Counting The Days Until The Stock Market Crash…

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Thursday Update...

(to watch on youtube: http://www.youtube.com/watch?v=PE496DuQqRo)

Strong chance of a 50% retracement bounce tomorrow, but that leave next with high odds of a crash.

Red

While I'm not sure if the market is topped for sure, everything is pointing to a crash coming very soon!

(to watch on youtube: http://www.youtube.com/watch?v=1CnPlDEgCZg)

Whether it is days away or weeks is unknown?  That 135.14 spy print is still out there and could be a real FP or a false one?  I don't know what it is?  There is lot's of technical damage done to the market right now, and the market could just as easily do a 50% retracement tomorrow, followed by a nice wave 3 down on Friday.

I was expecting a bounce today, but it sold off a little more to probably finish a 5th wave down inside a larger wave 1 down.  So, "if" the top is really in... then we should rally up to some Fib level tomorrow to make a wave 2 up.  Then a wave 3 down could start on Friday.

This is just one scenario, as the other one would indicate an ABC move higher to hit a double top, with a quick pierce above to hit that 135.14 print.  Everything looks extremely bearish right now... which is why I'm worried that a bear squeeze happens and smacks the bears in the face again.

I hope I'm wrong on that call, and it's only a wave 2 up with wave 3 to 5 down still yet to follow... instead of an ABC move up.  We have another intraday print at 132.85 spy from Tuesday, which is about at the 50% Fib level from last Fridays' high to today's low.  If we make it up to that level, and the short term charts start to look over bought again, it would be a good spot to get short again.

However, it might also just be an A wave up, and then a small B down would come next... which would NOT take out the current low, followed by a C wave up squeezing out all the newly trapped bears.  So be careful at that level, as it could be a trap?

What I think would be best is for a slow move up all day finally hitting that area late in the afternoon, within 2 hours of the close.  That would indicate that the market is still too weak to go higher, as it struggled all day long just to hit a 50% Fib level.

But, if it quickly goes up to that level within the first hour of the day, then it could sell off into a B wave down, and then have a C wave up into the close.  The key here is to see how strong the market is during the light volume/midday period.  The first couple of hours and the last hour will usually have the strongest volume... hence the strongest buying pressure, or selling pressure.

That's how you just get a feel for the market as it could go either way?  Once the 50% level is hit, look at the charts and check the volume, as well as other markets related to the spx (the dollar, oil, gold, etc...).   It's not easy, that's for sure!  While I'm bearish and think that the market is only going to hit the 50% fib level and then roll over into a wave 3 down by Friday, I won't rule out the possibility of a big rally either.

We are in dangerous waters now, and both bulls and bears are going to be tricked equally.  Just don't bet all your chips on one color... that's all.

Red

1838 COMMENTS

    • What was that guys named that does youtube video’s that said he was told that they were going to rally up past the top from the huge head and shoulder pattern that formed in 2010? I think he was a black guy, from the sound of his voice? He was right on that call, and I wondered if he had new video’s out? You emailed me his link sometime last year, so he might be on your list of people to watch?

    • What was that guys named that does youtube video’s that said he was told that they were going to rally up past the top from the huge head and shoulder pattern that formed in 2010? I think he was a black guy, from the sound of his voice? He was right on that call, and I wondered if he had new video’s out? You emailed me his link sometime last year, so he might be on your list of people to watch?

  1. From the looks of how weak this tape is, the chances of a crash tomorrow are increasing each hour. It looks like it’s going to take all day to rally up to back test the broken trendline around 1320 or so. This is very bearish right now…

  2. New intraday FP of 131.03 just now. That’s above the falling trendline on the triangle that the market is in right now. While that probably isn’t a target level, it could be a direction indicator?

  3. IT WON’T HOLD! Yes, I could eat that later, but with all the issues that are happening not only on our land but also across the pond, I see a dramatic drop. Since June 2010 we have all been reprogrammed to think “it,
    ‘s all ok” and we know that is the farthest from the truth. Get back to your thoughts as they were in April 2010 and now what do think is going to happen. we are in worst shape now THAN EVER. THEIR GAME IS OVER.

  4. I see a clear 5 wave pattern down right now, from the top last Friday to the current low today. I’m no elliottwave expert, but we “may” have put in a short term bottom, completing wave 1 down.

    If so, we should have an ABC move up tomorrow and possibly Monday. It should be at some Fib level (50% or even 61.8%). I’ve been wrong too many times in the past thinking the market was going to crash when it went down in a similar pattern, only to see a wave 2 rally kill my shorts. I remain in cash.

  5. I see a clear 5 wave pattern down right now, from the top last Friday to the current low today. I’m no elliottwave expert, but we “may” have put in a short term bottom, completing wave 1 down.

    If so, we should have an ABC move up tomorrow and possibly Monday. It should be at some Fib level (50% or even 61.8%). I’ve been wrong too many times in the past thinking the market was going to crash when it went down in a similar pattern, only to see a wave 2 rally kill my shorts. I remain in cash.

    • red,

      respectfully i am going to take the other side. i see a series of 1,2’s which would predicate yet another move to the 1270’s – 1250’s. i guess my eyesight is going… i am aware of the short term technicals – although i see what i see…. ok you can laugh and point at me when i am proven wrong – but just promise y’all wont throw jello at me!!

  6. they first started a rumor that Gadaffi was dead, then followed it by raising margin requirements on brent and now to be followed by WTI then metals
    Bastards are just thugs in a suit … Fork them all

  7. Red, shorts are were at record lows, before move started…Shorts were burned so many times, and now, all are taking any profits very quickly…thus, I don’t think you can count on any major short squeezes any longer… Also, overall economy picture is becoming clear to all…there was no recovery for anybody, but bankers bonuses (banks are still loaded with crap, so they didn’t recover)…food riots will put stop QE3…also, government is likely to shutdown next week…
    What will move this market lower are margin calls…Margin calls will undo any POMO coming in…plus, POMO has no strings attached, so banks will be looking to preserve liquidity, not buy more stocks, if we start moving down

    • MsChemeng,

      You are right about the record low shorts in the market. But I still think we will bounce tomorrow. As for next Monday and the rest of the week, it should be bloody.

  8. dow 12,400 down to 12,000, that’s all the feb pullback there is–if true, that sucks. looks like its buy the dips, and sector rotation again. say it isn’t so

  9. Damn, Gaddi really is crazy…in his radio speech, he mentioned al qaeda slipping drugs into coffee, the Kurds, the CIA and the Unabomber. WTF? It’s like listening to Madman Ben speak!

    • What am I missing here? Something has to be wrong. Either Lindsey Willimas is wrong (and not realizing he is feeding dis-info) or this is a false FP. Unless it is something specific to this fund or deflation before the inflation/gas hikes kick in?

    • OK, here’s the explanation for these print… UCO did a reverse split of 1:4, which explains it now. I thought that was a little odd? I knew some of the other etf’s were doing splits, but I didn’t know this one was too. Now we know… the rest of story! (Paul Harvey… LOL)

  10. red,

    what are you seeing in the charts for monday?? today has reset the short term technicals….. and headline risk for the weekend is high – are we churning come monday – up or down??? (btw i am making a tub full of jell-o just in case!)

  11. Gang, I don’t think this is the start of wave 3 down. I think this is only wave B down, with C up to follow on Monday or late into the end of today. It just isn’t high enough for a wave 2 up I believe.

    Just a feeling of course, as I could be wrong on this, but I don’t think it isn’t that simple to just get short on the first bounce up and ride it down. They will shake some bulls and bears out… you all should know that by now.

  12. Hey Red…what do you make of this. I have a scan on Finviz that is to locate momentum stocks moving higher. Weird results today, not sure if it constitutes as a fake print…never really caught one before. To be honest, never even knew about them until I started to come to your site.

    Here is a print screen of my results. It’s odd that the contra etf’s are showing up when their down today. Other than the etf’s…just a bunch of energy related names.

    http://screencast.com/t/6k44OzHAQ

    • I’m not sure Jeff? I know there were a bunch of reverse splits today, and I’m sure that is throwing things off. The UCO, FAZ, and many more did splits… so it’s hard too figure out what’s real and what’s normal?

  13. Right now we are .382 Fib retrace on Dow and .50 on SPX… that should hold… I don’t hear the fat lady singing yet…

  14. Ok, I’ve made my decision… I’m sitting in cash over the weekend. Looking at the past on the weekly chart, I can’t find any place that the market gaped down and didn’t retrace back up and at least fill the gap or go higher.

    The odds say (from past weekly candles) that we will revisit this level or higher at some point next week before selling off lower.

  15. red,

    with the small caps up over 2.2% today – which is a RISK ON decision of the market – your hunch is probably very correct. we will have to wait for another EVENT that changes the market back to selling and RISK OFF…

  16. Excellent day fellas. TNA was a nice standout for me today. Rally cap is now off due to seasonals negative for Monday. Hope you were all onboard the train today. Have a great weekend Red….

  17. Let me explain how this 3 day correction worked. Day 1 huge selloff that most bears miss, day 2 bears pile on because the world is ending next week. Day 3 even MORE bears pile on. Days 4-99 the bulls ram the market right up the bears ass. See you in 99 days.. 🙂

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