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Weekend Update…

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 wallsteet-attacked-by-godzilla

Wall Street is Coming under attack!  Job losses, fake earnings, corporations defaulting on debt, bailout's for the rich, housing markets underwater... all spell a CRASH Coming!  After all, how else can you paid off your debt... just wipe them out instead..."That's How"!

If you think that this is just another 10% correction, and that it's now over... you're dead wrong!  It hasn't even started yet!  Want the evidence?  I'll direct you to the 3 charts below (found on Shanky's Charts... link on my Blogroll)...

Daily Chart

Shankys-Charts-Daily-SPX -02-07-2010

Weekly Chart

Shankys-Charts-Weekly-SPX-02-07-2010

Monthly Chart

Shankys-Charts-Monthly-SPX-02-07-2010

So, could Monday be a "Black Monday"?  I don't know?  But the rest of the week isn't looking good.  Wherever we peak on Monday (1070-1080... or maybe we already completed minor wave 2 up?), the selling to come after that will be huge.  It will be a minor wave 3 inside a larger wave 3... both inside Primary wave 3 (or C).  It's going to be scary from here on out.  At some point there will be "Panic Selling"... and I might not even want to make a daily post during those times?

Although I didn't create this bubble, I really don't want to be the center of an attention.  As a matter of fact, I never created this blog to gain a following... only to post my thoughts.  I don't use any type of marketing or even any other type of blog optimization technique's.  I really don't want any traffic to the site.  But apparently I have quite a few people reading it daily... that don't comment (which is fine).

I'm just looking to make enough money to retire on, and then relax and enjoy life a little.  So, if my daily posts become weekly posts... you'll know why.  (Not saying that I'll stop posting... only that I might take some time off at some point).

Moving on...

Tony-Caldaro-60-minute-SPY-chart-02-07-2010

Here's what I see for next week... Monday should have the continuation of minor wave 2 up, inside of larger wave 3 down.  When that ends, probably by midday Monday (but it could go into Tuesday?), the minor wave 3 down inside of larger wave 3 down will start.  I think we will bounce on the 200dma (daily chart) around 1020, and come back up for minor wave 4 (still inside larger wave 3 down), and have another push down later in the week for minor wave 5 down (possible target... the 50ma on the weekly charts, about 980).

Remember, the 1000 level is important to the bulls, and a break of it would have the bears jumping on the short side faster then you can blink an eye!  Then once all the bulls have sold out and the bears are on the short side... Bam!  ...here come the buy programs to rally us back up for Larger Wave 4!  How high?  I don't know?  But, it will probably be in line with option expiration on the 19th.

That's what I'd do if I were them

Red

P.S.  Keep in mind folks... nothing is written in stone.  This is only a forecast of the possible moves coming.  If the government comes into the market again, with a "Stimulus Package Number Two"... it all changes.  But for now, I believe they won't do that.  Not until the banks get done unloading their shares (a few months?).  Then they will come to the rescue again.

"Lather, Rinse... and Repeat"

Black Monday?

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black-monday

Look out for next week... we're about to start a large wave 3 move down!  Destination... Unknown?  Monday is an "iffy" day, as we are now in a smaller wave 2 up inside of a larger wave 3 down.  So, it might not rollover until Tuesday, (but I created the image above just in case it does... as I thought it was cool looking).  I'll have more on my weekend update, but for now we bears might have to endure a small amount of pain while the tape pushes up to 1080 or so Monday morning.

That's about as high as I can possibly see it getting.  Honestly though... I don't think it will even come close.  We very well could drop Monday afternoon and not stop until we hit 1020 or so.  I waited all day for a chance to get in short and the tape looked so weak that I didn't think I'd have a chance to.  So, I got in around 1pm and the rally in the afternoon (unexpected... of course) put me a little in the negative on the position.

But, I'd already planned to hold it until OPX if necessary.  It's a 106/101 SPY put spread.  That means I bought the 106 and sold the 101.  When we hit the 102 area (not "IF", but "WHEN"), I'll get out and wait for a bounce to occur.  About 102.50 is where the 200dma is on the daily charts.  That should give the market a couple of days of a bounce, before more selling happens.  We could hit that level Monday if people start to panic in the afternoon?  Who knows?  It should be there before the week ends though... so don't panic!  Stay short!  We have lots more downside to come.

As for the bounce from the 102 area, I don't know yet if I'll play it back up or not, as it's too dangerous to go long right now.  I might take a small position, or just wait for it to peak and go short again.  We'll see when will cross that road.

Red

P.S. I know that it might seem like you have missed the big move and it's going to rally back on you... well stop thinking like that and relax!  The Monthly, Weekly, and Daily chart's are all rolling over.  Were going down to the low 900's... before the March expiration most likely.  Hang tight, the drop hasn't started yet!

Did Someone Press The Panic Button?

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panicbutton

Holy Cow!  Did Wall Street hit the panic button today?  They sure fooled me on this one, as I didn't see such a huge sell off coming so soon.  I was stuck sitting in cash on this move.  Bummer!  This changes the game plan completely of course.  Yes, the turn date for Monday or Tuesday is still valid, but it looks like it started early.

If you are all ready short... stay!  If this caught you by surprise like it did me... pray for a bounce!  I was looking for a little bit of selling today, but mainly a flat day before one final move higher.  But, at least I wasn't long the market... man that would be painful.

Ok, moving on...

I see 2 different possibilities for tomorrow.  One is... A little more selling in the morning as the late-comers' sell on the news.  Then the big boys should step up and rally the rest of the day.  I don't mean a big rally by any means... only a small up to close the day positive.Two is... The numbers tomorrow isn't as bad as the market thought (government gets out their erasers), and we gap up a little and rally early on, and sell off into the afternoon.  Either way, I'm looking to get short.  The consolidation area that formed today was in the 107.25-107.50 spy level.  That will be hard to go through, and I might go short there?  The next level of resistance is around 108.30-108.35, as should be about as high as I can see the market getting.  I'll definitely be going short there.

Tony-Caldaro-60-minute-SPY-chart-02-04-2010

Either way it plays out, this would produce a smaller wave 2 up inside a larger wave 3 down.  That means that Monday (or possibly Tuesday) would have a smaller wave 3 inside a larger wave 3 coming!

If that happens... look out below!  We are going down hard and fast!  Wave 3's are the most powerful waves and when you have one wave 3 inside another wave 3... you've got a hurricane coming!  Now understand that we might not get a bounce tomorrow?  You know how they kept all the bears (and late bulls) from going long during the rally from last March.  It was almost straight up with no pullbacks to go long on.

Well, don't you think they will do the same thing on the way down?  Of course they will!  Any bounces are going to be small and won't last long.  I'd be shocked to see a 38.2% retrace from today's sell off.  I think we'll be lucky to get 23.2%.

Regardless of how high the bounce is (if there is one?) I'll go short tomorrow into next week.  I really expect it to be ugly.  All of next week should be down, with very little chances of getting short again.  We are rolling down on the daily charts now, the weekly charts, and the monthly charts.  It's not looking good for the bulls.  We will have some bounces along the way, but I'm expecting selling into March.

What I'm doing is simple... I getting short tomorrow on any bounce higher (with those targets mentioned above in mind).  Whether it coming in the morning, (which is possible), or in the evening, I'll be getting short and holding through all of next week, and maybe into option expiration?  It depends on how fast it falls and the key support levels it hits.  When it hits heavy support, I'll go to cash, wait for the bounce, and re-enter short for a continued fall into March.

Some of you might want to ride it out, but I swing trade and will be getting in and out when support levels are tagged.  This huge down day certainly has come as a big surprise to me, and to many others too.  That's exactly how they like to play it... catch everyone off guard!

Good Luck Everyone...

Red

Waiting For The Jobs Numbers…

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The market went basically flat today, closing slightly lower.  This was the consolidation day that I was looking for yesterday.  So, I was off a day... nobody's perfect I guess.  Regardless, I'm looking for the swing trade play, and I'm just sitting in cash for now.

I think tomorrow could be another consolidation day, just like today.  Slightly up or down, but no big move yet.  Everyone seems to be waiting on the jobs numbers on Friday.  I think it will fool everyone and be viewed as positive... which will push the market higher again.

I'm really looking for a move to 112.00 spy or better.  I'd love for it to reach 113.00, which was the major lower level of support during the 2 week battle between the bulls and bears, while inside a sideways channel.  The 115.14 was the high, and the low was just a hair above 113.00 (spy).

The ideal plan to happen is for the market to pullback a little tomorrow and then rally one more time on the fake jobs numbers Friday, as you know the government is going to lie again.  Let's just hope they do a good job of it this time.

Here a chart of what I'm looking for...

The-Chart-Pattern-Trader-spy-daily-02-03-2010

The trades you decide to take shouldn't be based on what I'm taking.  I'm very confident of this wave 3 down coming, and that's why my risk tolerance is high.  Buying short term February puts could make you a ton of money or you could lose it all too?  My indicators tell me it's going to fall, so I'll be taking higher risks.  Choose wisely....

Red

The Bulls Are Running Again…

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bull-run

Look out bears, the bulls are back!  NOT!  I don't believe that for one minute.  This is simply the larger wave 2 up that follows the wave 1.  We are still on track for larger wave 3 to start down next Monday or Tuesday.  I was wrong about today being a flat consolidation day, as the bulls just kept on charging.  That's fine with me as I'm not short anything right now.  (Still in my USO long though).

I can't really see tomorrow continuing to rally without a pause day, but it could.  A slight pullback, and then another move higher on Thursday or Friday is the logical thing to do... but who's says the market is logical?  Regardless, I swing trade, so I'm just waiting for the short term indicators to start too rollover again.

I'm still thinking that they will surprise everyone on the job's numbers Friday.  Of course I could be wrong, and they start to sell off after they are released, but my gut tells me that every trader already knows that the numbers are horrible.  With low expectations like that, it wouldn't be too hard to beat them.  Plus, they have a habit of tricking the bears a lot too.  Never under estimate the government.  They will fool you every time.

So hang tight everyone... our time is close now!

Red

P.S. I'll be buying straight puts on the SPY on Friday or Monday.  It depends on how high we go, as to which strike price I'm going to buy.  I'll be looking to buy February puts, as the move down should fall into this coming expiration on the 19th.  Everyones' risk tolerance is different (mine is quite high), but I'm looking for a strike price that is "out of the money" by about 2 points from the high.

So, for example... if we hit 112.00 on the spy by Friday, then I'll be buying the 110.00 strike price.  If we are lucky enough to hit 114.00, then I'll be buying the 112.00 strike price.  Remember, I'm looking for about a 100 point move down before option expiration.  That's a 10 point move on the SPY.  That's a HUGE move folks!  You could make 5 times your money in a 2 week period... or you could lose it all?  It all depends on what the market does, and I believe it's going to crash.  What do you believe?

Up As Expected…

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Sorry for the late post today folks.  The market went up as expected, and should continue throughout the week.  Tomorrow should be a consolation day, before another move higher.  Again, I'm staying long my USO calls until Friday or the 38 level.

I don't know how high the market will reach by Friday, but the 1120 area isn't out of of the question.  Regardless of where it is, I'll be going short on Friday, as it could start the larger wave 3 down on the following Monday.  Now keep in mind that Monday could go up a little and the down move wouldn't come until Tuesday the 9th.  That's my actual projected turn date... but, it might come early, and I don't want to miss it.

I would rather ride out a little pain to the upside on Monday, then to see Monday crash and I'm not short yet.  Anyway, I'm tired, and haven't had a chance to do anything today.  I got home really late and now I'm posting late.  So, I'll end here.  Just stay patient, as the big one is coming soon!

Red

Weekend Update…

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What a wonderful time it is to be a bear!  The market just keep on selling into Friday, closing around 1071, surprising even me.  I said in last weeks post that I believed we would pierce the 1080 level intraday to trick the bears into believing the level has broken, and pierce did we ever!  We went straight through it, and continued on down to a low of 1071.59, which probably had the bears jumping up and down thinking the next level is 1030-1040 area.

Not so fast Mr. Bear (I am one... by the way).  Every down move will have a bounce back up from time to time... and that's exactly what I'm looking for next week.  A rally back up to at least 1100, or maybe as high as 1120 is overdue, and should occur next week.

Looking back at the chart I posted on last weeks "Weekend Update", I see that it played out fairly well.  I was off on the 1080 level holding, but other then that... it's pretty accurate.  I believe the breaking of 1080 is a bear trap, as it requires 2 days below the level to confirm the break, which would allow the market to fall to the next level around 1030-1040 (I don't see that happening).

Last Weeks' Chart....

Tony-Caldaro-60-minute-SPY-chart-01-24-2010

So, looking ahead to Monday, I believe we might have a gap down in the morning, followed by a rally up to close the day positive.  If the gap down doesn't occur, then it might just rally up and sell off a little in the evening... but I still expect a positive (or flat) close on Monday.  I don't think it will close down big again, like Friday.  It should be a flat to up day, for the market to consolidate before a move higher to 1100-1120 by Friday the 5th, (or Monday the 8th at the latest), as the finally high before wave 3 down starts.

To be on the safe side, I will most likely be going short on Friday the 5th, not Monday, as I don't want to miss out if it crashes Monday instead of Tuesday.  Since the first larger wave 1 down from 1150 to 1071 is 79 points, wave 3 down should be well over a 100 points before it's finished.  Whatever you do... don't go long on anything!  No dip buying, only "sell the rips"!  You will get killed if you go long in this market once larger wave 3 starts!

This Weeks' Updated Chart...

Tony-Caldaro-60-minute-SPY-chart-01-31-2010

Once the larger wave 2 up is finished by next Friday (or Monday), you should get short and stay short until options expiration on Friday the 19th.  This larger wave 3 is probably going to last until then (or longer).  This second cut through of 1080, on the down move from whatever high we reach this Friday, should pierce it quickly and not look back.  The first decent bounce level is at 1030, and should cause a pause day to occur, before the selling continues.

Once it breaks... hold on to your hat Nellie, as this is going to be one hell'uva ride down!  The 1000 level should also be heavily protected by the bulls, but when it breaks... look out!  We're going to 910-920!  This is a rare opportunity to make a ton of cash as this thing falls.  I will be holding on for dear life, as it's going to be scary as hell!

Best of luck to all of you...

Red

Are They Walking Off A Cliff?

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walkin-off-cliff

Is the selling every going to stop?  Yes... at least for a short while I believe.  I'll make this brief, as I'll do more research and post it on my weekend update.  I believe that we may gap down on Monday and rally back to close positive, or simply open up positive, sell off a little and rally back to close positive.

Either way, I think Monday will close positive or flat.  I think this move below the major support level at 1080 is to trap shorts.  I still see next week as a positive week, most likely creating our larger wave 2 as I posted on last weeks' Weekend Post.

I've said throughout the week on different blogs with my comments that it should go back up to 112.00 area.  Since the sell off went so low, I'm not sure if it will make it that high?  Maybe, but 110 is more likely now.  We'll see.  But for now, I'm still long on the USO, and don't have any shorts right now.  I'll reload next Friday most likely in anticipation of wave 3 down coming the following week.

Red

Another Volatile Day…

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ben-bernanke-re-elected

Gap UP, then Sell off hard... back up, down, up, and down!  Whew... what a day!  We did go lower intra-day to tag the 107.91 spy level, which should complete the 5 wave move down, of the larger wave 1 down.  It was possible that yesterday's 1083 was the end, but it turned out to go lower today to 1079... which hit the lower channel perfectly.

Are we finished with the larger wave 1 now?  I'm not sure yet... but we're close.  I could see another little push down tomorrow morning, and then a move back up to close around flat.  Then a move up all next week, just as forecasted on my weekend update.  I think that the support will hold this week around 1080, and the traders will calm down over the weekend and start buying again next week.

How high we go is unknown, but the ideal place would be 112.00 spy by the end of next week.  I did not go long on the SPY as I don't trust the up move next week.  We could just go sideways next week, and either end the week flat or only up a couple of points.  It not worth the risk for only 1-2 points on the SPY.  So, I decided to go long on the USO, buying the 35 call for $1.60 today.  I'm looking for a move to around 38 by the end of next week.

So, for tomorrow... I don't expect much more selling.  A flat day is my forecast.  Then a small retracement rally all next week.  It's risky right now to go long on anything... but I think I'll be fine with the oil trade.  I just wouldn't touch the spy right now, as it's in good support now which could break or bounce?  It's safer to sit and wait for now.

Red

We May Be Done With The Selling For Now?

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george-w-bush-whisper-in-obama-ear

The market looks like it completed 5 waves down in this larger wave 1 from 1150.45 to 1083.11 today.  I was looking for a wave 4 up and 5 down, as I posted on my weekend post, and I think we may have gotten it?  If Obama doesn't mention anything about Wall Street (as I suspect he doesn't have George W. telling him what to say... if so, look out! A crash is coming!  LOL!)... then the market will probably start a "week long"... larger wave 2 move that I'm expecting.

I think that elliottwave, fib's, ta's, and support and resistance levels... work really well when the market is in a trend.  I think we are now in a new trend... down of course!  That's why I think the forecast I put up last Sunday is tracking as well as it is.

During the last several months, when the market wasn't trending, but instead... stuck in a channel, forecasting was very tough.  I don't think I got half of the moves right back then?  Maybe it's just blind luck this time?  Either way, I'm happy that it's working this time.

So, if all continues as planned, then a slow grind back up to about 112.00 is expected over the next week or so.  Of course it will be choppy and great for day traders.  But, I like to trade trends, and I think the next one is up for a little while.

If you're playing options, then I wouldn't go straight long as the IV will kill your option price because the VIX is going to drop while the market goes up.  The only way to win is to do a spread or buy deep in the money calls.  It's still risky of course, but that's what trading is all about.

Red

Waiting On Obama…

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obama-salutes-with-left-hand

The market is looking pretty scared right now.  It rallied a little, and then sold back off into the close.  Tomorrow night is what the market is waiting on.  Although I think we will go up into the events, it is possible that we sell off tomorrow in anticipation of bad news from Obama... (which never happens as he's a great liar) and then start the 2-5 day rally from the low tomorrow.

It's hard to guess at this point?  I'd only recommend that if you are already short... stay short.  We are either going down into the events (FOMC meeting at 2:15 and State of the Union after-hours) or down after them.  Either way, I expect 108.00 to be hit.  I will look to close my shorts there... assuming that it doesn't pierce the level with huge volume!

That's one of those "iffy's" as I'm only assuming that it will hold on the first hit.  Now that's on a "closing bias", not intra-day.  I do believe we could pierce it intra-day to suck in more bears, and then close right at the support level... which could setup a good place for a bounce... with "could" emphasized!

This is a tough place to be if you aren't already short.  You Damn sure don't want to go long when it hits 1080, as it's way too risky!  So, you hope for a rally into the FOMC meeting, or a rally on Thursday (after Obama yaps his jaws late Wednesday night).

I'm sure our smart President will save us from this mess we're in... right?  After all, I know how Patriotic he and his wife are... just look closely at how well they honor the Pledge of Allegiance by holding their right hand over their heart (ops... that's their left hand!  Must be a new trend to use your hand with your wedding ring on it?)

Red

So Far So Good…

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So-Far-So-Good-by-Bryan-Adams

Looks like the market rallied a little today as expected.  I don't have anything to add today, as I explained it all in my weekend post.  I'm looking for another flat to slightly up day tomorrow, and Wednesday.  I'm still looking for a fall to 108.00 SPY by Friday (or Monday).

I expect the market to sell off either Wednesday afternoon, or Thursday.  It should hit the 108.00 level by Friday or Monday, and then I expect a 2-5 day rally.  Nothing much has changed from my weekend post.  So far everything is following the plan.  Of course life is never that easy, and it wouldn't surprise me if something happened too throw the plan off.

Hmmm... what could it be?  At break of the 108.00 SPY level would cause a huge sell off to occur!  Let's hope it holds on the first hit, and rallys back up.  I'd like another opportunity to get short again from a higher level.  So for now, I expect the level to hold and produce a bounce.

Red

Weekend Update…

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It looks like the tide has finally changed!  There is no doubt now that this market has officially rolled over, and is heading down!  I have to say that this took me by surprise.  I really expected them to pull it back to 1115 spx and then rally one more time into 1160-1180 area. But,  I don't see that as possible now.

Why?  Because the tables turned on them when Scott Brown won the Senate race in Massachusetts.  That state has been a Democratic state since 1972, withTed Kennedy leading it.  He has been a very powerful voice in the Senate all those years for the Democrats, and now he's replaced by a Republican.

I now see how important that is, as I didn't put the pieces together last weekend when I charted out my forecast.  I never realised how critial that seat was.  Obama's Democrats aren't in control of the Senate anymore, and this puts his health bill at risk, as well as any other agenda that he wants passed.

This has changed the "Grand Plan" that the "power's that be" wanted.  They... I believe at least, wanted to take this market higher into the February 9th-10th time frame.  Why?  Well, not too sound like anymore of a conspiracy theorist then I already am, but I'll go ahead and spill the beans now.

Ok...

What happens with these crooks is that they decide well in advance... which direction to take the market, and for how long (you should already know that... if you've been reading this blog for awhile).  They can do this because they manage to get key positions filled in politics, with one of their buddies (aka Ben Bernanke and Tim Geithner... both former Goldman Sachs boys).  This allows them to get free money (aka the TARP funds), and to get policies and laws changed to allow them to profit more.

This isn't only about "buying up their own stock" with the TARP funds, and then issuing new shares to the retail public at the high in the market, and then taking the money and paying back the TARP (aka... our taxpayer money).  Oh NO, that's not good enough for them.  They profit from it in both directions!  Yes, the decide when to "Tank" the market too, and steal the money from the average retail investor's 401k or pension fund money too.  Lot's of "Insider Trading" and secret payoff bonus checks for "service's rendered"... whatever that is?

They are well organized and plan everything in detail.  They set up these Annual Summits where they all meet and "cash their checks"... so to speak.  Basically, they funnel all the profits they've stole from the un-suspecting public through the Vatican and into "out the country" bank accounts.  The next annual summit is being held on February 4th-6th, 2010.  In the past, after every summit (within a few days), the market has started a huge sell off.  I know this all sounds kind of "Cloak and Dagger" stuff, but the fact it continues to happen should tell you that it's real.

Essentially, the checks all clear on the following couple of days, and then the market tanks.  They release some kind of news event to cause it to sell off.  It could be anything?  I think that they had planned for Obama to release his "We're going to get tough on the banks" speech on either the 9th, or 10th?  But, losing the senate seat to a Republican forced him to move up the time line.

The one thing I didn't see when I made my forecast last week was how serious it was when Scott Brown won.  I'm sure the death of Ted Kennedy wasn't planned, but it did happen... and that changed the plan.  So, does that mean that I don't see the market crashing on February 9th-10th?  Not at all!  In fact, it sets up the perfect "Wave 3" down after a nice corrective wave 2 back up to occur over the next 2 weeks.

Tony-Caldaro-60-minute-SPY-chart-01-24-2010

Looking at this 60 minute chart of the SPY, I think we just finished a wave 3 down inside a larger wave 1.  That means that Monday and maybe Tuesday should produce a wave 4 up, and then one final wave 5 push down into the end of next week.  The target is 1080 SPX.  After that, we should have a larger wave 2 up... hopefully into the time frame window of February 9th-10th.  That allows the crooks to get their checks cleared on Monday the 8th.

I expect some bad news to be released or some bad event to occur that will trigger the larger wave 3 down.  This is the one that could go down 97 points on SPX, as I talked about a week or so back.  I don't know if that is going to be accurate, but it wouldn't surprise me if it was.

That larger wave 3 down should take us into the options expiration date for February.  At that point, I'll have to look at where we finally stop at and see if that whole move down from 1150 spx is more likely a ABC, which would end it there, or a 5 wave move, which would mean that it will fall further.

If it's a 5 wave move, then we should go up into a larger wave 4 starting the week after opx.  That might take until the end of February or so, and then finally a larger wave 5 down into early March.  But that is all just guessing at this time.  We'll have to cross that road once we get there.  For now, let's focus only on the 2-5 day corrective larger wave 2 from the expected 1080 low coming.

I do think that it will be higher then we might expect, as the bulls aren't quite dead yet.  Some news event to spark a rally is all that it will take.  Maybe they will re-elect Ben Bernanke, and the market will use that excuse to start the rally.  Of course it will also start big bear squeeze on all those caught short at 1080, which could push it higher then I expected?

Again... I will still be looking for the major turn date about February 9th-10th.  That's one of the best opportunities of a lifetime... the absolute best one will come in about a year or so.  But for now, catching a larger wave 3 inside of a Primary wave 3 inside of a Major wave 1 (the entire 5 larger wave move from 1150... to maybe 920 area?)  is still extremely powerful, and profitable... if you're on the right side?

Of course after this big move is over in late February or early March, you should expect a long drawn out choppy Major Wave 2 to take us though the summer months.  Look out for September though... (keep all windows in high story buildings locked, or you might have someone jumping out one?)

Red

It’s A Great Day To Be A Bear…

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bears-standing-up

Another huge sell off... unbelievable!  I was wrong again, as support at 1115 broke and down we went!  I hope all of you that were short... stayed short, and didn't get out as I posted yesterday.  I guess I've been so conditioned to expect a rally to occur after any big down, that I simply couldn't believe that it would continue selling again today.

It's taken the PPT almost a year now to condition all the bears to close out their short positions after only one day of selling, as we have always had them come back in and squeeze the bears... killing any serious sell off from starting.  I have to change my thinking now, and expect any rally to be short lived, and the selling to continue down.

OK, of course this changes my forecast, and I'll go into detail on the weekend post.  But for now, I'd expect an 60-70% chance of a bounce on Monday and maybe Tuesday, and then more selling until we hit the master level at 1080 spx.  At that point, I'd say will have a 90% chance of a 2-5 day bounce.  It could just go down Monday and tag the level, and then reverse to start the 2-5 day bounce?  But, I think it will wait until Tuesday or Wednesday... then dump to 1080.

I just think that people will calm down over the weekend and allow the market to float higher on Monday, and maybe Tuesday.  Then more selling to 1080, at which point I will probably go long for the bounce.  I expect that it might pierce the 1080 level intraday and trap a lot of bears short... thinking that it broke the major support level, only for it to be rallied back up the next day (or later that day) in a big short squeeze.

But, after the rally is over... more selling is coming!  It will be a Wave 3 Down... and you know what that means!  Panic Selling!  I held my short over the weekend and will wait for the 1080 level to be hit before I get out.  I'll probably go long, but I'm not sure?  Yes, there is a 90% chance of a 2-5 day bounce... but too be quite frank with you, I might be too scared to chance it?  We'll see...

Red

Is It Dead?

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Wow!  What a Bloody day on Wall Street for the Bulls!  I was wrong yesterday in thinking that Goldman would hold up the market today, and that we would sell off to 1115 on Friday.  I hope that many of you were already short and profited from it even though it came a day early.  I know I'm a happy camper, as I was already short!

Today's volume was one of the largest I've seen in many months, with 338 Million Shares Traded on the SPY.  Big Volume = Big Down Day!  This is going to be an exciting year... if you're a Bear that is?

Looking at tomorrow, we have some good support a 111.40, and 111.20 SPY.  If we gap down, I'd expect those levels to hold, and the rest of the day should float higher... although not a whole lot higher.  No major news or earnings are being reported tomorrow, so that sets up a "Pause" day... (flat to slightly up).

Moving on...

Isn't it interesting how Scott Brown, a Republican, wins the Senate seat, and suddenly Obama decides to come out on TV and state how he's now going to be tough on the Banks?  Coincidence?  I think not... He did it because he's now worried about his popularity... which is now shrinking!  He has too act tough on the banks so people won't switch over to the Republic side when more elections come up.

He already lost a key Democratic seat when Ted Kennedy died, and was replaced with a Republican.  Now his health care bill (which is garbage by the way) is in jeopardy of not going through.  Then there is the economy, and this fake wall street rally... which isn't working or creating any new jobs!  Duh Obama!  I could have told you that!

Let's not forget about Ben Bernanke, as the Senate has yet to re-appoint him.  I think they won't, and that will be another "lack of confidence" of a recovering economy.  Which will probably start another sell off in the market?  So, looking forward (and I'll do more a in-depth post this weekend), I'm expecting a few days of a flat to slightly up market until Obama has his "State of the Union" speech next Wednesday.

If you are still short, and didn't close out today, I'd close them out tomorrow on any gap down and stay in cash over the weekend.  That's what I'm doing, as any move up next week will be limited and not worth risking... in my humble opinion at least.

Red

Still In The Rising Wedge…

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Unbelievable!  The PPT (Government) managed to rally the market back up to close just inside the rising wedge once again.  But, time is running out quickly and tomorrow should be the last day in the wedge.  I think that Goldman will release good earnings and that will keep the market from falling outside the wedge.  A flat to slightly up day is what I expect.

However, I expect selling on Friday and a possible drop to 1115 spx?  Now it's possible that tomorrow Goldman might not be able to hold the market inside the wedge all day, and we could sell off into the close?  Regardless... the market is going down!  It's taking a little more time to fall then I expected when I wrote my weekend post, but we are basically still on track.

My biggest concern now is that the time line for the final top (not for the year, as I expect a summer rally) may come early?  I had it projected out at February the 9th-10th, but because Obama is going to give the "State of the Union" address next Wednesday, on January 27th, I think we might not make it until February?

The loss of the Democratic seat in the senate to the Republican Scott Brown in Massachusetts could throw a monkey wrench in Obama's Health Care Plan.  Plus, the Senate only has until January 31st (a Sunday, so really only the 29th) to decide if they are going to reappoint Ben Bernanke.  Make NO mistake about it... this market is controlled, and this news events are going to affect the market tremendously!

Since Obama originally stated that he would support another term for Bernanke, it's not going to look good if the Senate doesn't agree.  I believe the main reason the market is still afloat right now is because of Obama's Health Care Bill.  If he gets that passed then he'll let the market fall.  He's trying to fool the American public with this fake rally, so he can get what he wants.

But, I don't think the death of Senator Ted Kennedy was something they were prepared for... and then losing the empty seat to a Republican!  This changes the game plan for them seriously.  We'll just have too take it one day at a time for now, but keep in mind that the huge sell off I'm looking for... could start next week!  Sorry for the change of plans, but I wasn't sure how this election issue would affect the market... and I'm still not 100% sure?  Only that things could be speeding up...

One more thing... if we do fall to 1115 by Friday, don't short the market!  I'm certain that the PPT will be buying early Monday morning to prevent any serious support levels from being broken.  They are going to keep this market up until after Obama speaks (at least that long).

Red

The Bulls Never Quit…

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Looks like we got our back test... only a little higher then I expected.  Regardless, I don't see it going higher tomorrow, as there are too many earnings reports coming out that should force it down.  But, here's the problem... we are still inside this rising wedge, and coming very close to the end.

Part of my forecast over the weekend is based on a breakdown of the trend line to about 1115 SPX, and then a final push higher to 1160-1180 for the back test, which would reach the conclusion of an elliottwave pattern up.  Different chartists have different levels, but they all complete somewhere in that 1160-1180 range.  The Bulls want this area badly, and they might not drop out of this rising wedge until they get it?

If the market doesn't fall to 1115, over the next few days, then I'm going to have to move the time line up from February 9th-10th, to January 27th-29th.  It's all about reaching the finally top... wherever that is?  Could 1160 or 1180, or somewhere in between?  But, once it is reached, the sell off will start.

So, if we breakdown out of the wedge before reaching the 1160-1180 level, then I'd expect a back test to occur, which should push us into the February 9th-10th turn date.  If we stay in this wedge until we hit that target level, then I believe we'll turn down early.  We'll see...

Red

Weekend Update…

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This weekend update is going to be a "KEEPER", as you should bookmark it and re-read it in about a month from now.  Also, you should save the charts posted here.  I'm going out a limb here by posting a "Turn Date" and stating how much I expect it to fall, but I've never been afraid to speak up when I have something important to say... so why stop now?   The chart below states what I'm expecting to happen over the next few weeks.  Study it hard!

 The-Chart-Pattern-Trader-spy-daily-01-16-2010

I'm expecting a flat to slightly up day on Tuesday (Market's closed on Monday for Holiday).  I'd say the intraday high could be around 114.00 SPY level.  The market could close up or just flat on Tuesday, but after the close and throughout the rest of the week, there is a lot of important earnings out.

Tuesday

Before Market Open: C, PETS, AMTD
After Market Close: CREE, IBM

Wednesday (my b-day =)
BMO: USB, MS, WFC
AMC: EBAY, SBUX

Thursday
BMO: GS, UNH
AMC: AXP, COF, GOOG,

Friday
BMO: GE, MCD

I expect the market to view the numbers as bad, and sell off into the end of the week.  The first target down is at 112.30 SPY, which is the horizontal support line at about 1115 SPX level.  This is where the market should bounce.  After that, there is the 50 day moving average coming in around 111.00 (daily chart), and a gap fill at 111.40 SPY (60 minute chart) that should provide good support for the down move coming.  That's about 1103 SPX for the gap fill (60 minute chart). 

 The-Chart-Pattern-Trader-spy-60-minute-01-16-2010

The chart above shows a possible 5 wave down move to about 1100 spx would be a good place to stop the move down, as it would fill the gap on the 21st and be an important even number that the Bulls won't give up easy.  It may not make it down that low, and instead stop at the 1115 area?  I personally think that 1115 will stop the fall as 50 day moving average on the daily chart (not shown on the chart above) hasn’t been hit since November the 1st, 2009.  Anytime the market has been away from a major trend line for that long, it should produce a multi-day bounce.  So, this chart shows a possible move down further, but I don’t really think it will happen.  From an Elliottwave point of view... the move shown is a 5 wave move down.  I think it will only be an ABC wave pattern.  Again, the big move down is coming February 9th-10th, 2010.  Don’t get sucked into a bear trap too early.

Moving on to a longer term I've posted another chart below that shows you where I'm expecting the market to go this year.  I believe the move from the March 6th, 2009 low of 666 to the final high of 1250-1300 will end the Primary Wave 2 Bear Market Rally with a 5 wave pattern completing it.  It’s hard to say when the exact high will occur, or how high it will go... but the down move has already been planned for mid-September.

The-Chart-Pattern-Trader-spy-weekly-chart-01-16-2010

Yes folks... the market is rigged!  Believe it, or not?  The move down in September will only be Wave 1 inside Primary Wave 3... but it will be violent!  It should be a couple hundred points, and then a Wave 2 up into the first of 2011 will happen, and finally... the BIG ONE!  Wave 3 of Primary Wave 3!  That one will take out the March 6th, 2009 low and head America into the Great Depression 2!

I really don’t want it too happen as it will be horrible for the America people, but I can’t stop it.  So, I will continue to try and inform as many of you as possible, and hopefully you can profit from it enough to help out those less fortunate.  This is a special post and hopefully it will give you some help in planning your trading, not get caught long in February.

Of course I could be wrong, and if I am I'll gladly admit it... and not hide behind a lot of double talk like some people do.  I'm clearly stating that I expect the market to go down next week, then up until February 9th-10th.  Then a large move down that will either go 97 points down, or down to 1047 SPX?  Which one... I don't know?  It doesn't matter right now, as the most important thing is to get yourself positioned short before it starts.

I'll jump off that ship before it sinks, and on to the next ride up when I'm finally on it...

Red

Market Dumps On Heavy Volume…

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Finally, a decent sell off!  The market sold hard today with 212 million shares traded on the SPY.  Remember how many times I've stated that heavy volume means a DOWN market, and light volume means that the market can be easily controlled and pushed up higher.

This is the start of nice down trend that should last though all of next week.  I'll do more on my weekend post, but briefly... I'm expecting a pause to slightly up day on Monday to occur.  The market usually doesn't have huge back to back down days, so a flat day is too be expected.  There will be a time in the future that the market will sell off huge many days in a row.  Not yet though...

Be patience... the big sell off is coming in the first week of February!  I'm expecting about a 100 point sell off in the S&P500 to occur, in a very short time frame... a week or two probably?  Save up your cash for this to happen.  I'll have more information as it draws closer.

I'll also have my usual weekend post up by late Sunday night.

Enjoy the weekend,

Red

Waiting On JPM?

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Today was a flat day as the market awaits JPM earnings tomorrow morning at 7am EST.  Intel's earnings came out after the close today and beat the street's estimate of 30 cents, coming in at 40 cents.  However, the street's estimate number isn't what's important, it's the "Whisper Number", and that was around 40 cents, not 30.

That's why Intel hasn't moved much after the number's were released.  That puts JP Morgan under pressure to beat the whisper number too, not the street's number.  Since they get free money from the government, I do expect them to beat the street's number.  But, will they beat the whisper number too?  We'll see tomorrow...

Red

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