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.

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Key Levels

Upside -- 1252, 1265, 1280

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

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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...


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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.

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Key Levels

Upside -- 1202, 1215, 1230, 1266

Downside -- 1172, 1121

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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.

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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.

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Key Levels

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

Downside -- 1174, 1150, 1121

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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.

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Key Levels

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

Downside -- 1182, 1150, 1121

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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.

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Key Levels

Upside -- 1207, 1223, 1237, 1262

Downside -- 1193, 1121

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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.

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Key Levels

Upside -- 1226, 1240, 1248, 1263

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

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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.

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Key Levels

Upside -- 1239, 1253, 1271, 1290

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

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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