11.30.2011 -- Global bailouts are fun...

Well.. apparently I'm not the only one that had a feeling we were about to collapse and obviously those more in-the-know than me knew things were about to go down. Zerohedge has postulated that a large bank in Europe was on the brink last night and it really has to be something that big to get the action we got.

Essentially we got a globally co-ordinated can kicking bail out by the worlds central banks.

Short term it obviously changes the landscape, but only short term, in the end it changes nothing, so it will remain to be seen how long the effects of this action last.

As pointed out by Zerohedge, the last time we had a globally co-ordinated action similar to this, the effects lasted only days. If a large bank is truly on the brink, I'm not sure how much lowering overnight lending rates by a half a point is really going to help. I would suspect that money is being diverted to them, probably from US tax payers, as we speak.

Sad... what the world is becoming... one giant global ogliarchy spending massive amounts of money to avoid deserved failures at further expense of the suffering tax payers.

In the end,.. nothing good will come of this.. nothing. Only worse and worse eventual outcomes will result.

We now have global moral hazard. And a global backstop coming from your pocket dear reader. If only most of the American middle class had the education to realize what is really happening. How their children are being robbed to save some bank in France or Italy. They don't teach concepts about money in public school for a reason I think. Only thing you learn in public school is one short class about how to balance your household budget and checkbook. This is not by accident.

-----------------------------

Key Levels

Upside -- 1252, 1265, 1280

Downside -- 1227, 1214, 1208, 1173, 1150

-----------------------------

SPX Daily;

So this is what we have now I think after our global salvation.

It will be very interesting to see how long this lasts. We are still under the 200dma and despite the tremendous 3 day rally, we havent really broke out of anything. It only looks like a very severe bounce at the moment.

We shall see...


------------------------

What is incredible these days is how starving the investment world seems to always be for good news. Anything really, rumor, whatever.. if it sounds even a little bit good it will ignite a rally, even if for only an hour.

There's 2 ways to look at todays news..

1) WOW! Global bailout,.. everything will be saved by the worlds central banks! All debt will be forgiven! The world is saved! Look up.. Unicorns are shitting skittles in the clouds!

or

2) holy shit.. things are bad enough that something was about to explode that required the co-ordination of several nations central banks to avert a global disaster. it stopped it for now.. but how much is a half point cut in overnight rates really going to help and it can't be the only bank in trouble as we've already seen the collapse of MF Global here and Jefferies been in danger.

Clearly.. the markets are only thinking #1 right now when any of this happens. Obviously there is no fear at the moment that maybe a half point really isnt enough or that there might be more dominoes waiting.

The only question here is how long it takes before the market begins to look at it more like #2.

Which is what all this is.. a big stinking pile of #2.

GL

CJ

11.29.2011 -- BOO!!! cover your shorts!

Alright,.. first a disclaimer.. could this be the C wave I was talking about before when we had 2 possible elliot wave counts and we needed one more big rally before the collapse?.. yes it could. We could certainly take one more big rally north and it would work out time wise as we would close out the year strong and head possibly into the mid-1300's by mid January.

Is this possible? Yes.

Do I think that will happen? No.

The market is trading like a bear market. Bear market rallies are furious and powerful, and this would be the time of year to do it, but the market sentiment just doesn't support it.

I've been at this for a long time and I really feel like these past 2 days are nothing but a trick to get you to either go long a bounce, cover your shorts or just get into a "trading" the market mode rather than just sit on your position and let it happen.

----------------------------

Key Levels

Upside -- 1202, 1215, 1230, 1266

Downside -- 1172, 1121

-----------------------------

SPX Daily

So here we are.. we rallied up to resistance at both the 50dma and mid-bollingers and then sold off right back to the edge of the channel.

Let me just say... closing back into that channel will be a death blow for the market short term.

The Stochs support some rally time, but on the daily.. we rarely get a perfect roll off the bottom and head north or the opposite with a roll off the top. We will almost always roll on the bottom or top for a long time before changing direction.

Long story short.. I feel this is a trick.. I feel i've played this game before. I feel like after 15 years of watching this game play out that i've seen this move and its bait on a hook.

Could we do the seasonal rally and fit the wave C EW count and all fall perfectly into place? Yeah..

I just don't think its happening this particular year.

------------------------

What to watch..

If we get back above the 100dma on a close and stay there for more than 2 days.. then I will strongly consider the option that we are going to rally into year end.

Otherwise, i think this market has some major selling to do.


GL

CJ

11.28.2011 -- Scare the shorts off the shorts

Big jump today. It didn't really get anywhere though except back inside the bollingers. Despite the big move, we didn't take out any important areas of resistance. In short, it was a big rally off very oversold conditions after closing on the bottom of the short term channel we were watching last Friday.

--------------------------

Key Levels

Upside -- 1205, 1210, 1218, 1240, 1266

Downside -- 1174, 1150, 1121

--------------------------

SPX Daily;

Heres a larger down channel. We have fallen into it and then todays rally burned off some oversold and rallied us right back to the top edge.

We may poke back out here.. but I suspect we stop at some of the resistance directly overhead and then violently head back south into this channel. The target at that point would be over 100 points lower.

Remeber folks, this is not how a bull market trades. A bull market will add 8 points to the S&P 21 times in a row. Just grind and grind and grind and eat up time and make you think that any minute now it will reverse because its been up for 15 days in a row. That is not this market.. this is how bear markets work. Moves to the extremes burning both shorts and longs out of their positions.

Too much debt cannot be bailed out with more debt. Printing will eventually destroy your economy, it only delays the ultimate end.

Despite the daily news and headline risk.. this market is trading just like any other classic bear market. It just appears to be whipsawed by daily news. It will eventually travel to exactly where it intends to and already knows its going. The rest is just noise.

S&P 400 within 3-4 years folks. Continue preparing yourselves for a very very difficult economy. Get out of as much debt as quickly as you can.

GL

CJ

11.22.2011 -- Scraping the bottom

We temporarily broke the bottom of that channel again today and then again managed to close right on the bottom of it.

While the MACD and Stochs now provide for a bounce opportunity, as well as still being in the channel, things don't look good for the market right now.

We are below all moving averages on the daily and they are starting to curl over.

The market now needs a ripper of a bounce.. if we just hang down here or just go ahead and break lower it will only leave this market a couple areas of support. 1140-1150 and 1120.

-----------------------------

Key Levels

Upside -- 1200-1207, 1222-1230, 1253-1269 (lots of strong resistance now above us)

Downside -- 1182, 1150, 1121

-----------------------------

SPX Daily;

Here is our channel. I had to adjust the channel slightly from yesterday and draw it at the steepest angle possible in order to keep us inside on the close.

I have a personal habit of adjusting when possible in a way that allows the oposing position from what I currently think, the highest chance of success. In other words, I will always make an attempt to adjust the chart, IF POSSIBLE, if it will allow for a set up that is the opposite of what I think the market is going to do.

In this case, I think we are going lower short term. I adjusted my channel allowing for todays close to still be inside the channel. It was possible to draw it that way, so I did.

This keeps me honest.

That said, the market cannot go much lower here without really breaking down lower.

If it breaks below this channel and stays there, there's only a couple levels of support and they both occur after large gaps lower.

1121 is still our critical level as far as whether this market still has a holiday rally left in it to head into next year.

Things are beginning to not look good for it here. Large impulsive sell offs and beginning to string together down days. Being below all the moving averages again on the daily is also a bad sign.

What happens next is critical. We will either bounce hard from here soon or we could immediately break lower or we could flounder around here til next week and then break lower. Both of the latter options are not good for the market. The market needs a strong rally to appear soon.

GL

CJ

11.21.2011 -- Another big sell off..

The big sell offs are starting to stack up here. But, we still really can't say this market is done rallying unless we take out 1121.

We finished today at the bottom of a new channel which is what our previous flag has morphed into.

------------------------

Key Levels

Upside -- 1207, 1223, 1237, 1262

Downside -- 1193, 1121

------------------------

SPX Daily;

Heres our new channel for the moment. However, we are already sitting at the very bottom of it. We had broken that support intra-day and managed to close back above it.

I'm still considering this a B wave. Its obviously going to cut lower, but I still think the highest probability is that there is another rally left in this market.

The good news is that there's cut offs where we can say that idea is dead. That for me is if this market keeps having sell offs like today within a short period of time and takes out 1121 to the downside. That will mean bad things for this market.

This market loves to confuse.. so I expect the 1121-1140 level to be tested (even if only intra-day).

Another thing to note is that we have burned off almost all the overbought levels in this market. Notice that the MACD is almost negative again and the stochs aren't far from dipping under 20. Like always though, oversold can become more and more and more oversold.. so don't take anything from that other than the potential for another rally is there and be aware of it.

GL

CJ

11.17.2011 -- Broke lower

We broke lower out of our flag today. That essentially means wave B of this ABC pattern is going to cut lower than originally thought.

The only thing that can bring back the idea that we have already started a big Wave 3 down is if we tank here, and I mean like 800 DOW points in 3-4 days and in a row.

Tough to come up with a new target for B, but 1150-1160 looks like a potential stopping point, with 1121 being really the rock bottom before thinking that we are in that big wave 3 down already. Considering we broke our flag south, I would expect the market to push this to the extent to confuse everyone and probably reach somewhere in the 1121-1150 area. How we get there will be important.

Keep in mind though, 1204-1216 has some strong support. So its possible we just stop there.

--------------------------

Key Levels

Upside -- 1226, 1240, 1248, 1263

Downside -- 1206-1210, 1184, 1158, 1121

---------------------------

SPX Daily;

Theres the clear strong break.

But you can see we have some support right here. We also have a Fib tracement that we bounced off of today (sorry this is unlabled in the chart, but that was the low today). Plus we have the 50dma right below us.

Getting back under all the moving averages could potentially be very bad for the market. But until/unless we get below 1121, we cannot really consider being in wave 3 down yet. If we start tanking here, like 100-300 points off the DOW everyday for 3-4 days straight, then its back on the table. For now though, we will operate in a manor that we believe the market will slide to 1204 and if 1204 breaks, then we may see something under 1150 for this B wave.

As has been usual lately, how this trades is important. How violent and how fast it is.

GL

CJ

11.16.2011 -- Bottom of the flag

We sold off today straight to the bottom of the flag. We did clear the bottom of the bollinger bands but we didn't get through the bottom of the flag.

It is possible that we break lower out of this flag and cut deeper for wave B, but I'm thinking its more likely that we maybe have a false break lower and then spend some time traveling back to the top of the thing and thats how they'll get this patter to last past Thanksgiving before breaking north.

-----------------------

Key Levels

Upside -- 1239, 1253, 1271, 1290

Downside -- 1236, 1226, 1220, 1204 (all pretty significat levels of support)

-----------------------

SPX Daily;

We stopped right at the bottom of the flag. We are also 13 points above the 100dma and 35 points above the 50dma.

Also noticed that just bouncing around and some time has allowed the MACD and stochs to correct some. The MACD down from an extreme level of 21 back to 12 and the Stochs off of overbought and back to a neutral state. This is the room the market needs to launch for that final rally wave.

We can break down out of this flag, but it would likely just be a deeper cut for wave B. It would take a close below 1204 to make me think otherwise.

This is a very headline driven environment, but it would take more than the daily dribble we are accustomed too lately to actually change the current structure of the market. We would need some kind of real concrete news that was truly a major decision rather than all the blubbery crud that comes out every other hour.

GL

CJ

11.15.2011 -- Still bouncin..

Not much new to add today. We are still bouncing along as expected. The range of our flag has narrowed to 20 S&P points and we are somewhat in the middle of it.

This pattern can be drug out to past Thanksgiving. I would expect that to happen as the entire rest of this pattern needs to take as long as possible to make it past Christmas before a major decline begins.

-------------------------

Key Levels

Upside -- 1265, 1271, 1290

Downside -- 1253, 1239, 1227, 1204

-------------------------

SPX Daily;

There we are. Nothing really new to add from yesterday. As I mentioned, volitility would seem to drop going forward until we exit this flag. Its just a small calm before a large storm.

There is heavy resistance up to about 1290 when/if we do break up out of this flag. It will be interesting to see if we can go as high as teh 1310-1340 zone with the large Wave 3 down waiting in the wind.

Keep watching oil folks. Its trending up even with a market just bouncing around and in the winter on top of that.. looking for 5$ gas by next May unless we have the S&P at 600.

GL

CJ

11.14.2011 -- Bouncin around..

We are still just bouncing around in that flag. I think we have another week or so left still to finish it. Volitility may appear to start to fall off heading into Thanksgiving, unless we break out of the flag before then.

Still have to assume this is a B wave flag and that we have a end of year rally heading at us.

------------------------

Key Levels

Upside -- 1265, 1272, 1290

Downside -- 1227-1235, 1202

-----------------------

SPX Daily;

As requested by a reader, I have labeled the current expected Elliott Wave count. This assumes our blue flag is a wave B with C remaining as a holiday rally, which will be followed by a big wave 3 down.

A close below 1225 would invalidate the theory tha this blue triangle is wave B. So a breech of that level would indicate B is going to cut deeper.

I've also included the old channel so you can see where we might go if we were to break south of 1225.

There's not a whole lot more too it at the moment. I suspect we spend some time in this triangle so that the following rally will last all the way through christmas and the new year. Either that or we break south and B cuts a bit deeper and eats up some more time before the rally starts.

GL

CJ

11.13.2011 -- Quick sunday update..

It's looking more and more like this is a wave B and we are in a small triangle/flag with another sharp rally coming into year end.

But I will say... its so obvious at this point, that it gives me pause. I generally don't like when the market is only giving you one option, cause that option often ends up being wrong.

------------------------

Key Levels

Upside -- 1269, 1290, 1308

Downside -- 1249, 1227, 1200

------------------------

SPX Daily;

We're going to focus on this triangle/flag that I previously had in red. It seems overly obvious that we are going to bounce up and down in this flag until the end of the month and then probably seasonally rally pretty hard for wave C up all the way through December.

It's staring everyone in the face. I don't like situations like that. When it seems very obvious like this, you have to pause a little.

But, I will say, this is all lining up timing/sesonally/pattern wise right into a perfect pattern.

Outside of a complete plunge out of nowhere on Monday or Tuesday,.. and it would have to be a hell of a plunge.. I'm talking near 100 points on the S&P... I would expect us to bounce around in that triangle for another 2 weeks and then rally hard for a month and then look towards some kind of complete collapse coming after the new year, probably in the 2nd half of January.

----------------------------

side note... watch gas prices.. I think we are shooting towards 5$ a gallon by Spring.

GL

CJ

11.10.2011 -- Expected small bounce...

As mentioned yesterday, if this is a B wave I would expect a bounce after yesterday considering the support we closed on top of. That did in fact happen today.

The bounce was not very powerful, but it was a bounce. For the big wave 3 down to stay in play, we will have to tank hard again tomorrow. Just as bad as we did 2 days ago.

Knowing the market loves to keep us all confused. I almost expect another 40 point S&P drop tomorrow.. but we'll see.. more below

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Key Levels

Upside -- 1251, 1272-1280

Downside -- 1227, 1199, 1121

* just a note here.. unusually large gaps between levels of support and resistance right now.. the next big move will be powerful.

----------------------

SPX Daily;

Here's pretty much the same things we had going on yesterday. We just had a relatively small bounce off of a double support area. Honestly, considering the support we landed on, the bounce should have been bigger and as a result has a bearish feel to it.

As I mentioned in the beginning, for the big wave 3 to stay alive, we will need to tank another 40 points tomorrow or Monday at the latest. Just to keep us confused with multiple options, I almost expect this to happen.

The alternative is we continue to bounce around inside the red flag I have drawn in there. That would pretty much confirm we are in a B wave and will be starting C up in the next couple weeks.

----------------------

Side note, I want to thank folks for a few donations I recieved recently, they are much appreciated. It might take me a day or 2 to accept because the account is in the verification process, these were the first donations I recieved. :)

GL

CJ

11.09.2011 -- Well that was ugly...

The market loves to confuse us. Yesterday I mentioned that the idea that we were in a big wave 3 down was all but dead and to keep it alive we'd need to drop over 100 S&P points in a week or less. And right on cue, to make sure we stay confused without any concrete answers, the market plunges 46 points in 1 day.

I'm still reluctant to say that a big wave 3 is back on the table, I think its more likely that we are just in the last phase of the B move of this ABC correction for wave 2 up. But it's no longer impossible. If this is a big wave 3, we will continue to tank and take out 1121 pretty quickly.

-----------------------

Key Levels

Upside -- 1234, 1255, 1272-1280

Downside -- 1229, 1199, 1121

-----------------------

SPX Daily;

You can see we closed on a critical point yet again. We are on a small trendline for a potential flag as part of the potential B wave and we are sitting on the 100dma. If we close more than 10 points lower tomorrow, then I think we move back to 50/50 probability on whether this is a B wave or really is the big Wave 3 down.

IF its the big wave 3 down. Then this is wave 3 down of 1 down of 3 down. It should be powerful and would take out 1121 pretty fast. Less than 10 trading days.

If this is a B wave, then we'll likely see some bounce tomorrow and we will likely remain inside that Red flag I have drawn. A B wave could retreat as low as 1150, but not lower than 1121 on a close.

Point being, we are left without a concrete idea of where we are at. Which is usually the case, if it was easy the rich people would be the 99%.

What we can do is watch how this trades. As i've mentioned, a 3 of 1 of 3 will be powerful, it will string several very large down days in a row and it will be relentless powerful and broad selling. A simple B wave will just not have that kind of impulse and power. Todays impulse and power is indicitive of a 3 of 1 of 3, but we need to see more strung together.. 1 is not enough.

-----------------------------

A little of my own thoughts on Italy;

Italy is a preview of what is going to happen to the US at some point in the future. With Greece basically toast, the contagion has spread to the next weakest link. The question is whether Italy can survive an assault on its ability to remain solvent. The answer to that is no.. nor would the US. Nor would Spain... nor would the UK... nor would Portugal.

It's like a financial war. If you can be attacked and they know you'll die.. you'll be attacked .. and you will die.

It's all a big chain reaction. Greece goes down.. MF Global goes down.. Jefferies is reeling and cuts its exposure in half.. Blackrock is exposed.. tons of firms are exposed.. they cut holdings.. what does cutting holdings do?? It means they must sell some of their holdings.. which does what? sends yields higher in those countries.. which weakens them more and puts other firms that werent as exposed in pain as the bond prices continue to fall.. more firms must reduce exposure..

That is the downward spiral of a government who has promised too much.

Where things really get ugly is when a few big firms go down because they do not have enough time to reduce exposure. Events like last night can cause that. Italian bonds literally exploding in yield overnight. Margin requirements are sure to be raised, causing you to have no choice but to dump positions or post more cash. It leaves very little time to attempt to reduce exposure. This kind of action is what causes a Bear Sterns or Lehman.

And if another one of those happens again.. ANYWHERE.. not just the US.. if Credit Suisse or Societe General or any of those go boom overnight. It will set off a much more dangerous chain reaction just like the Bear Sterns and Lehman disaster. That of the CDS firecracker chain reaction, that will ripple around the world.

.. be warned though... whats happening in Italy WILL happen to us unless we drastically change our ways in the very near future.

GL

CJ

11.08.2011 -- Closed at a turning point..

The market closed right at some resistance, which is pretty much the norm. If we close more than a few points higher tomorrow, we'll likely go straight to 1310ish.

If we start to sell off, it won't take much to challenge the bottom of the rising wedge again.

-----------------------------

Key Levels

Upside -- 1276, 1285, 1308

Downside -- 1257, 1228, 1198

------------------------------

SPX Daily;

There's our wedge and the potential to expand it. The expansion would be along the intra-day highs as opposed to the closing highs.

It's hard for me to believe those 2 big down days was all there was for wave B of 2. At this point, it is certainly possible and will basically be confirmed if we go any higher than 1282.

The timing of all this has me a bit stumped.

Unless somehow, this Wave 2 manages to stretch out for almost another 2 months before topping, its unavoidable that we begin a dramatic decent right into the holidays.

The only way it could stretch out 2 months is if we are in some kind of triangle pattern for B here that does a ping pong ball bounce between 1217 and 1283 until December and then we hit C of 2 and manage to make that last into January. The only way thats going to happen is if the market really falls into a lullaby here and volitility really drops.

We at least answered 1 question... that we arent in Wave 3 down yet. Its still remotely possible, but we'd need to tank like 100 S&P points in the next week. So, we just have to figure out how to map the rest of this correction.

I don't see how they drag this out til January.. but i've never seen the holidays fail.

GL

CJ

11.07.2011 -- Hidden big wedge?

So I think we had a hidden big rising wedge here for our wave 2 up. Which I think its obvious to most everyone that we are not in the big wave 3 down yet.

The interesting thing is that we are withing a week or 2 maximum for this wedge to finish. But we'll get into that...

-------------------------------------

Key Levels
Upside -- 1262, 1273, 1290-1310

Downside -- 1252, 1228, 1197, some weak support in the 1150-1160 area

-------------------------------------

SPX Daily;

So.. the blue trend on the top is just to show upside resistance from our initial decline.

But there's our big wedge. This had looked like a rising channel, but I had to sort of pick the spots the whole time and was never really super comfortable with it, but it was the only thing that at least fit o.k. This rally has no provied us with a bottom trend that creates a steep bearish rising wedge.

Look how close we are to completing it. We are narrowed to about 35 S&P points of space. We have already had one false breakout.. there may or may not be another. My vote is that there will not be another breakout to the upside.

I give this pattern another 2 weeks max, but it could really break at any time. I believe this is our wave 2 wedge and we are close to done.

IF we use the full 2 weeks.. it is possible that we get another thrust up and do one more fake breakout and maybe touch the 1300-1310 zone for a day or 2. It's possible but not necessary.

I still am very surprised that this market is setting up to have a very very dramatic sell off straight into the holidays. That would be a very rare event.

GL

CJ

11.03.2011 -- Looking like a B wave... but...

This is looking more like a B wave here, which would mean we are about to enter the final move down before yet another rally.

However, it's not dead set, the probability has just swung to the direction of a B wave.

If we were to tank extremely hard and fast tomorrow or Monday, big Wave 3 would still be on the table.

-------------------------

Key Levels

Upside -- 1265, 1290, 1310

Downside -- 1229, 1193, 1180, 1120

-------------------------

SPX Daily;

We are just underneath the top of that channel and just underneath the bollingers that are curling over. The MACD is still floating around extremely overbought levels of the last 5 years and the Stochs are on a sell.

But we rallied hard 2 days in a row.

What happens now? Either way, theres more selling coming in this move, the question is how much. As I mentioned, if this is to be part of the first 5 wave move of a big C wave, we need to tank and tank hard in the next couple days. We are set up for it here.. right near resistance and with volitility rolling very high right now. It just needs to happen.

If the selling doesnt come fast and furious, then it's most likely just a B wave with another strong rally coming that could make an attempt to last the rest of the year.

If this next sell off isn't impulsive and furious, i will be closing my short positions and stepping aside in anticipation of the coming rally.

----------------------------

There's not a lot of other clues here other than volitility is obviously very high right now.

Jefferies today tanked 20% after the open and was halted twice. It then regained most of that loss to only 2% down on the day. Usually though, things don't happen like that for no reason. I suspect there are issues at Jefferies despite todays recovery and they could be yet another MF. Could be exposure to european debt or to MF itself.

Put JEF on your radar screen. If the dominoes start to fall and the firecracker chains start going off.. that could be what kicks off the decline of our big wave 3.

GL

CJ

11.02.2011 -- About to fall apart?

So we got a counter rally today. Its very key what happens next. If this is a big wave 3 down, we will definitely instantly reverse what happened today and proceed to tank and take out the 100, the bottom of the channel and the 50, and all very soon.

If we just slightly pullback tomorrow or continue higher or even sit around and not do much, it will start to add evidence that this is just a B wave and theres still a final potential trip to near or slightly over 1300 remaining.

------------------------

Key Levels

Upside -- 1244, 1268-1273, and 1290-1300

Downside -- 1231, 1220-1215, 1192, then a big drop to 1097 and 1070

------------------------

SPX Daily;

We took out the 100 again to the upside but them rejected the mid-bollingers. Todays trading seemed forced to the upside. It didn't feel impulsive or like shorts covering. It felt weak, like it could fall apart at any time.

The MACD is just rolling over and the Stochs are now on a solid sell.

I think there's more downside coming. The question is just how powerful it is. Taking out the 50dma and getting back down to 1150 could still be a B wave.. so how powerful and fast the decline is will be key to assessing it. A B wave will take some time and have quite a few counter rallies like today and the selling just wont be as powerful. If this is part of a big C down then we should begin tanking again and take out the 50 within a couple days.

I added to my short position today. The futures are down and leaking, we shall see.

GL

CJ

11.1.2011 -- Has "It" begun?

Ugly 2 days, just nasty. We crossed right up over the 200dma for a day, still continuing to rhyme with 2008, and then reversed hard.

Could this be the beginning of the big fall? The one to finish off the great de-leveraging? Yes it could. But, it could also just be the B of an ABC correction still. So, we'll get into how to tell the difference.

---------------------

Key Levels

Upside -- 1229, 1243, 1273

Downside -- 1215, 1190, then air til 1011-1040

---------------------

SPX Daily;

We closed at an important level. Just barely above the bottom of the bollingers and right at the old closing highs before the breakout.

So, is this just a B with another rally thrust coming, or is this a big wave 3 down? How can we tell?

So far, this appears to be a big wave 3 down. The selling is fast, furious, broad and powerful and it's occuring on consecutive days. If this is a big wave 3 down, it will be VERY VERY powerful. If it's just a B, we will see the market lighten up here very soon and start seeing some strong bullish reversals back to the upside. You still will get counter rallies with a big wave 3, but they will come after many multiple days of selling and they will be fast and furious reversals that only last a day or 2 or may even reverse intra-day. If it's a B, we should see the selling more slowly abate and start to see some boring days of the market messing around and acting like the selling is tired.

Here's a way to look at it;

5 days if this is a big Wave 3;

Day 1 - Panic (down 250 on the dow)
Day 2 - Panic (down 200+ on the dow)
Day 3 - Panic (down 400 on the dow)
Day 4 - massive rally until 3, massive sell off into the close
Day 5 - Panic (down 300+ again)

5 days if this is a much much smaller B Wave;

Day 1 - Panic (Down 250)
Day 2 - Panic (Down 250)
Day 3 - Big reversal (Up 220)
Day 4 - screw around, up down up down up down (40 up)
Day 5 - Down (80) selling getting tired.. a big up move is coming

Some other things that will clue us in that this is a big wave 3 down;

1) If we break below the 50dma again here on a close
2) If the big down days just keep stringing together
3) If growth stocks, banks and leaders just don't participate in any rallies
4) If the leadership in the rallies is very very narrow

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Tomorrow should be a clue.. if we panic sell AGAIN tomorrow.. OR.. if we open higher and then proceed to reverse and panic sell again.. we will look more and more like a big Wave 3 is occuring.

Targets for a B wave -- 1190, then a rally back to the 200dma

Target for a big wave 3 down -- low 700s, potentially by February

GL

CJ