This picture's for Anna over at Hot Option Babe, as I know how she like's sexy, but classy costumes. For everyone else, just overlooked the sexy lady in red and picture a big round jolly old man with a beard as Santa. LOL!
Merry Christmas
Red
Another Yawner Day…
As far as the market goes, it was boring. But, the news wasn't good at all. The new home sales number was really quite bad. Of course the market didn't react too much as all the big traders are off for the holidays already. The new home sales dropped 11%, which would have caused a big sell off if it was released when the market had normal volume in it.
But again, the government planned this release of this information very carefully. I gotta hand it to them for that... but ultimately this only delays the recovery. It's almost like pumping your best athlete with powerful pain killers to keep him in the game. It's guaranteed to cause more damage to his injury, which will cause the recovery time to be longer, as well as keeping him out of the next few games.
The market is not healthy, and this insane manipulation will cause a huge sell off in the near future. I believe that the finally bottom will be 3,000-4,000 Dow, because of this manipulation along with the mass printing of money. I know I've jumped to a longer term outlook here, but I don't see much reason to try and predict tomorrow's outcome in this holiday season.
After the holiday's are over, you will see more posts on what I think will happen in the next week or so. For now, I don't see much change until the new year starts. Any sell off in the next week shouldn't go below 1103-1105 spx. That's if we're lucky enough to get that low?
Pay attention to the news coming over the last few trading days of the year, as I expect it to be really bad. It's the perfect time to "spill your guts out", as no one is in the room to hear you.
Red
Lightest Volume Of The Year…
The market traded slightly higher and ended basically flat again today. The SPY had only 91 million shares traded today, which made it the lightest day of the year. I'm still expecting a small pullback to 1103-1105 spx area, before another move higher. With this light volume any down days shouldn't last more then one or two days at the most.
As I said previously, I'm expecting the 1126 SPX/113.00 SPY to be hit before the end of the year. Next year should bring some selling in the first few months. After that, it's still undetermined. We could simply rally back up and put in a lower high, and then fall hard over the next year or so... all the way down to 3,000-4,000 Dow. I am expecting that to be the final target... when is the main question?
The other scenario is that we only fall the usual 10% down in January and Feburary, and then rally up one more time to the 61.8% Fib level (taken from the 2007 high to the March 2009 low). Either scenario is possible. We are currently at the 50% level, and could simply roll over next year and continue down all year... or only dip down 10%, and then rally up during the summer.
That would delay the ultimate low of 3,000-4,000 Dow until 2013-2014, instead of 2010-2011. Either way, we are still in a Bear market... not a bull market. But, that doesn't mean that I won't go long from time to time. I'll take whatever the market gives me, and right now... that's about Nothing!
Red
Typical Monday Rally…
The market rose today on light volume of only 108 million shares on the SPY. During this holiday season, I expect more sideways moves... again, it's not for a swing trader like myself. Tomorrow the 60 minute charts are rolling over and looking bearish on the MACD, however the daily's are still neutral.
Remember, the larger chart is usually the one that plays out. So, that means that the direction is unconfirmed. The dollar continued to rally today, but is hitting some resistance now. It could pull back a little, or just trade sideways for awhile, and a put in a bullish flag pattern. This could take all week to develop.
Light volume and a pullback or sideways movement in the dollar will allow the market continue up or sideways. I think they will try to push the market up to 1126 spx before the end of the year. Now is a great time to do it, as fund managers will be closing out positions, and buying up popular stocks before they send out their year end portfolio statement to their clients. (They want to give them the impression that they were in those popular stocks all year).
That mild buying, along with a little government money from good ol' Benny boy (given to Goldman Sachs/PPT) should allow them to hit that mark before this year is over.
Ok, back to what's going on tomorrow. I think we could pull back and close the gap around 1103 spx. That's about as far as I see us pulling back. I know that the 60 minute charts are rolling over, but that only means that it will be hard to advance upward any more. We could trade sideways for a day or so to work out that overbought condition, and allow the MACD to roll back up again.
My point is simple... no direction is clear yet. Yes, we are hitting the upper resistance level around 1115-1120, and we should move down for a day or two, but until we either put in that finally high at 1126 (50% Fib. level), or break that 1085 support... we are still trading in the Twilight Zone. This channel could very well continue until next year.
If you like to day trade, then you could have went short today around 10:30 - 11:00 am EST., as this time period has been very consistent with the high or low of the day for many weeks now. During this light volume sideway movement, all the big traders seem to leave around that time, and sometimes come back in the evenings and trade a little more.
During the rally up, the 3:00-4:00 pm time period was always when the buy program would come in and rally the market up, but that's not the case here lately. It's the morning only. So, knowing that 1115-1120 level is still huge resistance, you could go short there and look to get out into the close (if it falls enough), or wait until the next day (Tuesday) for a fall down to either gap support around 1105, or gap fill at 1103.
Again though, that's only for a quick day trade. I can't watch the tape all day, so I only do swing trades that are a few days to a week or so. Since I don't see any real move coming this week, or next week, I'm staying on the sidelines for now.
Red
Weekend Update…
I'm going to go "off subject" here for a little awhile, as I'm been lucky enough to have received an email about a week ago that told me about a website called "Project Camelot". I know this is going to blow your mind, as this subject is something that most people simply "Don't" want to talk about.
What is it? It's everything about the human race as we know it... meaning the "Truth" about UFO's, Alien's, Religion, Suppressed Technology, Underground Cities on Mars, Bases on the Moon, Stargate's, Planet "X" (Nibiru), and yes... even the Year 2012! Don't even waste your time watching the video's on the site unless you are "Open Minded". I've watched video's from only 3 of the people listed on the site so far (there are 60-70), and plan to watch them all. (Each video is an hour or more).
I know that I started this blog with the intent to write about the stock market, and I still will continue to do so. However, being that I constantly like to broaden my education in every subject, I couldn't stop at only the stock market. After all... that's just the way that all of us are trying to use to achieve the ultimate goal of "Financial Freedom".
It's not "Money" that I really want... it's "Freedom". I want to be able to go where I want, do what I want, eat where I want, sleep where I want, see what I want, etc... We should be living in a time period of total freedom, yet we are still all slaves to our master's. They are the "secret group" of people who rule the planet. They force us to work jobs in order to eat and survive.
The corruption that is going on in the banking sector is the way that they control us. But, it's such a small piece of the puzzle of "the meaning of life" that it almost seems "non-important" to me now. The stock market is only one of the thing that the "secret group" control. The other things can only be explained by watching the video's on the Project Camelot website.
Now that you all think I'm crazy, and have lost my mind, I'll move on to the stock market. The next couple weeks are going to be range bound as there aren't enough bears left to squeeze... therefore the market won't rally much higher, and the bulls aren't going to sell because of the taxes they would have to pay on the gains they made this year... hence we have a "stalemate".
They will wait until next year to sell, and any taxes will be delayed until the next taxable year. The "Bulls" I'm mainly referring too are the big institutions. The average Joe isn't in this market, and the few that still are... certainly aren't going to sell during the holiday's. Those are long term people, and won't sell until the market crashes down.
They will do what they always do... sell at the bottom, and buy at the top. That's way they are called the "dumb money". The "smart money" is going to wait until next year to sell, and lock in gains. So, as for next week, I'm expecting the light volume to continue... which will keep any sell off from happening. Yes, we could go down a little, and then rally back in the last week of December.
If you are a trend trader, playing options, then I'd stay out the next few weeks. Now, if you can day trade, then that's a different story. I just don't see a solid direction next week. Lot's of overhead resistance, and a lack of bears to squeeze, should prevent and rally past the current highs. And, light volume will prevent any real sell off. We are still stuck in the Twilight Zone, and will probably stay there until this year is over.
However, next year is going to bring the start of a sell off that I believe will take us down to 3000-4000 Dow by 2012. There... I said! I made a bold predict, and put myself out there. Call me really crazy now, (but I'm not).
I know this is not my usual weekend update, and I apologize for that... but I never stated that this blog is "only" for stock market related news. In fact, I've said several times that it's just a place for me to post my thoughts... nothing more, nothing less.
Enjoy your life folks, and enjoy the holidays...
Red
A Nice Day For The Bears…
Looks like we finally picked a direction... down! As for tomorrow though, I wouldn't expect too much. It's option expiration and will probably be just a flat day as traders just close out positions before leaving for the weekend. I'm not going to write a long post here as I don't expect too much tomorrow.
So, I'll save my thoughts for the weekend post on Sunday.
Red
Going In Circles…
The market seems to be like a dog chasing his tail... going nowhere fast!
What can I say that hasn't already been said? The market is still in the Twilight Zone. No direction has been chosen, so it could go either way at this point. Raymond Merriman has a "Turn Date" window of the 18th-21st... which direction is unknown. Do we have Santa rally from these ridiculous highs, or do will sell off a little? I don't know at this point.
Fund managers will most likely buy and sell some stocks to "pretty up" their portfolios for their clients. That's typical for the end of the year, (which might also be the main reason behind the Santa Rally?). But, at these highs... maybe they would rather sell and lock in the gains? After all, they've had a big rally up from the March lows.
I think a pullback next week to 105 spy, and then a rally to the end of year would be the logical thing to do. But, what do I know? I'm just a lowly peon looking for crumbs from my master... Lord Godman Sachs. (Kidding of course). Needless to say... I'm not expecting that to happen, but it should!
From a technical standpoint, we had a black candle... which means a big reversal could be coming! Will it come next week? Maybe, but I can't see anymore then a 5% correction down, and then back up to end the year. We may not get any sell off, as the light volume makes it easy to control the market. I'm not expecting much, but if we rally to the 112.30-112.50 spy level this week (possible intraday level of 113.00 even number hit), I will go short for next week.
The only way I can see it happening is for some big volume to come back into the market, which the PPT (or whoever) can't control. Then the technicals would take over and a nice sell off would occur. Maybe another scare like Dubai, or something else to spook the market before Christmas. Otherwise, everyone will be off for the holiday's and the only trading left is being done by computers. (Maybe my previous post of Forest Gump playing ping pong should have been the 80's computer game Pong?)
If not, then I'll probably just sit it out until next year. I just can't go long at these level. It's like being the last person to arrive at the party... chances are good that you'll be going home alone (or waking up the next morning beside someone that you don't recognize).
Red
Falling Asleep Now…
Sometimes I have written these posts a day earlier... at least part of the post. It's now 9:26pm on Monday night, and I've already written my Monday Night post earlier today, so this will be for Tuesday. I feel like crap today, as I have a headache and a sore throat. I think this weather is getting too me?
Anyway, I wanted to get these thoughts down before I forget them, and then post another boring post on Tuesday. Watching a video from one of the paid services I subscribe too, they mention how many people go to sleep during the holiday's and then come back and lose money because they're "out of sync" with the market.
I feel the same way. I want to just take the rest of the year off, as I'm sick of this sideways trend-less market. You can't make money in a trend-less market, unless you are a day trader... which I'm not. I buy options and hold for a few days to a few weeks. But, you can't make any money on these small up and down moves in the market right now. I guess you could if you were able to track the market all day, but I pop in an out to see where it's at, which makes it really hard to catch the high or low of these 2-3 day moves.
Then you get killed with time decay if you miss the exit. It's been really hard lately, even when I can pinpoint the support or resistance level that the market will turn at. For an option trader to make any money, you have to be in a trending market. Rarely does anyone catch the exact high or low of any market, so you are forced to wait for conformation of a new trend before entering the trade.
That means that you might miss a good portion of the move, if the trend isn't really a trend... but instead just a short lived rally or correction. I've been really frustrated lately, as you might be able to tell from my posts and comments. I believe this is exactly what they plan too do... frustrate all the bears, until there are NO more bears left. I'm almost at that point now.
But, after watching a video about "people falling asleep" during holiday season's, I realized that's exactly when they will take the market down. Remember Thanksgiving? While everyone was enjoying the holiday the market tanked on the Dubai news. Today, they rallied on the Dubai news, as they are getting a $10 Billion Dollar bailout.
My question is... could some other event bring the market down 20-30 points over night? All the bears are asleep now, so the market maker's wouldn't have to give any money to them. But, they could take the money from the fat gloating bulls with a sharp pull back. Wouldn't that be the perfect scenario... screw the bulls, and not give any to the bears?
The ol' "Heads they win, Tails you lose" game. I know that I personally missed out on the Thanksgiving down move. I was planning on going short that Friday, and they gapped it down a day before... preventing me from making any money of course. Crooked? Yes... of course it is! Again, we are playing against gangsters, (or should I say banksters?).
Regardless of how crooked it is, we all know it's a rigged game. We just have to learn how to cheat like they do... which evens the odds, and gives us a fair chance. Looking at the open interest in the SPY, I see that the 108 level would cause the most pain to option holders for the current month of December. Now, does that mean that it will close at 108? Maybe, maybe not? It only means that all strike prices above and below would cost the market makers more money to pay them out.
It's not 100% in their control, but while we will have such light volume it is possible move the market toward the price that benefits them the most. I really don't see a sell off that far, but that's exactly what I thought around Thanksgiving too. Some surprise event could spark a quick sell off, then the big Christmas/Santa Claus rally would then occur until the end of the year.
The level to look for on the way up is at 1126 SPX, which is about the same as 112.30-112.50 SPY. This will be an excellent level to short at, as it's got huge resistance there... dating back to the 2007 highs. Since everyone and their brother is expecting the usual Christmas Rally... what if we don't get one? Right now the percent of Bears in the market is lower then the October 2007 highs... coming in at only 16.4% (Source: Investors Intelligence)! That's a lot of Bears that are asleep!
All I'm saying is that we... meaning myself and all of you traders that read this blog and others, had better stay awake! The enemy always attacks when you are most vulnerable... AKA - Asleep! Yes, this sucks... as we would all like to take the holiday's off and spend it with our family. Of course that's exactly what they want you to do. Then you can come back next year and miss a big move in the market.
Believe me... these people are trying to take our money from us every chance they get. Stay awake, and watch your support and resistance levels. I think a big move is coming soon, and it will catch most bears off guard again.
Red
And The Ping Pong Game Continues…
Does this game look familar to you? It's Forest Gump playing Ping Pong between 1120 and 1085!
Since November 11th, we have rallied up to 1108, down to 1085, back up to 1114, and back down to about 1086, then back up to 1113, and then down to 1084, and back up to 1119, and back down to 1085, and back up to 1114... whew, I getting sick watching! My heading is spinning, and I think I'm goning to vomit now. Someone please get me off this ride!
At this point I couldn't even begin to tell you where the rest of the week will go? I can't even forecast tomorrow! I will say again that we are very overbought and should correct back down... so I guess I should go long, duh! WTF? I think I'll just stay out the market until the beginning of next year. You can't compete against someone as good as Forest Gump (AKA... Goldman Sucks/Government Sachs).
Red
Weekend Update…
Are we in the Twight Zone?
This has been any extremely frustrating week for all bears... especially myself. Although I'll be a bull when the market points in that direction, I like being a bear better. But don't get me wrong... I'll go long if there's a good chance to make some money on it.
Problem is... this market should be heading down, but it's not? How can you go long when the technicals point down on so many different charts. Very few charts point up, and if they do... they are overridden by the larger time frame. If a 60 minute chart is bullish, but the daily is bearish, then you shouldn't take a long position (unless you are a day trader only), as the daily chart over rules the 60 minute chart.
Going into next week, the market could actually continue this insane sideways up and down movement... all the way to option expiration. We are within just a few cents of hitting the 200ma on the USO (oil), which has very high odds of a bounce for at least 2-3 days. That will give the S&P an "up" move as the big oil companies, (that are in the s&p) will rally from the bounce up. This could stop any big down move in the market.
Then there is Gold. It is also getting ready to hit the 200ma too, which should cause a nice bounce up. That will again support the s&p, and prevent any big down move. It means that the market will be in this Twilight Zone as it bounces up and down, until gold and oil has their bounce done, and are ready to rollover to the down side again.
As for gold, I'm very bullish on it long term and think that it will explode next year. Oil is a different story, as demand has too come back for it to go higher again. I'm neutral on oil long term, but short term I'm looking for a bounce. Now for the wildcard... the dollar!
The dollar had another strong day Friday as it finally broke out of it's bullish consolidation trading pattern. The UUP (dollar) closed at 22.68, up 18 cents for the day. Another big move on Monday could cause a sell off in the market. The UUP will hit heavy resistance at 23.00, (which, by the way, a move from 22.68 to 23.00 is considered a big move in it). If the UUP hit's 23.00, the market should sell off hard, but it could be muted by oil and gold.
I'll be looking for some movement down next week, but I'm sure it will just bounce around some more... and not breakout of the zone yet. I'll be selling my shorts, at a loss of course, whenever I get a decent move down. If my positions weren't options, I might be able to get out without much of a loss. But, options get killed with time decay, and that's just exactly what the market makers want... to take you're money.
I have too say that I'm really getting tired of all the manipulation done by the government to keep the market up, and not let it correct naturally. It will come back to haunt them later on. In the meantime, I might have better success trading oil or gold, as I expect a huge bull market to occur in gold over the coming years. Oil... I'm not sure about long term, but both are ready for a bounce up next week.
Anyway, at this point, I don't see my prior forecast of a move down to 1070 area coming true. The S&P has so many different backup markets supporting it that any one of them can keep it up... (as long as we continue to have light volume of course). I don't see any heavy volume coming into the market until next year, after the holiday's. That means that commodities (oil), financials, gold, or the dollar can come into the rescue and keep the market up at any time.
Look forward... the only way I see the market falling hard at this point is for the dollar to get a huge rally up going, the financials to collapse, oil to fall hard on weak demand and large inventories, and gold to fall as investors flee to the dollar for safety. I do see all that happening next year, but as is for next week... it's unlikely.
Overall, I'm very disappointed, as it seems like all technical analysis's on the S&P is worthless... as they simply will not let is correct naturally. I spend a lot of time studying the market and where it should go, and I believe that it would have went there if I had made my forecast last year, or anytime before March of this year. I say that because of the massive printing of money that has been thrown into the market has changed all the rules.
You can't play poker fairly with someone who just prints more money to bet you whenever they run out. How can you ever beat them, even with a royal straight flush (spade high of course), by betting everything you have (as you can't lose on a royal straight flush)... only to have them go print some more money and raise the bet beyond what you have? That's what it feels like too me when I pick the right direction, but the time decay, and quick rally back moves, prevent me from getting out with a profit in time. You are forced to be a day trader only, which I'm not, as I don't have access to a computer all day... nor could I watch it all day, even if I did!
I'm sure many of you are also frustrated too. I know that there has always been some degree of manipulation in the market... but never to the degree that's it's at currently. They couldn't control the markets this much in the past, as they weren't printing trillions of dollars out of thin air... too be used to buy up the market, instead of stimulate the economy... of course.
Well, that about wraps it up, as I can't think of anything else too bitch about (I can really... but it's not worth wasting your time on, or mine!). If you plan on playing the market next week, you might look to buy gold once it hits it's 200ma around 108 on the GLD. It should rally back up to the 50ma around 113 currently.
Sorry my orginal forecast was wrong (or will be, as I now don't see it being accurate next week). The only way it could come true is for a huge rally in the dollar, which could (maybe) produce a big (20-30 points) down day in the market. Could we have a "Black Monday"? It's possible, but not likely. I just want to throw that out there, as technicals could easily support a "Black Monday", but oil and gold could stop it.
If... by some long shot, it does happen, I'd definitely be expecting it to rally back up before Friday. The "Current Pain" is now at 110 spy, so I don't expect any sell off to continue down. If you see it... get out of all shorts asap, as a rally back up will most likely follow it.
Red
Markets Out Of Sync…
Looks like we got our up day... now what? Well, that's a tough one, as the dollar, oil, gold, and the S&P are "out of sync" now.
Here's what usually happens...
The dollar sells off, gold goes up, oil goes up, and the S&P goes up. It's not always like that, as oil sometimes doesn't follow the dollar exactly, but it's close. You see, when the dollar is lower, the exchange rate to and from other currencies will give a net effect of oil companies being more profitable.
Of course gold will go up when the dollar goes down, as it's a hedge against inflation, and a "flight to safety". All other commodities will also benefit with a weak dollar, but...
Here's the problem...
Oil has been selling off hard lately with about 8-9 down days in a row. It's due for a bounce, as it's coming into some serious support levels. This doesn't bod well with the dollar... that is if we want the dollar to continue to rally up. If oil bounces up, then most likely the dollar will continue to consolidate sideways for a few more days, and then break out big to the upside.
They are at odds with each other, so either the dollar will patiently wait for oil to get a little bounce (while trading sideways for awhile longer), or the dollar will go ahead and break up out of it's consolidation zone, which will put oil down through the support level and onto another support level.
I just don't see that happening with 8-9 days down already with oil. Now, if it was just oil that was ready for a bounce, then maybe I say that the dollar would rally hard tomorrow, but there's also gold.
It is coming into some major support and should bounce up too. Both gold and oil are ready for a bounce, which means that the dollar is going to be hard pressed to break out to the upside until both of those two finish their bounce. I don't see the dollar selling off hard, but instead just a continued sideways to down movement, while everyone gets back in sync together again.
Ok...
So how does this affect the S&P, since the dollar and the market seem to be on opposite sides of the coin? Well, I think it means that we could continue to chop around here for another day or two. Yes, it could just stay in this zone of option death until option expiration next week.
That's the worst case scenario, and one I hope doesn't play out as I added to my short position today. Technically speaking the market is still looking very weak, and should fall 20-30 points (spx) in a quick one or two day period. But will it? Or will it just suck the last dime out of the option traders until opx, and then drop the market?
I don't know the answer yet, but I'm short and hoping for some "Sh#t to Hit the Fan" tomorrow or over the weekend, as that might be the only way to get this stupid market to move out of the death zone and into the bear zone.
As for tomorrow, if they cook the retail sales numbers, then expect another day like today. Remember, volume will be light unless something big in the news happens. That means that the PPT or whoever can prop up the market for another day.
Bottom line...
Anything can happen as no clear direction can be pinpointed for tomorrow. Some technicals point down, and others up. Oil, Gold, S&P, and the Dollar are out of sync. A big news event (that's bad) should cause a big sell off. No news, or good news should produce a slight up to flat day, which just keeps the market in the holding pattern a little longer.
So, in this case... we should think back to when we were children and hated to go to school. What would we do in the winter time if we didn't want to go to class the next day? Pray for Snow of Course!
Well maybe it's time to Pray for Bad News... if you're short of course?
Red
Rocky Gets Back Up Again…
Once again, the market stays afloat. I don't know how many fingers Bernanke and team have, but it's seems that they managed to keep the dam from busting one more time! I guess Spain isn't a big enough country to be of enough significance to cause any panic in the market, as they had their credit rating lower today, but the market ignored it.
I've never seen such a long time period where the market just won't go down. It's like Rocky Balboa or something... you keep punching it, but it keeps getting back up! It's time to retire Rocky! Give it up man! You're old and tired, let someone else step up and take over... like the "BEARS" for God's Sake! These Bullish Bulls are too full of Bullshit, and need a good lesson given too them. Sheessh, I'm getting tired of working so hard just to get the crooked government to come in take my money again.
Argggh...
This market should already be on it's way down, but I think they might hold us in this stupid sideways channel until the end of year, or decade... or maybe until every last Bear is dead! Hell, I don't know? Regardless, once again I'm staying short! Time definitely isn't on my side, as options' expiration is next Friday, but I still see a fall coming before then... if this dead horse will every die?
Moving on...
The Financials are now getting bought up as the money moves out of commodities and into the banks again. That, plus the constant selling of the dollar (from "The Three Stooges" of course) seemed to get the market back up again. I borrowed the chart below from "The Chart Pattern Trader", and once again I added my thoughts in Yellow.
I'm looking for a possible break out (but just another "Head Fake") of the top downward sloping trend line tomorrow, and then a big gap down by Thursday or Friday to take out the 1085 support line, and to fall all the way to the bottom downward sloping trend line... which should be around 1070 by then. But, for tomorrow... we have to wait for the MACD to rise up above the zero level and curl back lower by Thursday or Friday.
It should be a lower tower then the one just before it, around December the first. This will create a negative divergence, and that along with other indicators should cause the gap down to occur. Of course some future news event will be blamed for it, but it's coming... with or without the news.
Red
Finally, The Bear Gets Feed…
More Downside To Come...
Volume picked up today to 187 million shares traded on the SPY, but still under the 200 million, (or above) that usually produces a DOWN day. That's 2 day's that the market fell with light volume. What do you think will happen with heavy volume? Yeah... now you're getting exciting!
I expect some news out in the next few days to be reason for the big fall, but it's really just the technicals that are pointing down. However, people trade with their emotions, so a bad jobs number or some other news could be just the reason to sell hard. Regardless of what news the media blames for the coming fall, I don't care... I'm just glad to see the technicals starting to work again.
As for tomorrow...
We could pause or go up a little during the morning, and then sell off in the afternoon. If the market closes tomorrow below the low today at 109.27 spy/1088.61 spx, then that will confirm the move and the market should fall quickly to 107.65 spy-108.00 area. At that point, we should have a bounce.
We could push down to that level on Friday, and then rally back up next Monday for option expiration. I'm told that the "Current Pain" is 109 spy for this opx. The difference in current pain and option pain is that current pain only takes into account the last month of option purchases, whereas the option pain list all the purchases since the option became available. That could be over a year ago... which really doesn't make the market move to that area as those positions are too old. The last 30 days of option purchases is more accurate.
So, it's possible that we close next Friday around 109 spy. I suspect we will go down to the 107.65 level, (or possible lower?), and then back up for option expiration. However, we could just bust on through to the 104 level before a bounce? Any thing can happen at this point, so let's just hold on and see what happens over the next few days, as we are headed down for now.
Red
Light Volume Produces A Down Day…
With only 128 million shares of the SPY traded today you would expect a huge UP day... but it was DOWN! This is a big change in the market, and could make a big difference in the coming days and weeks. Apple was down, Goldman Sachs was down, JP Morgan was down, Oil (USO) was down, Gold opened down, and of course the dollar was down too... but recovered later.
The only reason the dollar (UUP) was down... was again due to government manipulation. Bernanke spoke and the dollar fell... coincidence? I think not!
This market is getting ready to fall hard folks! Stay short! Tuesday could be another pause day as the dollar tries to break overhead resistance. Once it does... the market could quickly fall to the 1070 area within a couple of days!
Everything is looking negative right now for the market. All the leaders... the Financials, Commodities, Gold, and the Technology are all struggling to rise up. The XLF (banking index) has been falling for several weeks now. Gold dropped huge on Friday and gaped down today. It may recover as it isn't viewed like other commodities because people flock too it when fear comes into the market.
But, the leader in technology... Apple, has been falling hard too. Oil (USO) broke out of the lower trend line in the downward channel it's been in. If it closes below it tomorrow then it will then be confirmed, and will fall hard to the next support levels. If oil can't support the S&P500, and the financials can't either... then who will?
Tech can't do it, Gold can't do it... what's left? NOTHING! The market is hanging on by a thread, and the "Three Stooges" can only delay it's demise.
It's coming down folks! Again, it might not be tomorrow... but Wednesday through Friday should be ugly! I just can't see any possible way to hold it up with all your leaders falling.
In the past, when one sector would struggle to make new highs, the other sectors would step up to the plate and rally the market. We have seen it time and time again. The financials start to fall and then Exxon would rally, bringing the market up. Or, technology (like Apple) would rally the market while oil took a breather.
It looks too me like all the big players are tired and ready to take a break. Simply put... the market is out of steam and ready to fall. I'm staying short! End of story...
Red
Weekend Update…
Wow... What a wild day on Friday!
First we gap up huge on the low jobs number, only to finally hit the master level of resistance that I'll been talking about for weeks now... 1119.13 (SPX)/112.38 (SPY). Then, we fall hard as the dollar gets a huge squeeze. Back up again to about the 20ma intraday level, then down one more time to put in a double bottom, and finally back up to about the 50% fib. intraday level to close out the day. Are we done now? Are the Bulls finally happy? I think so!
Monday should be a "pause" day (basically flat), as the dollar (which controls the market) hit a resistance level, will probably sell off a little bit to form a "Bullish Flag Pattern". That means that the market will head lower next week as I forecasted on last week's "Weekend Update" post. This now looks like Scenario ONE is going to play out. Here's the chart again, (from last week)...
Our first big move going down should take us to the gap fill area around 1070 spx. I believe we will break the 1085 level sometime this week, so I wouldn't be buying on any hit of that level, thinking that it's a big support level. Keep in mind that every time you hit a support or resistance level, it becomes weaker with every hit. Looking back, I see the first hit on November 12th-13th, then again on 20th, and a third time on the 27th.
That last one bust through the level and dipped to 1083.74 intraday. This will be the fourth hit of the 1085 spx level, and I believe it will break this time around. I think we will hit the 1070 level, and then bounce back up to probably the 1085 level as a "back test". From there I'm looking for more downside to about 1030-1040 area. I still believe this will happen before option expiration. (By the way, the "Option Pain" level is 102 SPY for December OPX)
Sidetrack...
There are a lot of great traders out there that many people don't even know about. Most don't publish blogs, as they are too busy trading to add all the extra work and headaches you get when you decide to publish a blog. I myself only started this blog to post my thoughts on the market and the economic, as I didn't want to make these "sometimes" long story's into posts or comments on other peoples' blog.
Although many people don't mind reading long posts, some people get annoyed with it... and rightfully so! Some posters, including myself, will have a moment that they need to air out their frustrations in some long bitching, and complaining post that has nothing to do with where the market is going, and of very little help to other's reading the blog.
So, I decided I'd put up my own blog, and that way I could bitch and complain all I wanted too... about Goldman Sucks, the government, the 3 stooges (Obama, Geithner, Bernanke), or anything else I felt like "airing it out" about. Well, that was my original reason for creating this blog. But, it's seems that now that I have that freedom, I don't post too much about it... but instead I post about where the market is headed. Isn't life funny sometimes?
Back on track...
In closing I am still short and will stay that way until OPX if needed. I will close out some shorts once we hit the 1070 level, and reload on the bounce. That's the plan for now, and it's of course subject to change. One final thing, you and I... meaning everyone who reads this post, should go over to The Chart Pattern Trader and watch Ron Walker's latest video. It's excellent in my opinion, and will definitely open your eye's a little if you think that this market is going higher next year.
Red
P.S. If some of you were on this page between 8-8:30 pm Sunday night, you may have seen the blog change back to the default theme. Sorry about that. I updated the blog and it erased my pictures. Stupid wordpress... Arrgggh!
Missed By 12 Cents…
![450perpetualcalendar[1]](http://reddragonleo.com/wp-content/uploads/2009/12/450perpetualcalendar1.jpg "450perpetualcalendar[1]")
In several of my weekend updates I have spoken about the market wanting to go to the 112.30-112.50 spy area. This area was almost reached today with an intraday high at 112.18 (spy). Will that be enough to satisfy the market? I believe it's close enough, and that the high for the year is now in.
Unless the jobs number Friday is really great, I don't see anymore rallying by up to try again. The market sold off hard the last hour of the day, as many are expecting bad numbers tomorrow. Comments made warn of weak numbers, and that should stop any rally back up to 112.18, or higher.
Of course it could rally some in the morning, but I expect any rally to be sold back down hard. We could simply gap down on bad numbers, rally back a little, and then sell off into the close. Regardless of whether it rallies up in the morning or gaps down, the end result should be the same... a lower close!
I believe this to be the start of the move down that will take us to 104 spy by option expiration. I posted on my weekend update that I see a move down to the 107 area for gap fill first, then a rally back up to under the lower support level around 1085 (SPX), and finally a push down to the 104 level (1035 spx) by OPX.
I know many people don't think that could happen, but I believe it fool a lot of traders. Several things are supporting this forecast, with one being the continued sell off in the banking stocks. Goldman, JPM, Chase, Citi, and others have been going down for over a week now.
Next you have the dollar and the fact that it appears to have found some type of temporary bottom here. It seemed to "not want to go lower" today, even though I'm sure the boys in Washington were trying to do so. Let's not forget about the SPX making a Triple Top too.
Gold also seem ready to pullback now. Everything is now pointing to another 5% correction in the market over the next 2 weeks. If the dollar gets a decent bid the people who are short, and there's a whole lot of them, are going to get caught in a huge short squeeze. Gold will fall, and so will the market.
Too many people are thinking that we are going higher, without any pullback. I don't believe it. Remember, the market makers like to take everyone's money... not just the bears! Bulls had better sell now, before the stampede start...
Red
Groundhog Day…
What am I going to say today? The weather was Hot and Sunny out today... just like it was yesterday, and the day before that, and that, etc... This is getting really old now. I feel like I'm in the movie Ground Hog Day! I wake up and it's the same thing today as yesterday.
![groundhog_day[1]](http://reddragonleo.com/wp-content/uploads/2009/12/groundhog_day1.jpg "groundhog_day[1]")
Will it every end? I don't know? I'm still short and looking for a sell off to occur soon... if I don't get old and gray waiting on it.
Red
Mr. Topstep’s Latest Video…
We rallied back up again today, taking out many stops as Mr. Topstep explains above. This is what I said might happen in my weekend post. Looks like Scenario One is now in play. Let's see if the down move starts tomorrow or Thursday?
As I said yesterday, I'm still short. This was nothing more then a "Bear Squeeze", designed to scare everyone out. I'm not scared! Every major technical is still pointing down. I'm sticking this one out, as I'm looking for a move down to 104.00 SPY before OPX. I expect to see it start this week. It could only be a few days, but a week is probably needed to get down to 104.00 spy.
That's all for now, as nothing has changed.
Red
Sometimes You Just Want To Sleep Through It…
No Follow Through Today As Light Volume Rules...
In order to confirm the down move from Friday we needed a lower low to be put in today. That didn't happen as light volume floated the market higher as I expected it might. I posted on my weekend post that Monday could be an UP down, and sure enough... it was!
The volume was less then the 200 million or more needed to produce a DOWN day, coming in at around 160 million shares traded on the SPY. What does this mean? It means that the market could trade sideways, up, or down tomorrow. No direction has been chosen yet.
We may simply chop around here all week, as it's hard to get any real selling when the Fed keeps manipulating the market by selling the dollar. On the other hand, the market can't seem to get over the 109.68 spy to 110.38 (Great Wall of China) area on a conformation close. That means 2 days above it, or below it, with the 2nd day closing higher or lower then the first day.
I'm still bearish as the daily charts are pointing down, as well as the weekly and many other indicators that are now bearish. I will hold my position as I believe the market will break to the down side some time this week. I do expect some bigger volume later this week, as there is lots of news out this week.
I'm still inclined to believe that the news must be really positive to get a big rally going, and on the other side... a really negative news event to cause more selling. Another news event like Dubai could come out this week. I seriously doubt that "everything is ok now". Traders aren't stupid. They are waiting for something really good... or really bad to happen.
Otherwise, they will simply day trade above and below the Great Wall of China... until something happens to cause a big break out! I think it will be something negative, and that's how I'm positioned. I continue to believe that a sell off needs to occur before any successful rally above the great wall will happen.
Red
Weekend Update…
Has the market really topped? What's in store for next week? Those are the two biggest questions that are going through my mind right now. To answer the first question... I'm not sure yet? It all depends on how far down we go in the next week or so. If we take out the 1030 SPX level, then I will have to say that the market has most likely topped.
Now... with that being said, I don't think we will take it out on this coming down move. Christmas is coming up soon, and that means that traders will be going on vacation. This will leave the market with very light volume... and we all know that light volume usually equals an UP market.
Regardless of the light volume or not, the end of December is usually Bullish... which is why they call it a "Christmas or Santa Claus Rally". But, for the nearer term... meaning next week, I believe we are headed down. I'm going to present 2 different Scenario's, but both are pointing down.
Scenario ONE
We open Monday and rally up a little more as Monday's have been bullish lately, plus some of the traders will still be out for the holiday. Light volume is also common on Monday's. Let's not forget that the governments around the world have had the entire weekend to come up with a plan to ease the fears of default over in Dubai. Trust on this one... they will announce something positive to curb anymore heavy selling.
However, the rest of the week should have lots of economic news coming out... and most of it should be negative. Any rally on Monday should be shorted as I expect the rest of the week to sell off. If it's really bad, then the target is 1030-1035 SPX. The "not so bad news" target is 1045-1050 SPX. If we rally up on Monday, then the 1045-1050 SPX area is where I'd expect the low to be this week.
Scenario TWO
We continue down on Monday to the 1070 area to fill the gap, then rally back up on Tuesday to hit the 1085 support turned resistance level. Then fall the rest of the week to 1030-1035 SPX. This is the most bearish forecast, and I really don't see it happening. But, anything is possible?
Ok, as you can see... both Scenario's call for the market to be quite a bit lower toward the end of this week. As I previously stated... I'm am now short the market, and will remain short regardless of how high the possible rally on Monday is. I'm sure that the market makers will try to scare all the shorts out of the market by taking it as high as possible.
Come to think of it... they probably have a lot of people short right now, which could be the fuel they need for a nice "short squeeze" on Monday. Again, I will ride out any push higher! The maximum that I can see is for one big "Hell Mary" push to touch the 1120 level. I don't really see it happening, but it's possible.
Looking forward, I think the more probable scenario is for a nice sell off this week, and then a rally next week, that could simply form a lower high, or possibly a new high up to that 1120 level. I don't think they will make it this week. Simply put, this week should be down, and next week should rally back up.
K.I.S.S.
Red
