Well, I expected them to take it back up (as I said yesterday)... but not all in one day! I stated yesterday that I thought we might go sideways to slightly up, gaining 2-3 points each day, and recapture about half of the down move that occurred on Tuesday. I really didn't expect them to recover all the move... sheesh, don't these bulls have any compassion for the poor little bears?
Surprisingly (not) the volume was light with only 109 million shares traded on the SPY (doesn't include after hours). Which means that they can easily move the market in any direction the choose... which is UP of course. I can only assume that the larger then expected move was propelled by short covering, as a lot of bears were expecting more downside.
I, on the other hand, expected some upside... just not so much, so quick! And yesterday, because I expected today to go up, I sold my USO 40 puts at 39.72. I had thought that they would go down to gap fill at 39.35... at which point I was going to get out. When it didn't happen, I sold at the end of the day, thinking that oil (USO) would go up with the market the next day. It didn't... In fact, it continued on down to close at 39.21.
Well, you can't win them all! I would've had a nice profit on that trade, but instead took a small loss. I made the mistake of not following my own advice. I was very confident that it would hit at least the gap fill at 39.85, and possibly hit the 38.85 level. I was going to bail at the first support, as it is too close to option expiration to wait on the lower support level.
Ahhh well... we live and learn (sometimes)!
Ok, since today was such a huge up day, and the fact that there is a lot of overhead resistance... I did go short today at the close (not much though). I got a spy 115 jan. put spread, selling the 113 put. Net cost was 62 cents. I'm expecting the SPY to close out this Friday at 114.00 (or possibly 113.00). Since I have a 115 put, if it closes at 114.00, then the 115 put will be worth $1.00, and the 113 I sold will expire worthless.
Not a bad return for only 62 cents (per option spread) risked. Of course if it goes to 113.00 even, then I'll make $2.00 on the 115 put I bought and the 113 put I sold will again expire worthless. That would be the ideal place to close, but you never know with this market?
Regardless... I'm expecting more downside next week.
Red
Edit... This just in, the reason for the huge up day is explained here....
I was beginning to wonder if this market would ever pause and take a rest, but... like all living things, it did! The sell off was impressive, but still looked a little bit like it was "controled". I'm not complaining, as it allowed me to close out my USO short positions, but I'm not ready to "jump up and down"... screaming the "Bear is Back" yet either.
Volume was much better at around 166 million shares on the SPY. It's still below what I'd like to see... like 200-250 million, but it's a nice start none the less. So, what's next you ask? For that answer, I'm going to show you the chart below with my forecast as to where I think we are headed.
For the next 3 days, I'm expecting a sideways to slightly up market, as Option Expiration is Friday, and you know how those market makers don't want to pay out on those options. They will probably pin the close on an even number like 114 spy, or something. That would be considered your "B" wave (or 2 wave) re-tracement back up move. Then next week, I see the start of a "C" (3) wave.
Looking further out, I'm expecting the market to move lower into the end of the month, and rally back before the month is over, and into early February. Then I believe that early in February we will see a really large move down. Possibly a 100 point drop (not in one day), but it will be what Elliottwave chartists would call a "C" wave or "3" wave. Volume should be quite high then. I'd expect over 250 million shares as it goes down.
This first move down toward the end of the month should find support at the 108 SPY level. From there, I think we'll bounce back up about 50% (in a larger "B" or "2" wave), into early February. Then the larger "C" (3) wave will hit with about a 100 point drop or so. I'll have more detail as it gets closer.
For now, I'm looking to get back short by this Friday. It's option expiration week and I don't see any more large moves down (like today) until this week is over. That again means... a sideways to slightly up market for the next 3 days. If you are looking to go short, be patience and wait until Friday. The market could retrace back up 2-3 points each day from today, and be at about a 50% fib level by then (from the high yesterday to today's low). That would be around 1140 spx, or so. Regardless of what level it's at, I'll be looking to get short again.
In my weekend post I stated that I didn't know where or when the market is going to correct. Well... it looks like we might have a clue as to "where" the market is headed? When is another question that I don't have the answer too... yet.
This is what CNN had on their website after the close today. I heard it was also on Yahoo too. It only lasted about 5 minutes, before they corrected it to show that the S&P was up 2 points... instead of 97 points down! But, I managed to "screen capture" the image for you.
It may have been just a simply mistake, but I've heard rumors that the people who control this market (yes... it's manipulated, and very heavily lately) sometimes post fake numbers to let some of their friends know where they plan on taking the market. Most of the time they do it on an intraday candle, but this time it appeared on the closing print of the day.
You can call me crazy if you want too, and maybe you're right? Maybe this is just a mistake... and maybe it's not? What if we continue to float sideways to up until the month of January is over, and then drop 97 points (or just to hit the 1047 level), in the month of February?
Many people believe the old saying that the month of January will set the tone for the rest of the year. If that's true, then I believe they will make January close out positive, so that they rest of the year won't experience another sell off like 2008. That doesn't mean that we don't go down and correct some, but it means that we shouldn't take out the March 2009 lows this year.
I could see us move down and up throughout the entire year, and still be above the March low when the year closes out. Between now and early February we could see them push it on up to the 61.8% Fib level, and that would be the high for the year.
Or, they could go flat until February... sell off 97 points (or to the level of 1047?), and then rally up to the 61.8 Fib level in the Spring and Summer months? It's hard to say right now, but I'm pretty confident that they are going to close out January positive, and that a sell off will occur in February. From how high... I don't know? I don't see much more upside, without a drop of 20 points or so... but anything is possible in this low volume market, and even a 20 point drop might be too much to ask for?
My plan is simple now... Stay out of this market until early February, and I'll know more then as to about "when" the sell off should happen.
Forecasting this market has been nothing short of Hell lately! The market had every reason to sell off on Friday... yet it didn't? It should have sold hard on the bad un-employment numbers that were released. They didn't just miss... they missed Huge! 85,000 Non-farm Payroll jobs were lost, and the estimates were for zero or 4,000 gain! We should have have tanked!
This was one of those hands that you would have bet everything on, as you were holding 4 Ace's! Yes, we should have sold off on bad jobs numbers, and also good jobs numbers! If they were too good, that would have been looked at as negative too, as the market would have expected the government to raise interest rates. That would have also caused a sell off.
I can't express the frustration I'm feeling right now, as you can't forecast a market correctly when it's 100% rigged! Look... there has always been some manipulation in the market, every since it was created. But, this obvious manipulation is absolutely horrible for the market in the long run. It will cause a massive... and I mean massive sell off, when it finally starts! It not healthy for the market at all.
I really don't want to see the Dow at 3,000-4,000 in the next 2-3 years, but that's exactly where we are heading if we don't see some health corrections soon. I believe it's too late now, as they have printed too much money, which is going to destroy the market... and the dollar too! You may or may not have seen this video by Glen Beck? It's been around awhile now, (but it's worst now then what the graph show). Here it is again, in case you missed it...
This is truly a scary time folks! I mean like... worst then the great depression in 1929! Our dollar is going to be destroyed and replaced with the Amero Dollar... probably around 2012? These crooked government and wall street thugs are going to cause a civil war in America, because they are robbing everyone blind! What will 20-25% of the population do when they have no job and no money? Believe me... that's coming!
Go over the Chart Pattern Trader and watch his video for 01-08-2010. The real unemployment numbers are currently 17.4%, not the 10% that the government tells us. I don't want to see this happen anymore then anyone else, as it will not be a good place to live in anyone. Can you imagine the crime rate with so many people unemployed?
Yeah, I know... it sounds like I'm bitching again, but this isn't about me complaining any losses I have accrued. It's about the destruction of America as we know it. This is so "Not Healthy" for the market... that words can't describe it.
The best comparison would be that the market is a marathon runner. Each day the runner will run a little bit, with short breaks (intraday sell offs) throughout the day, and then a good rest at night when he sleeps. Then he gets back up the next day and does it again. He takes the weekend off, and gives his body time to repair itself (slight correction in the market).
Over time the runner will build up muscle (strong support levels), and achieve many miles on his long journey (healthy bull market). This is the way it should be done... but the government isn't allow this to happen. Instead, they are giving the runner shots of adrenaline to keep him running without stopping to rest. Then, they give him speed to keep him from sleeping at night too! How long can he run without a rest? What is going to happen when he finally comes down from his speed pills and adrenaline shots? Total Collapse is not a strong enough word to describe it!
I'm going to post some past statistics (from Pramod, on HOB... hope he doesn't mind?) about the week of Option Expiration for January. Not that I expect it to work, as the market is only going to go down when they let it. But, I'll post it anyway.
SPY performance during Jan OPX week-
Jan 2009: DOWN 6%
Jan 2008: DOWN 5%
Jan 2007: UP 0.5%
Jan 2006: DOWN 0.1%
Jan 2005: DOWN 1.7%
Jan 2004: UP 1.5%
Jan 2003: DOWN 3%
Jan 2002: DOWN 1.6%
Jan 2001: UP 1.8%
Jan 2000: DOWN 1.6%
Jan 1999: DOWN 2.7%
Since 1999, 8 out of 11 Jan OPX weeks were negative. Does that mean it will sell off next week? Who knows? (Answer: Obama, Tim Geithner, and Ben Bernanke... anyone got their phone number?)
I think that I might be better to throw every dollar I have in Gold and forget about the market for the next few years? It's going to be the only currency of value in the future, that's for sure. Of course gold stocks would be impossible to cash in if the market collapses in the next few years, so you really need to get physical gold coins in your hands... not paper IOU's! So, what's Gold going to be worth in the near future? Watch this video...
I will say this... I think a big move is coming next week. Question is... which way? Alex, over at AMBG Trading also has a "BIG" move coming, but he's not sure if it's up or down? Neither am I? If you are into Astrology then you should read Raymond Merriman's weekend update too. It sounds like he also believes a big move is coming. His updates are sometimes unclear, but reading it now it sounds negative.
With so much confusion in the direction of the market next week, I think people are going to all jump long or short and pile on hard. The move will surprise many... just like Friday did. I hear a lot of bulls out there now talking about 1155-1160 spx on Monday, and most of the bears are dead now. Friday drove the bears back into hibernation... myself included.
So, it's times like now that I'm just going to throw my hands up into the air and say "I don't know" what will happen next week. I'm short the USO, but that's it. If you haven't already taken a bullish or bearish position, I'd say it's too late. We will most likely gap one direction or the other on Monday. Just don't chase the tape. If it goes against you, get out when you can. If it goes in your favor, hang on as I think it will swing back and forth quite a bit before the week ends.
The bulls need positive volume coming into the market if they want to continue on up to 1250-1300, and the bears simply need to wake up and go short. Any large volume in the market now will almost definitely be selling... not buying. I just don't know how long the bulls can keep the volume low? Wake up Mr. Bear... it's feeding time!
Sometimes is better to be ignorant, as knowing too much will only confuse you. Like today for example. Anyone with half a brain would have said that the horrible jobs number would have caused the market to sell off... but it didn't? Ignorance is now my best friend...
I'll still have a weekend post up by Sunday night. But for now... just enjoy the music!
The market is on it's way to the stars... Yes, we should hit 100,000 Dow tomorrow! Just kidding of course. Nothing much has changed today, as we are still awaiting the job's number tomorrow. I still believe that the market will sell off tomorrow, regardless of what the number is.
If it comes out positive, then you can expect a pop up in the morning and then a sell off later on. If it is negative, then the selling should begin right out of the gate. Either way, I believe the sell off will start tomorrow. Since it's delayed some from my original post last Sunday, I now see us heading down to around 1103 by next Friday. Then up a little for a few days and more selling over the next couple of weeks until we hit the 1070-1080 level.
Something's brewing in the market, as the Technology section got hammered today. Commodities was the main thing holding up the market, along with the Financials. I don't see much change tomorrow, as the big news is the jobs numbers... which will be released on Friday.
So, I'll keep this post short. Tomorrow should be another repeat of today. A flat to slightly down day is what I'm expecting. Yes, it's getting boring saying the same thing everyday, but nothing much is going to happen until "they" (the PPT) let it happen. It seems like the "big boys" have been secretly told not to participate in the market, as the volume is still extremely low.
Until the volume picks up to at least 150-200 millions, no serious sell off is going to happen. That will take the institutions partisipation... which seems too be "non-exsistant" right now? Where are there, and when will they come back into the market? I don't know? But when they do... look out!
We came within a Dragon's Breathe of touching 113.80 spy today. The intraday high was 113.68, and could be "close enough"? Tomorrow we should be at the center of the eye of the storm, or we could have been there today? I see tomorrow being flat to slightly down, assuming that the government fudges the ADP jobs numbers as I expect them to do.
If they don't, and the numbers come out bad, then "bolten' down the hatches" as the market should dump hard! However, I don't really think that will happen tomorrow. I do think we will start heading down, but more in a controlled manner. Remember, the money tree is still growing dollar bills, so I DON'T think they will suddenly become honest and tell us the real numbers... on any news they release.
We could, and that means only intraday, push up just a hair more to reach that 113.80 level (even pierce through it to an even number of 114), but anymore upside is severely limited. Put it this way... we are now 99% full, don't count on finding a seat! The movie is about to start, so sit down (get your short positions setup) and watch the movie.
First target is the lower trend line, and gap fill around 1103 spx (starting maybe tomorrow, and lasting till Monday or so of next week). Then I think we will go slightly back up into OPX next week, and finally a push down again after OPX... and continuing until the end of the month or the beginning of next month.
Looks like we got our "Happy New Year" rally as the Fund Managers buy up bargain stocks with the poor little Retail Traders' money. Nothing like paying twice the price for stocks with other peoples' money. Party like it's 1999 again! The "Dot Com Boom" is back, only this time it's the... the... ummm? well what is it? Oh, it's the "Free Money Boom" as the printing press is working overtime to save the day.
Ok, reality check now. Tomorrow should be flat to slightly up... 113.80 SPY is the most likely target. That is where I believe the market will stall. I think will we see a pullback starting on Wednesday or so, and that it will continue into next week hitting the 1103 SPX gap fill level.
Then, a little sideways to up movement into OPX, and down again the following week, with the 1080-1085 area being the target before a decent bounce. Then I'll have too re-evaluate the next move. If that channel line is broken, then we are going down hard and fast. But, I think it will hold and bounce... the question is, how high?
Happy New Year all of you and Happy 100th post to myself! I never thought I'd continue writing posts on this blog, as it was really only setup for me to talk to myself (yes, I know that means I'm crazy)... but I've had a few days off and feel refreshed again!
It's a lot more work then I thought it would be, and I sometimes get discouraged when the market simply goes sideways for daysweeks months on end, and then every time I'm forecasting a move based on the charts... nothing happen!
I feel like a idiot staying that the market is overbought, with all indicators pointing down... and then the market rallies! Yes, your clothes are on fire... but don't worry, you won't feel a thing! Duh!
Anyway... I'm looking forward to an exciting new year now!
Moving On...
Ok, I'm posting a chart from "the chart pattern trader" below (hope he doesn't minded). This is what I'm expecting to happen over the next 2 weeks.
I'm not looking for more then a 10% correction, before the rally continues to the 61.8% Fib level or the 200ma level... which will probably hit the same level by the time we get there. Somewhere between the 1226 and 1300 spx level, as the fib is different for the monthly, weekly, and daily charts... but that's the general area I'm expecting to hit by mid-year.
The 200ma will provide huge resistance, and if that also connects to the fib levels for each time period... which I expect it to do, then I believe that will finally end the Primary Wave 2 Rally. I'm actually sad that the wave to follow will be so devastating, and will wipe-out all those "retail" investors' savings and 401k plans.
But, I didn't create this bubble... that was Goldman Sachs! Maybe the people who will have their life savings stolen from them, will rise up and a demand for the crooks to be arrested? What else will 15-20 million un-employed middle classed Americans have to do... but march on the White House steps!
In a fair world, the market would rise and fall smoothly without manipulation and false bubbles inflating to unrealistic levels, followed by huge crashes. But, we don't live in a fair world. Greed from corrupt banksters, and others that stay hidden, create these boom and bust cycles. All we can do is to try and follow what they are doing and profit along side them.
The alternative is to be the victim. Profit with the crooks or be robbed by them... tough choice huh? Yes, if you have any moral values. But, you must focus on the good things you can do with the profits from following the crooks on wall street. That's what I'm trying to do now.
Accepting that the market is a heavily manipulated game, and adjusting my trading to include those factors has been hard to do. After all, the crooks didn't pick up the phone and call me to say... "Hey Red, we are going take the market up to ? by mid-2010, and then crash it down".
No, they forgot to call me. So, I followed the same charts that everyone else did... and got burnt going short, as they printed another $10 Billion Dollars to use in the market to stop a natural correction. Was that cheating... of course it was!
And of course that confused all the technical traders, defied the elliottwave predictions, ignored the short term fib levels, turned the astro turn dates upside down, and got the bulls high on helium gas! Did I leave anything out?
Anyway, I'm hopeful that a huge crash down doesn't happen now... but I'm more confident that it will. The higher we go, the further the crash down will go to. If the forecasts are right, and I believe they are, then 3,000-4,000 Dow is where the market is ultimately headed. That means that the high coming this year will be a high that we won't see for many years to come... remember it well.
Nothing has changed, it's the same as it ever was...
I am expecting a big move around January 6th, 2010. That's Wednesday I believe, and it should be a DOWN move! I don't expect more then about 10%, but that's better then nothing I guess...
Seems like another Dashavoo moment to me. Wasn't we here just yesterday? Yes, we were... only 2 cents higher today! Sometimes I think I'm living in the matrix, and evil computers are controlling the world. Yesterday we hit 112.99 SPY, and today it was 113.01... wow, the market is really rallying now! Someone wake me up when the nightmare is over.
I know it may seem like I'm a little crazy sometimes, and I probably am! After all, I don't drink anymore, (I need to start back though), don't smoke, don't do drugs, don't watch Jerry Springer, American Idol, the latest reality show, or any news programs on TV... so I guess I'm not normal am I?
That's because I woke up, and realized that the secret group of corrupt banksters, thugs, and hitler reincarnations (Obama) are ruling the world now. It won't be long before this blog, and millions of others are shutdown due to a "National Emergency"! What am I talking about you ask? Only the new bill (Link Here - google it for more websites) that Obama want's passed that allows him to "SHUTDOWN" the internet whenever he damn well pleases!
All Hail Obama, the new American Dictator! Folks, if you don't think this economy is 100% controlled by these thugs, you are sleeping in wonder wonder land! As long as the printing press is going (forever) they have full control of the market.... (and soon be our only "freedom of speak" left too). It will go down whenever they decide to rob the bulls, as the bears are already broke!
Everything in this market is well planned out. All the bad news is released during light volume days... especially during the holiday's. Did you know that they released the news about removing the cap on supporting Fannie Mae on Christmas Eve? (And let's not forget about how they released the Dubai news at Thanksgiving). This whole economic collapse, which was centered around the mortgage bubble, was supposedly saved by the bailouts of not only the crooked banksters, but also Fannie Mae and Freddie Mac.
Remember, they moved all those toxic assets off the banksters books and onto the governments books through Fannie and Freddie. Initially they set a limit or cap as to how much money would be given to support those firms, but now they lifted the cap... when no one was watching of course.
That means that they can put in a Trillion Dollars if they want too, not just Billions! Those assets are truly toxic, and I highly doubt if they are even worth 30 cents on the dollar. This is basically saying that "the economic isn't really recovering" as they have been telling us how it has been for months now. Believe me, if that news was realized during normal volume trading days, a sell off would have happen.
But again, the crooks pump up the bad news they can spin as positive, and sweep the bad news they can't... under the radar! There is NO really good news in the market. Any company or economic report that "beats estimates" is worthless, as they all based that on last years' numbers... which was horrible! How hard is it to beat the worst numbers in decades?
Yeah... I know, I'm bitching! Well, it's my blog, and I can call a spade a spade... or a crook a crook if I want too! Look, I've always known that this is just a big casino, and that the odds are in favor of the house... which I'm OK with. But when "the house" knows every card in your hand, it's crooked... and that's exactly what they know!
Technical Analysis's, Elliottwave, Fibonacci Level, and Astrology are all that we traders have too use to give us a fair chance of winning in this card game called "The Market". They have changed the way any of those methods work... which is cheating, or looking at my cards.
It's like having a winning hand and the dealer folding, not allowing you to raise the bet and win back some of your losses. (aka... releasing bad news when the markets are closed and you didn't get a chance to go short). And then pulling an Ace out from under the deck when you are chatting with the person beside you (aka... releasing bad news when no one is watching, which allows them to buy back any sell off... killing any short position profits you may have gotten).
I'm glad I'm still in cash right now, as these last few weeks have be nothing short of a living nightmare. It seems almost impossible for a swing trader to make any money in this market, which is why I'm looking for individual stocks to play, that hopefully they don't have too much interest in manipulating. Anyway, I guess I've bitched enough for one day. I look forward to another Ground Hog day tomorrow too!
Oh, one more thing... just a wild thought! Do you think this Thursday would be a great day to release really bad jobs numbers, as every trader is gone for the holiday's? Another bad report swept under the rug...
Another light trading day on wall street allows the buy programs to come in at the end of the day, and close the market positive. From a technical standpoint we are overbought and should rollover tomorrow, but I find that highly unlikely with such light volume.
Looking at the chart below (borrowed from Cobra's Blog) you can clearly see how overbought we are, and that today produced a black candle. That usually means a reversal the next day... but will it happen? I don't think so. I'd be shocked if we fell to 112 spy, even though we should go down to the 20ma (also around the "gap fill" area).
I'm now looking at individual stocks to short or go long, as I don't believe the market is going any where until they want it too. There are a lot of area's overbought now, like the "metal stocks", and should have less manipulation in them. That means the technicals should be more accurate.
Some of those stocks are Alcoa (AA), and US Steel (X). I think they will start to rollover soon and pullback to the 20ma (daily charts). I'm looking to enter a short position this week, if the opportunity arrives. Start looking for doji's and bearish candles on their charts. That will indicate that they are struggling to break through overhead resistance.
If the market pulls back in January as I expect, these stocks should drop about 10% or so. I doubt that the PPT will be too concerned about manipulating them, whereas the SPY could have some serious fakeouts on the way down. You know how they like to screw both the bears and bulls. Following what the market is doing is important, but I believe it might be better to play individual stocks... until a trend is started at least.
We are now at a dangerous point, as we managed to close at 1126 spx last week... which is at the 50% fib level from the 2007 high to the March, 2009 low. But for now, I suspect that the light volume during this holiday season will continue to allow the market to move up higher or just sideways. Therefore, I don't see much change next week, as we are still in a "holiday season" until next year.
Now, that doesn't mean that we can't pull back a little next week, (Monday would be the most likely day) and then rally into the new year (just no trend worth playing yet). Maybe a one day correction to fill the gap around 1103 (at the most)? I can't take anything serious until the volume comes back into the market. The spx can be controlled easily through the dollar, financials or commodities. Forecasting it now is useless, as any technical weakness will be bought by up.
Of course any major political event could cause a big drop for a few days, but who knows when something bad like that can happen? Only those that are in power can know that. Let's hope that they don't do anything stupid, as I certainly don't want a major war to break out somewhere again.
Moving on...
The dollar looks like it is back testing the moving averages and support lines, before another move higher will occur. That lends support to a bullish scenario for the market next week. Couple that will extremely light volume, and that should stop and serious sell off.
Personally, I'm staying out of the market until next year. I do see a big move coming, but I'm not jumping the gun just yet. Everyday brings new challenges, and opportunities... at least for some players. I'm waiting until I see something that has better odds of success.
This picture's for Anna over at Hot Option Babe, as I know how she like's sexy, but classy costumes. For everyone else, just overlooked the sexy lady in red and picture a big round jolly old man with a beard as Santa. LOL!
As far as the market goes, it was boring. But, the news wasn't good at all. The new home sales number was really quite bad. Of course the market didn't react too much as all the big traders are off for the holidays already. The new home sales dropped 11%, which would have caused a big sell off if it was released when the market had normal volume in it.
But again, the government planned this release of this information very carefully. I gotta hand it to them for that... but ultimately this only delays the recovery. It's almost like pumping your best athlete with powerful pain killers to keep him in the game. It's guaranteed to cause more damage to his injury, which will cause the recovery time to be longer, as well as keeping him out of the next few games.
The market is not healthy, and this insane manipulation will cause a huge sell off in the near future. I believe that the finally bottom will be 3,000-4,000 Dow, because of this manipulation along with the mass printing of money. I know I've jumped to a longer term outlook here, but I don't see much reason to try and predict tomorrow's outcome in this holiday season.
After the holiday's are over, you will see more posts on what I think will happen in the next week or so. For now, I don't see much change until the new year starts. Any sell off in the next week shouldn't go below 1103-1105 spx. That's if we're lucky enough to get that low?
Pay attention to the news coming over the last few trading days of the year, as I expect it to be really bad. It's the perfect time to "spill your guts out", as no one is in the room to hear you.
The market traded slightly higher and ended basically flat again today. The SPY had only 91 million shares traded today, which made it the lightest day of the year. I'm still expecting a small pullback to 1103-1105 spx area, before another move higher. With this light volume any down days shouldn't last more then one or two days at the most.
As I said previously, I'm expecting the 1126 SPX/113.00 SPY to be hit before the end of the year. Next year should bring some selling in the first few months. After that, it's still undetermined. We could simply rally back up and put in a lower high, and then fall hard over the next year or so... all the way down to 3,000-4,000 Dow. I am expecting that to be the final target... when is the main question?
The other scenario is that we only fall the usual 10% down in January and Feburary, and then rally up one more time to the 61.8% Fib level (taken from the 2007 high to the March 2009 low). Either scenario is possible. We are currently at the 50% level, and could simply roll over next year and continue down all year... or only dip down 10%, and then rally up during the summer.
That would delay the ultimate low of 3,000-4,000 Dow until 2013-2014, instead of 2010-2011. Either way, we are still in a Bear market... not a bull market. But, that doesn't mean that I won't go long from time to time. I'll take whatever the market gives me, and right now... that's about Nothing!
The market rose today on light volume of only 108 million shares on the SPY. During this holiday season, I expect more sideways moves... again, it's not for a swing trader like myself. Tomorrow the 60 minute charts are rolling over and looking bearish on the MACD, however the daily's are still neutral.
Remember, the larger chart is usually the one that plays out. So, that means that the direction is unconfirmed. The dollar continued to rally today, but is hitting some resistance now. It could pull back a little, or just trade sideways for awhile, and a put in a bullish flag pattern. This could take all week to develop.
Light volume and a pullback or sideways movement in the dollar will allow the market continue up or sideways. I think they will try to push the market up to 1126 spx before the end of the year. Now is a great time to do it, as fund managers will be closing out positions, and buying up popular stocks before they send out their year end portfolio statement to their clients. (They want to give them the impression that they were in those popular stocks all year).
That mild buying, along with a little government money from good ol' Benny boy (given to Goldman Sachs/PPT) should allow them to hit that mark before this year is over.
Ok, back to what's going on tomorrow. I think we could pull back and close the gap around 1103 spx. That's about as far as I see us pulling back. I know that the 60 minute charts are rolling over, but that only means that it will be hard to advance upward any more. We could trade sideways for a day or so to work out that overbought condition, and allow the MACD to roll back up again.
My point is simple... no direction is clear yet. Yes, we are hitting the upper resistance level around 1115-1120, and we should move down for a day or two, but until we either put in that finally high at 1126 (50% Fib. level), or break that 1085 support... we are still trading in the Twilight Zone. This channel could very well continue until next year.
If you like to day trade, then you could have went short today around 10:30 - 11:00 am EST., as this time period has been very consistent with the high or low of the day for many weeks now. During this light volume sideway movement, all the big traders seem to leave around that time, and sometimes come back in the evenings and trade a little more.
During the rally up, the 3:00-4:00 pm time period was always when the buy program would come in and rally the market up, but that's not the case here lately. It's the morning only. So, knowing that 1115-1120 level is still huge resistance, you could go short there and look to get out into the close (if it falls enough), or wait until the next day (Tuesday) for a fall down to either gap support around 1105, or gap fill at 1103.
Again though, that's only for a quick day trade. I can't watch the tape all day, so I only do swing trades that are a few days to a week or so. Since I don't see any real move coming this week, or next week, I'm staying on the sidelines for now.
I'm going to go "off subject" here for a little awhile, as I'm been lucky enough to have received an email about a week ago that told me about a website called "Project Camelot". I know this is going to blow your mind, as this subject is something that most people simply "Don't" want to talk about.
What is it? It's everything about the human race as we know it... meaning the "Truth" about UFO's, Alien's, Religion, Suppressed Technology, Underground Cities on Mars, Bases on the Moon, Stargate's, Planet "X" (Nibiru), and yes... even the Year 2012! Don't even waste your time watching the video's on the site unless you are "Open Minded". I've watched video's from only 3 of the people listed on the site so far (there are 60-70), and plan to watch them all. (Each video is an hour or more).
I know that I started this blog with the intent to write about the stock market, and I still will continue to do so. However, being that I constantly like to broaden my education in every subject, I couldn't stop at only the stock market. After all... that's just the way that all of us are trying to use to achieve the ultimate goal of "Financial Freedom".
It's not "Money" that I really want... it's "Freedom". I want to be able to go where I want, do what I want, eat where I want, sleep where I want, see what I want, etc... We should be living in a time period of total freedom, yet we are still all slaves to our master's. They are the "secret group" of people who rule the planet. They force us to work jobs in order to eat and survive.
The corruption that is going on in the banking sector is the way that they control us. But, it's such a small piece of the puzzle of "the meaning of life" that it almost seems "non-important" to me now. The stock market is only one of the thing that the "secret group" control. The other things can only be explained by watching the video's on the Project Camelot website.
Now that you all think I'm crazy, and have lost my mind, I'll move on to the stock market. The next couple weeks are going to be range bound as there aren't enough bears left to squeeze... therefore the market won't rally much higher, and the bulls aren't going to sell because of the taxes they would have to pay on the gains they made this year... hence we have a "stalemate".
They will wait until next year to sell, and any taxes will be delayed until the next taxable year. The "Bulls" I'm mainly referring too are the big institutions. The average Joe isn't in this market, and the few that still are... certainly aren't going to sell during the holiday's. Those are long term people, and won't sell until the market crashes down.
They will do what they always do... sell at the bottom, and buy at the top. That's way they are called the "dumb money". The "smart money" is going to wait until next year to sell, and lock in gains. So, as for next week, I'm expecting the light volume to continue... which will keep any sell off from happening. Yes, we could go down a little, and then rally back in the last week of December.
If you are a trend trader, playing options, then I'd stay out the next few weeks. Now, if you can day trade, then that's a different story. I just don't see a solid direction next week. Lot's of overhead resistance, and a lack of bears to squeeze, should prevent and rally past the current highs. And, light volume will prevent any real sell off. We are still stuck in the Twilight Zone, and will probably stay there until this year is over.
However, next year is going to bring the start of a sell off that I believe will take us down to 3000-4000 Dow by 2012. There... I said! I made a bold predict, and put myself out there. Call me really crazy now, (but I'm not).
I know this is not my usual weekend update, and I apologize for that... but I never stated that this blog is "only" for stock market related news. In fact, I've said several times that it's just a place for me to post my thoughts... nothing more, nothing less.
Looks like we finally picked a direction... down! As for tomorrow though, I wouldn't expect too much. It's option expiration and will probably be just a flat day as traders just close out positions before leaving for the weekend. I'm not going to write a long post here as I don't expect too much tomorrow.
So, I'll save my thoughts for the weekend post on Sunday.
