~ This post by DanEric40 has been promoted from StockTock Social. By the way, Dan nailed today’s move lower in his post yesterday. Great call!
What a ride! So what happens now? Well we haven’t quite filled the gap, so that is first order of business tomorrow. Since overnight markets will likely tank (they all play the same basic waves), I would expect futures to be red. Perhaps we just get the new low over with tomorrow. But that is a low probability because we are once again pretty oversold.
My primary count has a significant trendline coming into play and save the day. You’ll notice on my SPX 60 minute chart that I have a blue trendline down the middle. Notice how everything hit that on the previous waves down from Sep to early Oct.
So my primary count is:
1) Gap down and hit near the blue trendline at around 860-880 (just wagging this looking at the chart) and whipsaw up high for an intraday wave 4 action and then at least once back to the blue trendline. The wave that started from 1044 may have become extended (although the e-minis show a normal 1 and 2) which means we should see at least one whipsaw on Thursday, or at the very least the mini-intraday wave 5 play out (if I have counted correctly). Friday will be a rally day one way or the other, conveniently for OPEX. It is likely to be very brutal for any remaining shorts. We may very well start that rally sometime tomorrow so be on your toes! I expect a big zig-zag like all the other violent oversold rallies we have had recently.
My primary count then has tomorrow’s low as being wave 1 down in a 5 wave structure from 1044 to a new low. But I don’t want to get ahead of myself on this. I do show doomsday Monday in place just for fun!
Alternate:
2) Extend lower and try to establish a new low with this mini-extended wave from 1044 peak. I see this as low probability due to oversold conditions and some calculated Fib numbers I did on today’s waves. However, I may have missed something.
So I’ll be looking for blue trendline support tomorrow near the open. And if it bounces nicely, don’t get too bullish, it just may whipsaw back to the trendline before too soon. But that is not guaranteed, I may have not read the waves correctly.
The whipsaw may make sense for 2 reasons: 1) because people are panicking again. Traders may be trying to play the oversold conditions and get bullish, however many are on the flipside panicking and selling again. 2) So like the previous Minute wave iii down, you saw a lot of whipsawing at the bottom. These were all the extended wave “3″s and “4″s playing out.
In any case, the gap at 901.45 shall get filled and that means we won’t be gapping up and if we did we are coming back to fill the final 2 points.
If it crashes through the blue trendline, that would mean it is headed to at least a test of last weeks lows, 839 I would guess. But my intraday wave count doesn’t really show that happening just yet. It has already extended an extreme amount but ya can’t rule it out completely.
Good trading all and be nimble as always!
What is the highest a rally on thurs/fri can take us? 950-1000?
Open interest on SPX is at 1000 level. As I understand it means it’s the level that trading desks will try to defend.
Dude. I’m not feeling it, but after your prophetic post yesterday about today, I’m ot discounting it either. I’ll have my finger on the trigger at the specified levels to get out of my shorts. I’ll also have long trades in their place at the same time. Great work that is really appreciated. Ha, If the dudes at LEH only had this great of info they may still be in business. LOL.
Shank
What are you looking at for possible longs?
John
Possible longs that have been getting beaten lately could be POT and if you want get real risky go with GOOG it could be one of the reasons for a big rally on Friday. GOOG is posting earnings tommorow after the close. If I get out of my SKF long position at the right time tommorow i will be looking to go long GOOG AND POT and get out of them at fridays close. Thanks for all the info DAN you have been doing a great job. Timing is everything with these markets conditions. Hopefully we will all make the right moves at the right time tommorow. I ll stay tuned tommorow morning to see what the rest of the crew thinks.
GOOD LUCK TO ALL!!!!!!
I did some refining on the intraday wave charts that could shed light on how Thursday plays out
http://social.stocktock.com/photo/photo/show?id=2348194%3APhoto%3A1555
gold getting hit, looking for a entry
Daneric40: Seems like we are going to hit your target of 887. Would you be long at that point for bounce?
Now, we’ve nearly hit the 950 top target, but it isn’t OptionsX Friday yet. Do you expect a major drop Friday right from here, or is there more upside potential to 1,000 possbly and then drop?
Now that we’ve nearly reached the upward target of 950, are we going to drop from here or are we going to rally more to 1,000 and then drop? Other possiblity is that today’s low was the end of wave 5.
Daneric40,
I found your post last via SKF yahoo board. You EWT analysis was spot on today. Great job!! Is your doomsday or capitulation scenario for Monday still intact?
Thanks.
steve
Dan,
I am a new trader and watching your comments and Craig’s Videos & comments. Both of you are working hard and helping us out a lot. Hats off to you guys. Well I might be asking too much but if you can also post a small video clip like Craig here so that we can see it it might be very helpful. Thanks for you help.
Best charts ive seen…….yu du man dan…………