DOW : The Great Dow Highs of Summer 2007

[nbarter]

Hi DD, not sure what you mean by this paragraph. So you think a large correction is not imminent from the MSCI patterns?

 

Hi, yes, a bit unclear i agree. Basically, was trying to say that the pattern in the MSCI World Index as it was before today suggested that new highs were on the cards at some point over the next year or so. But, now that new highs have been made so soon (I am not positive, but it looks like they have today) it suggests a really long drawn out correction is less likely.

 

The MSCI, as i have mentioned before, seems to be showing the clearest EW patterns over the last few years. I don't know why the big EW commentators don't concentrate on this more (though to be fair i do not subscribe to any frequent EW analysis anymore, so maybe that have, but Yelnick as far as i know has not mentioned it and he covers the main ones).

 

Thus, talk of a top in the last couple of weeks was premature as the MSCI had not made new correction highs (and it needed to), unlike the major western markets. However, it appears to have made the new high today, or very nearly so, so we should be nearly there (it appears to need a new very minor turn down and then new high before a larger top is in place, in the next week or two). Whether this top is the final nail in the coffin for the recovery remains to be seen, but at the least it should herald a tradeable downturn. Fingers crossed this frustrating correction may soon be over.

[nbarter]

Well the MSCI World Index topped in April along with most other stock markets. Since then the falls have looked impulsive, so hopefully the long awaited correction that started just over a year ago is finally at an end and the next devasting phase of the bear market has started.

 

Wave one down that ended just over a week ago was sure explosive (though i missed the fun, being in the Amazon, but will be back in the UK at the end of the month and will again be able to follow the markets more closely). If the bear really has returned and this isn't just another correction before making a new recovery high then the next few of weeks should be very interesting indeed. We ought to see real weakness across the board, with the markets shedding hundreds of points (Dow is currently at 10620).

 

If the bear is back then we should see new stock maket lows over the coming years as the second phase of this depression really kicks in. This second phase should also be more devasting than the first and perhaps even more rapid. The start of the disintegration of the euro, for example, could come about even more rapidly than many are now beginning to expect.

[frizzers]

Apart from that, things looking really good.

[John Doe]

Hi DD,

 

So the travels nearly over. Looks like you might have been away for the whole bull run (~March 09 to now). Would be strange if your return coincided with the next leg down.

 

If the falls really are the start of the (C leg down falls)? then what sort of time scales are you looking at?

 

Also, don't you think the PTB will just have another round of co-ordinated QE? (Can't see how they could avoid it myself).

[drbubb]

If the bear is back then we should see new stock maket lows over the coming years as the second phase of this depression really kicks in.

This second phase should also be more devasting than the first and perhaps even more rapid. The start of the disintegration of the euro, for example, could come about even more rapidly than many are now beginning to expect.

 

I agree with that.

 

Back in Feb. 2010, I wrote for FSU:

 

"There is much talk of a possible "W" shaped, or double-dip recession. What is being little discussed is what I call a "Y" shaped downturn, where the second fall is so severe that it dwarfs the first dip, so that the second leg down comes to a lower level. When the two economic falls are put together the resulting pattern may look more like a small-case Y than a W. And the upturn may be slow in coming, with no quick recovery coming out of the second slide. The overall result may be worse than the 1930's, a Greater depression, rather than merely a repeat of what we saw eight decades ago.

. . .

 

Why am I expecting a new, more severe downturn?

 

"My expectation is that the next economic downturn will come quickly starting about mid-year, and those who fail to prepare will be blindsided, and suffer a very large loss of wealth. The time to make preparations is when confidence is high, and the cost of preparations is low, because fear has receeded. After a strong nine months rally in global stocks (which by the way, I forecast back in March as the market was turning up), there is now widespread denial of problems, and huge complacency. Preparations can be made now, and hedges put in place, at a low and bearable cost."

 

More, See : http://tinyurl.com/Y-shaped

 

==

 

I hope people have their "cheap hedges" in place now

[nbarter]

Well the MSCI World Index topped in April along with most other stock markets. Since then the falls have looked impulsive, so hopefully the long awaited correction that started just over a year ago is finally at an end and the next devasting phase of the bear market has started.

 

Wave one down that ended just over a week ago was sure explosive (though i missed the fun, being in the Amazon, but will be back in the UK at the end of the month and will again be able to follow the markets more closely). If the bear really has returned and this isn't just another correction before making a new recovery high then the next few of weeks should be very interesting indeed. We ought to see real weakness across the board, with the markets shedding hundreds of points (Dow is currently at 10620).

 

If the bear is back then we should see new stock maket lows over the coming years as the second phase of this depression really kicks in. This second phase should also be more devasting than the first and perhaps even more rapid. The start of the disintegration of the euro, for example, could come about even more rapidly than many are now beginning to expect.

 

A mere 5 days later and we have already shed 600 points from the Dow. Just looking at the charts and they look a bit scary. If the bear is back, and so far it sure looks like it, then these markets should have quite a way to go on the downside.

 

We have only just got back to the levels seen ten days ago during the flash crash. If this is a third wave (after the first down from April 26th to the bottom of the flash crash and wave two up over the next couple of days on the bail out) and waves one and four should not overlap, so that suggests wave three has further to go on the downside in order to avoid this.

 

The rapidly weakening markets also support the theory that the economy should nosedive soon, and possibly faster than in 2008, as Dr B has also suggested.

[chazza]

We have only just got back to the levels seen ten days ago during the flash crash. If this is a third wave (after the first down from April 26th to the bottom of the flash crash and wave two up over the next couple of days on the bail out) and waves one and four should not overlap, so that suggests wave three has further to go on the downside in order to avoid this.

 

Thats a very good point, missed that

 

EDIT: Actually, the end of this 5 wave move this should be one degree lower than the flash crash right, so we should see a wave 2 following this not a wave 4...

[GTG]

Welcome back DD, I'm looking forward to you reviving this thread after your travels. I must say I did enjoy reading your experiences in your travel logs and not least your amusing writing style and your choice of colourful language. An inate journalistic talent?

 

Anyway it's nice to have an experienced elliottician of 8 years performing in our midst especially for me a student of less than five months. As you may have noticed "those wave theorists" - nasty I suspect in the case of an element of the gold bug community - are few and far between on GEI.

 

It's interesting to note the timing of your travels coincided with what looks like to be a corrective wave and your back for what may be the big third wave slam down. If this is the big third wave down then I hope to make enough cash by the time it's finished to have the choice to be able to sit out a nice flat or complex triple three wave 4 correction at some exotic beach location. Returning to business for the fifth wave down.

 

Back to business, I would be interested to know how you see the structure of the leg up from the March lows last year to the recent highs i.e. it is easy to see a five wave advance as Frizzers presented on here recently. If that were the case then we are in for a few months of "chop city" as straight five corrective moves are always followed by more complex corrections.

[nbarter]

Welcome back DD, I'm looking forward to you reviving this thread after your travels. I must say I did enjoy reading your experiences in your travel logs and not least your amusing writing style and your choice of colourful language. An inate journalistic talent?

 

Anyway it's nice to have an experienced elliottician of 8 years performing in our midst especially for me a student of less than five months. As you may have noticed "those wave theorists" - nasty I suspect in the case of an element of the gold bug community - are few and far between on GEI.

 

It's interesting to note the timing of your travels coincided with what looks like to be a corrective wave and your back for what may be the big third wave slam down. If this is the big third wave down then I hope to make enough cash by the time it's finished to have the choice to be able to sit out a nice flat or complex triple three wave 4 correction at some exotic beach location. Returning to business for the fifth wave down.

 

Back to business, I would be interested to know how you see the structure of the leg up from the March lows last year to the recent highs i.e. it is easy to see a five wave advance as Frizzers presented on here recently. If that were the case then we are in for a few months of "chop city" as straight five corrective moves are always followed by more complex corrections.

 

Thanks gents, you flatter me.

 

I do not see the pattern up since March 2009 as a 5 wave pattern (and hence impulsive), but rather as a corrective pattern. The falls since have been quite nicely subdividing into fives and have the look of a returning bear. Thus, i think the bear is back. It looks like we ended wave 1 of three down yesterday, so have more of a bounce to come over the next few days before the falls continue. If i was a betting man (which i am) then i would add some shorts if the bounce extends up to 50 or 62% of the falls since the bail out jump highs of a couple of weeks ago.

 

It is possible that we have just finished an abc correction of the rise up to late April, and hence should see rises to new recovery highs now, but i really do not think so.

 

Will write more when i am back in the UK. I am currently in The Gambia where the internet works well, very well in fact, unlike when i was last here, but it is as hot as hell in this cafe and i need some air, and beer.

[nbarter]

As of today I am back in the UK for the foreseeable future. Looks like I took a good year off too from a bear perspective, a rather dull year of rising prices. So, I should have more time to keep abreast of developments and it sure looks like it is shaping up to be an interesting year.

 

Three main possible stock chart counts as I see it.

 

One: The move down from the late April highs is merely a correction and so the market should go onto make new recovery highs over the coming months.

 

Two: We have had 5 waves down from the late April highs into early last week. Wave 1 lasting just 3 days, wave 2 then rose briefly into late April before wave 3 took the markets down sharply to the bottom of the flash crash, the euro bail out then coincided with wave 4 and then wave 5 soon took over taking the markets down to the lows of a few days ago and crucially below the bottom of the flash crash.

 

Three: We had wave one down to the bottom of the flash crash, wave two up on the bail out and the first leg of a large wave 3 down to this week’s lows with a mini wave 2 ongoing.

 

I really do not think count one is likely; markets reached a common fibbo 62% retracement of 2007-2009 falls before falling, trendlines have been broken on these falls, vix has broken its downtrend, etc etc. Plus, the pattern of the markets during the falls has appeared much more impulsive, especially since the bail out. As more emotion gets involved as the markets got further into their falls over the last couple of weeks the pattern became clearer – which is what we saw in 2008 as the falls gained momentum.

 

That leaves count two or three. Both are possible, but I favour count three as waves 2 and 4 are of massively different size under count two (possible, but less likely). But, it does not really matter which of these is right as other than the short term, both call for the same in the medium and longer term, that is, big falls.

 

It looks like the market has a bit further to go on the upside as Friday’s trading looks more corrective to me, rather than the start of the next leg down. The bail-out high in the S&P was 1173.57 on the 13th May, and the 25th May low was 1040.78, a 9 trading day move. If the markets fall from here then the correction would have lasted just three days. Whilst EW is about price patterns, time patterns are often loosely fibbo related, therefore, the odds probably favour a slightly longer correction of at least another day or two. A 50% price retracement of these falls would take the market to 1107, a 62% retracement would take the market back up to 1123. Plus, there is a gap at 1115.05 on the S&P which the market may try and fill first. If count two is the right one, then the bounce should last a little longer and go a little higher. So far the correction has hit 1103, just shy of the 50% retracement.

 

The next few weeks look very interesting and if they pan out as I expect then they will give a really good idea of what we can expect later in the year for the next wave down of a larger degree. It is too early to say until we see how the next few weeks pan out, but we maybe talking a crash.

[GTG]

As of today I am back in the UK for the foreseeable future. Looks like I took a good year off too from a bear perspective, a rather dull year of rising prices. So, I should have more time to keep abreast of developments and it sure looks like it is shaping up to be an interesting year.

 

Three main possible stock chart counts as I see it.

 

One: The move down from the late April highs is merely a correction and so the market should go onto make new recovery highs over the coming months.

 

Two: We have had 5 waves down from the late April highs into early last week. Wave 1 lasting just 3 days, wave 2 then rose briefly into late April before wave 3 took the markets down sharply to the bottom of the flash crash, the euro bail out then coincided with wave 4 and then wave 5 soon took over taking the markets down to the lows of a few days ago and crucially below the bottom of the flash crash.

 

Three: We had wave one down to the bottom of the flash crash, wave two up on the bail out and the first leg of a large wave 3 down to this week's lows with a mini wave 2 ongoing.

 

I really do not think count one is likely; markets reached a common fibbo 62% retracement of 2007-2009 falls before falling, trendlines have been broken on these falls, vix has broken its downtrend, etc etc. Plus, the pattern of the markets during the falls has appeared much more impulsive, especially since the bail out. As more emotion gets involved as the markets got further into their falls over the last couple of weeks the pattern became clearer – which is what we saw in 2008 as the falls gained momentum.

 

That leaves count two or three. Both are possible, but I favour count three as waves 2 and 4 are of massively different size under count two (possible, but less likely). But, it does not really matter which of these is right as other than the short term, both call for the same in the medium and longer term, that is, big falls.

It looks like the market has a bit further to go on the upside as Friday's trading looks more corrective to me, rather than the start of the next leg down. The bail-out high in the S&P was 1173.57 on the 13th May, and the 25th May low was 1040.78, a 9 trading day move. If the markets fall from here then the correction would have lasted just three days. Whilst EW is about price patterns, time patterns are often loosely fibbo related, therefore, the odds probably favour a slightly longer correction of at least another day or two. A 50% price retracement of these falls would take the market to 1107, a 62% retracement would take the market back up to 1123. Plus, there is a gap at 1115.05 on the S&P which the market may try and fill first. If count two is the right one, then the bounce should last a little longer and go a little higher. So far the correction has hit 1103, just shy of the 50% retracement.

 

The next few weeks look very interesting and if they pan out as I expect then they will give a really good idea of what we can expect later in the year for the next wave down of a larger degree. It is too early to say until we see how the next few weeks pan out, but we maybe talking a crash.

 

I also see your count 3 as my preferred count, I have ignored the guideline for wave three being the most powerful and on the highest volume with reference to the flash crash because of the clear five wave structure down to this point with the alternation rule for waves 2 and 4 being intact - which you mentioned - Also the retracement of 76.4% from the bottom of the flash crash is more typical of a retracement of a 5 wave impulse move not that of the typical shallower rt of a 3rd wave - 50% max. is the more normal in my limited experience. Tony C's preferred count for the leg up from March last year is a 5 wave impulsive move and this is a correction down to the 4 wave of a lesser degree. It also coincides with his 4 year cyle low so as always vigilance is the watchword. I've got some skin in the game already on the short side so market action should keep me alert next week!

 

No pictures DD, easier on the pinkies ?

 

From: http://www.youtube.com/watch?v=v=CblfvBwj0ak

[nbarter]

No pictures DD, easier on the pinkies ?

 

Apologies, am living out of a bag and don't even have my normal laptop with the charting software on it available at the mo.

 

Yes, saw that recently somewhere, probably on Yelnick, that Tony C is bullish. I find it hard to be. I do not see the rise from the March 09 lows as a clear 5 waves, the third wave in particular (if it is being read that way) is far from impulsive looking. But, maybe i am being biased here because I have become institutionally bearish!! Need to guard against this, so will bear this in mind as we move forward from here; the coming weeks should help clarify whether this is just a correction before another set of 5 waves up or the early stages of a new massive wave down.

[nbarter]

Yes, saw that recently somewhere, probably on Yelnick, that Tony C is bullish.

 

Ah, just found Tony's latest thinking on Yelnick -

..........Therefore we have to conclude that equities are in a bull market, they have not topped, and they currently display no signs of topping in the near future.

 

Yelnick also lists EWI as seeing three main scenarios - the same ones as i listed yesterday. I guess not so surprising given that i learnt my EW from EWI publications over the years. Though as i have said before somewhere, i started performing better as a trader once i gave up subscribing to their frequent updates some years back and instead relied on my own analysis of the market. Though i still subscribe to Prechter's monthly EWT for his longer term view. As noted elsewhere on this site, he is looking for a triple digit Dow low in 2016. Amazingly bearish, even for me.

[nbarter]

It looks like the market has a bit further to go on the upside as Friday’s trading looks more corrective to me, rather than the start of the next leg down. The bail-out high in the S&P was 1173.57 on the 13th May, and the 25th May low was 1040.78, a 9 trading day move. If the markets fall from here then the correction would have lasted just three days. Whilst EW is about price patterns, time patterns are often loosely fibbo related, therefore, the odds probably favour a slightly longer correction of at least another day or two. A 50% price retracement of these falls would take the market to 1107, a 62% retracement would take the market back up to 1123. Plus, there is a gap at 1115.05 on the S&P which the market may try and fill first.

 

Well, we got the slightly higher high that i was looking for, though it never closed the gap. Since that high on Thursday last week we have lost just over 60 points on the S&P in 4 days, and now appear to be bouncing to correct this, so ordinarily i would look for it to retrace to the area of the previous 4th wave (1070 area) and then add some fibbo numbers too, e.g, a 50% retracement would take us a few pints higher than the 4th wave (closed last night at 1062).

 

So far so good, but then some uncertaintly has been injected by the possibly overly bearish sentiment indicators etc. E.g.

 

Consider the average recommended equity exposure among a subset of short-term stock market timers tracked by the Hulbert Financial Digest (as judged by the Hulbert Stock Newsletter Sentiment Index, or HSNSI). On Feb. 8, when the Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 9,940, +123.49, +1.26%) closed at 9,908, the HSNSI stood at 20.3%.

 

Tuesday, in contrast, when the Dow closed at virtually the same level (9,940), the HSNSI was 29 percentage points lower, at minus 8.8%. This recent reading means that the average short-term stock market timer on the Hulbert Financial Digest's monitored list is recommending that his clients allocate 8.8% of his equity portfolio to going short.

 

In other words, the market timers are a lot more discouraged by the Dow between 9,900 and 10,000 than they were in early February.

 

and, TRIN went over 13 on Friday, 4th highest in at least 70 years and such extremes seem to come at bottoms. The last really big spike came in Feb 2007, and the market then rallied further for a few months before the big banking crises set in setting off the big bear problems of 2007-2009. This time could be different, but such thinking is usually dangerous, so need to be alert to the possibility of a strong rally at any time.

 

So, on one hand the charts look like a series of ones and twos down meaning it is a coiled spring and should bust lower very soon, i.e this week or next, in a more violent and stronger down move than we have seen to date these past weeks. But, the sentiment picture mentioned above suggests some caution is needed as the count that Yelnick has recently talked about, that of a leading diagonal, could be in play which would mean a little more downside before a big rally takes the markets higher, to the 1100 area - which would set up a mouth watering shorting opportunity.

 

 

 

 

 

[chazza]

I'm in favour of the market putting in a minor (?) 1 around the 1020 mark. The recent wave action down IMO hasnt been clasically impulsive, combine that with the possible ending wave count in the DXY, potential support inthe EUR at 1.16, and the amount of bearishness now, I think that would 'work' better.

 

I took off 50% of my S&P short yesterday around 1045.

[nbarter]

Here's my own Elliott Wave count:

 

SPY ... update

 

The 5-waves down consumed 21 days.

 

If the market peaks today (let's say at/near Spy-111) that would be 12 days up,

and if next Thursday (at/near Spy-115) that would be 16 days up.

 

I agree, my favoured one too. The S&P hit 1040.78 on the 25th May and only 1042.17 on Tuesday's low, i.e it didnt break the previous lows. Should go onto to at least crest the 1105.67 high of 3rd June and more likely close the gap at 1115.05 that i mention in a post above.

 

The level of bearishness mentioned a few days back was a warning sign that the immediate bearish count of a series of ones and twos might be a stretch and so it looks like proving.

 

Wave A took 7 trading days (inc the bottom day) and so if we reach time parity then that would suggest a top mid next week. Likewise, a price distance parity would suggest only a marginal new top, at about 1107. Have to see if the pattern supports such a turnaround as we get closer. It may take a bit more to reset the bearish indicators.

 

A little more strength would also help clear up the counts on European markets where the falls of the last week had looked less than impulsive and likewise had not broken their lows of May.

 

Finally, worth bearing in mind the sporadically accurate Bradley turn dates for June. Unusually, there are three this month, 3rd, 9th and 26th. Note, the wave A high (as shown on Bubb's chart above) came on the 3rd June (hit), Wave B bottomed on the 8th (a mere 1 day miss), so worth keeping an eye on the 26th. Not another one after that until 10th August.

[chazza]

I agree, my favoured one too. The S&P hit 1040.78 on the 25th May and only 1042.17 on Tuesday's low, i.e it didnt break the previous lows. Should go onto to at least crest the 1105.67 high of 3rd June and more likely close the gap at 1115.05 that i mention in a post above.

 

Chaps I cant see your charts where I am, sounds like you favour a 1-2, 1-2 count still with this latest move being an ABC that started on the

24th May?

 

I was favouring the completed first wave count (albeit with truncated 5th flaw) and now starting on wave 2 from the 8th June, until I looked at the DAX which would favour a 1-2, 1-2 count probably. With A=C ending around the 13th June possibly

 

EDIT: Any better european index proxies the stoxx 50 is a bit small for my liking?

[drbubb]

Apologies, am living out of a bag and don't even have my normal laptop with the charting software on it available at the mo.

 

Yes, saw that recently somewhere, probably on Yelnick, that Tony C is bullish. I find it hard to be. I do not see the rise from the March 09 lows as a clear 5 waves, the third wave in particular (if it is being read that way) is far from impulsive looking. But, maybe i am being biased here because I have become institutionally bearish!! Need to guard against this, so will bear this in mind as we move forward from here; the coming weeks should help clarify whether this is just a correction before another set of 5 waves up or the early stages of a new massive wave down.

 

Here's the latest from Tony C - Who is long term bullish, but bearish for the next few months:

 

EXCERPT:

Since the long term wave structure displays a bullish five waves up from the Mar09 low, we're opting for the minimal 20%+ market damage at this point in time. This fits with the 4-year cycle low we are expecting this year, and the support levels we posted at the beginning of this correction.

 

To review, there were five levels:

1. OEW 1058 pivot - the 'flash' low;

2. OEW 1041 pivot - Major wave 4 low;

3. OEW pivot 1007 - 38% bull market retracement;

4. OEW pivot 944 - 50% bull market retracement; and

5. OEW 876 - 61.8% bull market retracement.

 

The first, (1058), was exceeded when the OEW 1041 pivot was hit and retested recently. The second level, (1041), has definitely provided support for several weeks, but only represents a 14.7% correction. The third level, (1007), gets close with a 17.5% correction. Yet, it is not until the fourth level is hit, OEW 944 pivot - 50% retracement, that the correction exceeds 20% at 22.6%. This fits, and has been our general target in recent weeks.

 

Another factor to consider is the timing of the Primary wave II low. Initially we had been expecting the 4-year cycle to bottom in June/July, with July the most likely month. Now, based upon recent LEI data, we may have to experience a more complex correction for Primary wave II. One lasting for several months instead of a just a few. This opens the timing window to a possible Oct 2010 low, the most common month for a 4-year cycle low. While this correction unfolds we think it best to remain cautious on the equity markets except for trading.

 

/source: http://caldaroew.spaces.live.com/

[nbarter]

The S&P hit 1040.78 on the 25th May and only 1042.17 on Tuesday's low, i.e it didnt break the previous lows. Should go onto to at least crest the 1105.67 high of 3rd June and more likely close the gap at 1115.05 that i mention in a post above.

 

It hit 1115.59 today and so closed that gap. So, the minimum is in place for this bounce to be over, and i suspect we might get some selling very soon, but then wouldnt be surprised if this bounce had further to run after a setback.

[nbarter]

It hit 1115.59 today and so closed that gap. So, the minimum is in place for this bounce to be over, and i suspect we might get some selling very soon, but then wouldnt be surprised if this bounce had further to run after a setback.

 

We only had a very small pullback before the bounce continued, hitting 1120 on Friday and closing at 1117.5. Further upside is possible, but i think gambling on it is getting increasingly risky. It could go up to the 1140 to 1150 area and form the right shoulder that every trader and his dog seems to be looking for, but that seems to obvious for mr market. The upcoming falls that i see are potentially massive and this could be as good a shorting opportunity as we have seen since May 2008, just before the 'lost summer and autumn' got into gear. I do not want to miss this opportunity, especially when the potential upside is only 20 to 30 points and so I started going short on Friday. I would love a little spike up early Monday to add to them. Alternatively, if it rises above the trend line connecting the July 2009 and February 2010 lows (currently around 1160) then i will stand aside (this was support for about a year and should now prove to be resistance if it were to get there).

 

There is a Bradley turn date coming up at the end of the week (26th) and maybe it will hold up till then, but it could equally prove to be just a short term turn coinciding with a mini wave 2 to correct falls this week if they occur.

 

Various other markets appear to be close to rolling over too, european stocks, oil, copper etc all appear to be at similar junctures. Maybe gold will hold up, and even rise, in the early stages of a crisis, but i suspect gravity will do its work there too in time. This should be the wave when deflation starts to become obvious to everyone. A double dip seems to be baked in already and was inevitable even a couple of years back. The current trend to tackling spending amongst nations rather than the reckless splurges of the last couple of years i fear will take the blame, but at least most of us on GEI wont be fooled. Carrying on the stimulus may have delayed things by weeks or even a few months, but at a high cost. The main problem was and still is, debt.

[frizzers]

Good work, Douche.

 

The problem last time was that the world got a global margin call. What's going to set it off this time around?

[ecoface]

We only had a very small pullback before the bounce continued, hitting 1120 on Friday and closing at 1117.5. Further upside is possible, but i think gambling on it is getting increasingly risky. It could go up to the 1140 to 1150 area and form the right shoulder that every trader and his dog seems to be looking for, but that seems to obvious for mr market. The upcoming falls that i see are potentially massive and this could be as good a shorting opportunity as we have seen since May 2008, just before the 'lost summer and autumn' got into gear. I do not want to miss this opportunity, especially when the potential upside is only 20 to 30 points and so I started going short on Friday. I would love a little spike up early Monday to add to them. Alternatively, if it rises above the trend line connecting the July 2009 and February 2010 lows (currently around 1160) then i will stand aside (this was support for about a year and should now prove to be resistance if it were to get there).

 

There is a Bradley turn date coming up at the end of the week (26th) and maybe it will hold up till then, but it could equally prove to be just a short term turn coinciding with a mini wave 2 to correct falls this week if they occur.

 

Various other markets appear to be close to rolling over too, european stocks, oil, copper etc all appear to be at similar junctures. Maybe gold will hold up, and even rise, in the early stages of a crisis, but i suspect gravity will do its work there too in time. This should be the wave when deflation starts to become obvious to everyone. A double dip seems to be baked in already and was inevitable even a couple of years back. The current trend to tackling spending amongst nations rather than the reckless splurges of the last couple of years i fear will take the blame, but at least most of us on GEI wont be fooled. Carrying on the stimulus may have delayed things by weeks or even a few months, but at a high cost. The main problem was and still is, debt.

 

Nicely written post and summary.

I have a short on the S&P order to open at 1146, and maybe this is a bit obvious, so I will bring this down.

 

[ecoface]

Good work, Douche.

 

The problem last time was that the world got a global margin call. What's going to set it off this time around?

A rating change on one of the major currencies like GBP?

 

[nbarter]

I do not want to miss this opportunity, especially when the potential upside is only 20 to 30 points and so I started going short on Friday. I would love a little spike up early Monday to add to them.

 

Looks like my luck might be in, futures are spiking up as i speak. Dow is currently priced out of hours at 10540, up 90 on Friday's close.

 

I am not sure a trigger is needed CC, i am not saying the markets will crash this week or even in the next couple of weeks, but that they should shortly turn over and gain momentum to the downside as mood becomes increasingly negative. A growing realisation that this recovery is a phony will help. Maybe there will be a trigger, such as the Fed raising rates or Spain imploding, but dont bet on it being needed to send these markets lower. Or maybe for a real contrarian shock, a weakening of the yuan against the dollar. Any such a shock may only come along once the action to the downside really gets going.

[nbarter]

Nicely written post and summary.

I have a short on the S&P order to open at 1146, and maybe this is a bit obvious, so I will bring this down.

 

Go with what your system tells you to go with, dont base your trading on my syphilis induced mumblings. But bear in mind that if this spike underway at the moment has legs and goes beyond the 1160 area then the moment of reckoning may have been delayed for a bit, so the risk is quite low if your trading size is not excessive - the S&P is currently out of hours at 1127.