10.12.2011 -- Still in the bear flag

We are still in the bear flag, things could really go either way. There's several possible Elloitt wave counts, so that is currently of no help. I like Daneric's count the best currently on his site.

http://danericselliottwaves.blogspot.com/

We are still waiting for our spot here. I still think scaling in short over 1240 up to as high as 1290 will be an excellent short opportunity or buying in the low 1000's will be a good long opportunity. We just have to wait and see which way the market choses to go.

Again, I must remind you, don't play in the mine field, you could blow your leg off.

The above said, we are probably due for a pullback here that will either consolidate and then breakout to the 200dma or we reverse hard and head straight down to the low 1000's. I'm guessing just a pullback right now.

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Key Levels (S&P Cash)

Upside -- 1210, 1239, 1276

Downside -- 1190, 1173, 1157

Support on the downside is weak.. resistance on the upside is strong.

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SPX Daily;

Not much to say here. We almost broke out of the bear flag/trading range, but then reversed (which was very predictable) and closed back inside.

We have rallied 13.6% from bottom to top in a weeks worth of trading.

Let me just note.. bull markets don't do things like that. They grind slowly for a long period of time. They don't rally 13% in 5 days.

It appears we will pullback here, maybe we'll take another shot at a breakout but I doubt it.

I bought my first small lot short today. A tiny scale in near the high at 1220. I knew we were knocking on resistance. It's below my target zone, but i wanted to get my feet just a little wet. I don't want to be left empty handed if this titanic suddenly strikes an iceberg.

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I posted this on the forums today. ( www.tickerforum.org )

SPX 5 year

It's a comparison of the 2008 top and what is occuring now. It's uncanny how similar they are.

If we continue to rhyme with that pattern, the market is set to plunge after this current rally ends somewhere around the 200dma(1274 currently).

If nothing else, it's very interesting.

Maybe the introduction of so many algo trades and other computer methods of trading has doomed the market to repeat patterns almost exactly over and over?

Or is it human nature to repeat our history?

GL

CJ