Bear Annihilation…

By Red, on June 10th, 2010

Are there any Bears left alive?

Today was the largest short squeeze ever, as Mr. TopStep quoted on their Twitter feed. I believe it, as I’m so far underwater on my short positions now, I think I can see the oil coming up from the seabed floor now.

I’ve covered basically my thoughts in the video above, but I want to add some more. The triangle breakout on the market from the top in April is only a slight breakout, and could still be considered “still inside the triangle/channel”… The downward sloping top trendline of the channel (look at 60 minute chart for channel), along with the horizontal support line around the 1040 level, forms a very larger triangle pattern.

It’s basically the same upper trendline of the falling channel that is seen clearly on the 60 minute chart, only without the lower sloping trendline of the channel. Just replace it with the horizontal support line around the 1040 area, and you have your large triangle. Hopefully that makes sense too you (as the horizontal line isn’t shown in the chart)?

Today the market popped outside the triangle (also the top trendline on the downward sloping falling channel… which is actually the same line). But, I believe it’s just a head fake, and it will reverse hard and go back down next week.

The main pattern that is now forming is called a “MA” pattern. These MA patterns, as explained in the video are very bearish, and if it plays out… an 80-100 point move down is too be expected. But, even though I still believe we will sell off hard next week, I have to consider how much open interest there is on the June put options, as next week is opx for June.

So, the possibility of a pattern failure is larger then usual, and that leaves the door open for a gap up on Monday and a continued run up or sideways into Friday. I don’t believe that to be the case, but it is possible. They want to take everyones’ money, and I just don’t know if there are now more bulls or bears left in the market? The open interest says there are more bears, but today’s squeeze could have a lot of them switching sides?

Needless to say, I’m disappointed by today’s gap up instead of gap down, but it totally worked by faking out everyone out… especially me. Again, I don’t expect much for tomorrow but a flat day overall. A move up to the 1093.56 20ema on the daily chart is likely, but I expect it to pull back and close around where it opens… and not break that level.

The best hope the bears can have is for every other blog to now start calling for 1100 or better, to form the right shoulder that appears so obvious now, as the next likely target. First 1100, then 1120, and finally 1150 where all the bulls can exit safely and the bears can board safely. Seems too easy too me, just like crashing this week was too easy. So next week looks like the rally up in opx that will make that right shoulder… which again, seems too easy too me.

Best of luck to both bulls and bears…

Red

Weekend Update...

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

Days like today are why I switched from options to 3x ETFs. It hurt, but not nearly so bad as if I had options that expire next Friday. I hope it works out well for the bears, myself included.

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

Thanks Dreadwin…

It took a lot of us by surprise I believe. But now, they squeezed out a lot of bears… so we should (maybe, hopefully, LOL) be free to fall all next week.

It's hard to predict, as it's triple witching next week, which could move the market violently up or down. Everything I look at still points to next week down big. We'll see I guess?

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

I was totally stunned by the open and relentless push up. I'm sure that the point was to have a squeeze and then a drop, but at what levels? Likewise, I do think that this move is a fake move, but that doesn't mean it will turn around in a timely manner.

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

That's exactly why I technicals don't always work, or if they do… I'm missing the part of the puzzle that makes them always accurate. The move today should have been a gap down, at least as well as I could read the charts.

But, they gapped it up to squeeze out all the bears. They did a great job of it too, as I'm sure a whole of them bailed out.

Now, everyone is expecting the 1100 level, then 1120, and finally 1150 to form that right shoulder. I think those people will be fool too, just like I was today.

By the way, where is Earl of? Did he get leave like SC because of my crazy posts about the Illuminati, Aliens, and other conspiricy theory posts?

I hope not, as I know other read his daily reports on TZA and TNA.

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

Haven't heard from Earl this week. Perhaps he's avoiding trading this nonsense.
http://www.reddragonleo.com Red Dragon Leo

I don't blame him for that…

I wish I would have skipped this week too, as it would have saved me a lot of money, and pain.

Bensjoyce

A Really big IF for friday

If retail sales is REALLY bad +.2 expected and it comes out -.5 AND U Mich. cons. confid. comes out 4 pts lower or so then expected then maybe the S&P can crash tomorrow. But Don't expect such rarities. It will probably come out sort of bad so the S&P only makes a huge drop ?20pt to support around 1064 and then rallies.
Bensjoyce

Please let me add. this is hypothetical but no one has mentioned this yet. We had a BAD employment figure last friday. Now if retail sales and UMICH sentiment is very bad then MAYBE the bears are correct. You got to look at the fundimentals. These are the triggers on the technical stage.
Bensjoyce

One person writes on X-trends about Atilla

What do you think of Atilla? I was short from Nov 07 to Mar 09, expect for a a couple short periods, but turned long late Mar 09 to Jan 10. What amazed me was that Atilla posted doom and gloom from April 09 to Dec 09, then he disappeared. Then showed up again with doom and gloom in late Feb, then disappeared and now he back again, doom and gloom once again.

I am very short now and I hope he is right this time, like he was back in 08 and early 09.

Rip Van Trader

Ben, nothing in life is for certain, and that goes for the performance of your puts. I have puts myself (rather a lot of them, plus ETFs) that I hope to make money on in the next couple of days, but there is risk involved. For me, the possible loss is about 10% of the potential gain. I think there's about a 95% chance of the market going seriously south in the next six weeks, so to me this is a good risk/reward ratio.

Look at a chart of SPX for the last half of 2007 and the first part of 2008, and you'll see the type of terrain we are negotiating. Sharp rallies and plunges are all part of the game, and they are unpredictable. We could have a rally as big as a 50% retracement, which would suck.

The most important point I am trying to make is that we are moving randomly within a channel; once we leave the channel, the direction will be fairly certain. We can exit through either the top or the bottom. Some of us think that a bear market is more likely at this time given the state of our economy and liquidity in the market, and others are bulls.

Practically every day, I see three possibilities:

1. It will tank today. For this reason, I am short at all times, though in varying degrees.

2. It will jump out of the channel and have an extended rally that could take weeks and cost me a lot of money, but when it happens I will cover and may even go long to recoup my losses.

3. It will jump out of the channel and FAKE THE START of the extended rally, but in fact tank within days. This is why I will not abandon my short position until we have at least two consecutive closes over EMA 20. You will see these in 2007, particularly 11/13/07 IIRC.

There is a fourth possibility, that of a new bull market (or substantial bear market rally, to be precise) as happened 3/09 and burned Atilla. I don't think this is going to happen because (a) our imperfect bottom is technically suspicious and leaves no one with any money except the market makers, and (b) it's been done already.

With June puts expiring next week, I am treating them as radioactive and will dump them ASAP. I think that sometime before OEX we will see a big red candle, and I will sell some at EOD and the balance the next morning. I do not care whether that will be at 1060, 1050, 1040, or 875; if we see that pattern, that's when the June puts will go.

As we are at the top of the channel, I will seek to buy some July puts today. Should have done that yesterday, but I was in shock from the rally, which in retrospect I think was a manipulated bear squeeze that may actually bring a sharp drop quicker.

Hope this helps!

Bensjoyce

another writes in Atilla's favor

Dear AMD, No need to delete my post … just few questions

Everybody knows that you developed your own trading system based on maths and your own market observations. You talked about it on TT board few years ago, you showed its real time signals in April/May of 2009 and once in 2008 too, it was really impressive, performed great on long and short side day after day. You no need to prove to anybody that you are a great trader, your system proved that already.

Why all this bearish talk all the time? If SPX goes to 1150 from here or to 1250 or what ever it is, your system will guide you there and you are going to mint money. I am sure you must have made loads of money last year, you don't just sit on bearish positions for months sticking to your bearish prediction while the market moves against you. back in 2008 you posted in real time, many times, how you got out of your positions and reversed almost for every 50 point move.

What happened to that AMD? If your prediction doesn't come true it doesn't matter, you will make money, your system is there. But its sad to see a few newbies getting hurt following predictions of a great trader when that great trader himself doesnt care about predictions but watches the market 24x7x52,

Btw, I am not MLMT (you must know it from my IP), I have seen you on TT board for many years, I know how good you are. We want that old AMD back, the one that caught fast moves both ways.
Bensjoyce

I don't mean to be a hog but this is interesting from Atilla: this am

If you see ES opening at or below 1081 tomorrow at 9:30

it will mean todays rally will likely be completely retraced by the end of Monday

Rip Van Trader

Yeah, I agree.

It means we're still in the channel, still in good shape.

Rip Van Trader

This from Yahoo:

“08:35 am : S&P futures vs fair value: -9.60. Nasdaq futures vs fair value: -20.30. Stock futures have fallen under a sharp flurry of selling following the release of the latest monthly retail sales figures.”

Yeah, yeah, yeah. The guys who bought an assload of futures to spark yesterday's air rally sold them overnight…at a profit.
Diablos

my 30, 1h and 2h all at high levels pointing down…

http://screencast.com/t/NGNhZTQ2NTYt

monicadern

Your charts always cheer me up. Thank you.

Diablos

If only they where still pointing down.

monicadern

ugh. Are you short?

Diablos

6'0″

yes, and in pain.

http://niftychartsandpatterns.blogspot.com anoopsan

SP 500 Fibonacci levels in daily chart
http://niftychartsandpatterns.blogspot.com/2010…
Rip Van Trader

FTSE bounced off its 20ema this morning, and looks ready for another rally. If (when) it fails, we are in the clover. I expect we will rally with them for at least an hour, might be a good time to stock up.

Up until yesterday's very artificial rally, spiralcharts.com was pointing towards 6/12 as a cyclical low, not a high.

I wonder if it will really be the low? That would make for a fun day, for sure.

Rip Van Trader

If this rally fails, it will mean that aninverse H&S pattern 6 weeks in the making is toast.

Something that may wilt those upper lips.

http://niftychartsandpatterns.blogspot.com anoopsan

Dow jones ascending wedge had negative divergence
http://niftychartsandpatterns.blogspot.com/2010…

Rip Van Trader

Very cool, San.

Today's really looking up for bears, I think.

http://niftychartsandpatterns.blogspot.com anoopsan

Looking good for bears till now

jimhobson

Did anyone have trouble accessing comments yesterday?

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

Yes Jim,

Disqus must have been down shortly for maintenance yesterday. They changed the “Share on” link below, as now I can only share my comments on Twitter and Facebook. It used too list 6-7 different sources, like digg, linkedin, etc… but not now. Bummer.

jimhobson

From Adam Mesh:

Yesterday is being hailed as a very significant day in the stock
market.

The Dow crossed and closed above a major psychological number:
10,000.

10,000 is a number that seemed years away when we were in a
nosedive below 6,500.

Now here we are.

The Media has already put together Dow 10,000 specials.

It seems like a happy ending right?

Not for everyone.

I spoke with some big time day traders and they were less than
thrilled.

Not only did the move happen overnight – the volume did not back it up.

That makes it harder to believe.

That means… well, it means that not that many people are “buying”
it.

Day Traders can't jump in and out of stocks because they are moving
up like a feather you just can't grab.
jimhobson

You would think this am retail news would sink the markets since it is extremely negative compared to yesterdays news that was rather luke warm.

But even though i added some good short yesterday iam starting to see that move to 1120-1140 to be more probable.

So I may cash out on today's bump.
http://www.reddragonleo.com Red Dragon Leo

They are trying to fill the gap from this morning… which is great for the bears, and then the market will be free to fall the rest of the day. Remember, there is a gap that needs to be filled from yesterday too, and that will act like a magnet for the market. It will eventually get filled.

And as I write this… the gap just got filled. Great.

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

Well, not yet on the spx and spy… but it did on the ES

monicadern

Good morning guys – it's been rough. I just switched my June puts (which were much under water) to July ones.
monicadern

And here we go again – isn't this fun?

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

The 20ema is now at 1092.58 spx, and it is the likely target for todays' high. We are still very overbought and should rollover into the close today. How far down is unknown, as it could be just a few points only… but I don't think it will close positive today, nor get past that 20ema around 1093.

monicadern

Thanks Red.

monicadern

ALRIGHT ALL, why don't we turn off our screens and ignore this for a little while, shall we?
http://niftychartsandpatterns.blogspot.com anoopsan

Dow jones hidden negative divergence
http://niftychartsandpatterns.blogspot.com/2010…

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

Thanks San…

Also, look at the 15 minute chart of the SPX and the Dow. They both now have a rising wedge forming.

http://niftychartsandpatterns.blogspot.com anoopsan

Leo the rising wedge

http://niftychartsandpatterns.blogspot.com/2010…

monicadern

So we all know that the 1040 number is the line in the sand and once it's crossed, we plunge. But, can't the forces that be keep it up at that level?

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

Doubt it Monica,

They don't have the money to support it with high volume. They only have the power in the pre-market now, as it still has light volume. That's how yesterday's rally happened. They juiced the pre-market will PPT money, and then the just let the short covering fuel the rest of the rally during market hours.

jimhobson

And the upside I an believing is 1100.
If we cross that we go straight to 1120-1140. then who knows??

Rip Van Trader

Jim, I personally think that the bull trend is so damaged that even if we made a 50% recovery, we would retest the lows not long thereafter.

As I suggested to Bensjoyce earlier, look at 2007 for more understanding of where we are at. Use a chart with 12, 40, and 200dma and 20ema.

Upside can pinch, but not for long. It's important to not be excessively leveraged.

monicadern

I have been going over and over in my head how to capitalize on the downside without getting killed in the process with leverage. Problem is if you short straight out, you don't make much. If you lever, you have to endure wild swings that can kill.

Rip Van Trader

I like puts and ETFs better than straight out shorting. That's how I got killed in the market years ago so am 'Rip Van Trader', lol.

You have to be careful with puts, but if you are not risking more than you can afford, you'll be OK.

Buying ETFs on margin could be a killer. Otherwise, you can ride out practically anything.
monicadern

but puts kill too. I have been killed and then made wealthy numerous times now. I guess there is no solution. Either you take risk for the potential reward or you don't.

jimhobson

Good points.

I think it setting up that stage one for one more push up to a RS. I was hesitant to believe that until yesterday's 270 drive on really nothing.

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

BP apparently doesn't really want to fix the leak, or they are just idiots. Many solutions are out there, but they won't do them. Here are 2 different solutions…

http://www.youtube.com/watch?v=FFUGv0iffe0

Reza

Its more of GM/Toyota part 2. BP -British, Shell-Netherlands, Exxon -American. Also, last month GS bad, now BP bad

Rip Van Trader

Bouncing off 1088 like a bad check.
http://niftychartsandpatterns.blogspot.com anoopsan

Dow jones rising wedge

http://niftychartsandpatterns.blogspot.com/2010…
IlliniKap

Hopefully we go down. The 5, 15, 30, 60 minute and 2 hour charts are not all oversold

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

Not yet, both they should all be oversold very soon IlliniKap

monicadern

Can someone answer an options question for me? What I don't understand about options is they are all about supply and demand, right? So if the market comes barreling down and gets to 104, I would imagine that suddenly103 puts would look very attractive as people would start buying them? But what happens if we cross too far below 103? so let's say the market goes to 990? Who will buy 103s when they can get 101s cheaper? Just trying to figure out when is the most opportune time to sell options positions.

Rip Van Trader

the 103s will go to 13 plus a premium. Sometimes the premium goes negative on deep in the money options, but not very much.

Your best customer will be the person who wrote them, who wants them the hell back before they bankrupt him.

monicadern

Thanks Rip.

Bensjoyce

I got this on Atilla's site. Sounds convincing. What the hell I'll keep my put. Have to get back on my ladder and start painting.

If anyone thinks I'll never make it in the markets. Your dead wrong. have no fear!

“ESM0 is opening below 1081 suggesting yesterdays 9:1 up day was another sucker rally that turned out to be fake

expect new lows in two trading days

and keep this one handy going forward, I wrote it myself, it is shown in the sidebar of this blog

Long Term: Based on our studies, the final leg of the secular bear market began on March 25 2010, nearly one month before SPX printed the final top at 1215 where the broken backbone is tested. This cycle will be terminal. Our projection for final bottom is SPX 170. We expect multiple large waves between the top and the final low. We project the first significant low before the final bottom to be SPX 400-420 range, this should be followed by a rally to 750 before the index heads towards the final low. There will be many intermediate term rallies and sell offs between these pivots.

Intermediate Term: The intermediate term top marked by the backtest of the broken backbone will likely lead to a severe intermediadiate term sell-off. This is the initiating move of this bear cycle therefore it will unusually be impulsive. Target is 965-920 range, however due to the impulsive nature this may extend all the way to 780.

Short Term: Severe strong downtrend, feeding on occasional powerful sucker rallies that are highly deceptive, coming on low volume and very strong breath. Public is persistently staying bullish or neutral despite the benchmark is now over 150 points off the high. The move will likely end with an unique selling climax.”

Rip Van Trader

Hey, Ben, I painted houses while I was in college, made good money at it. Very hard work, though, esp. for an older person. I know a couple of guys in their 50s who still paint, and it is rough.

I need a house painted in western MA, near Pittsfield (I'm in OH). Ever get over there or know any good painters in that area?

Rip Van Trader

Holy crap, about 3.5 million shares TZA purchased the last 5 minutes.

Bensjoyce

This is bearish? i would think

Rip Van Trader

Oh, yeah, TZA is a 3X short fund. The chart looks like it has a huge black bar at the 1 million volume level, but it's 3 hits close together, bam, bam, bam.

Moved TZA about 3% with that shot.

monicadern

Wish I could buy 3.5 m shares of TZA. Oh well, someone in the know is buying.

Rip Van Trader

I bought a bunch of TZA June calls. Just can't bring myself to pay those July premiums yet.

I think our next stop on the bear bus is 1055 (possibly after a rally to 1089), where I'll get rid of them.
monicadern

Good idea.
Rip Van Trader

Looks like we're going to rally here, so maybe wait to see how that goes.
AS2009

Rip – what did u see that made u think we were going to rally ?
Rip Van Trader

Prices generally move in a series of three steps which had just been completed, and we were in a low spot on the stochastics graph.

This is not always reliable but usually is. Sometimes series get strung together, or stochastics may stay at extremes for extended periods of time.

I also look at charts of stocks I'm trading, looking for extremes in volume or unusual trades. This sometimes helps me see when we're turning.
monicadern

The July's will help me sleep over the weekend. I adjusted for the premiums by buying more out of the money options because if it is going to go down, I believe it is going to go down hard. And, it may go down by june opex to some degree, but i think there will be a lot more room on the downside after that, and July premiums will be more expensive at that point.

monicadern

Interesting, thank you.
http://www.reddragonleo.com Red Dragon Leo

That's got to be an insider… or a fool? That's a lot of shares Rip. That should tell us that he/she is looking for a huge move down the market.

monicadern

I just followed suit. Not 3.5 million shares of course!

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

Maybe that “Earl of” buying all those TZA shares… LOL

monicadern

Earl, you crazy cat!! COME BACK!
Rip Van Trader

Carl probably just bought a shares of TNA, lol.

monicadern

Now that's funny!
http://www.reddragonleo.com Red Dragon Leo

Well, that would make sense with him hanging out here and listening to the rest of us… who seem to always be on the wrong side of the market. LOL

monicadern

If we are ever on the right side (and that's a big if), we should have a party!!!

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

LOL…

Absolutely! A Bear Party of course!

monicadern

RIP, what TZA calls do you have?

Rip Van Trader

June 8s

monicadern

thank you.

Rip Van Trader

Hey, Monica, VIX hit 29.57 today, has hit the third time on the bottom TL of a descending wedge, and looks ready to party.

I hope it breaks out upside today. Upper trendline is just a little over 31 and target would be 37.

monicadern

Yes, hopefully we will be partying with it!

http://niftychartsandpatterns.blogspot.com anoopsan

Russell 2000 too has a hidden negative divergence and it is more prominent here.
http://niftychartsandpatterns.blogspot.com/2010…

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

Thanks San,

By the way, I added you to my blogroll. I enjoy your quick and simple charts, as I'm sure many others here do too.

http://niftychartsandpatterns.blogspot.com anoopsan

Thanks leo. I didn't expect this to happen.
Rip Van Trader

Yes, San, and I'm very glad that you post here, really great stuff.

monicadern

Appreciate it anoospan.

http://niftychartsandpatterns.blogspot.com anoopsan

Thanks monicadern

IlliniKap

Closing below the weekly 50 SMA today is key. That's 1078.88 on the ES and 1081.66 on SPX

monicadern

muchisimas gracias. Have any idea where that is on the DJIA?

IlliniKap

10069.38…2 weekly closes below the 50 should make technicals and trend even more bearish…But I have my doubts. Seems like we are going to be manipulated to today to make sure we close above like we were 2 weeks ago unless we get an afternoon selloff.

monicadern

thank you. my worries exactly.
Rip Van Trader

I'm thinking prices will go down, but not as much as everyone hopes.

Then, we'll rally next week but it will stall, hanging around 1075 or thereabouts on OEX so no one will make any money.

Except the big boys, who will grab the options and either rally or tank in OEX final minutes, whichever is more beneficial to them.

Rip Van Trader

Good point, and once we get under there intraday, things will get bearish very fast.

jimhobson

I hate mixed green and red days,.
http://niftychartsandpatterns.blogspot.com anoopsan

Dow jones raising wedge with a triangle
http://niftychartsandpatterns.blogspot.com/2010…
Rip Van Trader

I'm hoping we're about done here, but bulls are like children or socialists, get a lot of do-overs. (j/k)
IlliniKap

I'm getting ready to throw the bearish case in the garbage for now. We are back to this being a completely upwards manipulated market, regardless of what the technicals say should happen.

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

It's just the last kicks of a dying bull… which can be quite violent.

kotla

If the market is following the same pattern of last 4 to 5 weeks then DJIA should be down atleast 100 by market close today and retrace back to 9900 by monday. lately fri, mon, tue are the red days (with triple digit losses) and wed pause, thursdays zooming high..

monicadern

Thanks – Attila just posted this article by Soros

http://dealbook.blogs.nytimes.com/2010/06/10/th…

Rip Van Trader

The market's just trying to get the rubes into the tent, and the skeptics out.

Think Wizard of Oz.
VinylMan

Technicals and fundamentals both support the bearish position (as does a common sense, reality based attitude about what is happening in the world). I have been bearish all year but played the bull because it didn't make sense to leave money lying on the road. May 6 changed my thinking and I will remain bear or out of the market. A whole myriad of things can drop this market substantially in a heartbeat. Nothing comparable on the upside so it pays to be short or out in my opinion. All I know is that the market still hasn't recovered from the hit. 1200's are gone, 1100's have made occasional guest appearances over last three plus weeks and in each case quickly voided and they are destined out also. Short of a big move later today, this will be the first week without a 1100 print. For all the chartists predictions, yesterday's bull love fest and everyone's fear all of a sudden that strikes me as a very positive occurence and continued follow through into a very normally scary opex week.

RecnadnuS

Hi,

Here is an update to yesterdays hourly. Resistance has held on the 60 as we thought. It will be interesting to see if she turns over today.

The 5 min is starting to show her age.

http://www.screencast.com/users/has001u/folders…
monicadern

Does anyone find it strange that they keep showing the oil rig explosion but very little has been shown of up dead wild life? Usually when there is an oil spill (even a small one) you see footage of lots of dead birds, etc. There has been some of that, but not a whole lot.

RecnadnuS

Watch FOX. The media is in the tank for Obama.

Rip Van Trader

How so? I don't have cable.

RecnadnuS

LOL! Thats a long story!

monicadern

you sound like someone else we know.
RecnadnuS

Do you know Bernie Goldberg?
monicadern

I can't say i do although it sounds like he is from my tribe!
Rip Van Trader

Ah, I knew a Sandy Goldberg, from the Oscar de la Renta tribe, I presume.

At least that's what it said on his glasses, his watch, his clothes, etc.

monicadern

Does anyone know what the latest from BAM is? Just curious since we haven't crashed yet!
Rip Van Trader

Today's lower TL broke down, a good sign. Now we will rally.

If we stay under 1089 through 2:30, we should be good for bearish fun.

Of course, I said something like that yesterday and got ****ed.

monicadern

well thanks. I am staying short no matter what. They will try to scare us all out before they take her down.

bigbadwolfusa

I'm with you and I like Cobras thought…I roll when we break 1105
Till then short…

http://lh6.ggpht.com/_APmrYvpA45s/TBGMgfJfXLI/A…

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

Todays' action looks to be setting up for a big gap down on Monday. The 60 minute is very overbought now, and turning down now.

I could see Monday and Tuesday being down hard, with a quick rally back into Friday to pin the market at a level that benefits the market makers the most.
IlliniKap

We keep bouncing off the damn Weekly Pivot on the ES, which 1076.33. Once that get's taken out, more downside potentially.

Rip Van Trader

We just formed the right shoulder of a little H&S on the intraday chart, which will take us to, ta-da, 177.8, the daily pivot.

http://niftychartsandpatterns.blogspot.com anoopsan

Dow jones raising wedge updated
http://niftychartsandpatterns.blogspot.com/2010…
http://www.reddragonleo.com Red Dragon Leo

This link was just posted on Atilla's site by jigdaddy (I wonder if he can dance… LOL)

http://www.reuters.com/article/idUSN11143181201…

I thought it was worth reposting. JPM selling at the top, is what it sounds like too me. Then the large purchase of TZA earlier today… Hmmm, sounds like the hand writing is on the wall now… if I'm reading is correctly?
IlliniKap

Another key for us bears today is that the VIX CANNOT close below 30!

monicadern

there are a lot of ifs.

IlliniKap

did I just miss some great news??? wtf
jimhobson

I think last hour they are going to run this market up. We know shortly.
http://niftychartsandpatterns.blogspot.com anoopsan

Dow jones consolidation will be resolved soon
http://niftychartsandpatterns.blogspot.com/2010…
Rip Van Trader

SPX information on Yahoo frozen since 2:19. It is now 2:57.

WTF? I rebooted my computer and no change.
http://www.reddragonleo.com Red Dragon Leo

I feel like a vulture waiting for the bull to take it's last breath.

monicadern

Guys – I am going to check out. Can't stand this anymore. I will stay short. Have a great weekend!

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

I don't blame you Monica…

It's too painful to look at my account right now, but I have even more conviction now that the market will tank next week… especially on Monday.

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

Everyone please keep your eye open for clues at to where we are stopping next week, before a fast reversal back up into Friday. Make a screenshot if you catch anything.
IlliniKap

This is the Bears chance to take control. It was our ball and we dropped it all week. Sadly if we don't close below the weekly 50 SMA and the VIX closes the week below 30, that is only going to bring more bulls out of the woods and we will rally next week in OPEX.

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

The best thing for the bears is closing about flat today. That leaves the door open for some disaster or false flag to happen over the weekend, to blame the coming sell off on.

IlliniKap

I don't know about that Red. This tape right now is looking bad for the bear camp.
RecnadnuS

I cant predict, just observe. The 60 is choking. The volume oscillator turned back and the resistance MA have held.

http://www.screencast.com/users/has001u/folders…

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

I'm pretty lousy at predicting too… but I see a lot more reasons to support a bearish Monday, then I do bullish. That 60 minute chart tells me that Monday isn't going to be bull friendly.

IlliniKap

Bears is dead.

bigbadwolfusa

if the bulls can get through the 200ma then we are dead…that will be tuff and if it happens then the double bottom is in an we r up from there…

jimhobson

Next week is going to be tough on bears. I added a TNA position w/ sso to hedge.

looks like I was right unfortunately.
http://www.reddragonleo.com Red Dragon Leo

Jim, IlliniKap…

This is great for the bears, not bad. You are reading it wrong. Monday will be bloody, and it's going to be the bulls blood that is spilled.

The market is loosing steam, and stuck in this channel, with a perfect MA pattern going into Monday. Do what you think best, but I don't see the bulls in control next week. Odds are now even stronger for the bears then they were yesterday.
http://niftychartsandpatterns.blogspot.com anoopsan

Dow jones consolidation resolved on the upside
http://niftychartsandpatterns.blogspot.com/2010…

Rip Van Trader

What's the target for that, San?

http://niftychartsandpatterns.blogspot.com anoopsan

around 10320 maximum

Rip Van Trader

Thanks, San!

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

If anyone was wondering why Goldman took a short position on the Oil rigs, one day prior to the explosion, this might shed some light on how they knew it was going to happen…

Chairman of Goldman Sachs International Was – Until Last Year – Also Chairman of BP

http://georgewashington2.blogspot.com/2010/06/c…
bigbadwolfusa

everyday…3:30 bring on the money makers and up we go…crazy aint it…
Imaginasian23

Hey guys and gals,

Benn lurking here for several weeks. I feel ya'll's pain. I was too heavy on the short side. Anyways, I know you guys like fake prints. There is a poster by the name of upn8th @ clearstation that put up a Euro fake print. Here is the link. http://clearstation.etrade.com:80/cgi-bin/bbs?C…

p.s. I never seen so much BS in the market in my entire trading life.

E

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

If the Euro goes up to 125 area, that would indicate that the market is going up too. That… I don't believe. Maybe the print is for after we tank?

I will save it for a later date. Thanks for sharing it.

Imaginasian23

No prob

jimhobson

I thought we hit 1095 for a while.

Folks, next two weeks are bull weeks.

bigbadwolfusa

all I can say is simply amazing…with all the bad news this wk and last and we just keep going up…what a joke…

jimhobson

Markets could care about news.

I kinda trusted the cycles but they seem to have bottomed earlier than most thought.

Looks like the RS crowd may have the edge. If we go above 1100 My bet is they are correct and i get out of my shorts and add more longs for a quick ride above 1120.

i got out of 50% of my short positions today but it was not enough. TNA and SSO protected some of the rest.

bigbadwolfusa

I'm liking cobras call…we get through the 200sma then we goto 117…but getting through the 200 will not be easy…this line up with your call for next wk being for the bulls…
IlliniKap

Yea I got killed today. The drop in volitility was already hurting but then rally back up just killed it more. Sad things is I picked up some more TZA June $7 calls when we broke the bottom trendline around 1:15 central, so shame on me. Closed out my FAZ and SDS calls for some massive losses, but picked up 200 shares of SSO at the close to hedge against my TZA calls. This absolutely sucks. Even on days like today when we had a decent gap down, the bears couldn't hold.

bigbadwolfusa

tells me either the bears are out or something funny going on…with all thats going wrong noway do we go up…not yet anyway…but such is life…

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

I'd say we just took out all the shorts now… Nothing left in the market but bulls.

bigbadwolfusa

not me…or Monica…I'm short till we break the 200 then I go long and pick up the little I lost…
http://rosabarba.livejournal.com Rosabarba

Speculative shorts are a small minority of the market action. What drives markets lower is liquidating longs. If the down days going forward show decreasing volume and fail to breach key price levels, holding net short is not the odds-on play, imo.

Personally, I don't see the bull case as in the free and clear, but the same goes for the bears, and while the bulls have had a good week, I don't think sentiment and positioning have shifted back to bullish extremes.

I notice a lot of people here are playing for more downside with short-dated, OTM naked puts. Speaking from experience, that is a poor choice in this sort of indecisive action and falling $VIX. Gains from that sort of play need to be taken, at least partially, when they arrive.

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

Very true, as I should have taken profits and reloaded at a higher price. As for next week, I certainly see Monday down… but by Friday the market could reverse back up? It's OPX week, and Triple OPX at that. Wild swings are likely to happen, I believe.

http://rosabarba.livejournal.com Rosabarba

Predicting day-to-day action, esp. over a weekend, is a bit of a coin flip, and we've already had a month of wild swings. It's possible the weak longs have already been shaken out in a month-long liquidation, and now a tenuous double bottom will form the base for a renewed move higher. Even if that's true, I have no idea what it means for Monday. I do believe holding (as opposed to quick-trading) naked, OTM, short-dated options of any kind is not a consistent winner and should be avoided.

About this time last year, I was a bear telling myself the same things I've been reading on this board, and it ended up costing me a lot more than it should have. It can be a huge mistake to impose one's own private trading opinions and sense of financial morality on the markets if the markets don't confirm. Notice how market leaders (e.g., GS, AAPL, etc.) performed today relative to the SPX, albeit in light volume.

Momentum indicators and other technical tools, while useful, are secondary to price action. If support holds and resistance starts giving way, the focus should be on dip-buying until resistance begins to hold and support begins to fail.

While I don't believe the current bear is necessarily dead, it is certainly possible it has done its worst for the time being. Something to consider, anyway.

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

Thanks for the advice. I must agree that predicting this market is very difficult. Reading the technical indicators is helpful, but it seems that many times they are wrong, or I've left out a piece of the puzzle… which means I'm reading them wrong.

As for Monday, I see it down, but that doesn't mean anything these days… the government can do what it wants to do (with enough free money of course). Maybe I need to call up Tim Geithner and ask him what's in store for next week? LOL
http://rosabarba.livejournal.com Rosabarba

Indeed, though if I may say, the urge to curse Geitner/GS/Fed/PPT/whatever can also be an expensive habit, since it becomes a way of convincing ourselves that our essential market views are correct and moves against us are short-term disruptions caused by extraneous forces. Again, it is something I saw and shared in spades last year, and it was expensive.

There is only one market. Whether the powers that be are “manipulating” it, however you chose to define the term, is irrelevant. All you want is to be on the right side of it.

Again, the bear might still be alive and kicking, but the action this week doesn't support the confident certainty I see on this board. Reducing leverage and/or hedging strike me as the prudent thing to do in this environment, bull or bear.
http://www.reddragonleo.com Red Dragon Leo

But I have so much fun picking on those guys Rosabarba… it's just part of my nature to point out evil. And believe me, it's easy to find these days! LOL
http://rosabarba.livejournal.com Rosabarba

By all means, criticize and debate to your heart's content. My only suggestion is that when it comes time to put money into the market, you consider only the market.

If the markets stabilize and just trade sideways, OTM options holders are triply screwed, facing theta burn, vol crush and zero intrinsic value. Naked, OTM options should be held in strongly trending markets or not at all.

We had a strong trend down from the end of April for about a month, and since then we've been rangebound, though wide and volatile. The trend may resume, it may reverse, or the range may hold a while longer. From where I sit, I don't see a high-confidence case to be made for any, so I wouldn't express a position with such a risky, unidirectional instrument as June or July OTM puts. FWIW.

newbear

I'm still short and in awful pain. But I'm having fun in Montreal for the grand prix.

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

Glad you're having fun Newbear…

Lot's of pain for the bears now, but it will be rewarded later on.

http://niftychartsandpatterns.blogspot.com anoopsan

Dow jones end of day analysis
http://niftychartsandpatterns.blogspot.com/2010…
cheesgo

look at the daily charts, MACD, Stoch, and RSI all have positive div. it is going up, how far, i DO NOT KNOW

We will pullback on Monday, we are overbought on 60 mins, get rid of the puts, load some calls

bigbadwolfusa

I feel the charts have said one thing and the price has done another…so I am going back to the very basics and use the 200sma as my resistance. If we can get through that then to the 50sma…but the vol is pitiful and even today was the worst so I am not betting that it gets through the 200sma but if it does thats my plan…I am short 115 and 108.40 so we will see…

cheesgo

I agree, Mr. market can bend down and sell off from here to under 1000

we just have to wait and see it is a pullback or sell off next week.

http://niftychartsandpatterns.blogspot.com anoopsan

SP 500 End of day analysis
http://niftychartsandpatterns.blogspot.com/2010…
Diablos

Last chart I have with bear hope…

http://www.screencast.com/users/rcjstocks/folde…

If accurate, Monday would be the start of wave 3 of 5.

cheesgo

wave 4 can not go into wave 1 unless it is a diagonal

only hope for bear is that this is 1-2, 1-2 and 1-2 situation, which is going to be very rare

and on the other side, $vix is very close to be oversold, positive div on MACD hist., although this is not very reliable

Diablos

Thanks much, knew that, didn't check. Well i got nothing.
Diablos

Corrective version (based on tony c)

http://screencast.com/t/YzdhZGY0MmM

Still get that wave 3 down Monday!

http://rosabarba.livejournal.com Rosabarba

Recall the reaction to this morning's extremely disappointing retail report: a reactionary selloff which soon stabilized, capping with a green close on the highs. Yesterday's jobless claims were also a disappointment, and the markets were up huge when all was said and done.

Rallies on bad news should be taken into account, as should selloffs on good news.

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

I agree you on that statement. It looks like the perfect reason to go long, and under normal circumstances, I would. But, I have other reasons to believe that a huge sell off is coming in the next 2 weeks, and technical analysis, rallies on bad news, or any other reasons to be bullish… have nothing to do with my reasons.

http://rosabarba.livejournal.com Rosabarba

Fair enough. Do you have a target in mind, or a level above which your thesis is invalidated?

Reza

Cramer said top of market 10500, down to 9700, range bound. But I think based on EPS, top is 10700-10800 area

http://pitch3.zstock7.com/ zstock7 Pro Select!

Hi Reza, DOW 10,500, short it, imho.

Phoevos

Red,

Comparing Merriman to EWI. Merriman in his latest seems to imply that last Tuesday was the low, even though volatility will continue until 6/26. EWI short term update favors further strong downturn (no certainty as to when).

IMHO, perhaps market will continue to oscillate until the 26th with nothing lower than SPX 1040 and then rally from late June to late July (which will be a good time to short until mid August).

Does this make sense to you?

AS2009

Phoevos – can you share more on merriman thoughts and accuracy of previous forecast ?

http://niftychartsandpatterns.blogspot.com anoopsan

Russell 2000 end of day analysis
http://niftychartsandpatterns.blogspot.com/2010/06/russell-2000-index-end-of-day-analysis.html
http://niftychartsandpatterns.blogspot.com anoopsan

Dow jones weekly chart analysis
http://niftychartsandpatterns.blogspot.com/2010…
http://pitch3.zstock7.com/ zstock7 Pro Select!

Red, really interesting video, I never saw your video's before.
Here's some ammunition for you.
XLE is at an unsustainable double top 54.. The 200 day sma, is 56. With BP and RIG, at such disgrace / uncertainty,
XLE going above 56?..Not this time……. 100% no way…BP and RIG, problems infect the entire OIH and XLE sector.
XLE above its 200 day, is saying XLE is a bullish sector….Impossible. Not with this much uncertainty in the XLE sector.
btw, I'm shorting QQQQ at 46

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

Thanks for the information Z…

By the way, I just put up my weekend update… refresh your page to see the new video.

http://pitch3.zstock7.com/ zstock7 Pro Select!

I just now noticed XLE is at its upper bb band= 54, 56 is the 200 day.
SAFETY MEASURES add costs…anytime a sector has expected, rising costs, 6 month's out, it does not get above its 200 day = 56.
If this market is stupid enough to give me 56 on XLE—I'm shorting EVERYTHING.
Where XLE goes, so goes the market.
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