Good for TZA.

    Ultimate Oscillator for TZA bottomed at 20 twenty four trading days ago and has generally risen since then but has remained below 50 for twenty two days and finally broke above 50 yesterday and added 2 points today. Indicating the end of weakness for TZA. Really good for TZA.

    MACD on the monthly chart crossed over upwards two days ago and is moving up. This last happened 2 months ago. Rather fantastic for TZA.

    Bollinger Bands for $RVX (VIX for $RUT): today’s doji candle closed at the Top Bollinger Band. MACD has crossed from below and is rising. Looks like $RVX will be falling. The last time $RVX closed above the Top Bollinger Band (like what happened yesterday), $RUT fell for 10 days. Good for TZA.

    Bollinger Bands for $RUT: The doji candle for $RUT is in the congestion area. The top Bollinger band is falling, and $RUT seems to be in a mature topping formation. MACD has crossed down. Good for TZA.

    Bollinger Bands for $RUT:$RVX ($RUT vs VIX for $RUT): today’s doji candle is far below the congestion area. The upper Bollinger Band is falling. Looks like a confirming that the topping process is completing. Good for TZA.

    TZA had a higher high, higher low and higher close (1 cent) – very good for TZA.

    Money flow for the Total Stock Market was $303 million flowing out of the market on a slightly up day. Generally good for TZA.

    I will post the AmericanBulls candlestick interpretation a bit later.

    Overall, it looks very good for TZA for Monday.

  6. for those with eagle eye's noticed that the $SPX close was below it's opening

    this is the 3rd consecutive lower close than open, I spoke a couple days back that if the $SPX would get 3 consecutive lower closes than opens it would indicate we would be on our way to the 1078 de-leverage pt.

    Well there is going to be a *** by that as the $SPX did not close below it's VST containment pt. (orange)
    http://www.flickr.com/photos/47091634@N04/44650

    the orange VST containment is @ 1166.50 and look where the operators closed the $SPX @ 1166.59

    Frequency of more than 3 consecutive lower closes than opens,
    in the last 111 trading days : 1 (terminated on 10/28/09)
    in the last 265 trading days : 4

    • Looked at $NYMO tonight. Looks most likely to me like the market goes down hard on Monday (we are at similar levels as we were on on the McClellan on Jan 19th and Oct 20 -both tops) and the MACD is clearly below the 0 line.
      http://stockcharts.com/h-sc/ui?s=$nymo
      Slightly concerned though that we didn't close below the channel trend line today. Are you saying it would actually not be good for the bears long term if we go down from here?

      • the probability of the $SPX closing below it's open on Monday is slim as indicated by the Stats from up above

        it hasn't happened in the last 5 months

        looks to me as we are heading for a high the day before the Pi ritual (thursday) and then we're closed on Friday due to the SUN sacrifice ritual

        • Thanks Sundancer. If that is the case, then I will just have to grin and bear it at this point. It will suck to sit through a 3 day weekend after reaching my lowest account balance in a year but so be it.

          • the good news for those with bearish positions is the next ritual timing sequence comes in @ 4/4/2010 which is a Sunday, so the trading day immediately before/after 4/4 would provide an opportunity for a reversal. So either 4/1 or 4/5.

            the origin of this sequence is the 3/24/2000 $SPX ATH

          • Sundancer, if it gets up to your 1191 by this date, the SPX would form the perfect H&S pattern, starting from the point you mentioned in 2000.

          • If you don't mind my asking. How much are you down, percentage wise? It would help to figure out what the realistic time frame and market movement needed to recoup the draw down.

          • No worries SC. Sadly enough, I am down about 43%. I am imagining that if we make it to 1191, I will then be down about 50%. I lost about 10% right off bat on an option trade. Started shorting agressively with 3X bear ETFs around 1080 so that's around probably where I need the market to go to regain 85% or so of that loss. You don't have to point out my insaneness or folly, I am well aware of it at this point. I will have to decide whether to swing trade along the way or just hold and pray 🙂 I am due with a baby in 5 weeks plus have a 3 year old so I won't be able to spend a lot of time focusing on the market anymore after that.

          • Congratulations on the new addition! And welcome to the next 18 yrs of homework problems, party problems, and boyfriend/girlfriend problems!! lol

            The portfolio problem pales in comparison, in terms of significance. lol

            If you are down 43%, then if the market goes from 1163 to 1080, that would most likely to reduce your overall losses from -43% to -31%.

            1163 to 1080 is -7%. 3x inverse would translate into +21% more or less, theoretically. In order to recover the -43% drawdown, you need to compound +21% 3 times. It can be done, but certainly not going to be easy.

            I do not advise parking in a 3x etfs. You may get lucky. But that is gambling. Trading is a business, not a recreation.

            If you cannot actively follow the market, there are several strategies. I am not going to sugar coat this. It should be obvious that the methods you are using have not worked. No offense to all the people you have listened to. But all those forecasts and opinions have landed you in a hole that will take a lot of work just to climb out. It should be obvious that if you are going to listen to any opinion, it has to be from a soure with a verifiable record. If you are going to use a tool or a system or a method, you have to check to see how it deal with the dot com boom and bust, the 2003 bottom, the 2008 crash, and the 2009 bottom. It a method or a system has nothing to show you how it handled those boom and bust, then there is no reason to put any faith in it.

          • Hi SC,

            Thanks for the words of advice and concern – not presumptuous at all and I appreciate it. I haven't listened to anyone and that has been part of my problem. Basically I did very well in my first year of trading on my own and then I got overly confident and greedy and took way too much risk. I don't believe anyone has all the answers. A lot of this time, I haven't followed my own indicators which has been detrimental. In the end, if I wind up getting lucky enough to make some money back (yes, totally gambling), then I will probably turn my portfolio over to someone I trust.

  7. don't forget about the $VIX weekly setup, this week was also a lower close than open, which makes it 7 consecutive lower closes than opens, the most since the economic cracks started appearing during the week of 8/13/2007

    this setup is as juicy as they come, the last time I saw a setup on the weekly like this one was a number of bank stocks last march before they went parabolic
    http://www.flickr.com/photos/47091634@N04/44650

    those with eagle eye's will also notice the $VIX closed the week @ 17.77

  8. The Daily view from Americanbulls

    TNA is now a WAIT (wait for a signal). The sell was yesterday at $55.61. TNA closed today at $54.52, down 2% since the sale. The candlestick today was a Black Candlestick (normal selling pressure).

    TZA is now a HOLD. The buy price was $7.04, yesterday. TZA closed today at $7.17, up 1.85% since the buy. The candlestick today was a White Spinning Top (complete indecision between Bulls and Bears).

    Two recent TZA Buy signals have failed and may perhaps serve as a warning:
    Buy at $7.33, sell at $7.14
    Buy at $7.11, sell at $7.05
    Buy at $7.04, now up 1.85%

    For that matter, recent TNA Buy signals have also been uninspiring:
    Buy at $55.36, sell at $55.43
    Buy at $55.69, sell at $55.63

    Summary of $RUT based ETFs & a few popular ETFs:
    Wait: UWM (2x), TNA (3x), SPY, DRV (-3x)
    Hold: IWM(1x), RWM (-1x), TWM (-2x), TZA (-3x)
    BUY-IF: QQQQ (Bullish Homing Pigeon Pattern, not very reliable)
    Confirmed Sell: DIA

    Action for Monday: none

    • That would be a 7.5% drop in just 3 days. On the $DJUSRE, that's just above the 50 day MA. I'm not saying it's impossible, but it would really need some sort of powerful motive wave down (3 of 3?) and it would have to start Monday.

      50 on IYR seems to be strong support.

  9. Sundancer, if it gets up to your 1191 by this date, the SPX would form the perfect H&S pattern, starting from the point you mentioned in 2000.

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