Wave [iv] of 3 of (5) *appears* to be over. It could correct more sideways and of course I do not rule out a move higher than 779, its just that the waves don’t currently *suggest* that will happen.
Commentary: I’d like to talk to my 4 charts tonight
1. SPX 1 minute. These intraday waves suggest the up correction is over. Note the cute little island top above resistance. I didn’t realize there was a small gap on the e-minis and it got closed on this up move. As a side note, the e-mini futures 10 minute candles that were red were way more volume than the green candles. Note the severe overlapping waves just to get the gaps closed. Total daily volume was higher today than the last 7 days. The total day ended as a red candle almost a doji but obviously definately ended down. Indecision. Bear market is winning.
2. The 30 minute SPX has a lot of neat trendlines I painted up. Note that a normal wave 3 expansion often extends 1.618 times wave 1. If Minor wave 3 expanded by this Fib amount, this would place the SPX at 652. It was weird that 2 trendlines cross at that spot in a few weeks.
3. CPC chart. A very instructive chart. Note the comparisons to previous Intermediate wave (1). The call/put ratio turned up today but notenough to move my 5 day EMA line back upwards. But it has hit a spot where it was expected to turn. Lets see some followthrough tomorrow. Once the market becomes “put heavy”, its gonna selloff hard like a wind at the market’s back pushing it down.
4. VIX chart. It neatly filled its gap today. It too is at a spot where a massive turn up would be expected. Many people seem to think its “broke” because its not behaving as it did in Intermediate wave (3). It would be better to compare this chart to Intermediate wave (1) instead and in that regard, its seems to be moving as expected. Note the comparisons.
5 out of 5 Dan.
Permabear, Schweizer, didn’t you guys post some symmetrical triangle charts that had lower 600 targets?
FYI, Larry agrees about the timeframe for chart #2 TLs. Here’s the podcast MP3, also available on iTunes.
http://www.tfnn.com/sti/rss.xml
my top Target is 735… my mid target is 670 …. ill see the wave count once at 670. however, first we have to get the rally threat complete and see if it has legs. if we start approaching even close to the pennant it will be interesting to say the least.
one thing for sure is time is ticking. funds usually rebalance at month end which leads to some push … however, last month we did not see it happen. only days left in the month. my turn date is 4th of March… fast approaching. may just begin declining now. the only thing im looking for is an re-entry into TWM after shedding it at $88… because everything else i set on Monday morning. a rip up would be nice to trigger more of my put orders. see what happens.
Dan, excellent analysis. there are tools for the bulls and tools for the bears to prove thier case. this is why we are going sideways right now.
The VIX Chart is great, it shows that the panic in Wave (3) is over and we are in the End Phase, i wouldn’t expect big panic any more.
I thought the VIX (1) vs (5) analysis was great also. As far as price action is concerned it will translate into lower lows IMO.
Call volume in VIX the last two days has been crazy. Check the open int. in VIX 60 and 70 calls, both March and April. Fear Factor re-runs are coming soon.
Hey FL. What is the VIX ticker on the options exchange? You know?
All different depending on month and strike. March 60 .VIXCN 70 .VIXCP
April 60 .VIXDN 70 .VIXDP
http://bloomberg.com/apps/news?pid=20601087&sid=aPCwImB7U3Kg&refer=home
Old news Phoevos. We discussed this yesterday. At length.
Key quote: “Am I saying that the market has reached its final bottom? No!” he wrote. “The wave count is not quite finished, and ideally the S&P should continue down into the 600s.”
How much more crowded can the short trade get? I agree, that the market has a very bearish feel and look to it. But I also notice a type of smart money buying that tends to confound those who rely on pure TA during bottoms and major reversals. This is evident by failed patterns as smart floor traders (working to accumulate for large players) take advantage of the liquidity pools created by less sophisticated traders still trying to trade patterns. Basicly I am talking about bear traps. Someone wrote a good book on this, Yoder I think, and he relates it to the payout and payback cycle. You will notice many of the TA trades worked great on the way down when bulls were still trying to fight (they were in the payback cycle) shorts now IMO are in the payback cycle and judging by the explosiveness of some of the last few days rallies they are getting pretty beat up.
Why did he cover?..anyone with that much flesh would use trailing stops…jeesh, extroverts love the spotlight.
Who uses trailing stops besides total noobs or traders on vacation? They are just a marketing ploy. I remember when I first started trading I said “look I have this great trading plan I will put in an order to buy here at the bottom of the channel and another to sell at the top and then to ensure I never lose money I will put and order in right below my buy order to sell incase the channel breaks, then I will just sit back and collect money! The fact is the buy order filled and then the stop filled and then the stock shot back up to resistance and instead of a big gain I had a small loss and died a death of onethousand cuts.
sure % stops are noobish…heck, they worked for me with SKF back in Nov….to each their own.
but why purposefully sell at 740 and publish it on the website…and then write that the bottom isn’t probably in…Prechter is a smart guy…strange.
Well I think that was a political move. His fan base is almost entirely made up of bears right now and I think he wanted to offer a gentle warning without disenfranchising them. It also leaves him a conveinant out if he turns out to be wrong on his call to cover but if he is right it makes him look like a genius because in that event the “call to cover” will be remembered and the “call of this not being the real bottom” will be forgoten. Smooth.
Does anyone think that we have possibly begun Intermediate Wave 4, instead of the widely accepted notion of Wave 5?
The idea is based upon the recent strength in financials coupled with weakness in gold. XLF shows positive MACD divergences.
From a contrarian standpoint, the questioning of my bearish bias means we are set for a large drop soon.
One thing I do know is that wave 5 did not go lower than wave 3 in the last bear market. EWT theory said it “should” have, but it didn’t. History might be repeating itself here on this primary wave down, with 741 holding. Keep in mind though that if there is a sizable rally, it likely is to correct the 2007-2009 drop, and that another big leg down is likely after that, but then again, that drop still might not go lower that 741!! I personally think it will break 740 at that time due to depressed earnings projections.
I personally think that we’ll go lower with wave 3 of (5), 5 of (5) maybe truncated.
Very well done DE. I appreciate your work.