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.

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Key Levels

Upside -- 1276, 1285, 1308

Downside -- 1257, 1228, 1198

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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...

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

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

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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.

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Key Levels

Upside -- 1265, 1290, 1310

Downside -- 1229, 1193, 1180, 1120

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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.

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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.

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Key Levels

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

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

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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.

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Key Levels

Upside -- 1229, 1243, 1273

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

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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

10.31.2011 -- Stocks are spooked

Happy Halloween! Late update tonight due to candy eating and all.

Stocks got spooked today. I didn't think the bear flag from Friday was quite done, but we went ahead and gapped down and broke it on the open today. Will be interesting to see how this pans out here. We should have some questions answered soon.

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Key Levels

Upside -- 1274, 1311

Downside -- 1245, 1230, 1218, 1188

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SPX Daily;

Pretty ugly reversal today that closed at the low. You can see we closed in an open pocket there which is why we closed at the low. We need another 12 points south just to hit our first level of support from here and that's just the mid bollingers.

Our bollingers are still pointing up and the 50 and 100dma's are curling up.

I dont think we can really start falling apart until all those things roll back over and are pointing south again. That's not to say we can't just fall right through them all and not stop and then cause them all to turn downwards because of that... we could do just that. But all three of those things will provide stronger support for the market as long as they are all heading north.

MACD is at 23.65. That is the third highest level in the last 10 years.

The other 2 occured just slightly higher at 24.77 and one was at the 2007 high and the other was just after the severe bounce that occured at the 2009 low.

The Stochs are still up above 80 and may start turning down here and flip to a sell.

Its interesting to me that the market got hammered pretty good today but we got very little movement south from the MACD or Stochs.

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Other items of note.. the weeklies are still on a buy here but the Monthlies are on a sell like the daily is about to.

To really get moving on the sell side, we'll need to get under 1230 first and then getting under 1188 will put the cherry on top.

GL

CJ

10.27.2011 -- hold... holllllddd.... HOOOLLLDDD...

9:00 p.m. add.. I've changed the settings so that anyone may leave comments without registering with blogger or having a google account. I had a temporary nusance who appears to be gone that caused me to change the settings.

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In the words of William Wallace in Braveheart.. we are almost there but we are holding... waiting..

Not quite done, but I think we are very close.

Doesn't feel very bearish does it?

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Key Levels

Upside -- 1300-1306

Downside -- 1274, 1255, 1230, 1209, 1183

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SPX Daily;

We are in our target zone here. I've increased my position to 30% short now. I will top out at 50% short here soon with anything over 1300.

If you got back several posts, you will remember that I posted that it will seem like all is clear and everything looks awfully bullish and most shorts will get squeezed out of the market. All the while, moving so fast that it would have been difficult to get long.

That is the nature of the bear. It burns both bulls and bears.

These are the times you must trust all the analysis that you've done and stick with your plan and execute.

Of course I must have a stop loss/breaking point. Mine here, is if we take out 1325 and/or we spend more than 2 weeks closing above the 200dma. Then I may close this position and take a step back.

That is the prize for the patience of waiting, .. if I'm wrong, then the pain won't be tremendous, as long as I admit i'm wrong withing a reasonable time and within my limits.

I don't think i'm wrong though.

Bradley turn date tomorrow, other fibonacci time relationships.

The MACD is at 21.. which is right in the zone of all major tops on the MACD in the last 5 years. The stochs are still rolling up above 80. The short term charts (30 min and hourlies) are tremendously overbought.

Elliott Wave tells us very bad news is coming soon. Who knows what.. reversal of the greek bailout, a larger country rolling over, a tsunami, a volcanoe.. who knows.. but something is coming and soon.

GL

CJ