Torturous Tuesday…

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As the Bulls and Bears both got whipped around today...

After so many days down in a row, you should expect some sort of "pause" day, and today was exactly that.  The market stayed in a loose range swinging up and down all day, until it sprouted some roots and grew a little into the close.  But over all, today was simply painful for both sides.

The 60 minutes charts and the 15 minute charts were previously oversold, and now they have worked that all off.  The 15 is now overbought, but the 60 still has some room to run higher tomorrow.  Whether or not the tape will follow it higher is not known?  If it does, then the 1070 area is about the expected high level target I could possibly see, before both charts are overbought again.

Once they become overbought, I expect to see some heavy selling as the daily, weekly, and monthly charts will also be pointing down... making the move down even deeper.  It's hard to say how high up the histogram bars will go, before turning over to the downside, but I expect it to be a small tower because of the downward pressure from the daily chart.

When you look at the 60 minute chart, you will notice that while the histogram bars where moving up, the price was trading sideways (except the pop higher at the end of the day).  This tells me that the daily chart is still putting pressure on it, and holding the price level down.

It basically means that there are still too many bulls trying to get out, and are waiting to sell at each pop higher.  The last pop at the end of the day, means that most of the sellers for the 1055 level are now gone.  There will be more sellers waiting at a higher level now, with 1065-1070 being a likely next target.

I don't see the market getting much higher then that yet, at least not until the daily chart turns back up and provides support to the 60 and 15 minute charts.  Unfortunately for the bulls, the 60 will be overbought by midday tomorrow, and another leg down should start into the afternoon session.

The daily chart is the key to getting a big rally up started.  It's kind of trading sideways to slightly down now, and could easily rollover to the downside and create a big move down... or hook back up and create a 3-5 day rally.  But I believe that in order to get the chart to hook back up, there needs to be some good news released to spark it.  What would that be, I wonder?

Red

120 COMMENTS

  1. From RJS263 on Reinhardt's site. Hope he does not mind, but falls in line with recent blogs.

    RJS263

    6.8.10 / 9am
    review 5/13/10 11:00am post. s/p down 1200 points and 1,000 pts in dow. off a bit on the dow 9,000 by end of may. but s&p puts from 5/13 to expiration on 5/21 generated 1,000% gains on many ‘out of the money’ put options. odds favor 9,000 dow within days. june 8, 9,10 could be historic.

  2. evil speculator has 3 scenerios which are very clear. longe term all bearish but short term 3 possibilities.

    I don't mean to be sleezy but I can post what subscribers read:

    Let me run you through those three possibilities:

    Soylent Blue (a.k.a. instant bear gratification): We are in the process of completing the c wave of a Minuette (ii) of Minute {iii} of Minor 3 of Intermediate (1) of Primary {3}. We may be done but this one could run until about 1.618 x the length of the a wave, getting us to about 1067. We should fall off the plate after that and don’t stop until below SPX 1000.

    Soylent Green (a.k.a. the impatient bear): We are completing wave (a) of Minute {ii} of Minor 3 of Intermediate (1) of Primary {3}. Which basically means we ride this thing up a little more – probably until the 1095 mark. After that it’s the express elevator to the ground level (i.e. below SPX 1000).

    Soylent Orange (a.k.a. revenge of the bulls): We completed Minor 1 late May and are now in a large flat which nearly failed today, but is technically still possible. This puts us at the onset of Minute {c} of Minor 2 of Intermediate (1) of Primary wave {3}. That one would drive us a lot higher and we might run a boat load of stops and not stop until about 1130ish – could get ugly.

    When do we know?

    Well, I give Soylent Blue about one day to sort itself out – if we are not heading lower by Thursday morning it’s lights out for that one. Soylent Green is the next runner up and only a breach of 1100 would probably convince me of Soylent Orange. Reason being is the rather muted A/D ratio which closed at around 1.5 today. The EUR/JPY also did not confirm the vehemence of the equity rally, the daily Zero was barely bullish, and we all know who was doing the buying today. The boyz had some fun today, that’s all I’m going to say about it.

    I have warned you guys about snap backs. You will have to live with them, because if we are right and this is Primary {3} any snap backs will be punished hard and fast, especially the further we descend.

    can get them but for subscribers

    • How about Soylent Teal, where we tag 1080 early in the day, but close about 1050, or below.

      1080 is my target for going 100% short, but I admit I will be sweating bullets. Even though I am relying on NYMO and put/call ratios to signal a bottom when it happens, we could run to 1140 first.

      • You know Rip, I have noticed that the day action tends to follow the night action so since we got to 1152 last night in the futures, you could be right. On the flip side, Atilla is calling for a massive 1000 point drop and then rebound and BAM investors has their crash window open today and tomorrow so I am hoping for soylent blue as well.

  3. This waiting for a cash is NOT the way to trade. Good traders make conisistant pofits and may or may not be positioned for a crash.

    I'm convinced that a 5 min renko chart will be my salvation (economic)

    • We are going to go up today Ben… in the morning session. Once the 60 minute chart peaks and rolls back down, we should take out the 1040 support level.

      If it doesn't take it out by the end of the day, it should do it tomorrow morning. However, I expect it to happen today, as Bernanke is likely to spook the market today.

      Remember, he is testifying today at 10am, and it should last most of the day. Nothing positive for the market will come from him… that's one thing I'm pretty sure of.

      Needless to say… I'm staying short.

      • Iam thinking of adding some short s over this bounce.

        may not get another clear shot for a while.

        • Today's the day, I think, much like May 18th.

          1069 was a resistance point, but I think we're going higher by 11am, around 1077. Probably, mid-day will be spent trying to break out further, with a sell-off at EOD.

          I am about 50% short now, going to add some stuff in high 1070s.

          • We could rally here, but the uptrend looks pretty broken to me.

            I think you got in at a good time.

          • We have hit cyclical support on the 60 and are ready to roll. The divergence of the Ergodic shows a continuation of the downtrend.

            There is too much talk of head and shoulders on the web. Cramer's headline made me nervous tho'.

  4. from jaywiz

    Tech internal are MONSTER OVERSOLD, and Today is a BRADLEY date
    imo, last chance to break under 1040 before a substantial rebound

    • First you claim how NOT to trade and then you quote wiz who yesterday called a crash, then changed his mind and now calls for a big rebound. Appears that what you're doing is an example how NOT to trade.

  5. Crude looks like its about to rollover. Now oversold on the 60,30,15 and 5 minute charts.

    • The Fed's have been trying to get a war started between Israel and Iran for awhile now… but they have been unsuccessful so far. They also tried to start one between North and South Korean, when they sank that submarine… but again, it didn't work.

      These “False Flag” events are becoming easier to spot now, and the people of the rest of the world are finally wising up to the Washington D.C. terrorist thugs.

      I predict that they will shut down the Fed's by the end of this year, and arrest Bernanke, Geithner, and everyone else involved in robbing Americans' blind.

    • I hope so. but these bears looking for “crashettes” don't pan out most of time it seems

      • Agree, but he is the only one I know that nailed the 08 crash I was on his blog at the time and banked amazing coin.

        • only thing I am afraid of is that it is hard to call a crash twice (even he mentions this). I wonder how on earth the flux capacitor works (and not the one in back to the future)!

        • That's cool. He mentions it's hard to call a crash twice – I hope he does though. I wonder how the flux capacitor works (and not the one in back to the future)!

    • Thanks Newbear…

      I see that mylifemytrade is bullish… LOL

      It's been such a long time since I had a good steak dinner. I'm going to go out this Saturday an order one… just so I can get used too the taste again.

  6. Looks like the market wants to touch the upper trendline on the falling channel that's on the 60 minute chart. That level is around 1080, and should be the “uncle” point for the market.

    Once the 60 minute rolls over, the move down will be fast and furious, as all the larger time frame charts will push down heavily on the market.

    Of course it doesn't have too make it up to 1080, as it's getting pretty overbought right now, and could rollover at anytime. But, I expect it to happen in the afternoon session. Tomorrow should be a very large down day, as the charts will gain lots of momentum when they fall below the zero level.

    • For SPY, the 50 Week SMA is at 108.34…high today so far is 108.28. Don't know if we can go much higher.

      • Yes, we are very overbought right now, but 108.34 is only a hair away… I'm sure they can touch it if they want too.

        By 4pm today, the market should have given back all of today's move up, and will probably be in negative territory.

    • oye – i just tuned back in to see the market has run up. I can't even look at my account. I am sticking through it though.

  7. I *think* the bulls are about done for today. Lots of bearish news around.

    Why are people suddenly concerned about the trade deficit, lol? I mean, it's sucked for 40 years and, yes, Virginia, we have squandered our national inheritance on foreign oil and consumer goods we could've, should've made ourselves.

  8. VIX is spraying a little perfume behind her knees, will be ready to roll pretty soon.

  9. All I can say is that if Ameritrade crashes, I will go down to their corporate office to kick some but. I have trade triggers set just in case but who knows if these will work?

  10. I just realized that we had a gap left behind on the VIX a few days ago at 29.70. I wonder if we have to fill that before the market can go down?

  11. Here's my guess – we ramp higher in equities to fill that vix gap, then we head lower into the close, ending at 1052 (futures overnight low). In the morning we gap down and head into the abyss. This will be the way to torture the most people.

    • The market is certainly being stubborn right now, as it should be rolling over faster, instead of forming a small bull flag. The last hour of the day will us if these bulls really want to go higher or not.

  12. Cobra posted this comment on yesterdays' post…

    “I don’t understand politics, so right now all I can say are since year 2000, whenever SPY rose more than 1% while QQQQ closed in red like today, short SPY at today’s close and cover 2 days later at close, there’s 85% chances that you could gain 2.84% in average.”

    Odds are clearly in favor of the bears right now. Just have to be patience a little longer.

    • Bears just won an important little battle to keep SPX under a 2 hour ema.

      I think it's going to suck to be a bull rest of the day.

  13. The only problem I see right now, is the 15 minute chart. It's acting like it wants too stop going down and instead roll back up and go positive again.

    That's why we are forming this bull flag on the 60 minute chart (and all the lower time frames too). We need this bull flag to fail, and head lower into the close.

    • I think I'm in agreement. The down candles have had huge volume vs. the up candles lately and today is the opposite. So I wouldn't doubt a move up still before sellers come in aggressively.

      • It certainly looks like a bull flag forming today, so it is possible that it will play out tomorrow, when the 15 minute chart rolls back up into positive territory.

        However, if it fails… the selling will start. I think the Initial Claims, and Continuing Claims numbers will be bad, and that will be the reason to start the selling again.

  14. Looks to me like the 60 minute came up to the 50, barely pentrated it and is holding w/ MACD flat rsi 53.

    Do not know if they can pull off another run

      • With jobs data coming out in the morning, I don't know if it will even get a chance to form that right shoulder needed for it too be a In-H&S pattern? It's probably going to gap down below the 1040 support level instead.

  15. It is most likely to be Monday morning, but what I've found with puts is that prices can actually be better before the actual bottom is reached, because of the uncertainty.

  16. Ramp of Pimp(see update at bottom)

    http://oahutrading.blogspot.com/

    “They” and/or the Elliott wave and crowd emotion jacked up this market to between 50% and 61%. Funny how Bernanke was pimping out the market the last 2 days. When was the last time we heard “the problem is contained, there will be little spillover”…hmmm housing market, sure glad that didn't hurt the economy or wallstreet. But the joke is the Bernanke conditioned his comment that Europe would not spill over into America as long as Wallstreet was OK. Huh? Blatant manipulation and lies. Wallstreet and the economy are hardly attached, but fundamentals drive Wallstreet rather than the other way around. Bernanke implied that it was the other way around, that Wallstreet could save Mainstreet. Before growth can occur we need at least 2 things—a reasonable level to grow from, and ATTITUDE change.

    UPDATE
    This ramp put one of my accounts into a futures margin call. They were screaming…send us money TODAY or we will liquidate you. Yeah, we will see how that pans out–if may need to transfer money over to Interactive Brokers even though their trading platform is not as user friendly. TOS is now Ameritrade (really the transfer just happened weeks ago, amazing timing, but they can no longer be trusted–they are the establishment of financial entitlement.) They didn't liquidate my positions, and I didn't send them money, and the accounts bounced back nicely. I also didn't get stopped out, but a maybe 3 points over that 61 Fib they would have probably got my “uncle cry”.

    That HBB sure got game, but they don't get up early enough in the morning and they go to sleep too quick on the way to the Hamptons. They won't do well when the spell of entitlement and connectedness get wiped off their silly Hummer driving faces by the reality that is coming. whew—-a rant.

    • I like it Steveo…

      It good to get fired up from time to time! After all, how else are you going to get everyone to wake up and smell the bulls**t coming from WallStreet and Washington D.C.?

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