Intraday Commentary ~ 02/10/2010

By
woo
– February 10, 2010Posted in: Intraday Commentary

Market ended fairly ambiguous today, right in the middle of a number of significant points. On the monthly chart it ended between the 50ma and the 200ma, in between a descending channel from highs (1050s), in between the 38% and 50% retrace of the last major fall, below a 3 day ascending trend line, but below a 1 day trend line. It is also sitting in between the 38% and 50% retrace of the rise from the 1057 area. How is THAT for fun?

Now many of you may notice that my counts above are different from daneric, craig, and kenny (who are great TA’s and EW guys). I just thought I would explain the reasoning towards my madness. Currently with my count above the wave 1 and the wave 3 are almost the same length, with wave 3 being slightly longer. In the other party’s count, the wave 3 is currently shorter than the wave 1. That is pretty much the only difference in count between my chart and theirs. At the moment I am leaning more and more towards the wave 4 having ended. I drew two fibs for you in light blue (similar to the observation that craig used). the first fib is A of wave 4, followed by an expanded flat correction, and then the other light blue fib which is C. In this scenario my wave A and wave C are also of similar length with wave C being slightly longer. the expanded flat correction here goes past the 38% of wave A of 4 and the C of 4 does the same, and I am leaning towards it dropping further from here. There is a chance that we could rise further, but I believe I would have to see another ABC correction happen prior to that move upward, but because the wave 2 was so drawn out, I don’t think it allows for enough time for the wave 4/wave 1 to form a 3-3-5 correction to change paths. So what I think I’m saying is that I am leaning towards wave 5 down having started.

That being said, wave 1 and wave 3 down in my count, were very quick, this probably will mean that wave 5 will be drawn out, this will work in favor of the market manipulators going into opex week as any big moves will be sudden, but most likely followed by corrections, double bottoms/tops, and drawn out consolidation and wedging. This will mean decay for those that hold, and frustration even if you call the overall direction of the market correctly. However, I wouldn’t be surprised if this wave 5 (if it happens) extends even as far as the 1.6x of wave 1. This means wave 5 will end at least below the 1119 level. Based on fib projections I would lean towards 1113 or even a 998 as a possible end point for the wave 5, but I won’t be able to confirm until I get more market confirmation. 1122 is a major fib retracement of the overall P1, so it will probably create some resistance adding to the drawn out movement of the wave 5. Wave 1 and 3 took about 3-4 trading days, so wave 5 will take longer than this, maybe close to two weeks.

However, the market is currently nearly flat in futures, so we won’t really know what the market is going to do until tomorrow begins. If we rise above 1081, I will probably throw away everything I said here and rework charts based on a 1 wave northward and the possibility of new highs. I entered a very small put position into closing on march SPY, and if we rise, I will probably consider adding to this position, or stop out and wait for the next significant point to the north until we get a confirmed break that shows bullishness. may be a lot of stopping out and frustration.

Just some things going on through my head in case anyone is curious. Good luck!

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From Unersaettlich:


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MACD vs PPO:

PPO is percentage version of MACD which does not get as distorted as MACD if the chart moves thru a big range of prices, as with 3x ETFs. Here is a free chart that shows them side by side:

http://stockcharts.com/h-sc/ui?c=FAZ,uu[d,a]daclynay[pd20,2!b50!f][ile12,26,9!la12,26,9][dd]a

Most of the MACD is unreadable on that chart, while the PPO is useful over the full range of dates and prices in spite of the extreme range of values.

In general, you can google a topic related to charts, or especially look it up directly on stockcharts.com, as in:

http://stockcharts.com/support/search.html#ppo


Why the rises on Monday and the dips on Thursday?



The Fib levels and wave action construct a channel in which the even-numbered waves push prices up and across to the upper boundary of the channel. The 2nd and 4th waves have been starting Monday or late Friday (gold boxes on the chart below). Similarly, those waves have been ending just in time for big 1st, 3rd, and 5th waves to drop (turquoise boxes), often rather precipitately from the upper channel boundary much of the way toward the bottom. That is just how the geometry happens to be working out in many charts lately as a result of the interplay of the Fibs and the resulting waves and channels that form when prices bounce off of them. Fibs have mathematical properties that cause them to generate other sets of fibs so that Fibs from different sets coincide with each other. 61.8% / 38.2% = 100% + 61.8%; 61.8% x 38.2% = 23.6% = 100% – 76.4%; etc., etc. This propagates the same S/R zones and trend channels up, down, and across a chart. So whatthehell, my bear buddies and I are loaded for bear with FAZ nice and cheap this afternoon, and lusting after the hoped-for action tomorrow. If it doesn’t work out, maybe the pop will happen on Monday. Or whenever. These things don’t go on forever. At some point, I could wind up giving people buggies at Wally World, but for now, maybe it’s worth a shot.

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How to do Fib levels at the office or just about anywhere there is a computer with spreadsheet software
The instructions below will give you a spreadsheet that does Fib levels in either direction, as in the following screens:



1. Open Notepad or MS-Word or just about anything that can edit AND SAVE plain text.

2. Copy the next 18 lines and paste them into a new document:

Level,$SPX,
=1+A10,=B$18-$A2*(B$18-B$10),
=1+A11,=B$18-$A3*(B$18-B$10),
=1+A12,=B$18-$A4*(B$18-B$10),
=1+A13,=B$18-$A5*(B$18-B$10),
=1+A14,=B$18-$A6*(B$18-B$10),
=1+A15,=B$18-$A7*(B$18-B$10),
=1+A16,=B$18-$A8*(B$18-B$10),
=1+A17,=B$18-$A9*(B$18-B$10),
1,667,<== Put Hi or Lo Here
=A10-A17,=B$18-$A11*(B$18-B$10),
=A10-A16,=B$18-$A12*(B$18-B$10),
=(SQRT(5)-1)/2,=B$18-$A13*(B$18-B$10),
0.5,=B$18-$A14*(B$18-B$10),
=1-A13,=B$18-$A15*(B$18-B$10),
=A17*2,=B$18-$A16*(B$18-B$10),
=A13-A14,=B$18-$A17*(B$18-B$10),
0,1576,<== Put Lo or Hi Here

3. Save the document AS A TEXT FILE (not a Word doc or some such) with the name FibLevels.csv to make a “comma-separated values” file that can be opened by just about any spreadsheet program.

4. Open FibLevels.csv with your spreadsheet program. It will do fib levels as is, but you will have fewer weird messages if you save and use a new version formatted for your spreadsheet program. Remember the proper suffix, such as FibLevels.xlsx or whatever MS-Excel is using this week.

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