The Perfect Storm Is Just Ahead…

By Red, on May 13th, 2010

No Post For Friday Gang, as I’m a Happy Bear Now, and looking forward for more fun next week. I’ll have the weekend post up by late Sunday Night. Go Enjoy The Weekend

And Friday Could Be The Start Of It…

From a technical point of view, a lot of damage was done today for the bulls. That late day sell off broke the rising bearish wedge on the 15 minute chart, as well as forcing the 60 minute chart to rollover and start pointing down. On the daily chart, the necktie did hold the market back and reject it hard.

Then there is the dollar (UUP), that had a huge buy candle appear in the last 10 minutes of the day, forcing a big move up in the dollar. This tell me it was “insiders” that know something is ready to happen. It was between 3:40 pm and 3:50 pm, and had 1.5 million shares bought up. Compared to the entire day, which only had about 4 million shares traded… that candle is HUGE!

Remember last week when Sundancer mentioned that he got an email from a friend at the Chicago Board of Options Exchange, telling him that a big buyer came in and purchased a ton of VIX Calls. Then what happened next? Thursday crashed, and the VIX soared.

That large buy of the dollar, of 1.5 million shares, tells me that the dollar is getting ready to explode higher. That is very unusual volume for the dollar. Something is brewing, and it’s not going to be good for the market. Let’s think about this from “outside the box” for a moment.

What event could cause a big move up in the dollar? Or maybe I should ask the opposite… what event could cause the Euro to tank, which would cause the dollar to soar higher? Could the rumor that Germany is going abandon the Euro, and go back to their own currency be true?

The article is up on Zero Hedge, and the link was posted yesterday by StockTech (thanks for the link). According to the article, German chancellor Angela Merkel is scheduled to give a speech to the nation on Friday evening, where she could announce a currency change from the Euro back to the Mark.

I don’t know what is going to happen of course, but I find it odd that she is waiting until the market is closed, on a Friday evening. Believe me, if the news was something that would be bullish for the market, it would have been released during the market hours.

Everything is planned and timed to be released when it benefits them the most. The German crooks are no different then the American crooks. Remember, about 200 families control 70% of the worlds’ wealth, and they are all part of the “good ol’ boy club”… meaning that they get together and plan out future events that will benefit them the most.

The leaders of all the countries are just the puppets that are in the public eye. The real people who control each country is the multi-billionaires behind the scenes. These aren’t some conspiracy theories that I’m making up… these people really DO control the planet, and especially the market.

You know that too be true, if you have been reading my posts long enough too see all these fake prints play out. Maybe not every one of them, but you have to admit that it’s really strange how those intraday prints are hit within a day or two.

Of course, finding out what they plan too do next isn’t always that easy, but we are given many clues. Like the big dollar buy today in the last 10 minutes. And, the fact that Gold is going threw the roof. Let’s not forget that Oil is still getting hammered. These are all big clues, that tell me that we have another sell off coming before another rally into mid-summer can occur.

So, from what I can see… Friday, and next week is looking like some big selling is still coming. Could Friday be “Black Friday”? I don’t know, and I don’t want to call it that… as I might jinks it. So, I’ll just say that I expect a down day tomorrow… how far down, I won’t guess at.

Red

Weekend Update - Armageddon?

MobyDoc

Next several trading days will be very interesting indeed,, btw, Merkel is a she.

http://www.reddragonleo.com Red Dragon Leo

Sorry, I just copies it from Zero Hedge…

monicadern

as usual, love the post Red, thank you! will you be working tomorrow?

http://www.reddragonleo.com Red Dragon Leo

Not a chance… I would miss tomorrow for anything. We could see a big sell off into the close. I'll be here.

AS2009

Hey Red – love your post – on my daily reading list

http://www.reddragonleo.com Red Dragon Leo

Thanks… I try to please. LOL

AS2009

You do an awesome job

newbear

Awesome post red, yes tomorrow will be very interesting and hopefully profitable for us bears as well.

http://www.reddragonleo.com Red Dragon Leo

Let's hope it is good for us bears. I'm really trying to look at all different points of view… both bearish and bullish, but I really can't see any reason to rally tomorrow.

Yet Fujisan posted these comments…

http://disqus.com/Fujisan/

I respect her a lot, as her trading skills a very good… but if I'm reading some of her comments correctly, she seems bullish into next week. I have too disagree.

But, maybe I'm not getting the whole picture by just reading what she's posting, as I don't know what the person asked her… that she was chatting with.

Anyway… enough said.

Rip Van Trader

She seems to be saying that she now thinks a turn will take place at 1149 rather than 1107, will rally to 1180 instead of 1168, and will be at 1150 for OEX. Presumably it would go lower later. Yes, I suppose it could play out this way, a more extended time frame. That 1180 level is still in the operators' hip pocket.

We've got all these data points that can be mixed and matched. I suspect a plunge today after a failed rally to 1170. Those with May options might want to get rid of half at EOD if that happens. Or, we may have a gap open, a rally to1180, and end the day with a black star or hollow red candle and plunge Monday. In that case, I would go for the gusto on the plunge because the rally option would have been played.

I woke up in a sweat this morning that WE are the bagholders and that this will turn into a bull market. Trying to shake that off. One indicator I follow (subscription to wallstreetcourier.com) shows that afternoon (big) money has not participated in this rally.

http://www.reddragonleo.com Red Dragon Leo

I'd say big money is waiting for the low from last Thursday to be tested again, before they dive in.

Rip Van Trader

Of course, a rally without a double bottom (happens sometimes), everyone jumps on board late.

I'm favoring a fake double bottom followed by another plunge, after a good-sized rally. Who knows? Best to stay flexible.

rationalnational

Great post Red. With any luck, this leg is wave 3 and will bring the SPX below 1000.

http://www.reddragonleo.com Red Dragon Leo

I think it's a wave 5, but either way… it should take out the current low.

rationalnational

Depends what degree..on the daily I think we are just finishing 2, and about to enter 3!

http://www.optionsblackboard.com/ Anna

I see your deserting me for this dragon! LOL

rationalnational

OMG you found me, ok, I admit it, a two-timing, good for nothing son-of-a…

…OK, perhaps I should just send flowers? =)

http://www.optionsblackboard.com/ Anna

Just send you in a box! Fedex

jimhobson

I have a few British friends that are ecstatic that Britain never adopted the euro. Not that it is saving Britain at the moment.

The world is shaking. It may get difficult but it will be far from boring.

http://www.reddragonleo.com Red Dragon Leo

Yes Jim,

We should have some wild swings next week. OPX week is usually Bullish, but I think the bulls might be shocked on Monday, if Germany drops the Euro.

jimhobson

Bears need to be cautious. Opex week can be difficult for bears.
bensjoyce

I would like to find out is this going to be wave 5 or did we just finish 2 and the next move is 3 (a big steep down move) How long will this take, how many days? various EW people attempt to figure this. Let us know when you find out. Many on the blog list on this site attempt to figure this.

http://www.reddragonleo.com Red Dragon Leo

I'm not really that good with EW counts, but this count looks pretty likely too me…

http://stockcharts.com/def/servlet/Favorites.CS…

rationalnational

You mean like a casket? I like this one

http://image62.webshots.com/162/2/75/88/4412275…
bensjoyce

Monthly BB has something to tell us. the upper Monthly BB has NOT been hit. If we close below the Middle BB , then the odd are that we hit the lower BB before we hit the top. Briefly, we will go down and touch the lower BB at 738 over time.
dollar

Red, I agree with you that the market is headed down, but I think the German currency story isn't real:

“Zero Hedge has added fuel to the fire by posting this from guest contributor The Prudent Investor on Wednesday:

'A web page of precious metals prices provider http://ftalphaville.ft.com/blog/2010/05/13/2306…

http://www.reddragonleo.com Red Dragon Leo

Thanks for the update Dollar…

The technical's tell me the market is going down to probably retest the lows from last Thursday and maybe put in a new low?

As too the Germany story… who knows? Lot's of rumors are started, and this could simple be another one. But, “IF” we tank the market again… they have too blame it on someone, it might as well be the Germans. LOL
jimhobson

It may be the French. Just saw report on cnbc, not that they know much.

http://www.reddragonleo.com Red Dragon Leo

Looking good the bear this morning… so far? Let's see if 115.00 can hold, or will she breakdown through support and fall to close the gap around 111.00?
Earl of

Carl’s morning call:

June S&P E-mini Futures: I think that last week's low at 1056 ended the correction from 1216. Today's range estimate is 1139-55.

1144.25-1159.50 range last night (15.25 points)
1139-1155 estimate for today (16 points)

1148 currently, so estimate is -9 to +7 from here (neutral)

http://www.reddragonleo.com Red Dragon Leo

I'm surprised that Carl doesn't have the gap fill area (1110-1120) from this Monday, as a possible low. Should this 1150 area break, I could easily see the market fall down and fill that gap.

Rarely does the market go inside a gap area, and not fill it. That 1139 is half way in the middle of the gap. Of course, it could stop there today and fill it on Monday… who knows? Just deal me another card… come on Ace, I need a BlackJack! LOL

Earl of

Filling gaps doesn't sound like Carl. He speaks of boxes, and target areas mostly.

http://www.reddragonleo.com Red Dragon Leo

I guess everyone has different ways to chart the market. I use the technical analysis a lot, and try to piece it together with some EW counts, the news, and of course the fake prints. Which by the way, we still have some fake prints at 111.30 in the afterhours session from Monday. I think that is our target down, as it will also fill that gap.

I know you don't believe in them, and that's cool too. Either way, that 111.00 area is likely to be hit again, as the TA's tell me that. Today or next week… I don't know, we'll just have too wait and see.

Rip Van Trader

Seems like when there's a big plunge, it goes lower second day on an intraday basis. Can't always bet on that, though.

monicadern

Holding shorts in a down market is just as hard as holding them in an up market. You don't want to be greedy but at the same time, you want to be greedy!
monicadern

Anyway, I'm above my breakeven so now I am on my second bottle of champagne!

http://www.reddragonleo.com Red Dragon Leo

Hey… I thought I was the only one allowed too be funny! ROFLMAO… Pour me a glass too!

monicadern

I guess we shouldn't be pouring anything until we sell for a profit. Why do I always jinx myself?!
monicadern

Also glad I got out of my gold short at the close yesterday. If Sundancer is right about the 6% up causing mayhem, we are in trouble.

monicadern

not a whole lot of momentum yet.

http://www.reddragonleo.com Red Dragon Leo

It's got to break that 115.00 area, as that's great support from all week now. After that, I'd say a flush down to gap fill is next.

monicadern

Yep – all of the good traders think it will stop there and maybe they are right. But if they are wrong, that will provide more selling ammo.

Rip Van Trader

Just bought a few calls as cheap insurance. If this sucker takes off to 118 at least they will defray my losses. We can count on a correction at 118, I believe.

Rip Van Trader

Oh, well, what's $800? LOL

monicadern

This is so hard.

monicadern

help me hang on g-d.

http://www.reddragonleo.com Red Dragon Leo

Just focus on those fake prints from Mondays' afterhours session. There were 4 of them on the 10 minute chart… all at 111.30! That's our target!

monicadern

I am. I have a 1/3 of my positions to cover there, 1/3 at 1082 and a 1/3 at 106.

sundancer390

SPY @ red containment 60 min
http://www.flickr.com/photos/47091634@N04/46059…
If the dam breaks then, we go back to red containment on 120 min

Why all of a sudden did 115.0 provide no support, because it gapped below containment.

Everything in the market is a moving target!!!!!

monicadern

Thank g-d you are here. Does red containment on the 120 = 105?

Rip Van Trader

I'm starting to think we will rally to 1050 and tank through EOD.

http://www.reddragonleo.com Red Dragon Leo

Rip, I hope you're not long now?

Rip Van Trader

Just a little, LOL. I can recoup at 1150.

monicadern

looks like you could be right.

http://www.reddragonleo.com Red Dragon Leo

On Monday morning of this week, there was a fake print of 114.21 at 9:10 am. We just hit it and are now bouncing back up from it. The next fake print is at 113.52, with only one print of it showing up right at the close of the day (4:00 pm EST).

But, there are a total of 4 fake prints at 111.30 in the afterhours session. I think that is our downside target, with a bounce at 113.52 up next.

jimhobson

Red ,

iam having trouble setting my stops. typical.

i f spy hits 111 are you selling or are you holding through opex. iam torn over this.

monicadern

I am getting rid of may puts and half of may vix calls at 1113.20 and keeping my june puts.
http://www.reddragonleo.com Red Dragon Leo

I'm going to sell part off my position (1/3 probably), and let the rest ride into OPX. Next week could get real ugly, if some bad news is released over the weekend.

So, I'll take some profits just in case they try to rally it on Bullish Monday, and Bullish OPX week. But, I really don't think the will. I see more selling next week.

monicadern

so far seems to be holding at containment.
sundancer390

Should Red Containment break on the 60 min. then back to Red Containment on the 120 min
http://www.flickr.com/photos/47091634@N04/46059…

monicadern

Muchisimas gracias.
ashsail10

Thanks a lot Sundancer.
sundancer390

9:30 CST Print 60 Min
http://www.flickr.com/photos/47091634@N04/46060…

Bulls trying to avoid castration…..

Rip Van Trader

I am up nicely, but people are bullish. I'm not covering anything yet. Maybe some as the double bottom approaches.
monicadern

Euro crumbling.
monicadern

guess maybe gold won't hold up after all.

newbear

Gold should bounce here.

http://www.reddragonleo.com Red Dragon Leo

Still more down coming…

We are now putting in a nice bear flag on the 15 minute chart. We could continue this sideways movement until the MACD works off some of oversold conditions. It may take an hour or two? It's hard to know for sure how, because I don't know how many of these 15 minute bars are needed before another flush down will happen?

http://stockcharts.com/def/servlet/Favorites.CS…

I doubt that it will make it back above the zero line and into positive territory, as I expect it to just inch up close too it, and then fall back down. The 60 minute chart is still putting huge overhead pressure on the market, and won't be oversold until the end of the day.

http://stockcharts.com/def/servlet/Favorites.CS…

newbear

It's looking pretty.

bensjoyce

Red……are you having fun yet?

Take notice of the cash spx monthly chart and note the 20 month MA

it worked or was touched upon 5 or 6 times (in other words it worked) in 05-07 (support) and acted as resistance once in 08

So my educated guess is that next week opx for June (along with all the European problems- I heard that German unions will go on stirke?) that the $SPX will test the 20 month MA (Bollinger Bands) now at 990.

Just a logical, educated guess.

http://www.reddragonleo.com Red Dragon Leo

Sounds good too me Ben… I'm with you on that call. I think a lot of Bulls are going to be surprised next week.
sundancer390

Yeah probabilities are decreasing that gold containment will hold the $SPX in the 1050 region, & the next weekly containment is teal which is in the upper 900's.
1173.57 Local Min Value
-2.12% 1148.69
-4.24% 1123.81
-6.36% 1098.93
-8.48% 1074.05
-10.60% 1049.17
-12.72% 1024.29
-14.84% 999.41
-16.96% 974.53
-19.08% 949.65
-21.20% 924.77
-23.32% 899.89
-25.44% 875.01

Have capital to buy all the way down to the last tier

http://www.reddragonleo.com Red Dragon Leo

If the market goes all the way down to the bottom tier, then it will probably take the market 3-4 months to get back up and put in a new high. Could be late August, or September?

That would make for one hellova Primary Wave 3 down coming in the last quarter. Man… that is going to be ugly!

Rip Van Trader

VIX long-term trend is up, so I expect that swings will be huge. Wouldn't be at all surprised if the market is mostly recovered in a couple of weeks.

We are focused on shorting today, but next is going long! Research over the weekend and make buys next week.

ashsail10

Is this numbers represent SPX or Gold? Thanks

sundancer390

$SPX

bensjoyce

Another educated guess. Next week, After the $spx hits the low maybe at 990 and then rallies, Gold will skyrocket, nosebleed style.

http://www.reddragonleo.com Red Dragon Leo

I don't play gold, as it's too hard to predict. But, if fear sets in… then Yes, I could see a lot more upside. But after this sell off is done, another rally will happen in the market… probably putting in new highs.
monicadern

seems that this is right. question is, how will we make new highs by jun 25?

Turbo Tim

Here's the drawing board

S&P earnings reduced by 7% – Previous top is 1220 – so market value is 1135. In order for us to get a bargain we need the market to drop from the previous low of 1050 to 980 area. But I think what is the pipeline is what they are trying to do is 1225, so a discount of 7% is 1140.

Any thoughts ?

http://www.reddragonleo.com Red Dragon Leo

We already below 1140 now, so 980 seems more likely now. Plus, I don't see any signs of a bottom yet, as none of the charts are even close too turning back up.

Rip Van Trader

Not much real panic yet. This is very orderly.

jimhobson

These markets are not looking at fundamentals. if they were the march09 run never would have happened.

Rip Van Trader

Most successful trading day ever, and the party's just getting started.

Sundancer, can't thank you enough for your guidance. I only went in partially, hedged and everything else because I'm a born Skeptic, but you nailed it.

sundancer390

Glad I could help!!

The Rituals never change!!

Rip Van Trader

I have to learn more. I Googled on some of the expressions that you use, and come back to…you. I plan to review your old posts and try to ask intelligent questions.

I have a sense of the ritual as far as the emotion-tugging aspects, but to be able to plot the turns is incredible.

Kudos again.

Pete
monicadern

Yes, we are all indebted to you and Red for that matter for providing this forum. Thank you for sharing your knowledge.

Earl of

New from Carl:

I think the market is about to retrace most, but not all, of the rally from 1102 to 1174 which resulted from the announcement of the rescue package for Greece. Midpoint support stands at 1113 and 1116 is the midpoint of the second box for this rally. I think we shall see a reaction low Monday or Tuesday. Once the drop from 1174 is over the move to 1300 should resume.

SC

Wow. Carl and I must be having the same breakfast this morning. lol

Damn you Carl. You had better be right, cuz I am seeing the same outlook. lol

Earl of

SC,

It does make sense, but I wish Carl had been right more often lately, so I could feel more comfortable thinking he's probably right this time.

SC

I came across a model that analyzes days like May 6. That is an outlier day. Historically, it never retestes the low. 2/3 of the time, it retests the previous high w/o a retrace. The remaining 1/3, it retraced the rebounce but did not retest the low, and then reverted back to test the high. So, the odds are strongly favourable to the bulls. But it is probably blasphemy to post this here. LOL

We either stabilize here at 112-113 or bottom at 110 Mon-Tue.

ashsail10

Thanks SC. I have already planned to go long 1/3 position in my 401 plan.

http://www.reddragonleo.com Red Dragon Leo

Agreed…

Sundancer I have learned a lot from you, and I also thank you for taking the time to teach us, and share your trading knowledge with us.

And to Rip… here's a cool avatar for you to use:

http://reddragonleo.com/wp-content/uploads/2010…

Rip Van Trader

Hahaha, that would be copyright infringement, maybe. Wouldn't want to face Sundancer in court!

To echo Monica, thank you for this congenial little forum, Red, and your articles. May your blog never become popular.

http://www.reddragonleo.com Red Dragon Leo

Rip,

Pictures are free all over the internet. Unless it clearly states that it's copyrighted, you can pretty much copy any picture you want. I certainly don't create all the pictures for my posts.

I do sometimes edit them, add text on them, and cut and paste several pictures together, but many times I will just use a cool picture “as is” on my nightly posts.

Anyway, just trying to help. If you don't want to use it, that's fine too.

Rip Van Trader

I was kidding about the copyright. Thanks!

Rip Van Trader

Red, that avatar is way cool! I opened in a new tab and looked at Sundancer's chart instead. I'll use it, thanks!!

sundancer390

11:45CST 195 Print
http://www.flickr.com/photos/47091634@N04/46049…

For those that don't use 195 min charts, some great setups come from that TF.

Diablos

Hi Sundancer,

So you'd like, and/or expect a move back to 1161+ this afternoon?

Thanks in advance

ashsail10

I think 1161 is on 195 min. For 60 min its around 1144. Thanks

Diablos

Thanks!

sundancer390

Red containment on the 60 min
http://www.flickr.com/photos/47091634@N04/46060…

http://www.reddragonleo.com Red Dragon Leo

Where are all the other containment lines below it? Looks like nothing but air below…

sundancer390

Yeah a lot of Air on the 60 min, but you just move down the chain

120 min
http://www.flickr.com/photos/47091634@N04/46064…

Diablos

My bad, thanks.

I do see a print at 114.15 @ 11:25 on the 1m.

monicadern

Diablos, can you tell if red containment moves lower or higher over time? I'm thinking that this 114.15 print you saw on Friday is actually a backtest of Red containment (to come Monday) before a major plunge. On Friday Red containment was at 114.37. Just wondering if it will have shifted by Monday to that lower level?

AS2009

I foolishly sold my puts at EOD yest taking a mere 20 buck profit per put vs the 275 profit it could have been today- kicking myself as I was left holding calls and they are killing me …

So do you think a backtest of the 60 min containment at 114.3 would be a good point to buy some sun ?

sundancer390

*IF* you are trading a plan that has lower prices in it, then the area around red containment (114.3 ish) would be an entry pt.

Rip Van Trader

Stepping out on an errand, see y'all later
Rip Van Trader

This next step down will be a doozy.
monicadern

Red, I just bought back in most of my May puts (still have the 114s plus the VIX calls) even though I know we are going lower. I just rather not take the risk that they expire worthless. If we bounce back today, I will buy more June puts.

Rip Van Trader

What keeps me in is lack of premium on the options. People just don't believe that it can go any lower.

I usually get out when the fear mounts, but never go the full way. I'm going to try it this time.

monicadern

Well, I had way more puts then was prudent. I still have a lot. And if I can add more June ones, I will. Just made me nervous holding May ones so close to expiration even though I believe we tank by then.

Rip Van Trader

I hear you. I was a lot shorter at one time (lost track of the days) and took a profit. Nor did I take an opportunity to go shorter today. I'm like 90% sure this bear rally has two more steps in it, but don't want to risk wiping out.

Once we get by this fake double bottom, the stuff will really hit the fan until close. Got to watch out for the PPT, though. 3:45 would probably be a good time to cover. I'm doing part today, how much depends on how big the numbers are.

monicadern

My husband forced me to cover but I am still have a large position. If we rally to 114.30 (and of course that is an if), I will buy June puts since they are not as time sensitive.
SC

Usually it is the hubby taking risks while the wifey forcing him to cut back. lol

But, remember those words you said about having learned your lessons…
monicadern

Thanks SC for the reminder – you sound like my husband! Yes, I am the risk taker in this relationship but imagine I would be in any relationship! Trying to curb my impulses
SC

Tell your husband, I know how he feels. The women in my life run the shows. First my mother. Now my gf.
monicadern

Don't marry her then!
SC

lol.
jimhobson

Thats why I took up yoga at a late age. So i could be more in touch w/ feminine side I fell like i was in control.

monicadern

By the way, the June puts I bought 2 days ago I entered in for June 30th by mistake (instead of the 19th). Does it matter?

SC

You bought the June Quarter end puts, not the regular June puts.

They expire on the last business day of the quarter, instead of the third Friday of the month. Other than that, everything else is the same.

http://www.cboe.com/Products/indexopts/quarterl…

monicadern

Thanks SC – I am assuming the downside to this is only slightly higher premium?

SC

Correct.

sundancer390

$VIX Daily Containment:

Currently dancing with it's last daily containment pt. in the 33 area
http://www.flickr.com/photos/47091634@N04/46065…

monicadern

and what if we break through containment?

sundancer390

41.23 *IF* that level fails, then
53.35 *IF* that level fails, then
68.30

monicadern

wow -thanks.

monicadern

i must be the only mom in the world trying to nurse and trade at the same time! talk about stress! just cut my finger and didn't even realize it!
http://www.reddragonleo.com Red Dragon Leo

… and people think I'm crazy! LOL
monicadern

Red, sorry to say i definitely win the crazy award! man, i've gotten good at typing with one hand!
jimhobson

That is funny!!

Good luck to you both.

Rip Van Trader

Very cool. I'm watching the VIX ticker.
jimhobson

And you mean what by daily containment? I assume you mean upper end of range moving to break out????

I play the VXX very closely.

sundancer390

Once an issue loses daily containment, a often violent move ensues

Here's a chart of the dollar that just recently lost all daily containment
http://www.flickr.com/photos/47091634@N04/46072…

jimhobson

Thank you for your patience, I gad not heard that term before.

http://www.reddragonleo.com Red Dragon Leo

Everyone get an eye out for fake prints now, and after the close. They might throw one out there to tell us their plans for next week. Look at all the charts, with different time frames, and different news sites.

Who knows? We might get lucky and catch one. It would be nice to know what the bottom is for this move down.
jimhobson

Profit taking should kick in any minute.

Friday before OPEX.

Its going to get real interesting

bensjoyce

?profit takiing you mean stock go up by short covering

or stock contiune down?

jimhobson

I think there will be a bit of short covering. But i may be wrong today its taking a while to get going.

monicadern

Sundancer, if we don't back test red containment today, you think there is any chance we back test it on Monday?

sundancer390

I'll have to see where we open Monday

I'll post some daily charts after the close

monicadern

understand. Still dancing with containment on VIX.

http://www.reddragonleo.com Red Dragon Leo

Dollar is forming a bull flag….

The market is forming a bear flag…

It's Friday, and the last hour is upon us…

Tic Toc, Tic Toc…
monicadern

vix gaining strength again.
monicadern

vix going through containment.
monicadern

VIX back below containment – sorry for the play by play.

http://www.reddragonleo.com Red Dragon Leo

You're an exciting girl… I like it. You keep me laughing, and entertained.

monicadern

And I give my husband ulcers!

http://www.reddragonleo.com Red Dragon Leo

Maybe you should cut back on the coffee?

monicadern

Not a chance!

newbear

I hope he trades somewhat.

Rip Van Trader

Sold my May stuff about 5-10 min ago.

monicadern

You still made a huge profit. Be happy!

Rip Van Trader

Wasn't that much, really. A good day, not as much as I'd hoped. Lots of bullishness, big upticks, bad chart patterns. I didn't want to eat those puts on a big rally.

Still committed to the Southern cause with ETFs and June puts.

Gere64

If you are interested in rolling your own, go to traders.com and search under George Reyna. He wrote an article several years ago that will allow you to plot your own version of containment lines. This is a variant Paul Levine's work from many years ago. Unfortunately he passed away before it gained mass acceptance. George sent me the software years ago and I lost it during a PC crash. It was crude and manual. I remember the concept though.

Happy hunting!

Rip Van Trader

Thanks, Gere, I'll bookmark that and study it further at a time when my wife has not had so much of the stock market.

jimhobson

I sure would have liked to have seen S&P close in the 1127 area. Would have set up Monday nice.

now its a guessing game again especially if they get it over 1135

monicadern

Nope – this is good for us bears. Another opportunity to get in!
http://www.reddragonleo.com Red Dragon Leo

It's a beautiful bear flag Jim… I can't see anything Bullish right now, that would leave me to believe that Monday will gap up and rally.

jimhobson

That took all of 8 minutes

http://www.reddragonleo.com Red Dragon Leo

Just shorts covering into the weekend, and bulls going long

http://www.reddragonleo.com Red Dragon Leo

Lots of “buy the dippers” going long into Bullish Monday, and Bullish OPX week. Someone is going to be surprised next week…
jimhobson

113 was the launch pad to go into Monday for sure. i was impressed they could pull that off with ease.

Rip Van Trader

It's amazing, how they squirt buys and sells to move around like astronauts with the gas jets.

Earl of

Carl at day’s end:

1139-1155 estimate for today (16 points)
1123.75–1148.50 actual range today (24.75 points )
Market was 6-15 points below Carl’s range.

Trades: No trades
Grade: C (lost no money)
sundancer390

A great amount of capital will be re-distributed next week
The general opinion has been growing all week among the “investment” community that the lows are firmly in & we are off to news highs
The thesis among the “investing” gurus is a spike in their handy dandy oscillator & every time this oscillator reached this level the market always put in its low.

*IF* the “investing gurus” are correct, then the higher low was put in today
http://www.flickr.com/photos/47091634@N04/46068…
Containment levels
yellow/dark purple: 1120's
light purple/blue: 1070's
burgundy: 1020's
white: 1010's
green (last containment pt.): 980's

Have a great weekend!!!!!!!!!

http://www.reddragonleo.com Red Dragon Leo

Thanks for the update Sun…

Have a good weekend, and we'll see you Monday.

P.S. I've enjoyed the extra pictures… lot's of happy people.

Gere64

LOL! Agree with you there for sure! Thats because most folks do not understand the math behind the oscillators.

Even a simple one such as the RSI. I have pointed this out several times on the ETF corner. The RSI is nothing more than a diffusion index. A 14 day RSI will cross 0 at the same point as price crosses the 28 Day EMA.

For those that doubt, plot it out!

Or, do the math
SC

Oscillators are not to be used alone. Various lenght of osc should be combined with various lenght trendfollowing indicators. Only rookies use osc on a standalone basis.
Earl of

TNA opened down 1.8%, and the opening gap was not filled. TNA was down 1.7% at it’s high, and closed down 5.8%.

An earlier gap from $56.70 to $57.39 was filled today.
A gap from today from $58.98 to $60.04 remains unfilled.

We are now in a New Moon Trade, which tends to favor TZA. The new moon was today, at 12:30PM eastern.
AmericanBulls had TNA with a Hold today, and TNA was down, so there may be a possible sell on TNA for tomorrow. The TNA buy was at $55.66. TNA closed at $56.52, up 1.5% from the buy.
AmericanBulls had TZA with a Wait, and TZA was up today, so there may be a possible buy on TZA for tomorrow.

Volume for TNA today was about 30% above normal.

$RVX (VIX for $RUT) closed up 10.3% with TNA down 5.8%. No divergence.

TNA had been down 4 days in a row, then up 3 days, now down two days. Neutral for TNA.

The low for TNA was from six days ago at $42.29. Today’s low was $54.25, 28% higher. Good for TNA.

Today, Ultimate Oscillator for TNA fell from 56.04 to 55.95 (0.09) while TNA fell 5.8%. A divergence. Good for TNA.

MACD fastline is below zero and falling. MACD slowline is above zero and falling. Not helpful for TNA.

Bollinger Bands for $RVX (VIX for $RUT): Today, $RVX gapped up and had a white candle about mid way between the upper Bollinger Band and the bar of yesterday. MACD fast line was rising today. The fast line is still rising. Not helpful for TNA.

Bollinger Bands for $RUT: Today, $RUT had a red candle that fell away from the 20day moving average and closed below the 50day moving average. MACD appears to be falling. Not good for TNA.

NYSE down volume was 21 times the up volume today – Good generally for TNA, with a 1-day delay — so maybe next Tuesday.

TNA had a lower high & lower low & lower close (not good for TNA)

Money flow for the Total Stock Market:
$ 858 million flowing into the market 2 days ago.
$ 270 million flowing into the market yesterday.
$ 2,900 million flowing out of the market today.
Not good for TNA.

I will post the AmericanBulls candlestick interpretation a bit later.
Overall, bad for TNA for tomorrow.

http://dreadwinaard.livejournal.com/profile dreadwin

Take a look at the volume the last 5 days in IWM — I'm curious what your interpretation is.

Earl of

Last 5 days for IWM:
Up day, vol 89M
Up day, vol 86M
Up day, vol 80M
Down day, 68M
Down day, 70M

I don't make anything of it.

http://dreadwinaard.livejournal.com/profile dreadwin

Since March of 2009, green days in the market are low volume ramps, down days in the market are high volume sells.

The last two days are low volume sells, the three before that are high volume buys.

Therefore, I am concluding that institutions are accumulating.

Earl of

Check out
http://online.wsj.com/mdc/public/page/2_3022-mf…

The weekly money flow was modest this week. I don't know how accurate this is.

Rip Van Trader

Red, thanks for the avatar picture! It's perfect!

http://www.reddragonleo.com Red Dragon Leo

You're welcome Rip…err Pete. LOL (I like calling you Rip though…)

Rip Van Trader

Either's OK with me. Probably Rip will cause less confusion, and I'm settling into it.

Earl of

The Daily view from Americanbulls

TNA was a Hold today, and after being down 5.8% today, is a likely sell for tomorrow. The particular candlestick formation – Bearish Three Inside Down Formation – is considered highly reliable. The buy price was $55.69 & the close today was $56.62, up 1.6% since the buy.

TZA was a Wait today, and after being up 5.7% today, is a likely buy for tomorrow. The particular candlestick formation – Bullish Three Inside Up Formation – is considered highly reliable.

Of the stocks & ETFs I follow, these are to hold on to:
UUP(US Dollar)
SCO (-2x Oil)
DTO (-3x oil)
ERY (-3x energy)
FAZ (-3x Financials)
EPV (-2x Europe)
SPXU (-3x $SPX)
QID (-2x QQQQ)
DXD (-2x DOW30)
DZZ (-2x Gold)

The list to avoid:
IYR(1x RE)
URE(2x RE)
DRN(3x RE)
GLD (gold)
UGL (2x Gold)
SLV(silver)
USO(oil)
UCO(2x Oil)
ERX(3x energy)
AAPL
AMZN
DRI
GOOG
EWG(Germany)
EWQ(France)
EWU(England)
EWX(emerging mkts)

The following are possible buys tomorrow:
GS
RWM (-1x $RUT)
TWM (-2x $RUT)
TZA (-3x $RUT)
SRS (-2x RE)
DRV (-3x RE)

The following are possible sells tomorrow :
IWM (1x $RUT)
UWM (2x $RUT)
TNA (3x $RUT)
DIA
SPY
QQQQ
QLD (2x QQQQ)

Today saw a marked shift to Bearish.
Action for TNA or TZA for tomorrow: Possible buy of TZA, Possible sell of TNA
Diablos

http://screencast.com/t/NGY5ZmIzMjQ

http://dreadwinaard.livejournal.com/profile dreadwin

That's a very interesting fake print. It was outside of Friday's trading range entirely. So, either some one made a fat finger trade, or (if you believe that fake prints give direction), the next stop is the upper 1150's (SPY 116).
sundancer390

I believe that was SPY's thursday close,

take a screenshot of the $SPX 3 min chart from Thursday afternoon, the operators left some key gaps

it will help you stay long on the way back up after we fall off the cliff

newbear

Hi Red, hope you're having a great weekend. Look up I picked up today at the Beer store, it's a local brewery you probably can't away with this in the US.

http://www.optionsblackboard.com/obb-live/my-ph…

http://www.reddragonleo.com Red Dragon Leo

That's funny… send me a 12-pack, would you?

newbear

you mean a 6 pack here's the other side even better:

http://www.optionsblackboard.com/obb-live/my-ph…

bensjoyce

Red and others, find a very bearish Frank Barbera of FSO online radio program
http://www.financialsense.com/ Frank B . starts in about 8 min into the program

Frank says if the Euro continues down Monday then its very bad for the S&P
He does mention 970 on the S&P

also on this blog list is “the chart pattern trader” who is very good

This later guy sees a “wave 2″ on the s&p to go a little higher “perhaps” (15 min chart) then wave 3 down. So may be a pop on monday the down??

http://www.reddragonleo.com Red Dragon Leo

Do you have a direct link to the audio? I can't find it on the site. Thanks

bensjoyce

I think this is better. I'm listening now. let me know

you'll love it. I hope it happens (for my sake too)

http://www.financialsense.com/fsn/main.php

Frank is there about 11 min in to 20 min. he mentions 980 S&P at about 17-18 min.

bensjoyce

Barbera mentions “970″ at 20min 6sec
bensjoyce

Hello- about the Euro- Frank Barbera says that it's key. Greek unions will call a strike on Wed and march. We'll see what hot air is gathered to spike up the Euro causing rallies, Perhaps over the week end. Maybe this won't happen. Will they intervene to bolster the Euro?

also that “small” 12 pt rally on the spx near the close. I suppose this could qualify as a wave 2 up. ie doesn't have to go another 15 pts up.

From: http://www.safehaven.com/article/16804/euro-the…

They are due to march in the capital on Wednesday from 6 p.m. (1500 GMT), in a rally which will give indications about the public mood before the big walkout next week. Investors are closely watching public reaction to government wage and pension cuts amid concerns broader unrest could hit Prime Minister George Papandreou's resolve in pushing them through.

Hypothetical: Riots break out Wed and the markets short term find a bottom in another panic. they recoup for 24hrs or so and then tank again going into expiration, maybe down to the middle monthly BB area 970-990 spx

monicadern

Hi there – like your projection but I am think that since Sundancer's ritual dates are Tuesday and Wednesday, the bottom might actually come in when you mention on Wednesday, but then I imagine we rally from there back into June. Then sometime in the summer (maybe late June?) we reach the top and then plummet really hard. Just a thought.

bensjoyce

I really only know a smattering of EW but the big down into wed (if it happens) would be some sort of 3 of 3 which means the bottom's not in yet. That's why I saved it for friday.

But I'm not a competant market technitian (nor speller!! LOL) so I'm not going to mislead people. I'll defer to the experts

Of course if I can figure it out, it won't happen. But I think I'm on to something. Also, watch out, gold and silver may skyrocket. silver may rally to 27-37.
http://www.safehaven.com/article/16805/gold-tec…

monicadern

Ben, I am a lousy market technician as well but I am pretty good at connecting the dots from everyone else! We had a VIX (equity buy) signal last week which is pretty accurate but can take a week or more to play out. The $NYMO is looking just like it did on February 5th before we fell to a low on Feb 8th and then bounced to new highs. So my guess is that this Wednesday, we get back down to the 105 SPY area. I completely agree that we have the “big wave” down to go, but I don't think it will happen until at least the end of June. From there, I think we tank even lower than the levels you mention. I will repost tonight after Red makes a new post.

sundancer390

After last weeks developments:
The odds of gold weekly containment holding the $SPX (1050's) is now 13%, teal weekly containment is in the 980's/990's
http://www.flickr.com/photos/47091634@N04/46114…

sundancer390

friday's closing #
1135.68 Local Min Value
-2.12% 1111.60
-4.24% 1087.53
-6.36% 1063.45
-8.48% 1039.37
-10.60% 1015.30
-12.72% 991.22
-14.84% 967.15
-16.96% 943.07
-19.08% 918.99
-21.20% 894.92
-23.32% 870.84
-25.44% 846.76

From Top
1219.8 Local Min Value
-2.12% 1193.94
-4.24% 1168.08
-6.36% 1142.22
-8.48% 1116.36
-10.60% 1090.50
-12.72% 1064.64
-14.84% 1038.78
-16.96% 1012.92
-19.08% 987.06
-21.20% 961.20
-23.32% 935.34
-25.44% 909.48

These #'s are in congruence that the low is not probable to come from gold weekly containment.
bensjoyce

Gold and teal must refer to color. i could not see the gold color, looks off white to me

How do you get 13% probability for the 1050's?? This means that there is an 87% chance that we go below the 1050's or that we stay above the 1050's.

Probably the latter
http://www.reddragonleo.com Red Dragon Leo

In that chart, I see an extra red candle (the last one made), that isn't showing on this chart?

http://stockcharts.com/def/servlet/Favorites.CS…

I see the larger red candle from last week, and this week's hollow white (green on your chart) bar, with the long topping tail. But, you have another red candle past it, that I don't have?

Where is it from, or what is that last red candle?

sundancer390

Very good eyes Red,

On SUNdays the operators screw around with the data feeds so that is why you're seeing an extra candle in my chart

This SUNday they didn't release any exciting previews

Usually the First SUNday of the month they give out some good previews for the month

I think it was the first SUNday in April when they released the script for the $DJI 10K tick

http://www.reddragonleo.com Red Dragon Leo

Have you found the prints to be equal to what that week actually did? If so, then we are looking at a sideways week, with no downside movement. If they haven't been actual, it would make me feel a little better… especially since I'm still very short.

sundancer390

The candle that you are seeing in my chart is a daily candle replica stuck on a weekly chart.

Breathe easy!!!!!!!!!

When the operators release “important scripts” I'll take some sreenshots

The $DJI 10k tick was taken on the first SUNday in April
http://www.flickr.com/photos/47091634@N04/44900…
http://www.reddragonleo.com Red Dragon Leo

Breathing easier now… thanks.

As much as this market is controlled, I don't always trust the technical analysis I do… like the one on my weekend update. Everything tells me that there is more selling coming, with Monday being the most likely up day, and the rest of the week looking ugly. But, I've only studied TA for the last year or so now, and I'm not an expect by a long shot!

So, I listen to what “they” want to tell me too…

monicadern

Good eyes red and thanks Sundancer. I was worried it was the weekly as well. Looking forward to seeing how the week plays out.

http://www.reddragonleo.com Red Dragon Leo

New post everyone… Weekend update is now up. Please repost any important comments on it.
http://www.bookwormlab.com/ professional writing service

Fantastic information and great story. Very happy to read about!
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