Tuesday, May 21, 2024

Weekend Update – The Recession Is Officailly Over

Midday Tuesday Update...

We only had 162 million shares traded on the spy Monday, and usually you will see over 200 million on down days... which means that this move down was more then likely just a technical correction as opposed to some real selling.

In other words, the big institutions haven't started to dump the market yet. Maybe they are waiting until Wednesday, when the last POMO money going into the market?  But after Wednesday, with no more POMO money until October 13th, and the non-farm payroll report out on Friday... I highly doubt the market can stay up this high.

I can see some 200-300 point down days coming late this week and possibly into early next week. For you non-option players, where time isn't against your side, hang tight as I believe Friday will be bloody!

Red

_______________________________________________________________

Now The Depression Begins...

Even though we didn't get the sell off I was looking for last week, the market never went anywhere but sideways.  It seems like the small injection of $30 Billion just delayed the selling for a few more weeks, as it certainly didn't produce another leg up in the market.

The Legatus Pilgrimage ended on September the 20th, and Bernanke states that no QE2 will be implemented, but that they will do whatever is needed to the support the banksters (errr.... the public).  So what really happened?  As Reinhardt pointed out on his site "a $30B rally is probably not a $800+B rally".

I think the $30 Billion is just about gone now, and the sell off will begin next week as a lack of stimulus money means NO buyers... and that means a sell off will follow.  While it's still possible that they will rally up on Monday, I think the high will be put in for the week on that day.

After this triangle pattern breaks up (it could break down, but Monday's are usually bullish), it will quickly make the short term charts overbought, and ready to rollover on Tuesday (or Wednesday at the latest).  The fact that the banksters could only raise $30 Billion, instead of $800 Billion like they did the previous rally, tells me that their power and influence is weakening.

Zero Hedge has an interesting article that states that Goldman Sachs will be asking for $500 Billion in a new QE2 bailout on November the 2-3rd.  If it fails, then certainly the market will tank hard from it.  I do think it will fail, and and the market will simply react as written in the charts... which is that it's overbought now, and ready for a serious correction down to happen.

The "failure" of the passing of this QE2 bill, will simply be the blame for the correction that follows.  It should be quick and deep, lasting 1-2 weeks of heavy selling.  The bottom should be at Dow 8300, our FP from many weeks back.  That could match up with the November 15th election, and "if" the Republicans gain back control at same time all of our FP's are hit, then a rally will happen from it.

So, will the market hit that low on election day?  I don't know of course, but I do believe the charts would align up perfectly of that target being printed in mid-November.  That's about 6 weeks from now, and of course we would have short term bounces between now and then... but I think a person would have very high odds of success by simply staying short over the next 2 months with the downside target already known, allowing them a really nice profit should it all play out as expected.

No one knows for sure of course, but everything I see now is pointing to a move down to that print over the next couple of months.  Playing the stock market is nothing more then gambling, with the added benefit of being able to increase ones' odd's of winning by piecing together technical analysis, fib's, elliottwave, politics, and just good old fashion "gut" feelings... and of course manipulation, corruption, lying, stealing, and cheating by the gangsters that run WallStreet.

It's harder to do that in Vegas, as I don't know any casino you can go to that only uses one deck of cards in BlackJack... hence counting cards now is a lot tougher with 4,5, or 6 decks mixed together.  Can it still be done?  Of course, but your odd's of winning are still a lot lower then what they would be by applying the same knowledge in the stock market instead.

But back to the market...

I think that taking a short position now, or anywhere last week, and holding until the elections should produce a very nice profit.  While trying to catch the exact high to get short is very hard too do, and mainly for short term swing traders.  The intermediate swing trader might be wise to start positioning themselves short for the coming 6 week down move.

This is of course just what I see in the charts, and what I sense with all the other pieces of the puzzle that I've tried to put together.  Will it happen?  I don't know?  I just know that the odd's are very high of the sell starting early next week, and lasting until the elections, with a few bounces along the way... to shake out the weak hands of course.

So in the end, we must simply fold our hand, lay down what we got, or take another card.  I'm a risk taker, so I'll take another card.  There's bound too be a BlackJack coming my way soon!

Best of luck to us all...

Red

Red
Author: Red

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Dgtzona
Dgtzona
13 years ago

Red election day is November 2 2010–

Red Dragon Leo
13 years ago

Why I am thinking the 15th? I’ve obviously got too much crap in my head. LOL…. sorry about that.

Mnytzfan30
Mnytzfan30
13 years ago

I saw Social Network and it has the Cramer Code numbers prominently displayed in one scene plus many other numbers, I am sure, with occultic significance but I’d have to watch that movie many times to be able to piece something together. Of course, a David Fincher movie wouldn’t be complete without an embedded V and even an inverse one. 969 and 560 definitely two numbers mentioned that caught my attention. Also a mention of the date February 4,2004.

Geccko23
Geccko23
13 years ago

xx

Red Dragon Leo
13 years ago

Well, I don’t under the Cramer Code either… so don’t feel back. Geccko has the best understand of it, but I don’t think he fully gets it either?

Regardless, at least an oversold correction should be coming this week… and maybe more?

Red Dragon Leo
13 years ago

Sorry about my stupidity… I didn’t realize you “are” Geccko until now.

Ok, so what have you figured out in the code? What’s so important about February 4th, 2004? I don’t see anything special that happened on that date? What am I missing?

Mike
Mike
13 years ago

Currently with a reasonable short position, the line in the sand is the 1150 level. If the bulls take it, I don’ t see a correction but some kind of a melt-up and this is some kind of low probability outcome based on all the technical aspects. But if we break 1136, we should have a substantial pullback testing again 1040. The other possibility is sideways action for many weeks in the current range bound and this scenario also does not carry much weight.

Looking at the chart, I see a similar topping pattern on August 6 with current price.We just need another small rise to complete it and then the fall can start. So if the market goes up tomorrow around 1150 it could be the last day of this rally. If the market goes down tomorrow , it would also mean the correction has just started assuming 1150 would still hold on tuesday.Based on the duration of the August correction, we should expect a bottom around Oct 28 with a total pullback of approx 10%.This bottom could hold a few days and after that it could be disaster or a strong rally coinciding with the mid-term election.So,I believe this week Mr Market will speak loud.

Red Dragon Leo
13 years ago

Agreed Mike…

Up or down Monday, it doesn’t matter. Once the move down starts, the fall should be continuous with only small bounces along the way.

Geccko23
Geccko23
13 years ago

Sorry discus messing with my id. It’s more of the numerical value in the date in my opinion. But 6years 6months 6days from that date comes close to the Cardinal Climax period of -08-7-10 to 8-9-10 and at the end of the movie the main character checks his ex-girlfriend’s facebook page and it lists her birthday as August 8(8-8)and the number 988 is mentioned prominently by one of the characters (after 969) as they count the number of visitors to the new facebook site at Harvard. As I said, I’d need to see that move several times just to piece something together.

coulous
coulous
13 years ago

Super le CAC40 DOWN !!

Go bear go !!

Red Dragon Leo
13 years ago

That’s cool… it’s no big deal. Looks like the selling may start today, as the premarket is down already. Not much though, so it’s too early to tell. I’d like to see that 60 minute chart get into overbought territory first, and then the ideal short spot will show itself.

anoopsan
13 years ago

Futures chart before opening bell : CLICK HERE

Red Dragon Leo
13 years ago

From the looks of the futures right now, today is looking like a down one.

anoopsan
13 years ago

Yes, As of now it is looking weak.

pezhead9000
13 years ago

Serge @ etfcorner has a nice 10min chart of SPY. Basically, showing a range between 114-115 with false breakouts going both ways.
http://www.etf-corner.com/markets/2010/10/spy-playing-the-breakouts-.html

Did you see cobra’s view:
http://cobrasmarketview.blogspot.com/2010/10/10012010-market-recap-is-11-up.html

any thoughts?

Red Dragon Leo
13 years ago

Thanks Pez…

I read Cobra’s report and he’s bearish for this week too, just like I am. I didn’t see Serge’s report, but after just reading it right now, I’ll say that it’s an “unlikely” scenario, but possible.

The key to the rally, or crash will be the QE2 on November 2nd-3rd. I failure to pass it, and down the market goes… here comes Dow 8300. If it passes, then a slow grind higher will happen.

I think it will fail…

pezhead9000
13 years ago

“Bernanke is jawboning” – appears that Denninger thinks the same about QE2
http://market-ticker.org/akcs-www?singlepost=2193791

Red Dragon Leo
13 years ago

I like it… especially that last line (and I quote):

“If the Bond market is right then this divergence resolves with an S&P 500 at about 750.”

If Bernanke is the 800 pound Gorilla, then the Bond market is Tiranosaurio Rex… I wonder who would win in that fight? LOL

Red Dragon Leo
13 years ago

Gang, it’s now 11am and the market is likely to go into sleep mode from here on out. Light volume could take over and allow it to move back up the rest of the day. While I still see a big move down coming, I want to see the 60 minute chart get overbought, and right now it’s just below the zero level and trying to go positive.

Until it does, I just don’t see any selling sticking. We had a premarket print of 113.96 on the SPY, and that’s likely to be the bottom for today. I base on the the fact that the 15, 10, and 5 minute charts are oversold now (yeah… I know, that’s hard to believe).

Anyway, I’m looking for a move back up into the close today. Hopefully by then, the 60 and 30 minute charts will get overbought, giving us the best place to get short.

This is mainly for you short term swing traders, as you intermediate term traders could short anywhere in the last week and probably still be fine. That’s assuming we are at least going down to rest the 1040, then 1010 lows possibly by the end of this week.

Red Dragon Leo
13 years ago

Well, I guess not? They passed that 113.96 print and went on to the double bottom level. Let’s see if it bounces here…

Red Dragon Leo
13 years ago

Now that trendline will be resistance (about 1134 or so)

anoopsan
13 years ago

Thats right.

Anonymous
Anonymous
13 years ago

vix and rvx are over 8%

Red Dragon Leo
13 years ago

That tells me there’s more selling to follow… possibly into the close? If not today, then we’ll likely chop around with a slight upside bias until the short term oversold conditions are worked off. Maybe late Tuesday or early Wednesday? Hard too tell right now? But more selling is coming…

Anna
13 years ago

I said the same on my Sunday pm post as them good to hear we are in sync 🙂
Vix I mentioned last night about to pop and looky! 🙂

Geccko23
Geccko23
13 years ago

The eVent is now happening. theVixis comfortably above its 50day average.

Jaywiz10534
Jaywiz10534
13 years ago

Hi RED
I published some new updates at the blog worth reading
Did you or anyone here request to follow me at twitter?
If not, then please go there and request to follow me-
trying to get to 200, now at 155 followers
twitter address is at JaywizFinancial
thanks

http://jaywiz.blogspot.com
POSSIBLE repeat of May 6th tomrrow w no comeback
NO guarantees, but its looking possible
Jay

Guest
Guest
13 years ago

hey red

Is there any POMO activity scheduled for this week ?

TIA

Red Dragon Leo
13 years ago

Yes, tomorrow and Wednesday it seems…

http://www.newyorkfed.org/markets/tot_operation_schedule.html

That means the retracement back up from today’s sell off should peak on Wednesday morning sometime, after the last POMO money is injected into the market.

Don’t know what level it will retrace too, but if today was some kind of wave 1 down, then wave 2 back up should go to one of the Fib’s levels.

I suspect it might be a backtest of the breakdown from the rising trendline. But, today’s pattern is a bear flag… meaning that we might not get any backtest at all?

We could enter wave 3 of 3 down tomorrow, with wave 1 down and wave 2 sideways happening today? It’s not looking very bull friendly, that’s for sure.

Red Dragon Leo
13 years ago

I see a little afterhours buying… not sure what it means though?

Red Dragon Leo
13 years ago

We only had 162 million shares traded on the spy today, and usually you will see over 200 million on down days… which means that this move down was more then likely just a technical correction as opposed to some real selling.

In other words, the big institutions haven’t started to dump the market yet. Maybe they are waiting until Wednesday, when the last POMO money going into the market?

Of they have been selling lightly into this rally, as all of last week went no where but sideways. I can’t see them not pushing the panic button sometime this week.

It could happen as early as tomorrow or as late as Wednesday. But after Wednesday, with no more POMO money until October 13th, and the non-farm payroll report out on Friday… I highly doubt the market can stay up this high.

I can see some 200-300 point down days coming late this week and possibly into early next week. For now though, get in, get out, take profits… as Mr. TopStep says…

Red Dragon Leo
13 years ago

Jay,

Make it easy for people to follow you… post your twitter direct link here.

Red

Of course my twitter direct link is (for anyone that didn’t know?):

http://www.twitter.com/reddragonleo

Geccko23
Geccko23
13 years ago

Just testing to see if I am having disqus problems again

Geccko23
Geccko23
13 years ago

Well, I was disappointed with the amplitude with the downmove but from today’s candlestick it looks like there should be some continuation tomorrow. Crude oil (at least uso) was putting in a doji top today although $xoi was down considerably. The 4s might work with another date Jaywiz mentioned below and the Cramer 8.53 number that he touches. I did find a number that seems to be the controlling number, controlling all the events since the April high. I’ll mention it after the next dip or to the few who might be interested.

Rosabarba
13 years ago

Hi, Red.

FWIW, I think a big swoon this week is less likely than not. I agree that the volume and action today appeared corrective, and while there might be some more downside, the IT trend remains up until proved otherwise.

Also FWIW, it would be a mistake, I believe, to expect the POMO effect to be specific to that day. Somebody crunched the numbers, anyway, and determined that the POMO edge involves the *number* of active days within a specified timeframe and extended for several months after a concentrated cluster of POMO days.

http://www.tradingtheodds.com/2010/09/permanent-open-market-operations-pomo/

As always, FWIW.

zstock7
13 years ago

GDX topped,
Hi Red!
Sorry for all the self promoting inserts on the GDX chart…
http://zstock7.com/wp-content/uploads/2010/10/gdx-10-4AAWW.jpg
I was able to post the $USD chart here the other day…which was based on the info, on this GDX chart,

Red Dragon Leo
13 years ago

Hey Rosabarba… nice of you to stop by. I haven’t backdated the POMO day’s but just briefly looking back at the last 7 days that they had them… all 7 produced a sharp spike up in the market.

So, it’s reasonable to assume that we’ll get some spike up tomorrow and Wednesday morning too. How high is of course unknown, but a fib retracement level should be expected.

Thanks for the link, and stop by more often.

Red Dragon Leo
13 years ago

Gold is one trade I wouldn’t short. Although you can make good money with it, if you catch it right… it’s safer to just go long on a pull back, as it’s in a long term bull market and will be for quite some time.

Geccko23
Geccko23
13 years ago

I just went over to Cramer’s to check out his show today and he has the controlling number on his scoreboard.

10: 04 (date)
30: 14 (score—whatever that means)

The 157 number shows up again if one adds everything up (as 15.7 or 58???) Of course this doesn’t really help me predict a date. But today was 56+56 or 112 trading days from the April high and tomorrow is 40 (5×8)calendar days from 8-26 (or 8-8).

Johnny T.
Johnny T.
13 years ago

Geccko,

Can you shed a bit of light on what info you are going for at Cramer’s? Are you saying he is conveying the timing of significant events? Is there an event in particular you are looking for?

anoopsan
13 years ago

Futures chart before opening bell : CLICK HERE

pezhead9000
13 years ago

GDX Pre-Market Real-Time: 56.85 1.30 (2.34%) – let’s see if GDX gets rejected at this level.
“there are things we don’t know we don’t know”

Red Dragon Leo
13 years ago

I think we can expect one more day of this pump job and then the real sell off should begin. Tomorrow is another POMO day, and the last one for at least October 13th… or longer?

Once the money runs out, reality should set in… and the wonderful non-farm payrolls numbers will be the blame for the selling. LOL

pezhead9000
13 years ago

GDX 57.68 2.13 (3.83%) – off to the races

Red Dragon Leo
13 years ago

With Benny boy still in drivers seat on the magical money machine, I just don’t have the guts to ever short gold. I’d go long only. We’ll still get a bigger pullback of course, but timing it will be tough.

I’m assuming you are long GDX right now and not trying to short it? If you are looking to short it… good luck.

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