Weekend Update…

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I can't find anything bullish?

I wasn't sure what to say this weekend, so I'll keep it short and simple.  I looked hard for a reason to see a gap up on Tuesday, but I can't find one?  Yes we are overdue... yes we need one... but I just can't see it in the charts yet?  Last Thursday I did a video explaining that I expected a move to 1040 on Friday... but it didn't happen?

Friday had everything going for it.  It had light volume, a holiday weekend in front of it, and traders leaving early... but it failed to rally?  In fact, the brief rally into the close was sold off in one 10 minute bearish engulfing candle.  Not good for the bulls at all.

While I still think we will see that 1070.50 spx fake print soon, it might not happen until we put in a lower low first.  While we did that last week, it didn't come with any panic selling, and that's what concerns me.  We need a capitulation day to wipe-out all the bulls, and get every bear back in... short again.

Most bears probably closed up their positions on Friday, expecting a rally next week.  After all, who would be brave enough to hold shorts over a 3 day weekend, after selling off for 2 weeks straight now?  I'd say those bears are in cash, and I'd guess that there were some bulls that went long into the weekend... but not many.

I think it's going to catch a lot of people off guard if it goes down instead of up on Tuesday.  Anyway, I'll keep this short, like I said.  But one other thing... you should watch this video below about the BP disaster, it confirms what I thought all along... it was another false flag event.

Red

Happy 4th of July everyone!

Update: This is a very interesting video by Karl Denninger, showing how the market in currently (as in July 4th, 2010) being manipulated up and down with fake bids and sells. Watch it... it's worth your time.

111 COMMENTS

  1. There's one part of the economy I can't get a true number on. Gulf states. $20 Billion isn't nearly enough to cover the losses.
    Here's what I think I'm seeing on the TV news.
    Florida alone, could lose a 1/3 of a trillion in tourism, this summer. That's nearly 500 dow down points.

    • That looks like a descending triangle, and it could break down into the cloud. However, it could break upward as I can also see slightly downward sloping wedge… although it's not close to the end of it yet.

      Hard too say as that moving average could also support it, and let it bounce upward in another leg higher. I see both bullish and bearish patterns in it.

          • The Eur/Usd disconnect was also seen last week. We have to wait and watch how this spans out. But the eur/usd and the equity market disconnect may not be there for too long.
            The eur/usd break out was not followed by equity markets and the break out in the pair too is stalling for too long. If it does not move up quickly this one will also end up in the failed break out category And will take down Markets like Dow and SPX with it

  2. That is the situation we face right now. The SP500 is down 16% from its April 23 top, but the Bond CEF A-D Line is at a new all-time high. As the chart illustration points out, instances of a decline in the SP500 that is not matched by a decline in the Bond CEF A-D Line tend to be temporary stumbles for stocks caused by worry and not caused by illiquidity, and so the stock market is able to quickly recover.

    http://www.decisionpoint.com/TAC/MCCLELLAN.html

    • Well, that would imply a rally in the market soon. While I've been expecting one to happen, finding the temporary bottom isn't easy to do. I thought we would bounce to 1040 last Friday, but that failed?

      So this week should produce a relief rally, but the charts aren't showing it yet. Maybe they will turn on Tuesday or Wednesday, it's hard to say. But we are certain overdue for a rally now.

  3. “This decline, while it does not look quite complete yet, should end Intermediate wave A of Major wave C. After it ends, probably with a retest of the 1007 pivot, we should get another one of those 80 point rallies for Intermediate wave B. Then another decline should follow, probably about 130 points, into the final low near the OEW 944 pivot. Many technical indicators we follow are already quite oversold after the recent decline.”

    http://caldaroew.spaces.live.com/

  4. Looks like the rally is on this morning, as they first took it down to 1002 pre-market, to hit all the stops of the bulls that went long into the weekend. Now, they are going to put a hurting on the bears it seems. The short squeeze from hell.

  5. Is there any catalyst for this today? ISM actually came in lower than expected and we're still rocketing to the sky. Dead cat bounce?

        • I don't know Jim? We do have a fake print of 1070 spx, and it will be reached at some point, but when is something I can't answer? I think a lot of people will go long on any dip today, as everyone knows how oversold we are.

          I just find it hard to believe we will go back down without a larger move up first. I'm still short, (painfully), but it looks like it's going higher too me, before selling back off again.

          • I agree with that target. i am in sso and out of all shorts except TZA which I have a bunch of at very low entry so Iam holding.

            i will add shorts as we continue this. Could last through opx but w/such weak news I do not know either.

          • Yes, this is all technical, because the news is still negative. I thought we would hit 1040 last Friday, but they waited until today to squeeze the bears.

            They took it down to 1002 ES on Sunday night and Monday night, and then jammed up this morning. I guess they were baiting the bears of a possible gap down today, as well as clearing all the stops the bulls put in on Friday.

            I have no doubt that we will get to 1070, not because everyone expects, but because of the fake print. The “when” question is what I can't answer.

            If we dip into the close today, a lot of people will go long I believe. Everyone knows how oversold we are, very few want to go short at these levels.

            Yes, there is still overwhelming bearishness out there, but are they really short the market right now? Or, are they in cash waiting for a rally up to 1070 to short? I don't know, but it certainly looks like positive day today.

            However, I've noticed that the overnight high or low is usually tested again at some point during the regular hours. Seems unlikely to happen today, but stranger things have happened.

          • The Helge charts were very accurate for yesterday afternoon and evening and they have continued to be.

          • Jaywiz does. Goto his intraday charts for the current week. They admittedly take some time to fathom.

          • You have the link right up there under intraday cycles. Helge has a link to your site also

  6. There is no conviction here. Rvix is even positive. No serious buying on this dip at least for now.

    After last nights futures I would not be surprised to see a total turn around and close negative.

    • I think most people are looking for a dip back down to 1020 area to go long at. However, should the 1020 area fail, then yes… we could easily go back down to that overnight low.

  7. XTrends is now a bull board and Well Armed has turned short-term bullish and they say everyone is bearish. I believe most of the hardened bears are out of the market.

    • Atilla is on a longer term time frame then I am. He can wait for several weeks or months if necessary. While I'm sure we are going up soon, I don't know if it starts today or not.

      The daily chart is turning back up a little bit, but we could still go lower first, before a larger move up. I'm still bearish short term, as in hours to days.

    • Yeah… that sure makes it easy to forecast tomorrow! My forecast is… “I don't know”. After all, that is called an “indecision” candle. LOL.

      Everything tells me we are about to start a big rally up, but I expected that 1040 level on Friday, not today. So what's next? Beats me?

  8. Russell 2000 made a new closing low and practically finished near the low of the day. I wouldn't consider that bullish. Breadth also finished slightly negative. But today was the day I was looking for. A penetration of a key support level followed by a one day bounce. 1987,1929,1930 all had similar days although '87 finished on the high of the day.
    Just hear Mark Hulbert interviewed on the radio and he said according to TrimTabs data all the historically wrong way traders are piling into the long leveraged ETFS even with the market dropping hard last week. I am not so sure Atilla can be claiming to be following the smart money. Any I checked the last two COT reports and if anything the retail traders are net long according to the two mini contracts which is where they would be concentrated and commercials seem to be net short.

    • I'm confused on today's action too Geccko. We are very oversold, and should rally up anytime now. But the candle we put in today looks quite bearish still.

      The bulls can say that we are consolidating before a move higher… and they may be right? The bears seem to be out of the market now, and into cash or long.

      Certainly, a big move is coming, and it appears like it should be up… but will it? I just don't know what to think at the moment.

      By the way, do you have a link to hear Mark Hulbert's radio interview?

      • Go to http://www.knx1070.com Click money and it was during the business hour today that Hulbert was interview around 1:40pm. I can't find the interveiw. It looks like one would have to subscribe to the podcast to get today's session. But they archive all the older podcasts. It's called the business hour with Frank Mottek (sp)…..Hulbert also writes a column at cbsmarketwatch.com. You can probably find the same information over there.

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