Light Volume Ramp Job…

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2102

That ended up with a bearish reversal candle...

Looks like Monday decided to gap up instead of gap down... but in the end, the day still closed down. Days like these are tough on the bears, as there wasn't any news or volume supporting the move up. Just the typical Bullish Monday history pattern, and maybe just because they wanted to suck in more bulls, and squeeze out more bears.

So now what? Well, I certainly don't see tomorrow as an UP day, as I think it's obvious to everyone that the 60 minute chart is massively overbought, and started to roll over into the close today. So, it's not a matter of "if" tomorrow will be a down day, but more about "how much"?

The first support going down will be around 1080, where the upper trendline will be back-tested (from the falling channel that the market just broke out of). From there, we can expect a bounce to occur... but how much?

Will that just be a smaller wave 4 down, with another wave 5 up still to go... pushing on up to 1120-1140? Or will the triple top put in today finish the wave up from the 1042 low, (most label it a wave 4), with a big wave 5 down still to come?

I wish I knew? But I don't. It's really up to the daily chart now. If the daily turns back down tomorrow, then we could see a big wave 5 down... probably to that fake print of 100.72 spy. However, if the daily doesn't roll over tomorrow, then it's likely only a backtest at the 1080 trendline, and will likely go back up for a final smaller wave 5... completing between 1120-1140 spx.

Here's the thing to keep in your mind. Today was up on very light volume, with only about 80 million at 2pm on the SPY. The last 2 hours of the day moved the volume up to 207 million. That means the market still has a lot more sellers then buyers right now.

The market has hit the 1100-1105 area now 5 times since May 28th. Two choices are now in front of the market. It either has now weaken the resistance door enough that the next time it hits it, it will blasted through it to a much higher level (1120-1150?)... or, it's gave up for now as the door is too tough to breakdown at this current time.

Meaning, it will fall back down to a lower low to get more fuel (bears to squeeze) to go back up and test the door again at a later time period. The lack of news out this week leaves me guessing at to which scenario is accurate?

This truly is a "do or die" time for both the bulls and the bears. The line in the sand will be the 1080 backtest tomorrow. Of course I do expect a bounce off the trendline, but that bounce has too go back up and take out the 1100-1105 level, if the bulls want new highs.

For the bears, they want the bounce at the 1080 level to only go slightly back up to sideways, forming a bear flag, which will force the market to fall back into the falling channel again. If the bears can get the market back in the channel, then a wave 5 down will most likely be the path for the market. A new lower low would then happen.

Either way, a news event could spark heavy buying or selling? However, the lack of any news leans in favor of the bears, as they don't need large volume to fall, like the bulls new large volume to rise up and break through the door overhead.

In summary, I expect tomorrow to go down to at least 1080 spx, then bounce. From that point, we could continue down or make another run for the door overhead. The daily chart will give us clues, for if it rolls over tomorrow, then bears will likely control the tape. But if it continues moving higher, then it's likely just a backtest of the trendline, with more upside likely to follow.

Red

153 COMMENTS

  1. Great post Red, I'm recovering from a hangover from partying too much in Montreal. I'm glad BP took a hit today since I'm loaded up on BP puts but my SPY puts are getting killed so far. It will be interesting to see what tomorrow brings. Good luck to all.

    • I feel your pain my friend. It's do on die for the bears tomorrow. They need to get the market back in the falling channel, or else the bulls will just take out the 1100-1105 resistance on the next surge up.

  2. http://stockcharts.com/h-sc/ui?s=$cpci

    I don't mean to be an alarmist but recently I way a chart showing the correlation between high $cpci and market correction within a day or two. lat 4 out of 4 times it worked

    $cpci is the big boys index put/call ratio- the smart money
    $cpce is the dumb money -equity put/call ratio

  3. I found it (I don't mean to get people all worked up, but rationally you should take a look at this)

    To elaborate: the following comes from

    http://www.patternprofits.net/2010/06/weekly-wr

    the charts didn't come thru. scroll about 3/4's down his post

    Sentiment Indicators
    Index option players (smart money) have also been a great indicator of late. I don't think it's a coincidence that the spikes in the $CPCI have preceded monster drops in the indexes by only a day or two. Check out the two charts below…

    The 2-3% drops that have followed these spikes in the $CPCI means someone is betting big on the put side of the equation and quickly cashing in. Well worth keeping an eye on going forward.

    Lastly, the equity option players (dumb money) continue to avoid put protection and I had to double and triple check this number on the CBOE. The complacency shown here is absolutely frightening given the session we saw on Friday. It's no wonder the bears can't wait for Monday's open. Nothing has me more scared for my longs than this…

    Breadth & Sentiment Charts Courtesy of http://stockcharts.com

  4. The point: The $cpci spike much higher yesterday. This is very bearish….see below

    (I've said enough)

  5. (I lied, here's another) Monday, June 14, 2010
    Brief Update
    The first thing I want to point out tonight is the $CPCI will be looking to go 5 for 5 in signaling short term swing tops over the past few months. I circled the readings near the 2.0 mark and showed how each instance was followed by significant weakness over the following 2 to 5 sessions. The smart money was loading up on index puts today and the ratio is once again in the range that we can expect prices to reverse and head lower…

    • The summation is a key indicator of the money flow. its turning and it normally is very accurate at indicating tops and bottoms. It is a very strong reason to go long at this time.

      I like the EW charts posted above but they are missing this short term. IMO. This short term will allow pros to sell out and suck in the retail. might as well play it until summation reaches top and go hard short again.

      i still have some short positions also but much lighter.

  6. breakpoint trades uses this all the time (it works) but this does not mean we can have short term whipsaws.

    As it was “about to” give a buy signal they cautioned that the market can still go down for another two weeks. As the chart indicated NOW it is on a buy.

    Can't mean we have a heavy spike down for a day. Which is what I'm looking for.

  7. sorry I ment to say CAN'T

    breakpoint trades uses this all the time (it works) but this does not mean we can have short term whipsaws.

  8. This guy seems hellbent on bearishness. two days ago he posted a “diamond” formation and forcasted a 57 drop monday.

    then monday he says a 67 pt drop. Now he drops the diamond and doesn't mention the 57 or 67 pt drop

    I'm not saying he's full of it. but maybe a little so…

  9. I don't like how UK market went up today after ours fell yesterday afternoon.

    I smell a trap.

  10. This kind of trading is tough on all. I got stopped out of a great TNA trade but not sso and tyh.

    Like i said before this week and into next will be bull. iam mid to long term bear but right now markets are telling us something else.

  11. Some how I don't think 1100 is going to hold the market back today gang. The market is too strong right now (aka… manipulated in the light volume environment).

    If breaks, 1120 minimum is up next, 1150 even being possible. However, if it fails again it will likely go down.

  12. this is probably the bounce that Anna was talking about yesterday

    we should come down soon, still looking for 1070-1080

  13. Obviously this market has been baffling and frustrating to us as bears and to very many other sites and posters in the same boat. Despite charts, experience and what-have-you we all still remain clueless and powerless as to what the market will do on any given day or series of days in the future. We can only make the best percentage call we can and hope for the best. Most importantly, we don't want to be out of the game if things do move in our favor so we have to position ourselves to be able to take advantage. To continue to hold while this moves opposite out intent is foolish. Take your loss, get out and wait to fight another day. No field commander worth his salt would allow his troops to suffer uneccessary casulties when things are clearly stacked against him. Retreat can be strategic. The old axiom of cutting your losses is very apt and true. When this turns and it will there will always be time to get back in and profit.

    • In addition let the market dictate to you not you instead of you trying to tell the market what to do.

      no matter your sentiment.

    • Me too Ben…

      Let's go arrest Obama, Geithner, Bernanke, and the rest of the thugs for crimes against humanity. Opps! Better not, as that would cause one be celebration… and new Bull market! LOL

        • Today's volume is so low I can't hardly see it on my charts. I believe they could have easily taken out the current resistance zone around 1100-1105… so why haven't they?

          • We are trying to turn toward the VWAP but it is lunch time in the Big Apple. Anyone heard from Rick Santelli lately?

          • Good point! We are at major resistance on the 60's. First the hidden div that took us down yesterday now the reg divergence is setting up.

            This makes sense when you look at the daily. It is setting up a hidden divergence.

            If we break the intermediate high. all bets are off. My only concern is breath. The triple MAC pattern is 80% reliable and it hit yesterday. Summation, BP and MACD.

            It is my hope that the low volume will cause a whipsaw. Personally, I think that it is related to tonite speach by the Bomster.

            What can he say that is not known? Meanwhile Toyota has not figured out what went wrong but they are off the front pages.

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

  14. I think we are clinging to to the Bear case and trying to find points to validate our thesis instead of looking at the actual writing on the wall. Volume may be low, there my not be new, but PRICE is king. We went up the entire Feb-April Run on pathetic volume, so all this needs to be considered.

    • Look at SPY on a 4-Hour chart. It's about to close over the 50 SMA on that chart. Hasn't done so since the April top and was even rejected yesterday. It's getting very close for the bears to toss in the towel for now and jump on the Bull Train. Waiting myself. If SPY closes above 110.33 at end of this hour, I'm closing out shorts and going long.

      • i agree. We are on the cusp. I think that they will headfake it above the 200d just becuase everyone watches it.

  15. All the “proffesional” I've been listening to in Feb May and now June were all full of it. This really gets me down.

    I have to trade off the chart only and forget this guru bullshit

  16. I think it's housing starts tomorrow. ??Maybe a crappy number and we get a sell off to get out of our puts, then buy a call for a rally to top BB??

    sounds desprite?

  17. wouldn't it be “typical” for them to spike down to the Middle BB 20dma just to screw the bulls?

  18. Just looked at the tape for the first time this afternoon. Feel sick. Oh well. Nothing I can do at this point.

  19. I'm grinding paint off a house (I'm a house painter) built in 1890. I look at my computer during the job and find my money getting toasted.

    Welcome to Purgatory

    • Don't feel too bad Ben… I'm a slave too, only right now I'm jobless… or at least I don't have enough work to be working right now. It seems my masters (the Illuminati) stole so many peoples' last dime, that no one has any extra to spend on the services I provide.

  20. the latest from mole. I could resurect. Need a sizable sell off and catch a big rally tomorrow???

    Mole postulates Euro/jpy to 115 correlates with s&p to 1125

    “How high we go is mainly up to the EUR/JPY – so let’s keep watching that. I reckon that the 115 mark on the EUR/JPY would nicely correlate with a 1125 reading on the SPX. No guarantees but a reasonable target at this stage. And yes, we could push much further than that – Minor 2 waves can theoretically correct a significant portion of their prior down wave – just so you know. But let’s all agree not to panic and let at least Soylent Orange unfold as proposed.”

    • CAN WE SAY SHORT SQUEEZE? Of course, I am still short. Just wish we would print 24 on the VIX today but I am afraid it will take another day of this. BUmmer.

      • The $VIX is more tail than dog, imo, though it has shown a willingness to bounce when it crashes its lower Bollinger band, now at 24.70.

    • The market imbalance has shifted from sellers to buyers is all. It happened last year when the news was just as lousy or worse. Can't say how long it will last, but if you're going to trade on technicals, the news is secondary, often seemingly irrelevant.

      • News is driving today. IDC call on Computer sales and Boeing's uping thier guidance. This is not a short squeeze….yet.

        • IMO, that's not the sort of news that spurs the market into 2+ percent trend days. The market was simply ready to rally, or rather continue the rally from last week.

          • I agree because at the same time Best Buy misses earnings both on Revenues and EPS and German Confidence was lower.

          • Indeed. That's the way it usually is: The news flow is mixed, some good, some bad, some days better than others. The market reaction to the news of the day is often pretty weakly correlated, or seems so.

          • BB makes its money in Q4 no one cares until then. The Boeing story is big as they have had so many problems.

            To each their own.

  21. If it gives you all any solace, massive amounts of money coming out of the Ishares SPX Fund, QQQQ and IWM. Look at the block trades down. But I'm not sure that's shorting going on, versus profit taking. If you look at the buying in on weakness, not much money flowing into the short funds.

    • I would be happy to give back a percent into the close. We are still OK unless we take out that high.

      • trust me, the best thing for the bears would be a rally higher today. but they never make it easy. if we could get to around 10400-10450 that would be key. then everyone will be on the bull horn and they can take it down.

          • shoot. I don't remember – I thought it was 24 but maybe it was 24.70? Let me go back and look at my comments on your old posts.

        • They are already on the Bull Horn. Just wait for the pattern to play out. The VIX filling a gap means nothing. The operators laugh at that kind of thinking.

          Have the courage of your convictions and the conviction to concur!

    • There is also the “10 point” un-spoken rule (that Keirsten reminded me of), that says that the market will exceed or fall short of a known point of interest, when everyone is expecting that level too be tagged.

      Most people are now expecting two different levels to be hit. One is the 1120 area as it where the 50ema is on the daily. The other is the 1140-1150 area as that where the right shoulder would be for the huge H&S pattern forming on the daily chart.

      So, it is likely that the market will either fall short or rise above either of those targets to fool both the bulls and bears alike. Where? Of course I don't know? Let me call Tim Geithner up on my Bat phone, and I'll tell you…. LOL

      • I say between DJIA 10400-10450. That should be enough to get the vix to 24.10. And, that will be above the 200 MA so all bulls will get long and all bears will have covered.

          • I use median lines and that is where I have support. Many time frames. Could be a little rip before that. Lots of put selling near the bottom and that dumped the VIX and moved the market up.

            Personally I don't think the market is going anywhere for years, It's in a range. The range is big.

  22. I wonder what kind of false flag the government will stage over the weekend to blame the coming 1000+ point drop on? If it's a suit case nuke, then do in D.C. and clean up the place.

      • Obama is joke Z… He's just puppet that's told to act tough on BP right now. He's part of the “good ol' boy” group, just like BP is. Nothing serious will ever come of this, toward BP.

        Just like Goldman won't have anything serious happen to them either. Just a show to trick the sheep, while their not paying attention, and then they can steal more money from them.

          • No, I'm saying that they are tricking the sheep into going long. There aren't many more shorts left in the market after today. Many of them had stops at 1111-1114 area… which were just taken out today.

            Now, all the bulls are long now, as they see a clean breakout of the 1100-1105 resistance zone. The trick well be when they reverse it back down and don't let them out of their longs… meaning NO bounces when falling.

            At what point they turn it is unknown. It could turn right here, just shy of the 1120 (50 day EMA) level, or at 1130-1135, just shy of the 1140-1150 right shoulder level.

            One way or another, they will trick both the bulls and bears by not hitting a predicted level, or going through it by 5-10 points.

            Some news event will be realize to cause the panic sell off. What, and when? I don't know. Maybe over the weekend? Or maybe this week, but something will be blamed for the coming sell off.

            It could be another debt crisis from one more of the PIIGS countries, or a false flag event. I hope it's only a defaulting country, and not another staged event that kills people. But, you never know what these crooks are planning…

          • Bulls are not all long now. What data are you tracking? Shorts are covering because they already took profits, it's summer.

          • No, they aren't all long now. They are just starting to get long. That's my point. Once enough of them are long, the market will likely reverse hard, and trap them.

            Most are now looking for that right shoulder to form around 1140-1150, which I don't think it will get there, but instead turn back down, falling short of that target zone, and trapping them.

            But, no one knows for sure? I only know that I've seen the market routinely fall short 5-10 points of a target zone, or over shoot it by 5-10 points. Which will happen? I don't know.

    • Red got your comment to help with graphics for site, love the idea, and will take you up on that, let me pick some pictures, still like my puppy dog picture, but that might be getting a little stale?

      • Yes, sounds like the planned sell off has changed. Maybe we go up to DIA 118.16 first, and then sell off? Or just tag the 50EMA at 1120, and then dump? Somethings strange… that's for sure.

  23. Will I'm not a big fan of the Bear Case right now, ETFs for all the Major indices posted fake prints today and substantial volume.

    SPY – $109.48 both Pre-Market and Afterhours

    http://www.screencast.com/users/illinikap/folde

    DIA – $102.10 and that candle had the highest volume for the day

    http://www.screencast.com/users/illinikap/folde

    QQQQ – $45.45 Printed During Trading Hours and Afterhours, once again biggest volume candle of the day

    http://www.screencast.com/users/illinikap/folde

    IWM – $65.36 Print Printed During Trading Hours and Afterhours

    http://www.screencast.com/users/illinikap/folde

    • Yes – I saw the one on the Qs and IWM during the day as well … one more reason why i bought the TZA call into the close as I cannot day trade and wanted to be able to sell them tomm …

    • Illinikap – can you tell me how do you remove the account tab that shows on the default of ToS … so you get the full screen view vs 2/3 of it ?

  24. I guess another bearish plus, we've filled the gaps on SPX from the move down. 1115.05 was waiting to be filled and it was right before the close.

      • Nope it didn't ….

        Newbear the fake print to 24.1 was the one monica caught a number of days ago – today's low on the vix is 25.68 …

  25. If we are forming a H&S on the daily, the right shoulder is SUPPOSED TO HAVE LOWER VOLUME. The low volume melt up to form the right shoulder at 1040ish could be validate the bear case from there and the H&S pattern itself.

  26. Sorry if anyone had trouble accessing the site in the last 30 minutes. I had too many scripts running on the server, and my hosting company shut it down temporarily, to prevent damage to their servers.

    I had to remove some of the plugin's, but will re-activate them later, after I change the “refresh” time on them. I De-activated the “Stock Quotes” and “StockTwits” plugin's.

    I don't know if anyone was using them, or even cared if they were there or not? Maybe I should take a poll asking if everyone found them useful, or not?

    What do you guys (and gal's) think?

    • Here's what funny

      I have hardly ever been to your site. I say a couple things that I was thinking. TWO minutes later I get a “you are forbidden to see this site” message. I'm thinking, jeeesus what did I say that was that wrong/annoying. I'm not only banned from posting but have actually been banned from SEEING the site?!?!??

      funny, just goes to show what jumping to conclusions on not a enough does.

      • That's funny… yeah, I worried about that. That's why got on issue asap, and got it back up. Seeing the “403 forbidden message” is not good for new people. LOL

        Welcome to my nightmare… he he he

  27. VIX did not hit the print of 24.1. If we get to that I think it will correspond with SPX in the 1130-1140. Outside of the market crashing from today's close, Bears best bet is that it continues to about 1030 (50% retrace of April High to May Low) to 1150 (61.8% retrace). If that scenario plays out, then way finish a Wave 2, with Wave 3 Impulse from there to new lows.

  28. For the contrarions out there, Cramer just said he doesn't trust the rally today because all the news coming out was very bad for the US. Surprising since CNBC itself and every other MSM outlet said we rallied today on good news. What a joke!

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