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....
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...
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!
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.
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.
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.
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?)
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.
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.
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?)
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...
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.
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).
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...
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!
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
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 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.
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...
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.
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...
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.
