Midday Tuesday Update...
We only had 162 million shares traded on the spy Monday, and usually you will see over 200 million on down days... which means that this move down was more then likely just a technical correction as opposed to some real selling.
In other words, the big institutions haven't started to dump the market yet. Maybe they are waiting until Wednesday, when the last POMO money going into the market? But after Wednesday, with no more POMO money until October 13th, and the non-farm payroll report out on Friday... I highly doubt the market can stay up this high.
I can see some 200-300 point down days coming late this week and possibly into early next week. For you non-option players, where time isn't against your side, hang tight as I believe Friday will be bloody!
Now The Depression Begins...
Even though we didn't get the sell off I was looking for last week, the market never went anywhere but sideways. It seems like the small injection of $30 Billion just delayed the selling for a few more weeks, as it certainly didn't produce another leg up in the market.
The Legatus Pilgrimage ended on September the 20th, and Bernanke states that no QE2 will be implemented, but that they will do whatever is needed to the support the banksters (errr.... the public). So what really happened? As Reinhardt pointed out on his site "a $30B rally is probably not a $800+B rally".
I think the $30 Billion is just about gone now, and the sell off will begin next week as a lack of stimulus money means NO buyers... and that means a sell off will follow. While it's still possible that they will rally up on Monday, I think the high will be put in for the week on that day.
After this triangle pattern breaks up (it could break down, but Monday's are usually bullish), it will quickly make the short term charts overbought, and ready to rollover on Tuesday (or Wednesday at the latest). The fact that the banksters could only raise $30 Billion, instead of $800 Billion like they did the previous rally, tells me that their power and influence is weakening.
Zero Hedge has an interesting article that states that Goldman Sachs will be asking for $500 Billion in a new QE2 bailout on November the 2-3rd. If it fails, then certainly the market will tank hard from it. I do think it will fail, and and the market will simply react as written in the charts... which is that it's overbought now, and ready for a serious correction down to happen.
The "failure" of the passing of this QE2 bill, will simply be the blame for the correction that follows. It should be quick and deep, lasting 1-2 weeks of heavy selling. The bottom should be at Dow 8300, our FP from many weeks back. That could match up with the November 15th election, and "if" the Republicans gain back control at same time all of our FP's are hit, then a rally will happen from it.
So, will the market hit that low on election day? I don't know of course, but I do believe the charts would align up perfectly of that target being printed in mid-November. That's about 6 weeks from now, and of course we would have short term bounces between now and then... but I think a person would have very high odds of success by simply staying short over the next 2 months with the downside target already known, allowing them a really nice profit should it all play out as expected.
No one knows for sure of course, but everything I see now is pointing to a move down to that print over the next couple of months. Playing the stock market is nothing more then gambling, with the added benefit of being able to increase ones' odd's of winning by piecing together technical analysis, fib's, elliottwave, politics, and just good old fashion "gut" feelings... and of course manipulation, corruption, lying, stealing, and cheating by the gangsters that run WallStreet.
It's harder to do that in Vegas, as I don't know any casino you can go to that only uses one deck of cards in BlackJack... hence counting cards now is a lot tougher with 4,5, or 6 decks mixed together. Can it still be done? Of course, but your odd's of winning are still a lot lower then what they would be by applying the same knowledge in the stock market instead.
But back to the market...
I think that taking a short position now, or anywhere last week, and holding until the elections should produce a very nice profit. While trying to catch the exact high to get short is very hard too do, and mainly for short term swing traders. The intermediate swing trader might be wise to start positioning themselves short for the coming 6 week down move.
This is of course just what I see in the charts, and what I sense with all the other pieces of the puzzle that I've tried to put together. Will it happen? I don't know? I just know that the odd's are very high of the sell starting early next week, and lasting until the elections, with a few bounces along the way... to shake out the weak hands of course.
So in the end, we must simply fold our hand, lay down what we got, or take another card. I'm a risk taker, so I'll take another card. There's bound too be a BlackJack coming my way soon!
Best of luck to us all...