I'm still looking for the market to go to 1108 spx before any significant correction down.  I believe it will be reached next week by Wednesday.  Option expiration was Friday for most stocks and indexes, but the VIX expiration is actually this coming week, on the 21st... which is Wednesday.  That's one reason that I don't think any major sell-off will occur until after the October month is closed out.

Those market makers don't want lose any money, so they need to keep the vix low until those positions expire worthless.  After that... well that's another story.  November should be a down month, as I expect a nice drop to occur in the next few months.  Why you ask?  Well, it's not all based on Technical Analysis, Elliottwaves, Fib Levels, or Turn Dates.  Nope, it's based on insider information.

You see... TA, EW, Fib's, Astro turn dates and any other method you can think off, hasn't worked too well lately.  In the past... yes, they all worked well.  But today things are different.  Massive printing of money equals massive manipulation of the markets.  So, you can basically throw all that charting out the window.  If the government wants the market to go higher... it will.

With that said, I don't mean to imply that charting is worthless.  Quite the opposite is true.  Charting is still valuable.  But, basing a decision on charts alone is foolish as the government can keep print more money to buy up any dips in the market.  Just when the charts say that the market is ready to crash... BAM!  Here comes the PPT to the rescue.

Going short against the government is suicide, and going long with companies that are borderline bankrupt is also suicide.  So, what do you do?  You wait until the government pulls the money from the market and allows it to behave normally... that's what!  When that happens, it will go down of course, as the economic conditions are still horrible.  If the government would just stay out the market and let it find a true bottom we would get this recession over with quicker and start a real recovery.  But, crooks do what they do best... lie, steal, and cheat to get what they want.

How does that benefit us?  Well, I believe that there are individuals that know what's going on... and most importantly what going to happen next.  I think that one of those people is the guy known as "Mr. TopStep".  He and his group of traders most likely have inside information, which they share with anyone who wants to know.  All you have to do is watch their video's on youtube.

I don't think that you should throw all other methods away and only do what they are doing, but they do know more then the average trader.  And after all, aren't most people who visit and read blogs every day just average traders?  I know I am... how about you?  If you had access to some inside information, from Goldman, JP Morgan, or some other bank "in the know", would you be looking for information on the future market direction on some blog, or would you listen to that source?

If I had that kind of information I wouldn't waste my time reading blogs everyday.  I do so because I feel that many of those posters have better knowledge then me.  Of course figuring out which ones is the really hard trick to do.  With that said, I think that listening to someone who is trading on the floor of the S&P futures is someone who most likely has some inside information, or at least more accurate information then most do.

And, he's willing to share it with anyone who wants it.  Just watch the free video's he posts on youtube.  Again, I want to say that you shouldn't make your decision to buy or sell based solely on what Mr. TopStep says, but you should listen and take that into consideration before making a decision in the market.  About a month ago he said that the market wants to close that gap from October, 2008.  Here's the video...

As you can see, we are almost there.  In the past, when the market gets inside the gap area and pulls back, it almost always trys again until it closes the gap.  Rarely does it go inside the gap window and not close it.  Since the market pulled back Friday, and the gap isn't closed yet (on a daily bias), I believe the market will rally one final time early next week to finally close that gap at 1108 SPX  (110.34 spy).  Here's Mr. TopSteps' latest video...

Then, the market should pull back to the 900 area or so, before another rally up.  Now, you may be asking... will that rally up break the current high, or the future 1108 high (if it makes it there next week)?

That's up the in air at this time.  If the government injects more money, then maybe is the answer.

If they don't, then "Hell NO" is the answer... Dow 4000 here we come!

But for now, let's just focus on the present... and that says that the market is going to close the gap this week and then sell off.  I'm just going to sit and wait until the high is hit, then go short. 

Red

Here we sit at line in the sand. With just a few points away from an extremely important closing price of 107.65 on the spy, it seems that the Bulls might just have the juice left to get there? Monday is Columbus day, and many traders will be gone. Plus, there is NO major economic news on Tuesday either. That means light volume for sure on Monday, and nothing to push the market down on Tuesday.

So, the Bulls must close above 107.65 on Monday, and push on up to that gap fill line at 110 by Tuesday. If that happens, then you can surely expect a lot of selling at that point. On Wednesday JP Morgan will release earnings, then Goldman on Thursday and Bank of America on Friday.

What's all that mean? Heavy volume... that's what! And what has heavy volume brought us in the past? A big sell off! Light volume equals an up market, and heavy volume equals a down market. Will it happen? It depends on whether or not the market believes the funny numbers that the banks are going to report.

Make no mistake about... they will beat estimates. Probably kill estimates! But, the bar is set so low that just about any company can beat estimates. When they changed the accounting rules back in March it made it too simple for banks to fabricate their earnings. So beating estimates is a given now. But, the market wants to see them beat the "whisper numbers"... and that might be tough to do.

It's really a tough call here as the market really wants to close that October 2008 gap at 110 (spy), which would be the Dow over the 10,000 mark. That sure would look great for the 3 stooges (Obama, Geithner, and Bernanke), as it would appear that the recession is officially over! Yeah right, and I'm qualified to be president too. Hey, actually I am qualified... I coached a softball team for many years. That's about equal to "community organizer" right?

Anyway...

The big cycle turn window is in effect now and the market should roll over next week. If it makes a run for 10,000 first, then it had better do it on Monday... as that will be the lightest volume day of the week. However, I don't expect it to happen as too many people expect it... hence it won't happen. I see a flat day Monday with a slight upside bias.

Tuesday through Friday the volume should pick up quite bit. How the market reacts to the banks' fake numbers will be the real question. I'm going out on a limb and I'm going to take another short position on Monday or Tuesday as I expect that to be the top.... where ever it is!

On Friday the TBT rose again, as you can see the 2 day rise in the 5 day chart above. This not good for the market folks. Something is going on that is signaling a change. A plunge is near, that's for sure. If it's from the current level or the gap fill level around 110... I don't know. But, Tuesday through Friday should be down.

Now, keep this in mind...

Once the down moves starts the first level of support is at 1040, then 1020, and finally the 995-1000 area. I give the 995-1000 area an 80% chance of a bounce, so I'd get out of all shorts at that mark. I also expect the fall to be fast, taking out the 1040 level quickly and the 1020 level too. It will fool many bulls that buy those support levels, only to see them fail as the market falls further.

On the other hand, many bears will be fooled too, when the 1000 mark is broken (remember, the support is 995 to 1000), and they will pile on short. They will be squeezed, as a nice bounce from that level occurs. It could go back up to the 1040 area, or possibly higher? But, I think 1040 will provide good resistance, so that would be a safe place to get out of any longs you may take from the 1000 area.

However, let's play it one day at a time. I'm not saying to go short again at 1040, as I don't know how high the bounce will be. Only to take profits there and look for another place to short. We'll cross that road when will get there.

All of this assumes that the market doesn't rally to the 1100 area first. If so, then time line is off. On one hand it's worrisome as everyone is expecting the market to rally to 1100 first before tanking, and on the other hand it's refreshing to know that I'm not in the majority this time.

Well, that's about the best I can do to help guide my fellow traders.  Sorry I don't have a crystal ball.  Just be patient when the market does start to fall, as the 995-1000 area should be the first stop before any decent bounce.  Hold on to your positions till then and get out and go long,  as I will be doing so.  Whether or not this happens before next Friday is anybodies guess?  We definitely will have the highest chance of that happening in the coming week, as the banks reporting are big movers of the market.  If the market doesn't like what they report, then the move might happen by option expiration?  Let's hope so...

Red

P.S. Here's a interesting video for you...