Stock Market Crash Tomorrow?


Odds are extremely high for a stock market crash now.  Could we have a Black Wednesday on May 19th, 2010?

I don't know of course, but we now have 4 out of 5 charts pointing down.  The only chart that isn't, is the 15 minute chart, which could give any trapped bulls a small pop in the morning to exit their longs, and get short.  I've called for a Black Monday 3 times in the past and been wrong on all three.

When I look back at the charts on those calls, I find that I didn't have them all lined up in the same direction... DOWN.  Which is probably why my calls weren't correct.  But, as each day passes, I learn more and more about how this game works.  Not that I'm an expert by any means, but it's becoming clearer too me now, as to how to tie all the different charting techniques together.

Let's look at the charts now, and see what they tell us.  I'm going to skip the monthly as nothing has changed since I last posted it.  You can look at it again by clicking here.  You will notice that it is from April 30th, 2010... and you can see where it's at now by going to Shanky's Charts by clicking here.

You will notice the red bar now in May, and if you try to find the 1260-1280 area on the now broken rising trendline, it looks like it could come in on the July candle, as I believe that the June candle would put it at about 1240 area (look to the right where you see 1240.03... that lines up with a backtest of the broken trendline on this monthly chart.

Of course there's nothing saying that it can't go back inside that trendline in June, and then fall back out into Primary Wave 3 (P3) in July.  Remember the fake print we have of DIA 118.16 (about DOW 11,816 or 1260-1280 spx), and the date of June 25th on the Wilshire 5000 chart I showed in my "Great Depression Two" video (now a separate page, so you can go watch it if you didn't see it the first time I did it).

I was wrong then calling this past Monday a "Black Monday" as I stated in the video, but so far... everything else is still lining up with the projected forecast.  The chart are now supporting a very large move down tomorrow, and that is what I stated in the video.  However, I now have reason to believe we will go much further down then "just below 105.00" as I stated in the video.  I'm looking for 980-990 now, before the rally back into June/July happens.

OK, moving on...

Let's look at the weekly chart now.  I'm just going to put a link to it here, as it's playing out like we expected it too.  Here is a link to a post from May the 2nd, 2010... and here's a direct link to the chart only.  As you can see, we are still headed down.  The Moving Averages haven't crossed over each other yet, but I think they will by July.  When they do... P3 is here!  But for now, I think they will move closer together over the coming month, trending sideways, and finally cross when the market rolls over in late June, early July.

Next up, the Daily chart...

Well first off, you can clearly see now that the 20 EMA (red line) is touching the 50 EMA (green line).  It's pointing down and should cross over the 50 EMA tomorrow.  Notice also that the MACD lines are still pointing down too, and the histogram bars are now getting deeper again.  The negative DI line (in Red, at the top) are still above 30, while the positive DI line (in Green) is below 20.  The ADX line (the Black line in the middle) is rising, which strengthens whichever DI line is on top... in this case, the Negative one.  The RSI is still below 50, giving strength to the bears.  This chart is still very bearish, and I definitely see more downside coming.

Now the 60 minute chart...

Notice how the MACD lines were pointed up this morning during the brief rally, but have now turned back down again.  The histogram bars rose up above the zero line, and quickly put in a much smaller tower, and are now ready to go back below zero tomorrow.  The RSI line (top chart) rallied up to the 50 line in the morning, and was quickly rejected and is now pointing back down, giving strength again to the bears.

Also notice that the market tagged the downward sloping trendline around 1150 and was rejected again.  The market is headed down, and it's most likely going to be a wave 3 of 3, in Elliottwave terms.

Finally, the 15 minute chart...

This is the only chart that could give the bulls some hope, but it will be short lived if it does.  I could possibly see a small early morning rally back up to the 1130 area, where the downward sloping trendline will be at tomorrow.  This is the last stop for the bulls to get off the train, as the tracks dead end at the edge of the Grand Canyon.  As you can see by the rising histogram bars, this could rally the market a little while it goes into positive territory and puts in a small tower, before rolling over to the downside again.

Once all 5 charts are pointing down... all hell is going to break loose next!  This could line up perfect with the time that the Senate votes on the Financial Reform Bill, when they stage a huge protest march in Greece, and when Germany bans short sellers.  Talk about a triple whammy!  All those events together, along with what the charts tell me spell one word... Crash!

Maybe I'm little too crazy for some of you too believe, and yes I've made some stupid calls and predictions in the past.  But, I was still learning the rules of this game back then during those calls.  Since then, I've learned to get a better view of the whole picture.  I could be dead wrong on this, and I wouldn't dare give you trading recommendations to go buy a certain etf or stock.  But, if you are long, I highly suggest you think twice about going to cash, and get out tomorrow when you can.


P.S.  This was a late day post by Diablos who caught this fake print, showing 115.03 spy.  I don't know if it plays out tomorrow or if that's a sign for where they plan to close it on Friday, which makes more sense, because of the huge amount of open interest on the puts at that 115 level.

Keep this target in mind tomorrow, as if the market can break above the downward sloping trendline around 113 spy, then this fake print should be hit on Wednesday... not Friday.  No way to be certain of course, but a gap open above the downward sloping trendline would then make this target highly likely.

But at this point, from looking at the overnight futures, I don't think this print will play out tomorrow, but will play out at in a future unknown date.  Could it play out this Friday where all the put open interest is, or will the market makers not be able to rally it back up to that level by then?  I don't know of course, but my gut tells me that they are the buyers of a lot of those put contracts, and want a market crash to make money from them.

Sometimes they like to fool you, and not close it where you expect them too.  I know that many times in the past, I seen a target level that was extremely loaded up with calls at that level, and I thought for sure that they would pin the SPY at level, to avoid paying out those call holders... only to see the market blow up past that level and close higher on option expiration.  So for now, let's just put it in our little bag of tricks and look for a future date. Thanks Diablos

P.S.S.  The futures are down 10 points as I finish this post.  It's not looking good for one more backtest of that trendline around 1130 tomorrow.  We'll see... anything can happen.


        • That's all you are supposed too see… it's a new post, and no one has commented yet except you and me. Go up to the title of the post, and you will see a link to the previous post (which was the one I made last night for day). The post you are commenting on now is tomorrows' post (Wednesday). Make sense?

          • You know I read about how the sky is falling here and I just thought it had already started. LOL

          • Actually, the sky is falling. The volcano in Iceland is going to mess up air travel for years, and cool the planet for years. The oil gusher in the gulf is gushing faster than anyone will admit, and it will gush until all the oil in that hole that wants to come out, is out. Gonna be a mess for years.

            But this web site will be working. So, we'll be fine 🙂

          • I sure hope the website is still working. A year ago I didn't have a clue how to make a wordpress blog. But, I learned a lot since then… and keep learning new things every day.

          • I think you are ahead of the game. I count myself among the red pill ones and still I regarded Iceland and the spill to be the usual short lived disasters. Now I wonder what they want from these soon to be mega pains.

            It makes more sense because MSM attacks a business that is going down anyway. For instance in recessions they start attacking hospitality etc.

            Read more here:

  1. Great post, Red, I appreciate the charts.

    Seeing as the new trading rules being bandied about include a 'circuit breaker' for a market loss of 5% rather than the current 10%, how about just one more 10% day for old times' sake? That would put us at 1008, coincidentally the same as the bottom of the target range for the Ascending Broadening Wedge that Cobra has highlighted:

    • I like Cobra and read his posts regularly. He's a great chartist, and I've learned a lot from him. I certainly don't know exactly how far we are going down, but I'm pretty sure that we “are” going down.

      • One thing I've learned the hard way is that nothing connected with the market is certain, but I think this is the closest I've ever been to staring down an empty elevator shaft.

        A 100 point day would sure be good advertising for the regulatory package that the foxes have designed for the henhouse!

          • LOL. My wife always marvels at how cynical I am. She bought a package of a new kind of Oreo cookies that has cookie crumbs mixed in the filling and I said, “I see they found a way of recycling their cookie scrap” and she couldn't believe it.

            The only sense of wonder I have is wondering what the heck agenda is behind the headlines.

          • I know how you feel. I don't have any personal friends or family members that understand anything I talk about. It's like I'm talking in another language too them. They all took the blue pill, and I took the red pill.

          • I feel your pain Rip. My husband, mom and just about everyone else thinks my cynicism is nuts. That's why I hang around you guys!

    • I was thinking that there would be another crazy down day like that before they actually implemented that rule.

  2. Red…when you say charts pointing down…in very simple term what does that mean to you…I always used the ma if you will to tell me …if they were stacked 50…20…10…then yep going down…5min 15min 60min all down by a little on two and the daily not…

    just want to understand your thinking better…thx

    • Whenever the market is trading above the 50ma, 20ma, and 10ma… it's in an uptrend. When market falls below them, it's in a downtrend. The more lines it falls below, the longer the downtrend should last.

      Then you need to look at the next large chart (longer term chart), which will tell you if it's going to be minutes, hours, days, weeks, or months… with the new up/down trend.

      Look at the weekly chart and you will see that the 20ma hasn't crossed over the 50ma yet. I think it will cross in late June or early July.

      I think the monthly will cross shortly thereafter, and the market is going to drop like a rock for the last half of the year. Bad times are coming…

  3. If our new bottom is dragged out a bit, maybe with a probing of very low resistance (Sundancer's projection) occurring next week, perhaps the 20 may cross the 40 and cause everyone to speculate that we are in a bear market.

    This would be a perfect time for a rally that would make your ears bleed, prompted of course by concern over the dollar and rising interest rates.

    Should be an interesting day today! Figures that I have a ton of real work to do.

  4. FTSE plunged to equivalent of very low 1100s this morning and is having a bounce. We ought to meet about where SPX closed yesterday.

    I suspect that this will be a very brief consolidation point for us, rather than the beginning of a rally.

  5. Carl’s morning call:

    June S&P E-mini Futures: Contrary to my expectation Monday's low at 1113 was broken by 8 points in Asian trading last night. My range estimate for today is 1100-25. I still think that last week's low at 1056 ended the correction from 1216. Strength above 1120 would be very bullish.

    1104.75- 1118.25 range last night (13.50 points)
    1100-1125 estimate for today (25 points)

    1114 currently, so estimate is -14 to +11 from here (neutral)

    • A slightly lower open, a slight move up to positive territory and then KABOOM! But this is sort of what played out yesterday so it probably won't happen again! If we get near 1140, I short more.

      • Look at the charts above Monica. In order to get to 1140, the market must cross that downward sloping trendline in yellow. That's not likely to happen, as sloping trendlines (up or down) seem to be even more resistance then horizontal trendlines.

        The market would have to gap over the trendline to race up higher to the 1140 level. With less then 10 minutes until the open, I don't see a gap up happening. The level to look to go short at again, is around 1130 or so.

    • Good morning, Red–

      I think that today is the day we've been waiting for. Day 1 of 2 actually, so I will stick beyond the close even though it will hurt.

      My guess for today is a low of 1050-1065, where we will close. Tomorrow will be a low of 1008-1020, closing about where we do today.

        • BTW, I respect Sundancer's low estimate, but think we will have a bounce before we go there.

          I will continue to dork around with options and not take any big equity positions until that is completed or ruled out.

          • It's hard to say how far it will go down, but it should most definitely take out the current low of 105.00 spy. Whether that happens this week or next… who knows?

          • There is a ton of downward pressure overhead now. As you can see from the charts above, the monthly, weekly, daily, and 60 minute chart are all pointing down. It's going to be hard to rise up very far. The 1130 area would be a gift to the bulls.

        • I agree, this should be the Big One, but if you look at old charts there appears to about a 50% chance that substantial losses are incurred the following day, though are reversed by EOD.

          I think today's bottom will be a fake-out, in the range I mentioned. I will be sorely tempted to exit at 1050, though.

          • I am sticking to sundancer's low estimate but I will get rid of my puts either today or tomorrow. I will hold onto the June ones. Meanwhile, if we have a giant bounce, I will then use the capital from my may puts to buy more june ones.

      • you think thurs will be big down day too (as well as today?) what about wave 4 up then 5 down into friday? ??no good

        • I dunno, I'm not an EW guy. It could happen; I'm seeing a lot of money flow into the market right now (looking at an SPX 5 day chart on Yahoo).

        • Excuse me, I didn't answer your question. I was thinking about the likelihood of a morning rally.

          I'm pretty sure tomorrow will be a reversal day and end about even. Whether it carries to Friday, I have no feel.

    • pivot is 113.41 and s3 is 109.56 so unless something out there really bad I'm going with 109 and hopin for 105…

  6. Well some green for a bit. Are they giving the bulls a chance to get out or bears an opportunity to add?

    With averages aligning I do not know how or who would be bullish but they seem to pull it out.

      • I don't think so…the stars are all aligned (charts) so pretty hard to find something bullish…I got this feeling in the gut somethings coming….probably need to eat…

      • Its the funny thing about EW. It amazes me how people can read the charts and counts differently.

        I am a vix fan. i believe that sentiment along with average alignment are the critical signs for market direction. But I too am often wrong.

  7. I'm pretty sure this phenomenon starts at 11am EST or 6pm GMT

    “Civil servants and public sector employees, who have vowed to step up protests, will march to parliament late on Wednesday to protest against austerity”.

    or course a riot doesn't have to break out.

    Also Fed and ECB checking rates to keep things calm

    from liveforex

    I have it on good authority that the ECB and Fed “checked rates” about 15 minutes ago, prompting a bounce to the 1.2315 area.
    The CBs call around to the banks and ask what they are seeing.
    In essence, they are trying to send a message to the market that they are “watching”…

    If the Euro is stable then (I assume) the S&P will be stable.

          • I need to learn how to do that. Can you key to the index??

            Re: freezing, my computer was acting suspiciously like a trojan was interfering on very active days, so I disabled a program called DCOM so no one can operate it over the web. This helped a bunch.

            If your cursor goes all floaty, it is most likely a trojan.

          • Yes, you can key it to the index which is what I do. You get lousy executions, but it is better than trying to type in the order when the market hits that exact point and having your system freeze. Red made a suggestion to me to put the trigger in somewhere slightly higher than you want to sell it (i.e. if you think SPY is going to 105, put it in at 106), so that you get the execution while the market is falling, rather than when it is bouncing.

          • That's a good idea. Best to execute before hope dawns. SDS is very volatile, swinging half a point in seconds. The option premium is very wild, all over the place.

  8. comparitivly large move up in the Euro does not translate into a large move up in the S&P. ?Could be bearish sign for S&P. Just thinking out loud

  9. RED – DO YOU KNOW WHERE NEXT CONTAINMENT DOWN IS?? I think 106? I will go back and look.

  10. “chart pattern trader” appears very good. Clear without equivication. He's on the blog list. watch his videos.

  11. wow the market is cratering and we didn't even have 2 consecutive 120 closes below containment.

      • Hi – I re-posted Sundancer's containment lines below. Looks to me like next level of support is around 1076 or so. I put in a trigger at 1079 just in case. Perhaps tomorrow we get to the 1020s (that's the next level) but I don't want to take that risk with my May puts. I bought some more May puts this morning as well that I will cover at 1079. Keeping all the June ones.

          • thanks big bad., Do you know where 108.03 corresponds on the SPX? I have a order to buy some puts in at 1079. Sounds about right.

          • THANK YOU! I will leave my order in at 1079, so I catch it on the way down, rather than up.

          • still early but I am beginning to dought if we get there today…haven't hit S2 yet but anything can happen quickly…I like your idea to set the triggers…

          • SPX 18-May-10 End of Day Data
            Open High Low Close
            1,138.78 1,148.66 1,117.20 1,120.80

            SPX 18-May-10 Pivot Points, Fib Pivots
            R3 1,172.03 Fib R3 1,160.03
            R2 1,160.35 Fib R2 1,148.39
            R1 1,140.57 Fib R1 1,140.84
            Pivot 1,128.89 Pivot 1,128.89
            S1 1,109.11 Fib S1 1,116.93
            S2 1,097.43 Fib S2 1,109.38
            S3 1,077.65 Fib S3 1,097.74

        • I dont know about you guys but I think I took two red pills to many last night….My gut tells me somethings not right…anytime a government does something to try and fix something it causes more chaos down the road.. I got a bad feeling somethings going down over in la la land Germany..there cooking up something or they know something is coming and they did what they did to prevent chaos…ok let me find some blue pills now…

        • Why is so many people bullish here? The charts don't support it. The monthly, weekly, daily, 60 minute, and 15 minute charts are ALL bearish! Maybe for short term bounce, but when the 60 and 15 minute chart realign and point down again… we could have another flash crash!

          Call me crazy, but the charts tell me that there is no way in hell we are going to rally up here. Look at the daily chart… both the 10ema and the 20ema have now crossed over the 50ema. That's very bearish!

          That yellow downward sloping trendline (in the chart above) is going to hold the market back. It must gap open over it, before it can rally. That didn't happen today. I see a big sell off into the close.

          • Actually I'm not bullish just keeping my mind open for a bounce but I agree the momentum is to the down side and it seems that sell the rip is in

      • I'm in Reds camp on this one…5 time frames point down… down it is….we are struggling to get back to open…maybe we get to yesterdays close but then back down…picking a time…today, tomorrow, Monday, Friday, is voodoo to me…cant see the future…but the over all picture when backd by the many time frames tells me where we are going but not the time I arrive…

  12. guys where we are at 12:30 cst is all that is important. otherwise don't read into the moves.

  13. What are your thoughts on adding to positions at this point? Bounced off 1102 and need to break it to continue the slide I would think.

    15 minute on vxx is rolling over a bit.

    S$P macd 15 crossed but rsi still down???

    • listen to sundancer. see if we are below red containment at 12:30cst and if so, add to shorts.

      • how do you read his containment chart…. what is 120?

        i don't understand what 120 is… could you explain some about it?

        • I am just listening to him so I don't understand it fully (trying to get there). 120 means two 60 minute blocks. So we closed below the red containment at 10:30CST. Then we have to close below red containment again (consecutive 120 minutes closes) again at 12:30CST. We should know the outcome in a half an hour. If we close below that red containment level at 12:30CST, we take a plunge. If not, then I don't know!

  14. guys check out this brand new site:

    its loaded with free educational content and a “road map” going forward a few months. Its definitely a great resource to consult before adding any positions.

  15. This market is just stair-stepping itself lower now, which is what it did yesterday after a high was put in. The 60 minute and 15 minute charts are point up now, which is what's causing the backtest again, of the downward sloping trendline.

    At some point later today, the 60 and 15 minute charts will re-align again, and point back down. When that happens, a 5 charts will once again be pointing down. Another thrust down is likely to happen then.

  16. IF today is like Feb 4th, I think get down to 1077 today and then down to 993 tomorrow morning before bouncing. Let me get the popcorn out!

    • looking at the 5 min chart the ADX and DI crossed yesterday at 1pm -DI up and today at 1pm we crossed +DI up…so according to the rules in at 111.92 but ADX not moving so I think going down…

      just thinking out loud

  17. the s&p is going up because apparently the Euro is going up. Need that Euro to tank and the news ain't there.

  18. Markets in the same place before I hit the road!!

    Dancing with Red Containment on the 120 continues……

    As I said in my morning post, the rogue bid won't disappear until consecutive closes below red containment on the 120min.

    Until then, don't wear yourself out watching every tick!!!!!!!!

    • Red, I thought containment was yesterday's close and that we already had two 120 closes below it. Where is it? That means, we can't make the move down until tomorrow if the last 120 close was above containment since we don't have 2 120 closes left in the day..

      • different setups on different time frames

        Daily containment setup
        120 min containment setup
        195 min setup

        the above chart is 120min.

    • You definitely have a longer view than most of us, Sun. Seen some nice paper profits come and go the past few days.

      The rally was a nice buying opportunity, though. I'm bristling with May puts again.

      Thank goodness that friggin' TL finally broke!

      • Rip – we are lucky sun's giving us any information at all. It's our job to read between the lines and figure it out for ourselves. He said a while ago not to used leveraged instruments so the fact that we are time sensitive is our fault.

        • Oh, I am as grateful as can be for all of Sun's input. He is VERY generous to share, and I feel like I've learned a ton in the past couple of weeks. Just an observation that he is looking at a much bigger picture.

      • You'll know you have conquered this Ritual when you can Catch a Big Wave and ride it all the way.

        I use to try & push pennies together as a daytrader when I first started. It's the allure of instant gratification. Once you get past that, you can lengthen your time frame.

        • I have been more of a swing trader and have been superstitious about the market when it is at extremes, especially at the top. Not a day trader, though, except by accident. My usual holding period is a couple of weeks.

          I have generally missed out on big moves like this, so it's quite an experience.

  19. To me it looks like 2 options for the close
    close above 111.77(SPY currently has 4 consecutive lower closes than opens)
    Close near 110.34 which is the SPY crash gap that was left from 9.29.2008 weekly print

    • Thanks – do you make anything of that fake print diablos saw at 120.60? Since we didn't have 2 120 closes today below containment, I am think we go up to that level tomorrow morning before hitting those two consecutive closes below containment? If we close below containment, and open below containment tomorrow, does that count as two 120 closes below containment?

    • oh yeah – last time we had so many consecutive closes lower than opens, the shit hit the fan the next day.

  20. This is a weird day. i thought the bulls were overpowering there for a bit.

    should have bought a bit more.

  21. hello sun

    where is that containment line so we all know. I assume its the bottom red line? what level is that. It's probobly the spy.

    thank you

    • Ben – I think ashsail is right – about 1112. You have to read between the lines:) just don't worry – we may not go down in a straight line, but we will go down.

      • I started playing short positions last dec. .

        until i see a good confirmed Stage 4 decline I will worry. Too many times i thought we were there and the bulls pulled a move.

          • Stocks move in 4 phases.

            1 Bottom consolidation
            2 upward movement
            3 top consolidation
            4 decline movement.

            Until upward trend is broken by all averages aligning downward and moving below trend line we are in consolidation.

            On the 60 minute time frames we are in stage 4. in 15 minute we are either there or close.

        • Me to Jim but I believe this time is different. And if you wait to get confirmation, the big move will be over! You either have to believe one thing or another or stay out.

          • You are correct and iam in. I add very cautiously but am very short. Question will be whether to ride out a bounce or not.

            In Dow Theory if we go below 10,221 there will be a crater.

  22. we just dropped below red containment line on spy at 111.77. But NOT two consecutive 2hr (120) closes

    • What does this mean? I can see the 3 touches maybe 4 off the white line

      don't know what ENV means

      is this bullish or bearish?

      • Ashsail, why did you get in cash? To me it looks important that we close below containment and if not, big gap up tomorrow even if the downtrend continues.

        • Monica, I made a mistake on monday when I went long but couldnt watch the market yesterday until afternoon due to some meetings, and then I came out with a loss.

          • makes sense. I want to see if we close below 111.77. If not, I will have to close out my may puts. Will hang onto my june ones.

          • 1 : One : Won
            8 : Eight : Ate

            The co-relational nature of the CON-struct

            The 390 in my AVA-Tar is for 390 minutes of trading per Ritual period(market day)
            Drop the placeholder off 390 & you have 39 which = 36
            SUM 1:36 = 666


  23. Looks to me that if we don't close below containment, there will be a big bounce tomorrow but that is just my interpretation.

    • That's my understanding but I am not 100% sure I understand! From Sundancer's chart, it looks like last time we had 3 bounces off the trend line, we gapped up big the next day. But, if we can get below that for the close, I imagine that would be bearish. My fear is that fake print Diablo saw. I will close out my May puts if it looks like we are going to close above it.

    • the selling will stop once we get above teal containment on the 60 min which is currently in the 1140's, until then the dynamics don't change

  24. Does anyone know what happened when we had 5 consecutive lower closes than opens? I am trying to find an example historically but am having trouble.

  25. They seem to be dancing around the 111.77 level now. So if I understand this correctly, a close below 111.77 should produce more selling tomorrow, and a close above it, opens the door for a gap up.

    • 111.77 has no importance other than the SPY consecutive close sequence
      Bears would like to see a close above 111.77

      • Boy are we off. Ok – I see 6 consecutive lower closes from Feb 13-23, 2009, no? From there, we moved up significantly the following day and then continued lower. Since Friday is opx, I better close out my May puts.

  26. Actually it would be good for us if we close higher than we opened. Talk about reverse psychology!

    • I prefer a decisive continuation to keep the fear up.

      The vixes did not help us much this afternoon.

  27. This is frikin insane. 20% swings every three minutes.

    Looks like consolidation but for what ?? Swing up or down tomorrow?

  28. Looky there – a close at 111.76. Guess that is not good but who knows if they will change the print. Red, I sold half my May puts at the close.

      • 2 occurrences of SPY 6 consecutive lower closes than opens in the past 555 TD
        1 in Dec. 09'
        1 in Oct. 08' happened during the Fall Harvest of Speculative Capital

        In the past 777 TD
        the longest SPY sequence is 8 consecutive lower closes than opens

          • see below. You may be in luck. Sundancer, we know leverage is stupid. Problem is, if you don't have a lot of capital, making 10% on nothing, is still basically nothing! But that is why I closed out most of my May puts earlier in the week and rolled into June ones.

          • FWIW,

            You have more capital than 99% of the state in which we both live.

            Be honest with yourself before its too late. SUN is right on this.

          • How do you know?! Believe you me, I am well aware of the dangers of leverage and yes i know, my trades have been too risky. However, if you use options properly, I actually think they make the most sense in markets like this as you can limit your capital investment. You have to be careful when you are dealing with options that are close to expiration and sometimes it's best to hedge with spreads. Nonetheless though, I have multiplied my account 5 times in the past 2 weeks and I wouldn't have been able to do it without leverage. Granted – I could have lost it all. I won't be this crazy going forward!

          • How do I know…check your out box!

            CONGRATS on that feat. That puts you ahead of almost everyone that I know.

            Unwinding spreads requires constant vigilance which amazes me given the babies.

            My work here is done. As my Dad told me 'A word to the wise is sufficient'.

          • Red,

            There was an interesing series of articles in S&C magazine a year or two ago looking at Open Close relationships. I think it was based on the QQQQ's.

            Regardless, it would do you well to dig it up and read it. Also, another on the theory of runs as applied to the market. Might want to pick that one up as well.

            Tease: Right after publication the relationships fell apart. So, like all TA it is just another arrow in the quiver but you will not fell your opponent with one.

            Also, I agree with the comment regarding leveraging. What SUN mentioned happened to me as a kid when I thought I had it all figured out.

            The market may or may not be a casino. But if you talk to professional gamblers, they will tell you that position sizing is key.

            One of my good friends hold a graduate degree from Stanford as paid his way through school counting cards for a syndicate. This is no BS story. Although I did not believe him for years!

          • Yeah, I lost my tookie 30 years ago shorting oil service stocks that kept going and going. That's where my SN comes from. I'll never use margin again.

            I play options, but only small amounts. Often the risk/reward is better on options than buying the stock outright. I've done OK so far.

  29. my 2 cents is this: To get this crash business going your going to have to have an event. The technicals waited for it but it didn't happen.

    The govt's don't want the Euro to crash. Greece isn't going to leave. The fed and the ECB checked rates today. ie possibly a Warning of possible intervention. Euro had a nice turn around today to the upside. So I think there is a possiblility of intervention during Europe time overnight. So the S&P jumps to 1138 or more, depending on what the ECB does. It is opx week and all this can add leverage fuel to the Euro rally

  30. Something is weird… the Euro is up now, the dollar down. The Financial Reform bill failed, which should cause a rally tomorrow, but the market is down a little in afterhours, instead of rallying?

  31. Hey folks, a diamond formation is starting to form on the 60min june emini sp

    this is bearish (I think)

  32. Red, I guess we are going to at least 120.60 tomorrow. Just hope we don't get above 1140s. ARGHHHHHHHHHHHH!

  33. I have doubled down on my long popcorn position!!!!!!

    Leverage kills during Big Rituals

    Now this close on the SPY today is rather scary if you're long
    The operators did this same Ritual during the Oct. 08' fall harvest of Spec. Capital.
    The Wednesday of that Week here was the SPY Ritual
    10.8.2008 Open: 97.52
    10.8.2008 Close: 97.51
    5.19.2010Today: 111.77
    5.19.2010 Close: 111.76

    • Even more scary
      SPY had 5 consecutive lower closes than opens after the 10.8.2008 close (Wednesday)
      SPY has 5 consecutive lower closes than opens after today 5.19.2010 close(Wednesday)

          • Yes, you are. The big move should be made tomorrow with a lower low put in on Friday and then a hard reversal. Moral of the story – get out at the open on Friday. Of course that is, if history repeats!

        • nevermind Red, my link doesn't work. Just go to yahoo finance and click on two year chart for the SPX and then enter in the dates 10/3-10/13 2008 and you will see what Sundancer means. 10/9 was a big gap down (which should be tomorrow), with a lower low formed the following day. From there we went back up. So looks like low will be put in on Friday. NOW, don't go write any Black Thursday posts or it could jinx us!

  34. Carl at day’s end:

    1100-1125 estimate for today (25 points)
    1098.75–1122.75 actual range today (24 points )
    Market was 1-2 points above Carl’s range.

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

  35. We are now in a New Moon Trade, which tends to favor TZA.
    TZA opened up 1.7%, and the opening gap was filled. TZA was up 8.1% at it’s high, and closed up 3.8%.

    AmericanBulls had TNA with a Wait today from the sale yesterday. TNA was down today, so TNA will be a Wait again for tomorrow.

    AmericanBulls had TZA with a Hold today after the buy yesterday. TZA was up today, so will be a Hold for tomorrow. The buying price was $6.10, and TZA closed at $6.67, up 9.3% in 2 days.

    Volume for TZA today was 46% above the 1 month average. Good for TZA.

    $RVX (VIX for $RUT) closed up 3.9% with TZA up 3.8%. No divergence Good for TZA

    TZA had been down 3 days, up 2, down 1, now up 2, but drifting up generally. Good for TZA.

    The low for TZA was from seventeen days ago at $5.30. Today’s low was $6.31, 19% higher. Good for TZA.

    Today, Ultimate Oscillator for TZA rose from 39.5 to 48.1 (+8.6) while TZA was up 3.8%. No divergence. Good for TZA.

    MACD fastline & slowline are below zero but rising. Good for TZA.

    Bollinger Bands for $RVX (VIX for $RUT): Today, $RVX climbed above and closed below the top Bollinger band. MACD both lines are rising. Good for TZA.

    Bollinger Bands for $RUT: Today, $RUT had a long tail red candle that closed between the 50day moving average and the lower Bollinger Band. MACD appears to be falling. Good for TZA.

    TZA had a higher high & higher low & higher close (good for TZA)

    Money flow for the Total Stock Market:
    $ 21 million flowing out of the market 2 days ago.
    $ 42 million flowing into the market yesterday.
    $ 264 million flowing out of the market today.
    Good for TZA.

    I will post the AmericanBulls candlestick interpretation a bit later.
    Overall, Good for TZA for tomorrow.

  36. The Daily view from Americanbulls

    TNA was a Wait today, was down today, and remains a Wait for tomorrow.

    TZA was a Hold today, was up today, and remains a Hold for tomorrow. The buy price was $6.10, and TZA closed at $6.67, up 9.3% since the buy.

    Of the stocks & ETFs I follow, these are to hold on to:
    RWM (-1x $RUT)
    TWM (-2x $RUT)
    TZA (-3x $RUT)
    ERY (-3x energy)
    FAZ (-3x Financials)
    QID (-2x QQQQ)
    DXD (-2x DOW30)

    The list to avoid:
    IWM (1x $RUT)
    UWM (2x $RUT)
    TNA (3x $RUT)
    GLD (gold)
    UGL (2x Gold)
    ERX(3x energy)
    QLD (2x QQQQ)
    EWX(emerging mkts)

    The following are possible (but unlikely) buys tomorrow:
    IYR(1x RE)
    URE(2x RE)
    DRN(3x RE)
    UCO(2x Oil)

    The following are possible (but unlikely) sells tomorrow :
    UUP(US Dollar)
    SRS (-2x RE)
    DRV (-3x RE)
    SCO (-2x Oil)
    DTO (-3x oil)
    EPV (-2x Europe)
    SPXU (-3x $SPX)
    DZZ (-2x Gold)

    There were no stocks or ETFs that were likely to be bought or sold tomorrow.
    Today was less Bearish than yesterday.
    Action for TNA or TZA for tomorrow: Hold on to TZA, avoid TNA

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