Weekend Update…

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MONDAY UPDATE:

Not much changed today, as we had a slightly positive day as I expected.  The high was around 1075, which isn't quite as high as I'd like to have seen.  I'd like to see a back test of the falling trendline (1080-1085) from the April high before another move down starts.

In this 60 minute chart you can see that the MACD is trying to curl back up, and the histogram bars have now moved up from oversold territory to the zero line.  I'd like to see it go up and make a smaller histogram tower then the previous one, putting in a negative divergence on the chart.

That could push up the market to the 1080-1085 level that I'm looking for, before more selling happens.  We might not get it if Goldman Sachs doesn't do a good enough job of lying about their earnings?  The high could already be in for the week?  Hard too say... but the charts tell me we need to push up a little more tomorrow first.

We'll see I guess...

Red

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The Sh*nola About To Hit The Fan!

Sorry for the bluntness... but sometimes you need too make a point stand out.  Next week is looking like a slaughter house for the bulls, as a big move down is likely coming.  While anything is possible, the odds of next week rallying hard like this past week... are slim and none.

Last week I really was expecting it to close out positive, as it appeared that they wanted to take the market up to the 112.41 spy FP from a week back or so.  But, the large sell off on Friday changed everything.  Had they really wanted to take the market up for awhile, they would have closed Friday flat to slightly down.

This now tells me that the big boys are short again, and plan on taking her down below the 1010 bottom.  This next move down is likely to be some kind of wave 3 of 3 of 3... in Elliottwave terms.  Again, I'm no expert in EW, but anyone can count it after the fact... and that's exactly what I see coming next week.

Monday has a 66% chance of being an UP day, according to Cobra's statistics (see his blog for more detail.  It's listed in my blogroll).  Plus, the 60 and 15 minute charts are pretty oversold now, and need to reset themselves.  This will likely take all day Monday and possibly early Tuesday too?

Since the first major earnings announcement (from any company that can move the market) is from Goldman Sachs at 8:30am on Tuesday and then Apple after the market closes, you shouldn't expect an major selling on Monday.  If Goldman reports like CitiGroup and Bank of America did on Friday... it's going to get ugly!

Then you have Baidu on Wednesday after the bell, and Amazon and Microsoft on Thursday... also after the bell.  These are the major movers for next week.

Of course I don't know what they will say, but Apple has reception problems on the antenna of their new iPhone... which tells me they aren't going to rally the market.  Goldman is likely to report similar to the other banks... meaning they meet estimates, but have a negative future outlook.  I don't know about Baidu or Microsoft, but the charts of both companies look exactly like the rest of the market... ready to roll over and tank!

At this point, I really can't see anything but a huge sell off coming.  I'm trying too be neutral here, and look for both bullish and bearish points of views, but this looks very bearish too me next week.  I was bullish all this past week, and did fairly well on my calls.  I was wrong on Friday closing between 108 and 109 spy, but I did call for the day to be a down day.

No one can get them all right, and I'm not one to overlook my bad calls... believe me, I've made many.  I'm getting a lot better at reading the charts, and they tell me that disaster is coming!  Throw in a 106.66 closing price on the SPY and a 109.99 high and you'll have a devil of a time convincing me that we are going back up next week.

Good luck to those brave bulls that went long over the weekend.  You have a 66% chance of an UP day Monday, but I wouldn't push my luck after that... as there's nothing bullish in the charts for next week.

(Major FP in 2nd Video)

Red

P.S. This oil disaster isn't getting better...

Watch this video too...

153 COMMENTS

  1. lot of good bearish arguments from Cobra's blog. He sees 940 on the S&P by the end of the month 10 trading days. http://cobrasmarketview.blogspot.com/

    Jim Carolan of the “Spiral Calandar” (lunar/solar cycles) sees spiral Calandar dates for July to be the 15th and 27th. (looks like the 15th was good to catch potentially a big plunge, starting friday 16th.) Spiral dates are either tops or bottoms, but of course not perfect, sometimes a little late or early, I'm told.

    http://spiraldates.com/
    scroll down a bit

  2. Red, thanks for your hard work and providing a great blog! Personally, I'll be happy with S&P 825, 830 or 940. lol Looking forward to Anna's update as well, a site you have also lead me too. Thanks, Pzy5t0

  3. Thanks Red for your excellent work. I couldnt able to comment in the blog as its difficult to do during work.

  4. Selling into every bounce seems to be picking up as indicated by vix movement.

    But the bulls are going try to recover. more add points on the way.

    But

    • Yes, as should be expected in the first 1 1/2 hours of today. But, the selling pressure should start to lighten up soon, as we are going into the slow period of the day.

      If a rally going to start, it should be coming soon I believe. Many retail traders are shorting these bounces now, and I suspect they will squeeze them out sometime today and possibly tomorrow too.

  5. You'll also notice that the VIX has been falling all day… not supporting this sell off. That is another indication that they will push it higher before rolling back down.

      • It is amazing. I do not know. We had a hugh down day and no PPT.

        Given that AAPL is 20% of the index you would think it would drop more.

        My guess is that it was the MSFT upgrades but I could easily be wrong on that.

  6. PRE-MARKET Tuesday…
    GS,UNH,PEP,WHR report earnings, and could negate what’s happening in AH, Monday.
    IBM and TXN down 3%. Thus QQQQ’s taking a hit.
    I still have the slow sto's pointing down. I did manage to short TXN, and DAL.
    My longs, I'd rather not talk about those AT ALL.

    • “My longs, I'd rather not talk about those at all.” …LOL!

      I actually think you might get a chance to get out tomorrow. I think there will be one more attempt higher (probably 1080 area) before selling off hard the rest of the week.

      Maybe you will get lucky?

  7. they hold the market up buying amzn and nflx and other PE's that are unstainable, when it cracks under the weight of “good stocks” what do you think will happen to these high flyers

  8. Hey Red – the action today was impulsive going down (this AM and again at end of day and after hours) and choppy and corrective going up- looks like near term the trend is down IMHO

    • I agree with you 100% Al…

      I think were are going down to this target before we have a serious rally…

      http://reddragonleo.com/media/2010

      But, tomorrow could push up a little more… maybe to reach that 1080-1085 area for a backtest of the downward sloping trendline. Or, we could just start selling off without touching it? But either way, the trend is now down.

      • Red my take is for the very near future(1 – 2 days), don't know that we'll get to the area of that false print in your chart, my crystal ball isn't that good, I actually lean bullish a little farther out but I'll let the market tell me rather than the other way around

    • IBM is down 4+pts in AH. Apple,Gs,Intel all down also. IBM drop is going to put a big hit on the DOW. Unless GS can save the day pre-market tomorrow but GS just had a huge rally on the so-called good news of its settlement with the SEC.

      BAM Investor has been under hacker attack by some members of the “Apple Cult” according to them.

      • I know… I listened to the audio from them. Those guys must be pissing off the operators, as they've tried to shut them down several times now. Thank goodness I'm not a popular as there are, or they'd be trying to shut me down too.

        I must not get enough traffic to cause a big stir inside the group. That's fine with me, as I'm not trying to promote the site. I have nothing to sell, and no ad's on the site to try and make money from… so I don't do any advertising.

        I still have operators (trolls) posing as people on the site, who post from time to time. I know who they are, and I talk to them anyway.

        They are just normal people doing the job they were hired to do… which is spy on blogsphere to see what they've discovered. I'm not the only site they are on.

        It's just there job to go post on different sites and cause confusion. All part of the game. We all live in a matrix, and everyone has a role.

        Mine is to expose the truth, and theirs is to suppress it. It's be going on for all eternity, the good guys versus the bad guys. I'm one of the good guys of course.

        🙂

    • Red, Seeing that FP of 349 on VIX brought a question to mind. In your opinion, how many FP never work out? What is the percentage of ones that materialize versus not? I know you have the DOW 8300 FP and the 11800 one out there. Do the TPTB change their mind and say “okay, the situation has changed and the 11800 print is no longer valid”? Just thinking of various scenerios like we get to the 8300 and then they introduce QE2 of multi-trillion and then the market jumps to 11800? Basically wondering when we can forget about 11800?

      • I don't keep track Johnny… but when we finally head in the direction of the FP, they always hit +/- a point or two. The 11800 one might not hit until we have massive inflation kick in?

        That could be 2012 or so? While that seems high, by then it might only be equal to 4-5000 because of how the dollar will be devalued by then.

        The downside print I expect to hit within 2-4 weeks.

  9. The vix is not moving and the index won't either, options prices are basically flat, on a down day. This is clearly being held up. I am to dumb to cover, but it looks like I should. Simple math used to be add the down and the naz together and you have the spx, not even clse today.

    • Until that 60 minute chart gets overbought, I don't see the selling sticking. The daily is rolling over, but the 60 is trying to move back up. While they are fighting each other, the market is likely to swing back and forth.

      Once the 60 peaks, and starts to roll back over, aligning itself with the daily, a big move down will come. Could be tomorrow?

      • You may be right, but I am concerned that the 1st good earnings report will be the “reason” to run this up. I really hope we don't have to wait for that “reason”

        • Just like the chart Apple Al posted, if we completed 5 waves down, then that could have been a “A” wave, with “B” wave back up taking us to 1080-1085 area.

          But after that, it's down hill from then on I believe.

  10. They are trying desperately to save this week.

    Vixe s ae week but still positive. Perhaps we are just in the lull of the am and the people are just not nervous yet.

  11. Now I know the markets are rigged. JPM and C post lower than expected profits… and the stocks tank. GS fails miserably… and is up 0.5%?????

    • Yeah, but not tooo positive! The bears are looking to enter or add.
      CNBC is frustrated over BAC and TXN.

      Its fun to watch.

      They are clueless.

      • A wave 2 or “B” wave back up to 1080 or so, is just what they need to squeeze out the bears that recently got short. I wouldn't be surprised to see an end of the day ramp job.

          • Yeah, but that was based on charts. It was the area that the falling trendline would come in at, should the market rally back up. In this case, that FP of 109.79 spy probably holds more weight… and could be the target tomorrow? (That's assuming it's real, and not just a late fill or something?)

    • I would like to believe that, but this will be a very positive hammer if this holds, you can toss the bear case to the wind. After the fact someone will show how EW predicted this. I never see EW really working untill after the move is over. I am short and will stay short simply because if we need this much nonsence in the moves there must be a real problem to hide.

      • There's nothing positive about today… it's just the charts (60 minute) working off the oversold conditions. We'll sell back off tomorrow (however, we could push up a little more in the morning… but I wouldn't bet on it).

  12. cnbc says market up on story fed will stop paying interest on reserves to force banks to lend….how much bs is out there that they try and explain it?

  13. unbelievable….been trying for 10 minutes now and still no shares available to short the spy…

  14. The VIX is getting hammered today! We could see a pop in the morning to allow the VIX to fall back to a double bottom, before turning back up and tanking the market.

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