The Bears Are Back In Town!

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Wednesday Update...

(to watch on youtube: http://www.youtube.com/watch?v=LxluTg5CWjo)

Red

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And it's about time they wake up and join the party!

Yes, finally the charts are starting to work again, as the bears took control today and while the bulls took a much needed rest.  Looking at the charts now, we are oversold on the 30 minute and shorter time frames, but the 60 minute and the daily still have room to go down a little more.

Since we still haven't hit that 116.71 spy FP from early this week, I'd say that after this brief bounce ends we should be heading down to that level.  By then, the 60 could become oversold and a decent rally back up could occur.  It's too early to tell if this thing is going to stop there, bounce back up to some Fib. level, and then head down lower in some larger wave 3... to an estimate target of 106 spy, or if it ends at 116.71 and then rallies back higher toward our DIA 118.16 print.

(to watch on youtube: http://www.youtube.com/watch?v=0BOqJ6MyteY)

So, I'm only going to say that I expect tomorrow to be flat to up as the short term charts work off the oversold conditions.  It's possible (but not calling it), that they could become overbought by Thursday and roll back down on Friday into that larger wave 3... making Friday a certain color, if you know what I mean?

Again, just speculating here, and not forecasting, as that won't be known until the end of the day on Thursday.  For now let's just see what the bulls can muster up tomorrow, and how high they can take it back up?  Previous support is now resistance, so that 1200 level is going to be a tough one to pierce through again.

Anything is possible, but odds are now with the bears.  I'll be looking to get short once I see the charts get overbought again.  Maybe tomorrow, maybe Thursday, or maybe Friday?  I won't know until we get there.

I hope all of those short took some off the table today, as we could trade sideways to a little up for several days now.  No point in waiting it out if you don't have too.  Anyway, that's about all I got for now.  I'm expecting a flat to up day tomorrow... call it a "pause" day.  After that, we'll see what the charts say and re-evaluate.

Red

74 COMMENTS

  1. Not to sound like negative nancy but I think we have a pretty good chance of continuing to go down this week. (Depending on how this sentiment plays out)

    -Renewed fear in PIIGS (Portugal, Ireland, Italy, Greece & Spain)
    -Bank of America has issues. They sold their entire position in BlackRock (at a discount) and I think they are in desperation to raise more capital.
    -China planning on raising interest rates (Again) on Friday.
    -Continued Critisism over QE2.
    -Foreclousure fraud is being pushing in the news again.

  2. I have so many mainstreaM stocks, even some DOW 30 stocks, below RSI 29, some stocks are at RSI 24 and getting worse.—ONCE a stock goes to this low of an RSI, it takes on average, two weeks for it to, bottom, trade sideways, and then push higher 3 or 4%, to reach RSI 30 again….TWO WEEKS, TWO WEEKS,TWO WEEKS….Have I got your attention on the time frame? Good, proceeding to the next, harder to understand concept….
    These stocks stay so low, for so long, ( see time frame above), that they eventually PULL down the QQQQ to RSI 30…..
    I’ve seen this happen 20 out 0f 20 times, without any exception….Does that get your attention?
    Let us now proceed, to the logical conclusion.
    The QQQQ’s are going to RSI 30….Trade accordingly…..

  3. 1203 is the highest possible the SPX can go to, next day or so or next Monday….and then down another leg…a bigger down leg than the past 5 days. SPX at RSI 44, and to make RSI 30, that’s a 100 point drop. approx 1080….

  4. Still a very weak tape today. I thought I’d see more of a bounce? At this rate, the 60, 30, 15, and 5 minute charts will all be overbought by the end of the day. That doesn’t look good for tomorrow… at least not for the bulls.

    • LOL… yeah, this rally is tough on you I’m sure. We are so used too seeing a bear squeeze happen that today’s action seems unreal. I really expected more of a rally today.

  5. The market is being held back at the bottom trendline from the falling channel that it’s now outside of. It looks like a bull flag on the shorter time frames (10 minute), which should push the market back up into the channel.

    If it fails to get back in that channel by the close, I expect it to drop hard tomorrow in another leg down. On the 60 minute time frame, the pattern is a bear flag. I don’t know which one will play out, but generally the larger time frame rules over the smaller one.

    • Thanks San… that’s the exact chart I was talking about. The market is extremely quiet right now, which is eerie the way it makes you feel. Almost like something big is getting ready to happen… but what? A pop higher, or a big drop lower?

        • well just looking at this its very clear that the market is shifting but i dont know how far this rally up if there is one will be going cause like the charts say there is alot of hurdles it needs to clear and by the time its done doing that it might have used up all the strength leaving the market open to drop at an alarming rate with nothing to hold the bears back.

    • Thanks San… that’s the exact chart I was talking about. The market is extremely quiet right now, which is eerie the way it makes you feel. Almost like something big is getting ready to happen… but what? A pop higher, or a big drop lower?

    • Red!!!!!!I need my 1200, so I can short everything…If I was rich like Warren B, I’d do a basket trade, and short all 8000 listed stocks ( at market) ..and then hand input more shorts in the pink sheets.

      • Unfortunately, the only people with access to Buffett-like heaps of money are 23 year old Harvard MBAs, who think screwing with everyones’ 401k’s is a big joke…

  6. I think everyone may be waiting for the GM IPO to get a pop out of the market before continuing the selloff.

    Can’t see much happening Friday, but you never know. Continuation next week? You know people are getting margin calls and a lot of traders will have to reduce exposure for risk management.

    Europe is still a major issue that won’t go away.

    • I’m still trying to figure out how FRI can be down, with GM up like 16% on it’s first day, on it’s IPO … Probably goes to $45 eventually..That’s 15 years of estimated forward Revenue. Kind of reminds me of GOOG’s IPO, with all of this attention…

      • Well, it’s possible, but it seems like everything has been back-asswards since the beginning of all this QE stuff…it seems to me like more of a mind game than anything else now.

        I bet this is more of a “sell-the-news” event because it’s been hyped up so much as an “automatic success”. Everyone was talking about September being a bad month, then October being a bad month, then everyone selling the news on announcement of QE2. None of that happened because the financial media was hyping the “sell-the-news” crap on every one of those points. There doesn’t seem to be much of that this time, so it might actually happen, but I haven’t been paying as much attention as others have.

        Maybe we’ll have a “TARP moment”?

        I still believe that traders are just waiting for a better price to open the trap door, so I’m biased that way. Plus, the forex guys, who I’ve noticed tend to have a much better handle on where things are going, are simply waiting for a better entry point for shorts in the next few days.

        Then again, things are still really jacked up, so gotta roll with the punches. The one thing that still points to a selloff are the charts, and even though the charts have been saved at the last second the last 10 weeks, they haven’t actually lied yet…

    • I’m still trying to figure out how FRI can be down, with GM up like 16% on it’s first day, on it’s IPO … Probably goes to $45 eventually..That’s 15 years of estimated forward Revenue. Kind of reminds me of GOOG’s IPO, with all of this attention…

  7. Well, there is a potential pre-flash crash fractal now set up although today’s doji was a little different from the pause day on May 5. Complacency abounds and no one seems to share my sentiment so I feel very very lonely out there. ISEE all equities saw quite a bit of bullish activity registering a reading in the 220s. Crude oil continued its freefall. A lot of chatter about GMs IPO holding up the market but I think it is irrelevant now because pricing has already been achieved. Interesting close on the Dow at 11007.88 and the Russell 2000 had a nice close: 707.77. McClellan Oscillator bounced today from -265 to -210 area; it didn’t bounce this much on May 5; instead it flatlined. I am looking for a plunge below -300 which should cause a nasty selloff. Many bears though think this is a wave 4 pullback which should be shallow. Quite a consensus on this though. I am waiting for AAII poll tonight to see how much bearishness has risen. Also want to see Investor’s Intelligence poll today although most likely I won’t see the results until tomorrow.

    • I did add an emini put and re-entered a gold short (which I was previously stopped out of). If nothing materializes tomorrow, there is another key date in the near future. Another key fact that highlights Nov 15 as an important pivot high. 5months and 20days from the Cramer episode on May 26—ie 5-26–ie5-8 (which was displayed on his scoreboard that night) which featured all of those 1987 and 1929 references using 5-20’s tickertape for CRM is November 15.

      • There was an 8trading day/10calendar day difference from the April high to the flash crash. Flash crash like most of the hard declines have been on Thursdays. Meanwhile, Atilla is calling a bottom based on a hook pattern. It was also an inside day pause day. MUB, the municipal bound ETF has been quietly crashing losing all of its gains for the year with yesterday’s close. We have yet to hear the hysteria from the media that usually accompanies such a decline. The junk bond market is starting to shut down also from an inundation of massive supply and now declining demand.

        • Apple has the May 5 fractal and Apple is the market now. Meanwhile, the blogosphere is just dead tonight. Comments are almost nil. Complacency abounds

  8. this game is so predictable… as i send… this is a bear setup… boys.. get ready to short this pig…its possible that we will retest the 1200 highs… so… patient is the key.. let it fall first… and then short this pig. and thank me later lol

    • Based on what the daily chart is now looking like, our down move could have ended yesterday? This is a pretty powerful rally up right now, and I wouldn’t short it. The risk/reward isn’t worth it… in my opinion. Plus it’s opx tomorrow and you know how they like to squeeze the shorts on that day. This could continue into tomorrow? Just be careful going short here… that’s all I’m saying.

      • see my post, pretty convincing backtest already occurred, but Fear Factor indicate more rise coming.

        If my new short goes black, I will tighten stop to breakeven based on FF pushing to the upper bollinger

  9. Took a small short, based on ES and Doctor copper both executing a nice backtest.

    TOS becomes even more annoying with every day updates. Perhaps it is just “not taking”. If you do not do the update, you are not logged in at all….can’t use the software, MUST UPDATE.

    Predicting Earthquakes is like predicting P3, it will make you look like this guy

    Fear Factor — indicates a bit more market rise
    QE/Fed pumping is the only thing making this bear flag from hell extend to absurdity.

    And the GM shenanigans and other lies about how Gov made profit on bailouts. Trillions were thrown to the wolves, and a supposed wealth effect, to keep the masses from rioting. Personally, I only know a handful of people who are buying this shit (the lies I mean), the vast majority know this is bogus, that we are being ripped off, that the banksters/HBB ought to go to jail but never will.

    http://oahutrading.blogspot.com/

    • Most people don’t seem to care about the truth. This rally seems like a “bulletproof” bull. I mean come on there has been tons of bad news and none of it halted this rally for more than a few days. People are too consumed in their own lives to care. For months I have been spreading the truth and I doubt if I have influenced even one of my friends or family members.

      Meanwhile pieces of crap like Warren Buffett get the metal of freedom. Really, when is the last time you think he did some manual labor to deserve a metal of freedom? Probably never. You think because he gives out of his wealth that he gives a shit about people? The answer is NO and if he wasn’t rich he wouldn’t give out of his poverty.

      People think I am crazy when I go to the store and stock up on food. I purchased rice, beans, flour, sugar, coffee, tuna, ramen soup, pasta, pasta sauce and water. I am not dumb I know prices are rising and we are at risk of hyper inflation and even food shortages.

      So, Let’s continue this farce of a market.

  10. And we rally past the points we lost on the big sell off.

    Were gonna hit 11,800 or more.

    The dollar index has not ONE good reason to rally and the Federal reserve shops more than a woman!

    QE2 WILL not be overturned.

  11. Today formed a perfect bull flag. I’d expect it to play out tomorrow on the opening gap up. That should squeeze out all those bears that went short today. After the open, it could roll back down some… but since it’s opx I wouldn’t expect too much selling tomorrow.

  12. Hell why stop at 11,800.

    The Hang Seng trades at 24,000 and the BSE Sensex trades at 20,000.

    Why can’t our sorry ass (manipulatedinflated) market trade at least 20,000 or 30,000!

  13. sorry havent been around im sick feels like im about ready to drop dead.Anyway todays action was somewhat of a surprise move but honestly there were rumours about the GM IPO floating around during the last few days and everyone was just looking for an excuse to rally.However with that being said is this rally going to be short lived remains to be seen.If im looking longterm then honestly i dont see the market going into the red anytime before next year for the charts wise i hate to say this but this really does look like a decent pullback before another forward move takes place.The normal market cycles have been shot to hell Sept and Oct are gone and is Nov going to be red ?????? This is what happens when the market is being manipulated the crap out of it.Well everything changes traders 20 years ago would be having heart attacks every 5 mins in todays trading so the only thing is 3 words. Think Learn Evolve . I am going back to basics of trading using either Uptrend rules Down or sideways.Taking each day as it comes and keeping my chin up no matter what happens.

    Money is a byproduct of surviving the market.

  14. How the “F” did the whole world go from everything is falling apart Ireland going bankrupt Madman Bernanke is ruining everything with the dumbest idea in the world…

    …to the sky is blue everything is peachy keen Ireland will be bailed out so load up with Euros because all the stock markets all over the world are going to explode in vigor.

    What the “F” is that “S” about? I’d really really like to take a Louisville Slugger to the heads of every single one of those CNBC pumpers and Madman Bernanke and everyone else who is complicit in all this garbage. Unbelievable!

  15. Nice close especially Nasdaq. I wouldn’t be surprised to see the decline renew tomorrow. No massive bull flip today and no key resistance was taken out. 10 day average is still overhead and declining. Dollar looks like it hardly corrected and bounced off the 50day average which is acting as support. 73 trading days tomorrow off 8-9-10 high; there were 73 tds going into 8-9-10 high from the April high so that sets up a possible top for tomorrow. 2 Pi number is coming soon also. In fact that date has a convergence of cycles like no other. The magic number, the Blackberry Number scrambled. Mc Clellan Oscillator should make a new low after this bounce ends. It rarely drops that low with a single spike and this could still be the first spike down. (Complex bottom formation) Its the second spike down that is usually the most powerful. And this first spike down exceeded the mid August decline’s 3/C wave spike decline and yet this decline has not even achieved the points lost in that decline.

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