09.29.2011 -- Just waiting to break lower...

Shorter update tonight. It appears that they are trying to stop a boulder from rolling down a hill here. Just..... neeed..... tooo..... hollldd... it...... til..... fri....daaaaayy.....

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Key Levels

Upside -- 1170, 1200

Downside -- 1142, 1134, 1121, 1115, 1102

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SPX Daily;

We opened up big today and tried to take out the mid-bollinger bands, which we did breifly, then failed and traveled all the way down to the bottom of the bands, which is what we bounced off of near the end of the day.

If we don't take another shot at breaking below the bollingers tomorrow, then it will probably happen on Monday.

Most of the support underneath us is now weak and been tested several times. 1115-1121 is probably the strongest area that has a chance to hold.

Not sure what to expect tomorrow, it is EOQ, but not sure that matters anymore.

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One other note from today.. all the momo stocks took a pretty good beating despite the day ending quite green on the DOW and S&P. AMZN, CMG, LULU, etc. all had it rough. Hedge fund redemptions the likely culprit.

After tomorrow, the market should reveal what the next big move is going to be.

GL

CJ

09.28.2011 -- Bears in control..

Today is not what the hedge funds wanted to see. As i'm sure many of you have seen the piece over on Zerohedge showing the mega losses some of them are facing at the end of this quarter and the redemptions they are likely to see through the 1st of next year.

It will be interesting to see if they put up some kind of fight the next couple days. There's 2 weak areas of support and 1 stronger line of support left. But we'll get to that.

Another point of interest and something I mentioned a long time ago. We have super confirmed death crosses in this market. The 50 is WAY below the 200 and the 100 has also crossed below the 200. ON TOP of that, the 200 is now sloping downwards and is no longer rising. That exact situation is what happened shortly before we had a decent rally back to the 200 and then the hefty market crash in 2008.

Could we still rally to the 200 before really selling off? Yes. In fact, I believe its almost necessary. The question is the EW count right now. Most EW bean counters believe we have 4 finished waves in the current pattern, meaning theres one more decent downmove to go. After that will come a somewhat powerful rally. THAT is probably what will get us back to the 200dma. And THAT touch is where the real plunge will begin.

That plunge will be EPIC. It will probably rank 1st or 2nd in percentage plunges in history. It will be one of those sell offs that will flush out many shorts along the way simply because they will believe the market must bounce at some point, yet it just keeps going lower with a few very violent and very short lived bounces inside to clear the bears. Bear markets screw bears and bulls. I'm sure some of you remember from last time. Fewer of you may remember from the 2000 bear. (which was my first bear market at the age of 20)

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Key Levels

Upside -- 1175, 1204

Downside -- 1145, 1138, 1121, 1102

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SPX Daily;

There's our last few lines of support. We have the bottom of the bollingers at 1145, we have the last trendline support at 1138. Both of those are mild support. Then we have stronger support at the closing low of 1121. And then again, more mild support which wont hold at 1102 which is intra-day low support.

If we get below 1121 again, it's all over for this range and we'll head to the low 1000's.

The low 1000's should complete this pattern and start a powerful bear market rally. Our first powerful bear market rally of this cycle. It will target a fake breakout over the 200dma. (wherever it happens to be at the time)

THAT point.. will be the short of the century. It will be where you want to go short and not look at your computer again until we print S&P 500-600. It will be difficult not to get scared out of your position. It will take nerves of steel.

Another bear rally will follow and then the final plunge of this cycle which I believe will finish between S&P 350 and 400.

At which that point will be THE BUY of the existence of the stock market. You dump 10 grand into stocks at that point when everything will look horrible and like the world is falling apart probably sometime in 2013 or 2014 and you will become a multi-millionaire.

It sounds easy but will not be. The plunge will be so dramatic, it will take nerves of steel to remain short and if you get pipped even once,.. it will be moving so fast to the downside that you'll never get back in.

At the bottom, it will seem so horrible that you may think nothing will ever recover. It will again take nerves of steel to put your money back in.

You have to remain calm and remember the market has given us a map ahead of time, just don't let it take it from you.

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

As for tomorrow.. The next 2 days is tough. I still would not be suprised by a real push to shore this up for EOQ. We could plunge though.. they are running out of time and may give up. Especially if their current positions are already hopeless as far as redemptions go or if there's bad news out of Euro land overnight.

GL

CJ

09.27.2011 -- Pick a damn direction already...

Interesting close today among interesting action. The close was potentially a fail for the bulls. But there's still several areas of support below this, so bears can't get too excited yet.

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

Key Levels

Upside -- 1179, 1207, 1259

Downside -- 1150, 1129, 1121, 1102

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SPX Daily

As you can see there, we closed just below the mid-bollingers and under that trendline after trading far above both intra-day. Closing underneath that resistance after the breakout is definitely bearish here.

I hesitate though because Friday is End Of Quarter, a very heavy window dressing period. As i've been saying, I have to think they will attempt to get the best level possibly by Friday.

If we were to tank here, right into EOQ.. that would be a sign of very bad things about to happen.

We are still in this trading range we've been in for awhile, at some point a break is going to come. Bears cant start to get to excited without a break under 1121 and bulls can't get to excited without a break over 1216 or so.

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Other interesting items of note today. Despite the large up day.. AMZN, CMG, LULU, PCLN, AAPL all performed badly today. CMG and AMZN were particularly beat up for an up day.

These are those growth stocks that are in quite a few ETF's and mutual funds. The breakdown of these types of stocks like "The 4 horsemen" in 2007, signaled the beginning of what was essentially a market crash.

So we have all these stocks performing badly on an up day and we have a big intra-day reversal closing below some support.

The ball is in the bears court today.

GL

CJ

09.25.2011 -- Fake break lower?

We may have a fake break lower here on our hands. We are either going to plunge very soon below 1102 or 1250-1275 is still on the table.

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Key Levels

Upside -- 1151, 1178, 1213

Downside -- 1121, 1102

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There's not a lot to this analysis, so here's the chart;

Basically, its key whether we can work our way up back into that channel or not.

If we do... the chances that we had a fake break lower and a failed 5th wave down get a lot higher. It would mean the first major downleg of this bear market is complete and we are about to start the first major countertrend rally that would take us up to 1275 or so.

If we do not... then we will likely finish plunging soon down to the low 1000's to complete the first major pattern down. Then the first major countertrend rally would begin.

I really think thats all you need to watch right now. We either reject that channel from underneath and continue the previous plunging or we manage to break through it and close back up in it.

It is IMPORTANT that we CLOSE convincingly back into that channel in order for me to feel the likelyhood, that this rally goes much higher, is raised significantly.

The futures tonight appear to indicate we are going to take a shot at it.

This week is also EOQ. Friday is the last day of trading for the quarter, so that immediately has me leaning towards this week having a bullish tilt and we manage to get back into the channel.

News trumps all though, we shall see.

GL

CJ

09.21.2011 -- Do or die soon...

Ugly day. The market is not dead yet though, it is still inside of the wedge/channel (depending on how you want to draw it). We are below the bollingers though too.

We are now looking like a Wave 4 of 1 with wave 5 of 1 coming up. That should target about 1040.

My current guess is 1040 late October/early November, then an xmas rally for big wave 2 up. January sometime would start the disasterous wave 3 down.

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

Key Levels;

Upside -- 1186, 1206, 1220

Downside -- 1163, 1150, 1121, 1102

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SPX Daily;

So there we are, still in the wedge and channel.

Ugly candle though, certainly the type of selling I would expect to encounter as we kick off wave 5 of this first big primary wave 1 down off the top.

The market absolutely has to hold 1150. 1150 getting broke on a close will cement a trip to the low 1000s.

That's about all for today, the lines in the sand are right there, big sell off day, I would guess we are going to break south here. If this is a wave 4 of primary 1, it is long in the tooth and it would be about time to start wave 5 of primary 1 down.

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

One other note.. despite the big down day.. almost all the individual momo stocks I mentioned yesterday closed down only slightly.

An interesting note to that though.. they all broke out higher intra-day, a couple making new all time highs intra-day.. then they all proceeded to sell off down below the resistance they closed below yesterday.

I think a lot of these (AAPL, AMZN, CMG) may have seen their tops for awhile today.

Time will tell.

GL

CJ

09.20.2011 -- Today looked bearish..

I'm significantly more short term bearish today than I was yesterday. Today started out how I expected today to go, but then we put in a short term double top and closed with an ugly candle back down into the bollinger bands on the daily.

We can still see 1250 or higher before a big move lower, but it is now possible that 1223 was as high as we are going to get.

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Key Levels

Upside -- 1208, 1223, 1250-1269

Downside -- 1189, 1169, 1154, 1121, 1102

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Here's the chart;

SPX Daily

We logged an ugly candle today. That looks like a reversal hammer which closed back into the bollinger bands.

The question now is whether we stay in this wedge after some selling and then head back up for one more surge, or if this rally ended today.

The good news is that we have this wedge to watch and all our key levels. If we break this wedge south, I put a very high likelyhood that we will head much lower and take out 1102 on our way to at least 1040. The bad news is that this market just got significantly more difficult to get short and catch that move. I think I have no choice but to wait for the wedge break and short that if it happens.

There are 8 days left of trading until end of quarter. I have to think that they will attempt to close the quarter on as high a note as possible, which is honestly the only thing that makes me believe there is one more surge left in this rally. Otherwise, the technical picture looks much worse today.

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

Now, some more reasons why I am much more bearish today. Keep in mind, I'm very long term bearish, but I felt like the market had the juice to get into the upper 1200's, and still might. But today really is putting a big question mark on that possibility.

Here are 3 more charts today.. The momo stocks (or if others prefer, "high growth" stocks) have been having a field day lately and although I've seen these longer term patterns, they just were not complete and they kept charging ahead. Today though left some ugly looks to some of these and I would like to share.

Chipotle (CMG)

That's ugly all the way around. Ugly candle, ugly double top. It's just plain ugly. This chart does not bode well for Chipotle in the near future.

Amazon (AMZN);

Ugly candle, ugly megaphone top. And while CMG was only a 1 month double top, this is a much longer pattern. AMZN also looks in trouble here in the near future.

Apple (AAPL);

Another ugly candle and ugly pattern. I don't see how you could view this chart as bullish. This to me looks like Apple is going to have quite a drop back down to the low 300's coming up here soon.

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

These stocks appear to be putting in tops. These high growth stocks that have been marching ahead in the face of everything else that make up large % of holdings in so many funds, when they rollover it will be a sign that this entire market could be teetering on a cliff.

We need to continue to watch these stocks and watch the wedge in the S&P. If these growth stocks rollover and the wedge breaks, that very drastic decline i've been talking about will be beginning.

We can still take one more ramp up to 1250-1260, if it's going to happen though, I expect it to happen in the next 8 trading days.

As I have been, I'll be remaining flat here until we either get to the mid 1200s or the wedge is cleanly broken on a close.


GL

CJ

09.19.2011 -- Just a pullback

This is a tough market to trade. Hopefully not to many of you got caught short down around DOW -180 thinking we would tank into the close.

The daily bollinger bands once again showed up to provide markers.

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Key Levels;

Upside -- 1225, 1258-1283 is a big cluster of resistance

Downside -- 1185, 1165, 1120, 1102

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We'll go straight to the bollingers and the chart.

SPX Daily;

We traded the daily bollingers again. You can see there that we fell down through the top but stopped just above the mid-bollinger line and found some support and then traded back up and managed to close just above the bollingers.

Todays candle and where we closed really makes me think todays sell off was just a pullback in the middle of this larger move that is still targeting 1260-1280 by EOQ. 9 Trading days left until end of quarter.

What I think may happen is that we do see this market top out this bear market rally in that 1260-1280 range, which will test some moving averages from underneath. The test will fail.

That will leave us with a market that just completed a bear market rally, failed at big moving average resistance AND just completed end of quarter and heading into one of the typically worst months of the year for the stock market.

Everything is lining up. MACD is close to positive, the Stochs are going to be topping out soon, 9 days until end of quarter, the bear flag is completing its pattern.

This next drop will be bad.. it could be horrific. It depends on where we are in this cycle. My targets are either 1040 or 820. I think we'll reach one of those targets end of November or early December and then have a bit of a relief xmas counter trend rally.

Violent times are coming.

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A couple more points of some things that for me cement that we have more buying to do and we will hit those targets in the upper 1200s.

1) Look at the action today in LULU, AAPL, CMG, PCLN, and AMZN. The momo stocks are alive and kicking. In fact, many of these are at or near all time highs. These will fall apart and the falling apart will signal that what I described above is about to happen. For now though, these stocks are charging ahead.

2)For such a whipsaw of a selloff, volume was low today. When the cluster bombs start going off, volume on the selloffs is going to be very high.

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Last mention of the day. NEWS WILL TRUMP ALL THIS. If a bank in Italy or France blows up overnight or more likely the CDS spreads launch on something overnight that indicate a blow up is about to occur. If Germany makes a drastic decision to back out of bailouts. If the euro begins to crumble.

Any of these things can happen overnight and trump everything else. It can accelerate plans and instantly change the picture.

It's the primary reason I am only lightly playing this rally with a very quick trigger finger.

I got popped out today with a small profit and will stay flat until my goal of heavily shorting the market over 1260.

GL

CJ

09.15.2011 -- Broke some resistance

We broke some resistance today at the top of the bollinger bands. There's a bit of an air pocket here.

We may burn off some short term overbought levels tomorrow and bounce off the bollingers to go higher, or we may just continue straight higher without pause.

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Key Levels

Upside -- 1230, 1251, 1274

Downside -- 1199, 1181, 1163, 1158, 1121, 1102

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SPX Daily;

We broke out of the top of the bollinger bands today. We closed at the high and in an area that really doesn't have much resistance all the way up to the 50dma at 1230.

We are very short term overbought though. So it's possible we take a breather day or maybe sell off a bit and head back down to bounce off the bollingers from the top.

There's some more buying to be done here.

We are completing this pattern though. We should finish somewhere in the 1250-1283 range. A pop over the 200dma might be the goal here right around end of quarter, which is Friday the 30th. 11 more trading days to EOQ.

The transports were really moving but slowed down today, so did the momo stocks. The banks though had a real big up day. Seems money is rotating through the sectors for this rally.

Once this pattern is finished, we will have another big sell off. There are again 2 possible EW counts. Once count would have us falling from the 1250-1300 zone down to 1020-1040. The other would be much more dramatic and have us falling from 1250-1300 down to the mid 800's. We should be able to deduce which one as its happening.

Gl

CJ

09.14.2011 -- Trading technically perfect...

Some people today seemed to think that this was a mystery rally with violent moves out of nowhere and a market that seems bi-polar.

I will argue here with clear evidence that it is in fact a market that traded techncially perfect today.

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Key Levels

Upside -- 1200, 1232, 1250

Downside -- 1181, 1158-1163, 1137, 1102

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Again tonight, straight to the chart;

SPX Daily;

(click to enlarge in case anyone didnt know)

Take a look at todays candle.

First, we rallied as expected. We had the reversal hammer print a couple days ago and we spent 2 days closing back into the corrective channel and then back into the bollingers.

Today we simply traded the entire range of the bollingers. Nothing more. No mystery, no craziness.

We opened up and then traded straight down to the bottom of the bollingers. During which time we burned off the very short term overbought levels. Then we resumed the climb and went all the way to the exact top of the bollingers. When we hit that about an hour before the close, we sold back off, once again burning off short term overbought levels.

We traded the top and bottom of the bollingers to a fraction of a point folks.

Excellent trading opportunity.

If you've been following me long enough, you know how much value I put into the daily bollingers and today they proved it.

That sell off at the end of the day was nothing sinister, it was simply smacking that wall at the top of the bollinger and coming back down. We most likely will continue to rise. As soon as those bollingers, especially the mid-bollinger line (the dashed line) starts turning back up into an upward slope, that's when the market will find it support and take a launch north here.

Target for me is still 1260-1300.

We seem to be moving quickly, so I'm going to put that target sometime in October and we have a late October crash. But obviously that timing can change. We'll just have to see how it plays out.

Watch those daily bollingers folks. They are important, they mean something. (old school UHF reference for any wierd Al fans.. I know there are very few of us..haha) For those of you that don't get it.. watch the movie "UHF", if you like dumb but funny movies, it's a classic.

GL

CJ

09.13.2011 -- Back in the bollingers

Update : 6:09 p.m. -- I'd also like to mention 1 important occurance today. The transports. The trannies were up 3.64% today. That significantly outperformed most other major indexes.

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We've quietly climbed back into the corrective channel and back into the bollingers on the SPX daily chart.

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Key Levels

Upside -- 1184, 1206, 1235, 1250, 1261

Downside -- 1162, 1154, 1121, 1102

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I'll start right off with the SPX daily chart;

As you can see, we are back into the bollinger bands now today. Yesterday we had a key reversal and ended back in the corrective channel as well as posting a hammer reversal candle.

The market sure doesn't make it feel like it's going to rally does it? Opening futures were -12 this morning and then that quickly changed into the open. During the day was muddling around w/ a constant feeling like we might tank and then finished on a bit of a positive note.

This market will eventually die, but it doesn't look like that's in the immediate tea leaves. Just as I mentioned yesterday, I'm thinking either October it starts or January it starts. They may attempt to rally this market through Xmas even further than I thought, but I'm not really sure yet. The signs will reveal themselves though.

Right now, the signs point to some buying. Never underestimate the power of end of quarter buying. Those 401k statements need to be shored up so everyone isnt jumping out of the market at the same time. There is exactly 13 days of trading left until EOQ.

I did take a small long position this morning pre-market, we were playing with the bottom of the channel again and I felt it was good risk reward spot heavily tilted in my favor. If we took out yesterdays low, I would have dumped it.

I will have a very testy trigger finger with it... News can show up out of nowhere and change the picture dramatically in this type of environment, but I do think we are going to switch over to better sentiment where it will take some really bad news to derail things for a bit.

Looking further into the future.. somewhere from 1260-1300 is going to be an excellent spot to short this market and is what i'm really waiting for. After that comes a decline of potentially epic proportions. Sentiment will become worse than the bottom of the last bear market.

While Greece is giving the world headaches, I expect sometime soon it will become obvious that Italy, Spain and possibly France are cancers that are much much more dangerous.

GL

CJ

09.12.2011 - Held the channel

It was dicey, certainly was doubting my position today for a bit, but we held the corrective channel.

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Key Levels

Upside -- 1165, 1185, 1210

Downside -- 1148, 1135, 1102

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The market looked toast today, but that was one hell of a late day rally.

Here's the chart;

Few things in this chart. We had obviously penetrated the corrective channel during the day, but then reversed hard and closed well back into it.

We also printed a reversal hammer candle. A green candle and in this case is probably a bullish reversal hammer.

We still have quite a bit of MACD to correct to get back to a slightly positive number we want to see in order for the market to look primed for a fall again. The Stochs also look like they may turn back up here near the halfway mark.

Another thing in the bulls favor is that the next 2-3 weeks are heading into end of quarter. You have to assume there will be an effort made to make those 401k statements look not quite as horrific and keep the sheeple in the market for as long as they can.

We could of course just tank on some greek debt news or european bank explosion... but things left to themselves without intervening news and I think we are prepping for that hard run at 1260 right about now.

It will be a wonderful opportunity to get short this market. You must be patient and wait for your target. Then you must be patient and sit through some violence until the turn back down comes. Much like we have been sitting through violence waiting for the real turn back up to come.

We are setting up for the months of October and November to potentially be disasterous.

Could they push it off til January? .. it's possible.. but I doubt it.

Either way... D day is getting closer. Make sure your families finances and such are in order and ready for a very very very rough patch. By that I mean, a lot of jobs will be lost again. Deflation may set in.. debts may become very difficult to pay off. If you are sitting on a family situation requring 2 full time jobs to pay for your lifestyle and a bunch of debt, you are not in a good situation right now.

GL

CJ

09.09.2011 -- Quick update

Definitely made a bad call for today. I did expect a fairly quiet day and that was obviously wrong.

I do want to quickly point though that my view has not changed ... yet.

SPX Daily;

Notice that we bounced off of and did not take out the bottom of the corrective channel.

If we take out the bottom of that channel on a close, then there's a consideration to be short again.

Right now though, this chart looks to me like we are going to burn anyone who went short into the close today.

GL

CJ

09.08.2011 -- Same patterns we've seen before...

We pulled back some today obviously, but I think a pullback is all it is.

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Key Levels

Upside -- 1210, 1243, 1250

Downside -- 1170, 1142, 1121 and 1102

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Why is it a pullback?

I'm seeing the same patterns we've seen for the last 2 years that have occured when the market is just pulling back and in a bullish phase, rather than being in a bearish sell off phase.

1) The momo stocks were mostly UP today despite the broader sell off. LULU was up, CMG was up, PCLN only took a pin prick down, AAPL was up. You should always keep the current set of momo stocks in your quote list, as they often say something about current action. The 2007 momo list was the 4 horsemen via Cramer if you were around at the time. RIMM, AMZN, AAPL and GOOG. Those 4 stocks really crumbled when the real sell off in 2008 began.

2) One index that has defied the odds and gravity and has been a consistent sign is DOW Jones Real Estate. aka... IYR. IYR held up well today. Small caps got crushed but IYR just took a relative pin prick. This is another pattern i've seen over and over and over.

3) We closed out the day on a sell off but did not take out the lows. Closing at the lows seems to be fairly consistent during the selloffs that really gain steam.

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Not much changed from yesterdays daily, so here's an hourly of the SPX;

Here's our channel again up close. I do think we have a date with the top of that channel again and I think we'll like have a fake breakout over top before the next big move down.

That said, you can see on the hourlies that we are still overbought and heading down on the Stochs.. so we may get some more pause time tomorrow. Don't expect tomorrow to be a big day either way... calm consolidation. Next week may be a bit of a big pop north to challenge the top of this channel and put us in range of our targets to short.

If we happen to suddenly collapse (because anything is possible in this environment), it must be respected if we take out the 1121 to 1102 area to the downside.

GL

CJ

09.07.2011 -- Back to the grind

Hello everyone, hope you survived the evil investment world without me for a couple weeks.

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

Key Levels

Upside -- 1220, 1236, 1248, 1265

Downside -- 1166, 1145, 1118, 1102

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Lots of whipsaws as expected, but not much has changed from 2 weeks ago. There's a couple different Elliot Wave counts here. They mean totally opposite things with 1 count seeing 1040 within 3-4 weeks and the other count seeing 1245-1280 within a couple weeks.

I'm in the camp that we are going to see the 1245-1280 range before the next crash phase begins.

The other camp is that we will see something around 1040 and THEN a rally to the mid 1200's before the next crash phase begins.

Either way, I believe we eventually see that mid 1200's target before we get the real plunge that takes us well below 1000 on the S&P.

Just 1 chart tonight (I'm easing my way back into posting)..

SPX Daily

There's our corrective bear flag.. either a wave 4 with wave 5 coming soon and taking us to 1040 before the bigger corrective rally arrives, or we had a failed 5th down and we are entering the beginning of C of an ABC corrective of the big move off the top at 1370.

It really could go either way.. the timing works out both ways. If its a wave 4.. then we'll have a fall sell off and then the big rally off the low 1000's will be a end of year Xmas rally. If it's a big corrective now, we'll plunge soon, again in the fall, except a much worse plunge and then again a big corrective around Xmas time.

The biggest reasoning I have that we are in a larger corrective right now that will see 1265 or so, is that the MACD on the daily still has not really corrected itself. I have that circled in the chart. If we can climb that MACD back up to a low positive number off -12, I think we'll be primed and ready for another crash.

Either way.. it's coming folks. 2012 will be a rough year.

GL

CJ