Countdown To The Crash!

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Wednesday Update...

(view on youtube, go here:  http://www.youtube.com/watch?v=sTBQtx4-9fA)

Red
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Is it really going to Crash?

I don't know, but it certainly has all the signs of a large sell off coming.  Maybe not a crash, but a big move is on its' way I believe.  I see this Thursday and Friday as big sell off days... maybe even going down to that 105.39 spy fake print (FP)?  Who knows?  Regardless of how far it goes down, tomorrow might be the best opportunity to get short in quite awhile.

This has all the similarities of the first week of August, and you can see what happened after the week ended... it was ugly.  I think that's the kind of move we are going to get this Thursday and Friday.  I just can't see an explosive move up yet.  The daily is just too tired, and needs to sell off some first.  Maybe it can rally back after a pullback, but for now I see a big move down coming.

Also, we keep getting new FP's, that show some big moves to the downside.  These prints will be filled, and based on the amount of them I have now, I think it's coming very soon now.  The writing is on the wall now, but the timing is still unknown.

However, the charts are pointing to the daily and 60 minute charts rolling over by this Friday.  Also, the Fed's POMO money will be done by Thursday, along with the portfolio managers spending their last dollar too, as the quarter ends on Thursday.  So, putting all these pieces together you have a very high chance of a big move down coming by Friday.

Anyway, I'll keep this post short and ended it here.  Beside, I've said it all in the video.  My thoughts are that tomorrow will be the best opportunity to get short before a big fall.  Good luck to everyone...

Red

1198 COMMENTS

  1. Thanks for the FP definition…I forgot to mention…if you look at the August Fed schedule, you’ll notice that the temp ops were reverse repos, to take money out of the market, creating a very smooth trip down. Aug 4 was the first since Dec 11, 2009.

    One very interesting factoid is that the Fed explicitly states the list of reverse repo counterparties, but not the permanent ops list. Take into account the fact that they are on their way to hiring 400 traders in the NY Fed, tells me that they don’t want anyone to know exactly where the money is going.

    I still think we’ll have another headfake, but when the money dries up Oct 7, we won’t even have another buyback schedule until Oct 13. But then again , the mysterious counterparties may want to leverage the last $10 billion to drive the market down. In either case, lot of volatility soon.

  2. they’ll (all risk assets, starting with precious metals, corn, eurusd, equities) all turn between wed-friday….and dollar index ST bottom….It’s expiration, month end, qtr end and the charts are lining up for this….

    I don’t anticipate a crash, but a sharp move down for sure on pmetals, corn, even ES…

  3. One last link – I’m on the West Coast, so it’s early yet –

    http://www.businesscycle.com/resources

    This is the Holy Grail of leading indicators. Scroll down to “Monthly Leading, Coincident and Lagging Indexes” and look at the green line. That is leading. Then look at the blue. That is coincident. Notice how the green line makes an abrupt 180 and dives. Notice how the blue has just topped. NOW, notice how the green line drops farther than it has since 1974.

    Moral of the story…sit tight.

  4. The dollar index is at 78.98 (reached my monthly and qtly targets). either she’s bottoming right now or at 78.45 which is a reversal point….So up the dollar now or real soon, and DOWN for pmetals, es, corn, eurusd, etc, etc

    ES unlikely to go below 1100-1097 IT… ST 1119-1125… Price must stay below 1139-1139.60 for this to happen

  5. Well… no gap up! Bummer…

    Looks like we’ll chop around awhile first, as the 60 minute chart is still pointing up. It could take most of the day to move up to overbought territory. That means the market shouldn’t fall hard, as we need this chart to peak out first… and roll over to start the sell off.

  6. Gang,

    This looks like it’s going to take us into tomorrow morning as the 60 minute chart is taking its’ sweet time moving up, and is currently still below the zero mark.

    We need it to peak itself into the positive territory to setup the perfect shorting opportunity. This chart (by The Chart Pattern Trader) shows a good illustration of what he expects too happen, and I agree with him.

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1926808&cmd=show%5Bs203387376%5D&disp=P

    We need to clear out those overhead stops above 1150 before a nice move down can happen. That leaves the possible gap up for tomorrow morning, as it didn’t happen today as I was hoping.

    This also lines up with what Mr. TopStep quoted about the portfolio managers running out of cash by 11:30-Noon on the last day of the quarter… which is tomorrow.

    Plus, the Fed’s still have some money left to buy up the market, and it’s scheduled for tomorrow morning too. Seems like the perfect storm is coming tomorrow, so be ready to place your bets.

    We are looking for a move slightly above the 1150 level to get short. Maybe 1155 or even 1160 on a quick candle move. But by the end of the day, I expect the market to sell off reversing the entire move up in the morning.

    Just keep your eye on this chart. We want to see it go into positive territory and look peaked somewhere around noon tomorrow. We’ll also want the 30, 15, 10, and 5 minute charts to peak together too. I believe they will all line up insync together, which will give you the perfect spot to get short.

    Good luck to us all…

  7. I tend to believe the catalyst will be the dollar or currency turmoil for this market correction. My gut feeling tells me we could have a strong reversal in the dollar, it is way oversold. Otherwise the bull will continue upward to SPX 1300. This is crucial time now.

  8. His “major” turn date (I expect a minor one tomorrow) is November 16th… the day after the elections. Hmmm? Could that be the “major” crash date?

    After tomorrow puts in a high, and the sell off afterward starts, the dollar should rally back up… maybe to the top trendline in his falling channel. This will give us a nice sell off in the market… maybe not a crash, but at least a nice correction.

  9. Hanging man candle on most indexes yesterday; highly reliable bearish reversal. Time to scale in short position now, never know we may gap down tomorrow morning ,trap all the bulls and make it difficult for bears to short at a low-risk setup.

  10. Very true Mike…

    Ideally, I’d like to see the push up into the close as that would be a good indicator that the high would be put in today, as opposed to tomorrow.

    No way to know for sure, but I just feel like they are going to do a quick head fake tomorrow morning and gap over the 1150 level, and then sell off.

    However, that’s not a sure thing. So a wise move would be to start scaling into some shorts today, for tomorrow could just open down and continue down all day.

    It’s better to have some positions short, then to miss the opportunity I believe. If it does go up quickly in the morning, then you’ll have an even better spot to get short at.

    Listening to Mr. TopSteps’ video, I believe he thinks the money is just about run out now. All that’s left is what money the Fed will put into to market in the morning. Still, it could drop first, and rally back to a lower high, and then roll over into the afternoon.

    Tough call, but again… scaling in short today is a wise move (IMHO of course)

  11. Here’s a great article about what’s likely to bring down the stock market…

    http://www.inthemoneystocks.com/n_rant_and_rave_blog_single.php?id=9874

    I’m routing for the Tea Party (link on my blogroll, under “Social Networks” close to the bottom right of this page), and hope they do get elected.

    If so, then the market will crash right after the election is over and surprise most traders that will be expecting a Democrat or Republican majority.

    Who knows? Maybe the Tea Party can gain enough seats to take over? Wouldn’t that be great? I think so, as the crash resulting from them gaining control would be a healthy thing for the economy.

    Flush out all the crooked banksters, and let the “Too Big To Fail”… FAIL! Who needs Goldman Sachs anyway? Have you ever been to a Goldman Sachs teller machine? I haven’t… How about the drive thru teller? Nope, not me. In fact, I’ve never even seen a Goldman Sachs bank. So why the hell are they called a bank, and why are they “Too Big To Fail”? Let them Fail, I say… along with JP Morgan, Citi, and too many other crooks to mention.

    Ok, enough with the rant…

  12. Red,
    Your assessment is quite right. My question now is how can the market punish the maximum participants at this level? I keep looking at the dollar making this double bottom on 15 min. chart and wouldn’t surprise me for a bounce maybe coinciding with european markets open tomorrow right before US market starts trading. The other thing that bugs me is this POMO effect. Whenever all participants know about it and I think that is the case here, it is usually fully anticipated and therefore we won’t get any spike over 1150 tomorrow. Otherwise we should have already got it by now.

  13. There is still that gap around 1153-54 that Mr. TopStep talks about. It’s from May 13th I believe. I doubt they will sell off without closing it. They are too close to “Not Close It”. It’s rare that they get so close, and leave it open. I still think it will push up and fill that gap tomorrow morning at the end of the day today.

  14. I don’t think it will be taken out firmly, but a quick stop sweep, and gap fill (for that 1153-1154 level) could happen on a 5 minute candle. Then a big reversal from there should happen.

  15. Gang…

    Here’s the big problem with the move down we just had… NO Volume! For the day, the SPY just has 137 million shares traded, and it’s now 3:30pm. For a real sell off to happen, I’d like to see over 200 million shares traded on the day.

    I think that the move down was just some late day profit taking. It could be reversed tomorrow? I don’t know for sure, but I wouldn’t be surprised to see it run back up in the afterhours/premarket session, and open up flat or higher tomorrow morning.

    I still think the big move down will start Thursday afternoon, and Friday. But if you already took a short position, I’d just ride out any move up tomorrow, as I don’t believe it will last.

  16. Looks like the pattern being established is that people are playing the Fed purchase card, and today’s upward action at the very end (last 3 minutes) shows that people are catching on.

    I bet it’s a BIG up day tomorrow, BUT, ending with a bigger selloff than today. Might be when we have a big dip. Then a huge upward headfake next week.

  17. Well, we might have some potentially exciting developments tomorrow. POMO has been discussed ad nauseam the last few days and I don’t know how many sites both bullish and bearish that have posted POMO schedules. It appears POMO has been embedded in the trader’s zeitgeist and the next one is of course tomorrow. Bears afraid to short and bulls think there is a floor beneath, wouldn’t it be interesting if the trap door is released below instead. Tomorrow’s POMO overly anticipated by all.
    I revisited the CNBC Prechter interview from a few days ago and noticed all of the same embedded dates in the stock updates as were in the Cramer Code video. (by the way I did an indepth analysis of the Cramer Code in the last comments section for those interested). But all of these previous comments about no crash happening is giving me buzzkill. Don’t particularly feel like revealing the other dates.

  18. Illuminatus director David Fincher has a movie coming out on Friday, the Social Network, about the Facebook founders.. Interesting time for such a movie to come out near the peak of another echo tech bubble. I believe Fincher directed the Catalyst video for LP but from the previews I have seen, I haven’t noticed any of Fincher’s usual occultish and subliminal touches. Fincher is also stepping out of his usual genre.

  19. Tomorrow, Sept 30 is 396 or 66×6 trading days from the March 2009 low ie on 03-06-09. 87tds from that March low is 2 days following 07-08-09 low ie the July pivot low (7-12). 309 tds from that low is tomorrow. 309 an encoded 9-30.

  20. Hi Geccko23!

    After your comment yesterday I was finally able to find the right Cramer’s episode and see the code you’ve been talking about.
    The numbers on the screen surely do look creepy.

    At the end of his talking about SalesForce there is a clue what those numbers on the screen were, all those 4:10:24 and 4:18:15 and 4:20:58. This is the after-hours tape of the SalesForce stock and the numbers are time points. Cramer even call them as such, saying “…and at four eighteen the price was this… and at four twenty – that…”

    Although I know now the source of these creepy out-of-place numbers on the Cramer’s screen, their origin is not as important as their happenstance and confluence with other numbers. THIS is what’s always fun to experience…

  21. Thanks Akka, I am glad you have shown an interest. The Prechter video has those numbers in spades, in particular two other numbers. I believe his appearance was highly ritualistic. He came on right after the Dow high(in the 10870 area ie 10-87) and CNBC/Maria B.??? was very cordial towards him and there wasn’t a ramp job following his appearance. It’s sort of like the Boy Who Cried Wolf and finally got it right but no one paid attention and he was ignored.

  22. Oh I had another Linkin park inspired premonition this morning. I got into my car this morning and LPs new song Waiting for the End was playing (it’s more of a poignant song than its title suggest although the title probably has a darker deeper meaning). It was at 8:47 (87)again on station 987am and the title that appeared on the radio screen was just “Sun”. Then finally at the end of the song, there was just “End”. LPs album is 1000Suns but I don’t know where the singular “Sun” came from. Then I heard a promo later about something premiering tomorrow on a certain broadcast network (the same one as the EVENT—notice they have both Es in the logo pointing to the occultic V) My odometer was at 387xx. Last week when the Catalyst played my odometer was at 38565 (ie 111 plus 5-6) and the number below was 166 then 167 and it was 66 degrees. Very freaky and I am not BSing. And the other station I listen to that plays LP (the main one actually ) is 106.7 which I now see probably isn’t a coincidence to the 1067 number that I have been seeing frequently.

  23. CRM had the same close yesterday as the SP: 114.7 down 2.27 (ie 911 and 29 or1929??). By the way, a certain poster talked about an Apple ritual last April near the high and I checked that there is an Apple ritual that the Wiccans engage in around the autumnal equinox (and Halloween also). And it has something to do with the setting sun.

  24. Sorry, I just keep seeing these numbers. On bloomberg, Dow futures are at 10769 (1067). JNK closed at 39.(8)6. JNKs 50 day average at 39.01. 309 number of unread emails in inbox. No bs. Market better tank tomorrow or I am going to look foolish.

  25. GDP revision up down up 2.7 1.6 1.7 Unemployment good, POMO day starting at 10:30.

    Bears are gonna get it today. Gonna go to Yoga so I can grab my ankles and hold on better.

  26. Let’s just look for the charts to get overbought. Remember what Danny Riley said about the portfolio managers running out of money by 11:30-noon (that’s Chicago time, so that’s 12:30pm-1pm EST).

  27. Back on May the 14th, the high was 1157.19 spx, and we just hit 1157.16 today, so if that’s the gap date the TopStep guys are talking about, then I’d say it’s close enough to be called “Filled”.

    I can’t see the gap on my charts, so if anyone can post a chart showing a gap between May 13th-16th, please post it. Thanks.

  28. I hope everyone took advantage of that pop, and took some more short positions. The 60, 15, and 5 minute charts are all rolling over now. The 30 minute didn’t quite make it up to zero on the longer time frames (65,90,12), but it’s heading back down now. On the shorter time frame (12,26,9) it did peak with all the other charts, and is following the downward path with them.

  29. Good piece of work RDL, you made the call yesterday, it followed your script perfectly so far. Now we need a lower low under 1132 just to be more comfortable. We need to take that tuesday’s low(1132.09). Don’t know if we can get it today.

  30. A 0.318 fib retracement of today’s decline makes it to 1143.50, a good level for short with a tight stop. Another factor is this 2 o’clock rally we seem getting these days,are we going to get one today ?

  31. There’s a rumor out that there is going be be some heavy selling at the close today. I don’t know if it’s true of course, but regardless… the charts tell me we are rolling over now and should continue selling off tomorrow too.

    Here’s the quote from Mr. TopStep…

    “A rumor floating around late yesterday was that there will be billions for sale on the 3:00 cash close. We don’t know that for sure so don’t go running off and sell the SPZ because of it. The trade we look at is what we call the “walk away trade” The way this works is going into 12:00 Ct you are supposed to starts selling the SPZs with the idea that the mutual funds have used up all their cash by 12:00 on the last day of the quarter leaving the S&P susceptible to a decline. It’s a trade that has worked for years and we have a feeling it may work again today. Use stop, live another day.”

    Here’s the link to the full story…

    http://mrtopstep.com/2010/09/30/equities-report-930/

    Whether that happens or not, the charts tell me that we are going down for several days. How far is unknown? But the daily and weekly are now ready for a pullback. Once these short term charts get overbought again today, we should see another leg down. Possibly into the close, or all day tomorrow.

  32. Red I hate to say this but there is not crash here! only some profit
    taking, not good to lead folks to far out there or they will get killed.

  33. Well, I see a good move down tomorrow and possibly into Monday. Maybe not a crash, but a nice move down for people to profit from. Let’s see what tomorrow brings first, before we go jumping to conclusions.

    I think tomorrow will be down nicely, and should it get very oversold, then everyone can exit their shorts and wait to see what next week brings. The makings are there for a large sell off tomorrow, but no one knows whether on not they will allow it too happen? Not me, not you… only Benny and the boys.

    With that said IMHO, the “major” crash should be around election time (just guessing here of course, so let’s not take any positions until we get closer to that date).

  34. sweetie that’s my point don’t jump to conclusions! when you say crash allot of folks think down more than 10%!!~ even that is only a correction. i love you to pieces, but you have to be aware of folks that might take your crash as over 10% or more. Could it happen, maybe, but I doubt just end of quarter profit taking. just sayin

  35. Mr. TopStep…

    http://www.youtube.com/watch?v=IA8saAN6WIU&feature=player_embedded

    Pit Bull says 20 handle rule in effect (and 50 handle could come into effect?). Tim calls 1104.90 ES, “if” the selling continues and 50 handles comes into play?

    Huge volumes today too…

    Otherwise, Tim’s looking for 1127.20 ES (to 1120.40) today. “If” it gets there, that’s a good spot to exit your shorts and take some profit.

    Since the “rumor” about the massive selling isn’t until the close, it might be wise to save a few shorts… just incase it actually happens.

  36. If we get a late day rally,my stops are at a little over today’s high but it looks to me more like a trend reversal with good volume on the way down. I doubt the high will be taken. We just need a lower low to confirm a trend reversal. I think the risk-reward is good.

  37. Could this be why we’ve been going up so high? Just enough to drive up AIG’s (preferred) shares high enough to pay back their TARP loan? Just a thought…

  38. Just read the headlines about AIG and FedGovt plan to convert preferred shares (govt owned) into common shares, which the govt can sell like Citi.

    What if there were collusion to help AIG out of govt control by the other big banks? Then all the Big Ones are free again. Then they can truly do what they want again.

    Just thoughts…

  39. If this support line from the 1040 low doesn’t break today, then it’s possible that they could rally it back up tomorrow, as the 60 and 30 minute are oversold right now.

    The bears need a break of it today, because if it doesn’t… the bulls will be able to go back up to the high of today and take out the 1150 level once and for all.

    When rumors are spread, like the one that Mr. TopStep mentioned about a big sell order into the close, we should always be leary of them, as the are usually released on purpose by the government. Of course it’s done to trick the traders into going in one direction, while the government plans on going in the other direction.

    While the early morning gap up and crap call I made was right, the huge sell off could be erased if they remain above the support line today.

    While I believe a break to the downside is coming soon, if you are playing options, you should consider the possible move up tomorrow… should the support line not break today.

    As Anna stated, this isn’t a crash. It is just a correction, and we might have been fooled here by this move down. We need the support to break today for the bears to gain control.

    Just keep tight stops, in case a bear squeeze happens? If it does, then 1160-1170 will be possible for the bulls. I don’t think it’s going to happen, but I want everyone to be ready in case the tape turn back up hard and traps us bears.

  40. They’re not allowing this to break down today. Be careful here bears. Something doesn’t feel right. Let see what happens at the close, but the selling has been stopped in it’s tracks, and we have heavy volume today. Somethings going on…

  41. Prudential said it’s paying for Star and Edison with $1.7 billion of capital from its balance sheet, along with $1.3 billion raised by selling new stock. The insurer will also borrow another $1.2 billion.

  42. Usually the first day of the month is an up day, but when it’s not, my god, you can get a huge huge red candle. I remember one first day in JAN, I was 80% LONG, and that was the worst—stopped out of everything, opening bell.

  43. Don’t know yet DJ30? It could go either way tomorrow? They held this tape up, and closed it inside the major support line it’s been riding from the 1040 low.

    We had very heavy volume and we still couldn’t close below that support line. That has me very worried, as it’s a bear worst nightmare. That support line should have broke today with the heavy volume.

    They might be faking us all out, and plan to take it up to 1160-1170 tomorrow? Who’s knows at this point? If the job’s data isn’t too bad, or even good, then we could rally up even more.

    I’d say that it’s 50/50 at this point. But, a break of that support line… and down she goes.

  44. Yes everything is riding on tomorrow but today was disappointing to say the least.Maybe im missing something out here can you check over what i think and give your own input on it.

    Cycle turning over to down trend on day chart.
    Volume was high today.
    trend line on the up has been broken.
    res point has been holding even after its been breached so many times.

    Everything points DOWN tomorrow however with the crap thats been going on its anyones guess

  45. Loved that headfake today. Many traders probably went all in once we broke resistance only to eat crow… Putting on the bull cap tomorrow due to seasonals. Spy at the 10dma and ready to rock and roll. Next week will be another story……………….

  46. The market didn’t tank today but it looks like it made a major reversal. Bear flips on pretty much most of the indices although most of the flips did not breakaway from their recent ranges. Nasdaq and QQQQ reversals were the most impressive; both made a new daily high with lower RSI reading and then closed beneath last Friday’s low. (gap up open). $vix closed barely above its 50 day average but if it puts another close with some distance above the 50day then it’s game on. McClellan Oscillator with a minor change reading yesterday (probably another one today). I haven’t see anything that would register tomorrow as a significant date(but some do) other than tomorrow is 111 trading days from the April 26 high. We’re also approaching the vicinity of 33 squared days from the October 11 2010 highs. Also fractal similarity to the early August high. Apple,Bidu,Goog with ugly charts/topping patterns. Plus we have had some flash crash previews earlier in the week with PGN and a minor version with Apple. There was a flash crash a few weeks ago with a big name stock that was barely reported (I only saw a slight reference in WSJ)

  47. Red, I see the recent moves like this:

    1. $VIX is painting a bear flag in a channel:

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1926808&cmd=show%5Bs143877580%5D&disp=P

    The move down in $VIX was impulsive, this flag is corrective. At this level of $VIX, we are back to early September levels when $SPX was at 1060-1080. This cannot persist forever. I would characterize it as a “stealth correction” similar to when the $VIX rose in late July and early August of 2009.

    2. Dow measured in Gold:

    Stealth correction part 2:

    http://www.screencast.com/users/dreadwin/folders/Default/media/77c52603-a125-4102-b4ec-5eafaf0d3eff

    When measured in gold, $DJIA is near the early September price levels.

    Since we are close to the lower BB, it seems that downside risk here is small (!!), which seems totally counter-intuitive. But as you say, support should have broken today. Because it didn’t, my model forces me to go long!

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