Tuesday, June 25, 2024

Will A Pullback Happen After A Double Top From The 2007 High?

Barron's April 22nd, 2013 Magazine Edition Tells Us The High Is Near!

(to watch on youtube: http://www.youtube.com/watch?v=ZLzB7i1MyRE)

Red

____________________________________________________________

(to watch on youtube: http://www.youtube.com/watch?v=qxa8k7pGpAA)

Hitting the old 2007 high seems certain now, and after it's hit a several week pullback should follow...

The spoken (but of course not guaranteed) rule is that the longer the period between one prior top and it's double top in the making the stronger the resistance.  Therefore the odds are much higher for a pullback before making a third attempt to pierce through that double top and make a new all time.  As for how far and how long the pullback will be is usually based on how overbought the market is on the various time frames.  Looking at the daily, weekly, and monthly charts one could argue for a several week pullback versus just a few days... and I personally concur with that logic as well.

I'm going to present two different scenarios here but both have the market pulling back next week.  Each scenario is just the longer term wave count but in reality the only difference in the price level of the market and not the expected periods of the highs and lows.  Since I'm not an Elliottwave expert I'm going to study the charts of someone that is, and input possible future wave counts with likely date periods for the highs and lows.  One of the counts puts a new all time high next year and the other puts it this year.  But both counts still give us the important turning periods.

Scenario One...

First, lets go over what I said in the last post.  I proposed that we would top in the first week of April and then sell off for several weeks toward the end of the month.  I was thinking that wave down was going to be a wave 1 down with the move back up starting in late April and likely ending in late May (with the 22nd being my target date) being called wave 2 up.  Then a wave 3 would follow which would be one very nasty panic wave of selling.  This was also based on the high being hit in the first week of April to be nicely above the prior all time high of 1576.09 SPX in 2007.  My thoughts were that we'd do some type of ritual number like 1666, just like they bottomed at 666 in March of 2009... and had an intraday low of 333.33 on the day that the high was put in for the year of 1987 before the crash that followed later that year (that date was 08/25/1987).

While hitting 1666 would probably be very obvious to any "red pill taker" today (and even some "blue pill takers" would figure it out too) the odds of that happening on Monday, (the ritual "eleven" date) seem very slim with the SPX closing at 1569.19 on Friday.  This leaves the next ritual "eleven" date of April the 10th for that possible high happening.  But I just don't think that's the way it's going to play out now.  I've been doing more studying of what happened in the past and I now am going to give that scenario low odds and go with the second scenario that I'm going to go over now.

Scenario Two...

I was reading Tony Caldaro's blog last week (which I haven't done in a very long time) as I wanted to get his Elliottwave count on all the various waves and see if I'm missing something.  Sure enough I did indeed overlook something (assuming history repeats itself?), which I didn't go looking for until I seen Tony's wave count was different then mine.  Since I'm not an expert at EW theory and Tony is I decided to go back in the past to see if it was possible that his wave count could play out (and to see if it had happened in the past as well).

So what is his wave count and how is it different from mine?  Of course I'll go over that in the video but let me see if I can explain it here for you as well.  Tony proposes that we are in an "intermediate wave 3" up right now inside a larger "major wave 3" up... inside an even larger "primary wave 3" up.  His count would suggest that we still could drop for an "intermediate wave 4" down anytime now, which I suspect will be on Monday when (and "if"?) we hit the double top zone of 1576.09 spx (hopefully pierce it by a few points), which could last 2-4 weeks toward the end of April.  This then leaves the wave up into the late May Legatus meeting to be a final "intermediate wave 5" up and not a wave 2 as I previously thought.

This also means that the current coming double top zone must be broken for that to be a valid "intermediate wave 5" up.  I'm thinking we'll hit 1610-1630 spx around that May 22nd ritual date now, which obviously won't be the wave 2 up like I previously thought but the final 5th wave up (intermediate) inside a larger "major wave 3" up.  This would setup the first wave down from that May peak to be an "intermediate wave 1" (or wave A I guess?) inside a larger "major wave 4" down.  The start of major wave 3 up was 1266.74 spx on 06/04/2012, which leaves a lot of room for big 5 wave (intermediate) panic sell off to happen.

But, here's where I disagree with Tony...

Tony states on his weekend post that he see's the top for the bull market in February or April of 2014... which of course there just happens to be a Legatus meeting then too!  Coincidental?  He also see's a high of 1650-1700 spx, which I see a ritual number like 1666 spx, so we agree on those two points. But I don't understand his wave count that he has laid out because it would project the market way higher then this 1650-1700 top area.  Let me explain... if we follow the plan with his wave count into May and put in a high of 1610-1630 that will complete the intermediate wave 5 up and the major wave 3 up then the first of a suspected 5 wave (or 3 wave) intermediate wave series down should start.  This also starts major wave 4 down, which again needs to stay above 1266.74 to be valid... but that leave major wave 5 up that needs to take out the late May high of major wave 3 (thinking 1610-1630).

So if that happens to be his 1650-1700 target just how do that end the bull market?  That only would complete major wave 5 up inside primary wave 3 up.  Where does primary wave 4 down and primary wave 5 up come into play?  My speculation is that primary waves one, two, and three are really A, B, and C and there won't be a 4th wave down and 5th wave up, as if there were the high would be closer to 2000 spx... and I just can't see that happening.  The other alternate is that the major wave count is wrong and the move down in May starts primary wave 4 down and that top completed all the major waves up.  Then we could go down as deep as 1074.77 to make a primary wave 4 down and back up to 1666 for primary wave 5 up.

This lines up with Tony's call for a final high in early 2014 but ironically doesn't match is wave count?  I'm not sure if I'm missing something here but I've went over this many times now and I can't make the waves match up with his target for the end of the bull market... not unless you change the label's of the current waves.  But I guess the wave patterns aren't really that important as the most important thing here is to catch the turning points correctly so we can all make money from the moves.

Therefore, I still calling for an important top this week with April 1st being the most likely date...

Then a 18-20 calendar day sell off seems likely... if history repeats itself.  Followed by a rally into the next Legatus meeting May 23rd-25th, 2013 with the most likely topping date being on May 22d (which is a double "eleven" date).  Whether that date is accurate or not remains to be seen... and some how I wouldn't doubt that it won't be accurate just because I've been talking about it so much lately.  If the gangsters read this blog (and I"m sure they do) then they will most likely change the date just so I'm wrong.  So just take that date as potential date and not something written in stone.  Many, but not all, important tops are on "eleven" days... which I'd guess at 30-40% of them are.  That's actually pretty high considering that they could land on a one, two, three, four, five, six, seven, eight, nine, or ten day just as easily... which when adding in the 11th day you have odd's of only around 9% for each number.  Therefore hitting "11" 30-40% of the time isn't normal... unless of course it's planned.  😉

Backing up a little, I mentioned that I looked back in the past to see if Tony's wave count every happened or something similar... and something sparked my eye.  When the high was put in on 03/24/2000 of 1552.87 spx it was truly and "all time new high" that there wasn't anything even close to it in the past to compare it with.  That was the intraday high and the closing high was 1527.57 which was revisited on 09/01/2000 when an intraday high of 1530.09 was reached but failed to hold and closed at 1520.77 spx.  That was the last time the market would see that level until 2007 came along.

(to watch on youtube: http://www.youtube.com/watch?v=ACvZH2YSTiM

Seven years after that 2000 top the market hit 1555.90 spx on 07/16/2007 with it's intraday high.  It couldn't hold that high, (which was just 3.23 points over the intraday prior high), and closed at 1549.52 that day.  The market then dropped Tuesday and continued into Wednesday the 18th for the first wave 1 down.  It put in a nice bottoming tail on Wednesday and rallied hard on Thursday the 19th to hit 1555.20 as an intraday high.  That move completed the wave 2 up which was followed by the start of the wave 3 down on Friday the 20th.  That move lasted for 18 calendar days until wave 3 down bottomed on Monday 08/06/2007 with and intraday low of 1427.39, or 133.51 points in total from the top.

Then you had a wave 4 up that lasted 3 days topping that Wednesday the 8th, and then a wave 5 down that lasted until an intraday low of 1370.60 was hit on Thursday August 16th, 2007.  The total 5 wave move down was 185.30 points in total and 28 calendar days.  What's important to see here is that a double top that happens after 7 long years did indeed produce a very nice sell off.  That's why I'm also expecting a similar type of sell to start this week when we hit (and slightly breakthrough the 1576.09 double top from 10/11/2007.

This all leads me up to May 22nd for another all time high and sell off to follow...

I'm not going to go count all the waves made prior to 07/16/2007 high (from 2000) as you can study Tony's charts for that... or a dozen other EW chartists.  The thing that caught my eye the most about this period was the fact that after the 2000 high was broken the market did sell off, but more importantly it recovered to make again another new "all time" high on October 11th, 2007, which was 1576.09... a 20.19 point move higher then just a few months back.  This supports Tony's theory that we are in intermediate wave 3, which if tops on April the 1st and drops for 2-4 weeks to make intermediate wave 4, then intermediate wave 5 up should be around 20 points (or so) higher then this early April high.  And if that high is say 1580 then 1600 or more seem reasonable for late May.  My thoughts are for a little higher move (1610-1630) as rarely do patterns repeat exactly.

Besides that, if you are going to have a 1929 style crash this time around (and I believe we are) then you should certainly go a little higher then everyone expects.  If you get up to 1610, 1620, or even 1630 spx in late May then I'm pretty sure every bear will go back into his cave and give up for the year... only to miss the really nasty bear feast that should follow.  Remember that this major wave 4 down can be as low as 1266.74 (the start of 3 up and the end of 2 down), which is over 400 points from where we are now.  That could very well end up being primary wave 4 down (which is my thoughts) if Tony's count on the market being in a major wave 3 up is wrong.

I personally thing we will complete not only the intermediate wave 5 up in late May but also the major wave 5 up.  I can't figure out how the wave count really could line up but it makes more sense to be starting Primary wave 4 down in May (to end in Sept/Oct 2013) followed by Primary wave 5 up into spring of 2014.  I say that because I believe the sell off to start in late May will likely be faster then many will expect, much like the 2011 summer sell off was.  I really see it as being a primary wave 4 down with primary 5 up into spring of 2014 ending the whole rally from the 2009 low.  Tony's the expert here on EW counts and then only thing I can't figure out is those major wave's.  For this to work out as I expect both the 3rd primary wave up and the 5th major wave up must end in late May.

Brief update from Ali...

Ali hasn't any new updates per-say as nothing has changed.  But he did email a few days ago with more supporting evidence that this move down in May will be a very, very nasty wave... which is why I think it will be a primary wave 4 down (which can go as low as 1074.77 to still be valid), and now just a major wave 4 down inside a primary wave 3 up.

Uranus 17-Year Cycle... you may examine the cycle in detail back to 1897. We are currently in a 17-year sideways-to-down cycle that began in the year 2000. Each sideways-to-down cycle contains a mid-cycle panic as Uranus crosses the 36° harmonic, as it did in October, 2007.

October 2007 Uranus 36° Harmonic... This resulted in the corresponding top in the markets, leading to the 2008 crash. As a matter of fact, this cycle is interwoven with Venus-Earth 13-year cycle which is going to peak in late May. I assume that the bearish market could continue into early 2017, of course with some bumps on the road, for example we are going to have a major turning point in October of 2015 which could be a bottom.

Ali Firoozi Yasar

Let's also not forget that 2013 is the year of the snake and May is the month of the snake, which 2001 was (911 happened), 1941 was (pearl harbor), and of course 1929.  Good things don't happen too much during snake years I guess?  Throw in the all the stuff we have covered in this post and prior posts, and I think we have some really good odds here for a bear feast to occur.  So I'll be looking to short the market Monday, April the 1st (will it be April fools day for the bulls?) if they hit the prior all time high of 1576.09 (and hopefully pierce it a little).

Obviously I'm not going to pass up a chance to profit from another 133.51 point drop like what happened from 07/16/2007 to 08/06/2007... not to imply that it's going to be that exact amount again, as that's highly unlikely.  But never the less, a very nice move down should be coming over the next several weeks and I think it's worth shorting.  History shows it to be accurate and the gangsters were manipulating the stock market back then too, just like they are today.  The part that most bears won't see will be the rally back up from the late April low.  I think they will all be expecting a wave 2 up (like I was in the last post) so they can catch the wave 3 down.

Unfortunately I think they will all be sadly taken for their money once again as the market will very likely repeat something similar to 2007 where the rally back up didn't put in a lower high but instead rallied up 20 more points higher and put in a new all time high.  This will squeeze every last bear out of the market for sure as very few people will be expecting such a powerful rally to start in late April, early May.  In fact everyone will be chanting "sell in May and go away"... only to see a rip roaring rally the first 3 weeks of May that will blow the tires off the bear bus!  Those bears will be stranded once again just when they thought they were ready to go over the mountain and down into the bull abyss!

On top of that I also expect the bulls to miss a lot of that rally too as they will have some really big scars from the early April bear attacks.  Most will be hesitant to go long and will miss the rally.  Can't blame them really as after a new high is reached on April 1st who would believe that there would be another higher "new high" to come in late May?  I'd go so far as to say that the bull will also think the rally up is just a wave 2 and become bears at some point trying to short it at some Fibonacci level all the way up... only to get squeeze themselves and propel the rally that much more.  After that 1610-1630 level is hit I think there won't be any bears let on the planet... except for me (and those of you reading this post).  🙂

Red

 

 

 

 

Red
Author: Red

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Peter Trunk
11 years ago

Nice post Red. A little nervous about May? ha

Anonymous
Anonymous
11 years ago

Friday was 10 trading days off the nominal high earlier ala the March 2000 double top. This time with the new high on Friday there were substantial divergences seen with the European markets which were no way near their previous highs 10 days earlier.

Friday was also a Fib 89 trading days from the November 16 low.

Peter Trunk
11 years ago

I don’t think this is the start of the dip

Red Dragon Leo
11 years ago

Gang I am still not short because 1576.09 spx hasn’t been taken out yet. The April 1st call is just because it’s another ritual “eleven” date and that 30% to 40% of important tops seem to be on ritual dates. There is another ritual “eleven” date on the 10th, but they don’t have to top on one. The important thing to remember here is that the all time high is like a magnet for the bulls and I just don’t think they will stop until they hit it. I’m waiting on that, and it doesn’t matter if it’s a ritual “eleven” date or just some random day… focus on the target, which is a slight pierce of that high.

Red Dragon Leo
11 years ago

On the shorter term (like the 60 minute chart) I believe we are still in some kind of 5th wave up… probably called a minute wave 5th by EW people. Doesn’t matter the label as it’s likely the final wave up inside intermediate wave 3 up, which started last December at 1343… and from the looks of things we could hit it today or early tomorrow?

Peter Trunk
11 years ago

Big POMO day tomorrow. I see possible top

Red Dragon Leo
11 years ago
Reply to  Peter Trunk

I’m looking for a nice solid white candle up day to take out the 1576.09 spx prior high, which could be tomorrow as you pointed out Peter? An overnight rally that gaps up at the open tomorrow (over that level) would do the most damage to the bears mentally.

Then chop sideways all day putting in a bull flag at the close (similar to 02/27/2013), with then one final higher high on Thursday (like 02/28/2013) followed by a sell off on Friday (maybe like 02/20/2013) is what I’m looking for. That should start the first smaller wave 1 down that I think will be 25-40 points and last 2-3 days long.

Peter Trunk
11 years ago
Reply to  Red Dragon Leo

Look at the volume on the 158 weekly calls Red

Red Dragon Leo
11 years ago
Reply to  Peter Trunk

Wow! What’s the odd’s of the market makers closing below 158 SPY this week with 148,000 Calls and only 4,000 Puts? I’d say 99% chance we’ll close below 1580 SPX by Friday the 5th. Nice catch Peter… 🙂

Peter Trunk
11 years ago
Reply to  Red Dragon Leo

Was thinking that unless it was an insider himself? I mean that’s a pretty hefty bet for a weekly position….

Red Dragon Leo
11 years ago

New Newsletter Update…

Peter Trunk
11 years ago
Reply to  Red Dragon Leo

been locked out of email. Is the outlook still any good on that stock?, your first recc.

Red Dragon Leo
11 years ago
Reply to  Peter Trunk

Yes Peter… in about 60 days or less we should be making a bunch (assuming all goes as planned?). Then when they go out for wreck number 4 and bring it up… we’ll anyone that holds that long will probably be rich. 🙂

Seawind 4
Seawind 4
11 years ago

Well I’ll try to post again……
Thanks for the post Mr. Red….
Once a pullback starts…..What will the media say to explain it….hmmmmmmm North Korea????

Red Dragon Leo
11 years ago
Reply to  Seawind 4

I don’t think they’ll need a reason for this first wave of selling Seawind but I’m sure they’ll invent a good story for the May sell off.

Peter Trunk
11 years ago
Reply to  Red Dragon Leo

any target?

Red Dragon Leo
11 years ago
Reply to  Peter Trunk

Sorry for the late reply Peter, this new disqus doesn’t show your comment at the top like the old one did. So you have to go scrolling through looking for something new. Really stinks…

Anyway, I’m looking for 200-400 points down on the SPX from the coming sell off starting in late May with the 22nd being the most likely day for the final high. Of course do keep in mind that I’ll likely be wrong on that day as the gangsters read this blog and will make me wrong just because they can.

Peter Trunk
11 years ago
Reply to  Red Dragon Leo

LOL. time will tell, all you can do is hope

Peter Trunk
11 years ago

Nice to see a red day, but still looks weak to me

Red Dragon Leo
11 years ago
Reply to  Peter Trunk

Needs to be one more wave up to 1580-1590 zone to take out these retail bears. Call it a final C wave up inside a final 5th wave up or something like that? Doesn’t matter as I’m not shorting until 1576.09 SPX is taken out. For all I know they could chop this around and not put in that new all time high until the next “eleven” day (which is the 10th, next Wednesday). Doesn’t seem likely but anything is possible.

Peter Trunk
11 years ago

Nice to see a red day, but still looks weak to me

Red Dragon Leo
11 years ago

It is entirely possible that the high of 1573.66 SPX is all we are going to get for now. They could have decided to stop around 3 points down from the previous high instead of going over it by 3 points like how the 1555.90 (07/16/2007) was when compared to the 1552.87 (03/24/2000).

If so, then this could have ended that intermediate wave 3 up and we are now starting the smaller wave 1 down inside a larger intermediate wave 4 down. This 5 wave move that makes up intermediate wave 4 down could be 100 points (the one from 07/16/2007 was 133 points). I’m now going to look for the next wave up to be a smaller wave 2, just like the 1555.20 peak was on 07/19/2007… followed by the smaller wave 3 down that we are all looking forward to.

Remember that the “operators” of this game called the stock market have too change things up a little to keep us sheep guessing. Sometimes they give us clues like today when they closed the DOW down 111.66 points. Is that a signal that the high is in now? Could be?

The key here to watch is to see how powerful this rally back up is? Will it be a smaller wave 2 and only retrace 50% or even 38.2% of the sell off we just had or will it go up to take out the all time high of 1576.09 (maybe by the next “eleven” day of April 10th)? We’ll have to play this close here and look for news events or reports that can move the market hard.

Possibly they use the jobs data to spark a rally that does take out the prior high or maybe it’s a non-event and will only produce a smaller wave 2 up? Either way I’m now waiting on this move up before shorting. I missed this move down (obviously) as it never occurred to me that the could do the opposite this time around (meaning miss the prior high by 3 points instead of going over by 3 points).

Ah… the life of an “operator”, who’s sole job is to trick us sheep and steal our money. What a wonderful place they will have waiting for them in the afterlife!

Anonymous
Anonymous
11 years ago

Well, it’s pretty obvious when D-Day will occur now and the market needed to top yesterday 4-2 if it was going to do a traditional trading day decline into D-Day (the real 42——by the way 42 will be released next week???)

Now let’s get back to the NCAA tourney—–1987 NCAA champ Indiana was eliminated last weekend by its 1987 nemesis Syracuse. Meanwhile, Louisville led by another 1987 Final Four coach, Rick Pitino has made it to the Final 4 joining Syracuse. The star of the 1987 Indiana team, Steve Alford was the New Mexico head coach who was upset by Harvard in the PI matchup (3-14 seed faceoff).

Afterwards, he signed a ten year 20 million + plus extension with New Mexico but then bolted ship when traditional power UCLA wooed him to be their next coach.

Going back to the Harvard-New Mexico matchup, Harvard’s head coach was on the 1987 Duke squad that was eliminated by eventual champion Indiana in the Final 4. He also was Michigan’s previous coach. Michigan has now returned the Final 4, the first time since the Fab 5 era (45???) in 19(93)???. Don’t really understand the Michigan connection but Michigan might be a Bradley state???

Anonymous
Anonymous
11 years ago
Reply to  Anonymous

Michigan won an NCAA championship in 1989 or 24 years ago so that helps explain some of the connection.

Michigan’s star guard Burke scored 20 points and 10 assists in the Sweet 16, the first guard to do so since Billy Donovan of Providence (coached by Pitino) in 1987. Donovan of course is Florida’s head coach and they were eliminated in the Elite 8 by Michigan.

Red Dragon Leo
11 years ago

I think the bottom is about in now gang and we should start back up tomorrow and into early next week. We could still hit a new high above 1576.09 and that “could” happen on Wednesday the 10th as that’s another ritual “eleven” day.

Red Dragon Leo
11 years ago
Red Dragon Leo
11 years ago
Reply to  Red Dragon Leo

The last time FAS was down that low was 10/03/2011 and the SPY had a intraday low of 103.97 (which puts the SPX around 1039.70)

Red Dragon Leo
11 years ago
Peter Trunk
11 years ago
Reply to  Red Dragon Leo

interesting. If we get there, I’ll gladly short. Going to get some may 148 SPY puts if the new high is put in next week. Safe, and will still pay pretty nicely

Dave Lane
11 years ago
Reply to  Red Dragon Leo

Nice catch Red !

Red Dragon Leo
11 years ago

Looking back at 2007 they closed near the 1552 spx 2000 high on a Friday and then the following Monday they hit 1555.90 for the final high before a 133 point drop followed. Will history repeat? A close tomorrow in the 1570 range is possible and then a gap up open on Monday to clear the 1576.09 high by a few points…. then a sell off to follow.

Monday is the 8th, which is 0+4+0+8+2+0+1+3=18, and 1+8=9… which is the number of completion. Could we hit a few points over 1576.09 at the open? I think it’s looking more and more likely to happen. I’ll be patiently waiting…

Red Dragon Leo
11 years ago

Quick 5 minute video update… http://screencast.com/t/UMUqqdiI

Peter Trunk
11 years ago

wait for 157 Red. and goog to 800 would be a nice play for next week

Peter Trunk
11 years ago

poor shorts.. too soon. Have a feeling we hit 157. where I’ll be shorting, – 158 area on a ritual day

Red Dragon Leo
11 years ago

Good morning gang. Here’s what I’m expecting…

Choppy all day today with a possible move up into the close. Tuesday we should see our rally that carry’s over into Wednesday for a final peak just shy of the recent 1573 spx high. It could stretch out until Thursday morning I guess but I’m thinking it puts in the high on Wednesday.

What I think we have here is a 3 wave move down (possibly 5 wave… on the 60 minute chart) from the 1573 high to the 1539 low, which makes up the first smaller wave 1 down. Then toward the end of the day on Friday we appear to have started the first A wave up inside the smaller wave 2 up.

Today we should see the continuation of the A wave up and/or start the B wave down. Then the C wave up could be a nice solid white candle on the daily chart, which should squeeze any bears getting short right now. If that happens on “Turn around Tuesday” then it could conclude on Wednesday at some point.

It depends on how high up it goes I guess for how early it ends on Wednesday. If it’s up quite a bit then it could end at the open on Wednesday. If this thing drags it’s feet then we could be delayed by one day on all of this forecast and see the big move up on Wednesday and the conclusion on Thursday.

One thing to remember is that old saying about “The low is usually put in on the Thursday or Friday the week before option expiration”. That saying is accurate a lot as the market makers don’t want to payout to option holders so they manipulate the market the opposite direction the week of expiration every month (on the monthly options mainly, not the weekly).

Now since I’m thinking that we are heavily overloaded on the call side of things right now it’s looking more and more like the top will happen on either Wednesday or Thursday, which is means the market makers will do the opposite this time and put in the high prior to option expiration next Friday.

Red Dragon Leo
11 years ago

This A wave up (inside a wave 2 up) looks like it continued today as I really am not sure if we had a B down yet? This means we could see the B down tomorrow, which might only last half the day. Then the C up could start into the close Tuesday and carry into Wednesday to end the wave 2 up.

Then (possibly in the afternoon session) I expect to see a little selling late Wednesday to start the wave 3 down (which should be 60-70 points). You also have the initial claims out on Thursday which should make the traders want to sell late Wednesday in fear of another bad report like last weeks’ job’s report.

It’s all in the charts and the wave counts of course but they need to blame something on the move down coming so it should be either that or the PPI and Core PPI on Friday. Doesn’t matter the reason the selling is already planned.

I will be taking a short position should this play out like I expect it to. A 60-70 point down move is well worth the risk in my opinion. I could have went long earlier today but the upside is limited to only around 20 points from the low range this morning so it wasn’t worth the risk to me.

Red Dragon Leo
11 years ago

Hmmm… the afterhours high on the SPY at 4:59pm is 156.66! We could have put in the high today or tomorrow at the open? I really don’t see a 3 wave move up since the low on Friday as it looks more like one long wave up… an A wave inside a 2 wave I’m guessing.

But possibly the choppy sideways move this morning was the B wave down and the move into the close was the C wave up? So we need to be prepared to short tomorrow morning if this thing looks tired and ready to rollover as a wave 3 down should be next, and it’s a 60-70 point move.

It’s going to be a tough call as we could also start a B wave down tomorrow and back up Wednesday for the C wave up to complete the whole wave 2 up. It’s really a guessing game here but if that 156.66 afterhours high remains the high going into tomorrow then I’m likely going to take a gamble and short tomorrow… especially if we go up higher at the open.

Red Dragon Leo
11 years ago

Ok gang, it looks like we are dipping down a little here in the morning which tells me that we’ll likely see the high happen tomorrow morning around the open. We could even break the 1576.09 high by 3-4 points, which would be the ideal situation for us bears to get short at. So I’m waiting until tomorrow to look for that short as today seems to be a day that they will use to kind of reset the short term overbought charts to allow for one more move up tomorrow.

Anonymous
Anonymous
11 years ago

shorts and USD are being torched right now

Red Dragon Leo
11 years ago
Reply to  Anonymous

Yep… just like they did in 2007 when they teased the bears relentlessly until they final pierced through the 2000 high by 3 points to hit 1555, which if they do the same here then we should expect 1580 for sure… maybe a little bit more?

Anonymous
Anonymous
11 years ago
Reply to  Red Dragon Leo

It has been tough for the bears in the past years..April 10 seems to be an important date since I have seen in a no. of unrelated astro blogs with that date being a possible flash crash??

Red Dragon Leo
11 years ago
Reply to  Anonymous

It’s a new moon too… which are common turning points (+/- 3 days) according to http://spiraldates.com/

Red Dragon Leo
11 years ago

Getting close to a new high gang, which was my original thoughts anyway. Lets see if they can hit 1580 tomorrow with a possible squeeze up to 1590? Here’s something interesting… https://www.mr-topstep.com/index.php/equities/2554-big-option-plays-in-vix-spy

Dave Lane
11 years ago

WOW RED ! You have been hitting it out of the Ball park for the last three weeks.

Red Dragon Leo
11 years ago
Reply to  Dave Lane

Just doing more studying of the past Dave, and been a little lucky too! If all goes as planned we’ll see a move up tomorrow morning to take out that 1576.09 prior high and stop somewhere between 1580-1590, but I don’t know where in that range? However, I’d hope that it happens early in the start of the morning session.

Anonymous
Anonymous
11 years ago
Reply to  Red Dragon Leo

Just curious what do you think of the scenario where no new high and the market just plunge thus bears miss the boat to short? it does seem everywhere I look, everyone is expecting that new high for spx….since dow has already got new high after new high, just a thought

Red Dragon Leo
11 years ago
Reply to  Anonymous

Well, I’d rather miss this move down if I’m wrong about tomorrow then have shorted today and get squeezed another 10-20 points up tomorrow. The move down is only expected to be to around the 1500 (maybe as low as 1485?) and could be choppy on the way down… which makes option plays hard to do.

The crash move down in late May is my main focus and on that move I won’t complain too much if I’m off by a couple of days and don’t catch the top exactly. This one coming tomorrow (or not?) could be a short lived move and my thoughts are that I’ll either catch the top or miss the bus.

Just don’t get caught up in the emotions of this move down as there are very high odds that the real high for this year will be in late May around 1610-1630 area, which means the high coming tomorrow will be less then that level (or the high was in today?).

Red Dragon Leo
11 years ago

Pop and drop coming tomorrow… as these gangsters never make it this easy to get short. If we don’t pop up over the all time high at the open tomorrow then it’s possible they delay it until Thursday and just sell off a few points on Wednesday to lure in some shorts, but I really think they will do it tomorrow as it’s another “eleven” day.

Red Dragon Leo
11 years ago

I’m taking a small short here gang. The market could go a little higher but we are close to the top I believe. Remember, this move down could be choppy and not more then 80 to 100 points over the next 3 weeks.

Peter Trunk
11 years ago

just got short here at 147 may puts. 100 points would work for me

Red Dragon Leo
11 years ago
Reply to  Peter Trunk

If it closes at the high today then we should see one more move up after a brief dip. This looks like some kind of wave 3 from the strength of the move. So possibly a small wave 4 down and a final short wave 5 up? If so then it could go up a little more to maybe 1600 spx I guess? (My thoughts are that today is the top though).

But this could also be some type of C wave up, which means it ends today or at the open tomorrow. I got short around 1581 as I didn’t know how high it was going to go (still don’t I guess… won’t know till it’s finished. LOL). But I’m happy with the timing of it as I’ll just ride it down to 1500 by the end of the month if things go as planned.

It’s likely to be choppy though, so your straight puts might not make you as much as you think because of the time decay and choppy ride. But you should still do ok on it. I choose to do a put spread to filter out the time decay on this move, but I’ll be doing straight puts for the May move down (of course) as that one should be much bigger.

Peter Trunk
11 years ago
Reply to  Red Dragon Leo

I was hoping for a triple lol. I [aid .32

Anonymous
Anonymous
11 years ago
Reply to  Red Dragon Leo

does the dip at 3 pm look like a 4 and then a 5 into the close? If that is the case, the retails might just see the rug being pulled out from under tomorrow? Besides, EUR did nothing with this equity ramp today..kind of odd, the only one is AUD which has been rising since last night..

Red Dragon Leo
11 years ago
Reply to  Anonymous

Don’t know at this point? We might continue up tomorrow to 1600 or even 1610? It’s completely everything I discussed in the post here, as it put in a new high just like it did in 2007. Back then it only went 3 points over the old 2000 high of 1552 and then it dropped 133 points (from that new high at 1555) before resuming the move back up to make the final new high at 1576 spx.

This time we have gone 13 points higher with our 1589 high today, which I was expecting it to be more then 3 points higher but I’m a little surprised it went up this much. I guess they had too many bears to squeeze this go around, which took it much higher then usual.

The key here is how the market acts tomorrow. If it opens flat and briefly makes a slightly higher high and rolls back down and slowly drops all day, then we could have seen the high. I don’t want to see it go up hard again or go down fast. The best thing for the bears would be a slow move down that doesn’t panic the bulls to get out or the bears to get in.

Let them all think it’s just a dip before going higher again so the bears will now join the bulls and get long on that dip. Then rally back up a little to fall short of the high and back down again (slowly) to chop it up confusing both sides.

Today’s candle pattern (an ‘all up day’) is a solid white bullish candle that puts the odds of a higher high tomorrow of around 90% (from past history of similar candle patterns). That doesn’t mean it’s got to go up huge, as even .01 cents is still a higher high.

And it doesn’t mean it’s got to hold as it could go up just a few cents and then rollover the rest of the day. However, if it trades sideways all day then that would be the wave 4 down most likely, (which also makes a ‘bull flag’) leaving a 5th wave up to 1600-1610 still possible.

What we bears want to see is a slow move down in the price level while the overbought charts rollover and start going down. If those charts start going down but the price level chops sideways then there is likely one more move back up yet to come.

Anonymous
Anonymous
11 years ago
Reply to  Red Dragon Leo

thanks for the reply. btw, tony has updated his wave count, extremely bullish now…who wouldn’t be after this continuous up move….

Anonymous
Anonymous
11 years ago

it is no doubt we are in a bull market, check out this awesome graphic

as it exposes where we are in the bull market right now http://sentiment-trader.blogspot.com/2013/04/bull-market-stages-bull-market-stages.html

I did not know but a bull market has 6 special stages, and where we are right now might surprise you.

Red Dragon Leo
11 years ago
Reply to  Anonymous

Interesting… and probably accurate. The question is… what stage are we really in? After this coming May sell off I do see one more rally into spring of 2014, but I think that will end the bull market.

Peter Trunk
11 years ago

That earnings increase makes me think we’re in stage 3. I hope my shorts don’t get smacked. I did get them 1 cent off of today’s close on the plus side

Red Dragon Leo
11 years ago
Reply to  Peter Trunk

Yeah, that’s the problem with doing straight puts. You need to be very accurate on the entry and the move down needs to happen right afterwards. Sadly I don’t see a quick move down but a choppy one, which will cause time decay on your puts, and it can get worse if they continue up to 1600-1610 for a few more days before dropping.

But we won’t know until tomorrow I guess? As for what stage we are in? That’s a tough one, but I’d hope stage 5 but I’m think stage 4.

Peter Trunk
11 years ago
Reply to  Red Dragon Leo

Yeah, was a bit concerned with chop, that’s why I bought so far out. Hearing a lot of people with a 16-1650 target=scary. Makes me thing I should sell if there’s any immediate dip in the morning. Do you have a target? I’d assume it was hit since you went short?

Red Dragon Leo
11 years ago
Reply to  Peter Trunk

I have the 156/153 put spread Peter, so all I’m looking for is 153 spy before it expires by April 26th.

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