Blow Off Top Likely To Happen Next!

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But after that, I think Friday will sell off some...

(to watch on youtube: http://www.youtube.com/watch?v=4RNpfHKGW4M)

It seems that most all of the short term charts have been reset from overbought to oversold over the last few days.  Both the 60 and 30 minute charts still have a little room to go on the "downside", but with the extremely light volume I doubt that the actual price level will drop that much.

This means that we could see a little weakness in the morning, but I expect those 2 charts to roll back up fairly quickly and push the market up for a new high.  Yes, I know that sucks for us bears... but that's what the charts say right now (and of course the charts "DO" still work for the bulls, just not the bears).

After Thursday... who knows?  If the market gets overbought again on all the short term charts, the I'd expect Friday to sell off some.  But calling a top seems almost impossible in this insanely manipulated market.  It truly is totally NUTS! ...but how can you go long at these levels?  I can't, and won't.  You'll lose big time if you do so in options.  The calls will be destroyed with the falling vix, even if the market goes up as you want it to.  It's a "no win situation" no matter what you do!

So for now, let's just take it one day at a time.  Tomorrow is looking very bullish too me, so I'm still looking for that blow off top to happen before I get short again.  I've been burnt too many times right now, and my butt is sore.  If we get that big move up early in the morning tomorrow, then it could sell off into the close... which at that point I'd be looking to get short again.

If it's strong all day then I'll have to wait until Friday to see if it looks ready to roll over.  I know we are close to a top, but I can't pick it exactly... bummer 🙁   This could be one of those week's that puts in a final top followed by a bloody next week, as we never know what bad news they could release over the weekend?  Remember, most crashes are on Friday's and Monday's... just food for thought.

Good luck everyone...

Red

P.S. Don't forget about our 14.86 FP on the VIX, which should be hit if we get a blow off top tomorrow.

1938 COMMENTS

  1. Hi Red,

    another article worth a read – I’ve thought this myself for sometime but who knows – if it is the case then the ramp up will keep going. And from the figures I have read, this type of war is a much cheaper alternative to conventional warfare.

    http://slopeofhope.com/2011/02/qe2-and-the-art-of-economic-war.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+typepad%2Ftradeblogs%2Fthe_slope_of_hope_with_ti+%28Slope+of+Hope+with+Tim+Knight%29

    Good luck mate and I think you are right about a blow off top on the morrow

    Muzza

  2. overseas trading is a bloodbath. EVERY retail asian investors, is selling US, because of CSCO, It takes about 2 weeks to unwind the selling. If you think buying the dip is going to work—well… get in and out fast, over the next two weeks. or even better, just get out….wait for march rally

      • Call me crazy zstock, but I think with the money that’s rolling in the next several months, THEY are going to try to double-top the dow. I mean, all-time double-top. It just hit me today.

        I think that’s Madman Bernanke’s goal for the end of this round of QE. Think 1999.

        Or, there’s QE 3, 4, 5, 6, etc, this could be just the half-way point to a major, unbelievably overbloated market.

        • Did you see how the market was barely above water when the dollar was down 1% yesterday, yet today, the dollar is up and the market is barely underwater? This is a display of absolute power…

          …as long as the money flows.

  3. Since we gapped down (instead of gapping up) we should be in sell mode for the first few hours of the day. While it could stay that way all day, (I doubt it), I do expect it to turn back up and rally to fulfill the vix FP before the real selling begins.

    For today though, I expect that they will fill that gap around 131.18 spy, and may even dip a little lower too. Just don’t get caught into thinking that “this is it”, as the volume and the vix don’t support any fear here.

  4. Maybe we will just have these fake sell offs from now on.

    It’s not good enough for the market to just go up anymore. Now it has to sell off, so the gangsters can buy precious calls for dirt cheap.

  5. Interesting……like I have mentioned before though….daily open interest and volume have dropped off significantly as prices continued to rise to new highs. Less and less committing to the long side…pro’s are stepping out……

    Keith
    thedailyeminitrader.com

    • Yes, volume has dropped off a cliff… which is why it’s about useless to try and short (with options) for any decent multiday pullback. They simply won’t let this market go down.

  6. Hi Red,

    I recall a super low SPY print the same day (3/30/2010) the DIA print of 118.16 was seen. It was 20 something. Do you have a screenshot of that one?

    Thanks

    • It’s on the toolbar below under “Images”… third one from left to right, second row. It’s for 20.16 on the SPY! Now that’s one scary print!

      (let me know if you can’t access the toolbar, and I’ll dig up the link to it)

  7. red,
    so it seems that the primary dealers are looking to suck the VOLUME OUT of the market so they can play liquidity rebate fun and melt it up. So volume is the KEY….. how do you FAKE volume so we can take back the markets???

  8. Well, I’m off by a day as usual. The 60 and 30 minute charts are still in negative territory on the histogram bars, but they are inching up close to the zero level now.

    The 15 and 5 minute chart are now rolling over toward going below the zero level. If this continues (which I believe it will), these 2 charts will be oversold by the end of the day and aligned back up with the 30 and 60 minute charts.

    This will have all 4 of this short term charts pointing up into tomorrow morning. If we are ever going to get a blow off top, it will have the best chance when all of these charts are in agreement with each other… in other words, Friday!

  9. what a strong market…. down all day.. and rally back up… with strong close.. tomorrow we will be heading to the moon. 🙂 grab your spacesuits boys.

  10. Mubarak not stepping down til September – I think the protests continue on… biggest one yet was scheduled for tomorrow

    • What time? Maybe they rally hard in the morning to put in a new high and then sell it all off into the close on the protesting? (all planned and timed out that way of course)

  11. Rally tomorrow with a blow off top, or tank? Which one? I have no idea at this point? Lot’s of stop sweeping that last 10 minutes… which means a big move is likely coming tomorrow!

  12. The Deutsch bourse buying out the Nyse is the bell ringing at the top. Unfortunately, it hasn’t been announced yet. Dow rsi is too high also. Daily upcount for all indices now at 8 consecutive closes above the close 4 periods earlier. A close at this level or above will give us the vaunted 9 count to go along with the weekly 10 count.

  13. Whatever hit I’m going to take on longs, I could have more than made that money going long this week.
    Hi ACP, I’m going back to buying all the dips, just like you said to do.:)

    • Yeah, I don’t see what would really tank this market except cutting off the ca$h……eur/usd down 1.30 EOD and the market was flat? I mean, if you BTFD and the momentum changes, so what? Just take your small haircut and change strategery again.

      I needed a moment of clarity……

      • I analyzed what would have happened that -160 Friday, and buying that dip would have resulted in a smalll loss, that would’ve been recouped on Monday. Hell, they could change the program tomorrow and screw everybody, but the haircut would be no bigger than any other haircut I’ve taken unsuccessfully shorting!

  14. Red,

    I’m still showing the FP of 14.86 on the VIX as a 52 week low on my account posted on 2/8/11. Is it possible that was simply an error or not really a FP? From watching your posts, it doesn’t seem like FP’s stay up that long normally. In your experience how long do FP’s normally “show” themselves?

    • Maybe it had to go down to almost tag the lower BB so it could generate a sell signal for the market – just a thought – at this point if it is a real FP – it would only indicate that at some point after we tank that we will recover and then off to the moon 🙂

  15. CMG good setup for short? After announcing it was up alot like $20 AH, right now it is down almost $9 from yesterday close. Got downgraded – some analyst say it is over valued (No.. you can’t be serious…. over valued…WTF) anyway, aside from my sarcasm it is worth looking at. It still has yet to fill the gap around $180. Just a thought.

    • These bastards will keep pumping until the last penny is gone, probably beyond June. And when the market slips in the summer, The Madman will make a speech and threaten any who dares challenge him. There will be a prolonged period of irrational exuberance, but the time will come when there is cumuppance, and it WILL be brutal……

  16. Wow it actually looks like the VIX FP can be hit now as it is falling off a cliff and them markets are yet again going to new highs. I think we are in POMO time right now… maybe this will be the blow off top…

  17. ok now they are saying that Mubarak will be stepping down… so which is it???? and does it matter to the markets – nothing matters… everything good or bad seems to make this farce of a market soar….
    someday….

  18. As long as POMO is in effect, you can expect this melt up. If the FED cannot keep long term rates in check, then POMO may backfire at some point, but so far, so good according to Benny…

  19. Intraday FP on SLV of 29.15??? @ 11:06am
    not sure if FP but it is still on charts and only stayed there for a second

  20. YMH11 moving higher to possibly retest the highs……buyers on the way up getting ready to be an entry opportunity for the larger shorts @ 12233 level.

    Keith
    thedailyeminitrader.com
    Sign up for FREE!

  21. Wow! This is just painful…

    The statement of: “The markets can remain irrational much longer than you can remain solvent” is sooooooooo true. If my wife knew of the beating I was taking, she’d want to join in with the bulls to make it hurt even more! I’d walk in the door tonight and she’d announch “honey, we are having Bear meat for dinner!” LOL!

    • My story as well. Trading account has taking a severe, severe beating since Feb 2010. I has a total bull through 2009 and then got bearish, and haven’t been able to shake my prefernce and bear outlook. It’s stupid, but I don’t know why I’m more scared to buy the dips, then shorting at highs

  22. I turned bearish around the same time and been paying for it since.

    What scares me about buying the dips is when this thing does turn and BTFD fails for the masses, we know it will go down 4x faster than it went up. Which means it will be difficult to get on board…

    • I suspect, the wise ones have 4 long for every 1 short.
      if it falls 4X, the 1 short will cover more than the longs.
      if the short expires, ah thats the price of profits.

  23. Hey Red, We didn’t “sell off some” today… When is the announcement that CHINA is getting off the dollar? I thought we were supposed to be hearing that this week. Help us…

    • As long as Benji and his QE keeps going, there are no stopping this. As everyone else I assume, I turned Bearish end of August. I was UP some $33,000 and now down almost $30,000. Its getting depressing seeing my VXX, FAZ, BGZ, UNG in the toilet everyday.

      • how I remember August. it really felt like flash crash was emminent.
        on that 3rd bounce, I did get suspicious. if you told me then, where we are NOW. I would have said you were on CRACK!!!
        yet here we are. Zimbabwe-land

  24. Now the only thing that will crash this market is Bernake gets a heart attack. No bad news in the world can bring this market down. So either one of two things happen:

    1) Bernaki dies (e.g heart attack)
    or
    2) Obama resign

  25. Hi Red and all…
    Capitulation de jour… Although, I gave up on TA of any kind, there is convergence of Gann cycles middle of Feb (14th-15th)… Jan 19 Gann highs held for some time, but nothing works anymore…supposedly if we turn next week, should be 14-15weeks down…I’ll believe it, when I see it…
    Good luck all…great day for Egyptian people, but this is just the start, as dictators all over the world are on notice…there will be protests in Iran on Monday, if numbers are in any way close to Egyptian, it will get very bloody…Iranians have it lot worse that Egyptians, and I think they are pissed at their leadership trying to frame Egypt as Islamic revolution…
    Euro Debt, China tightening (possible food riots), US debt ceiling are still alive and well…All my positions are in options in April to June, but if this BS doesn’t turn soon, all be really screwed…

    • The Egyptians are about to get royally screwed. Replacing a secular dictator w/ a Muslim will be a bloody mess.

      • Well, right now it “good ole” military dictatorship in Egypt…however, I think most of Middle East countries will be in turmoil lot sooner, than whoever going to rule Egypt emerges… However, the region has learned from Iran 1979, if Iran follows on Monday with bloody mess against its people (again), it would make religious rule lot harder to take hold…

        • We can only hope the military maintains control. i am familiar w/ Egyptian military and when I was involved it was a professional secular bunch.
          Clothes can change

  26. if this market is any symbol of freedom, then you people are not free! seeing these rigged markets make me mad, no matter if i’m winning or losing.

  27. Jim, no form of leadership works. they all screw the people, it’s always been that way… of course there is bad and there is worse. but, a screw is a screw. lol

      • not when its millions or billions of people and the incentives of cheating/robing them are so high with little accountability of them. Leadership of small groups then yes, maybe. but even that breaks down.

      • I’m sorry, I agree with you. but it is seldom you find a good leader anymore who isnt ready and willing to steal from the masses. Many of todays leaders are misleading thier people and robbing them while doing so. I appreciate your compasion for the people over there.

        • I agree with you. But I have known many outstanding leaders in my career. They are there. But it is difficult to get them to move into politics.

          Jim

  28. Finally, I got my internet back! Sheesh… what a pain in the rear! I had a modem go bad on me, and had to get a tech to come swap it out for me. Of course that’s on top of the site being down all of yesterday, due to too many requests hitting it.

    So, did you guys (and gals) have fun without me? Did I miss the crash? LOL

    • I don’t see any big up on Monday Robert, but I will say that the trend is still up… for now at least. I see Monday as a pause day, or even a negative day, as the short term charts are looking over bought now. We’ll see I guess…

  29. I have been reading all of your comments and feeling your sorrow as I have been a bear since August as well and loosing my shirt and than some. The only trade I made that was good was investing in SLW but by the time I was getting more agressive even that start loosing money due to the recent regress of silver, however I am still bulish on the silver on the long run, but this is the only thing I am bullish on even though I am starting to regret that dearly. I have post on my new blog some great videos and links to articles about what is to come with the dollar devaluation and inflation that is on the horizon. If any of you don’t have nothing better to do this weekend stop by my blog and your comments will be great appreciated. Sorry I have not been able to install DISQUSS just yet, small techincal problem
    http://www.aninformedmom.blogspot.com
    Great weekend everyone and really enjoyed your postings…

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