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Thursday, July 30, 2009

The QQQQ's and The Great Asset Mania









The qqqq's are where America's retail (and institutional) investors pour forth all their "asset mania" bullishness. And why not? These are the companies that have the cool toys that the investors themselves play with. These are the companies that have piles of cash. These are the companies that are in no danger of bankruptcy.

The Great Asset Mania, as Robert Prechter (founder of EWI and co-wrote the definitive bible - Elliott Wave Principle) likes to describe, greatly manifested itself in the tech stocks of the qqqq's in 2000. Unheard of sums of money were being paid for stocks of companies that never earned it nor deserved it. If anyone has doubts about the basic tenets of EW's (social mood is what drives the market. Not news. Not fundamentals!) look no further than the proof of the great 2000 peak in the NASDAQ of which the qqqq's was the driving sector.

But of course the asset mania popped a bit and the qqqq's fell hard. The hard fall down to the 2002 low shook out all the crap in the NDX and all the frauds and other non-performers. A great cycle b wave rally ensued for many years and the big tech survivors grew lean, strong and innovative and earned piles of cash (I speak with broad strokes here of course). And investors rewarded those companies such as Apple and Google by bidding up their stocks to much higher P/E levels than other indexes or sectors.

In actuality, the great asset mania diverted itself to real estate and another great bubble was blown. And the qqqq's, in their 5 year run from 2002-2007 only managed to regain a percentage of their lofty highs of 2000. Yet still, stocks such as Apple peaked at $200+, Google at $750+.

What do stocks like Apple bring you? Not much except one thing: you hope to sell it to the next sucker for a higher amount. The love affair with high tech still lingers from 2000. I hear retail-types at my work talk about how great a time it was and how they all played the market. Of course they all have stories of woe and how they all lost a bundle!

After all, the products and services produced by these companies are what the everyday retail investors sees and uses the most. Apple, Google, Amazon...they see and use these and they invest. So the asset mania does not die easily. Yet the long term waves also shows that it does wane. The qqqq's are nowhere near their 2000 high (nor 2007 high) and are in danger of more hard down moves. These down moves will represent the final dying days of cycle wave c of supercycle wave (a) of the great asset mania.

When people realize that buying Apple at $175 is not a good thing if no one is willing to buy it at $180, eventually all things reach their limit. What choice do they have but sell?

So getting to the charts I have posted , first, the qqqq's are in the same basic count as the SPX: A triple zigzag to P2 peak. I have their P1 as truncating. It makes sense: If any sector was going to truncate at the P1 low, it would be the qqqq's. They did have a hard down wave (3) of P1 afterall and they represent the leading edge of bullishness. From the daily you can see where a ton of resistance overhead will be approaching. Basically it should stop the qqqq's. Once the qqqq's are stopped, they will signal the end of P2.

For if the best, most cash-rich sector who is still the object of remnants of the great asset mania and the source of speculative $$$ and bullish sentiment cannot advance through resistance, what sector will?

From a monthly standpoint you get the picture too. Again, look at my long term NASDAQ zigzag Supercycle wave (a) and you will realize that the qqqq's will be a big part of this decline.


The last P2 rally in the qqqq's retraced a hair over 61.8% Fib. The current rally is over 50% now and it may approach the same mark in one last fit of bullishness in the final Minor C wave of a triple zigzag. But technically, the qqqq's will be stopped. In addition, by EW theory terms, the qqqq's will be stopped and the great asset mania will burn out lower in cycle wave c of supercycle wave (a). Things are not good out there in the economy at all from my perspective.

And years from now when the great asset mania seems truly dead and buried, it will live again. Not at the levels of our greatest manic period but it will produce some nice uplifts. Our children and their children don't learn from our "mistakes". Nature rules the human species as a social unit.

I don't chart the qqqq's much but I never take my eye off of them. They are, indeed the spear point of the remnants of the great asset mania.

If you liked these charts hey, become a follower cause Kenny is trolling for more and surging ahead of me!

119 comments:

  1. Dano make a garlic clove necklace and we can stop Kenny....I have silver bullets

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  2. Is Kenny still online?
    Very prosaic blog on the Qs! and the rest of it!
    TJ

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  3. TJ,

    Kenny is definitely still online! He has 440 posts on his blog so far today. Dan has a link for Kenny's Blog on his Blog List, too.

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  4. Dan,

    Thanks for your work here. It looks like it would be better to short the S&P or the DOW versus the Nasdaq here. Thanks for the analysis.

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  5. Be careful predicting the future... I do strongly believe in EWC, but there's an alternate count where supercycle (a) is a double zigzag and bottoms at 800... your cycle a could be counted as a zigzag rather than a five.


    There's also the idea that grand supercycle III ended in 2007... this makes the rebound from the tech crash a failed fifth in QQQQ, but it's less implausible in the large caps... then, we could be in primary b of cycle a.

    Or, this decade's a flat-bottom contracting triangle, still in V of III, and bounces off 1100 twice more for a c-d-e...

    Not saying that any of these are more correct than yours, just that other potentially valid counts can be made. Careful about predicting the future...

    The good news (if you're prepared to short in the near future, which everyone here is) is that it's relatively hard to argue that we're not going to have at least one more five down. Unless someone wants to claim that some cycle-level wave completely ended in March. Now THAT seems doubtful.

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  6. FYI: NDX (Daily) Closed Today "Shooting Star" Candle...

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  7. check out the O/I in SPY for august:

    SPY 100 226K calls vs. 8K puts
    SPY 99 81K calls vs. 13K puts
    SPY 98 98K calls vs. 31K puts

    max pain around 96, thats a of meat on the bone for the market makers to chew on

    leads me to believe market will come down and zap these premiums by opex

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  8. Dan, Fantastic post and fantastic blog in general! I have lurked for a bit, but per your request above :), I have joined you as a follower. Keep up the great work!!

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  9. The $NDX Weekly (log scale which many use) has us at the downtrend line already, and since the RSI is at ~70 on this chart and the 50% fib has been kissed, ... makes one wonder, eh.

    $NDX Top?

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  10. Dan - Congrats on the big post on Mish's site and being added to his blogroll. Well deserved. Proud of you bro! Way to go. K is gonna shit himself after he pukes all over his PC and beats his dog. LOL. I'll console him today.

    And for those that ask if Kenny is still up and running, why yes he is and I suggest (and believe Dan would to) that you all keep an eye on both counts.

    Nice work as always,

    Shanky

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  11. Dan,

    Thanks for quickly fulfilling your pledge to post charts and comments on the Nasdaq 100. (We all knew you would!)

    Bloomberg has an article dated July 30 (which Google Blogger is preventing me from pasting the link to) that confirms that the past two-week rally in the Nasdaq 100 has reached an RSI advance/decline momentum level not seen since Jan. 3, 2000 (near the peak of the tech bubble).

    The big decline did not start immediately, but when it did occur...well, we all remember it was severe. An analyst in the article says the high level of RSI momentum of the past two weeks in the Nasdaq 100 is "very dangerous short-term."

    May longs be cautious here and shorts be prosperous soon.

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  12. Here's the link:

    http://www.bloomberg.com/apps/news?pid=20601057&sid=ap7LDqAVH2ZM

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  13. Anyone see something I'm not seeing here?

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  14. SRS, I think that it was rather disingenuous to post the quote from the analyst from Miller Tabak, Peter Boockvar as you did. In fact, you didn't even quote the gentleman accurately, at all. Moreover, you should have posted the entire quote.

    "In the very short term, it's dangerous... We could have a pullback before we make the next leg. The rubber band is getting stretched."

    I guess some people only want to "see" what they want to "see".

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  15. may be setting up for a 3rd of a 3rd down...

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  16. i'm not counting today becuase those PM will mess up my count

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  17. Wags,

    Lighten up, man. You're being way too critical. You have no valid reason to mischaracterize my motives as being "disingenuous." As you said yourself, "I guess some people only want to 'see' what they want to 'see'", and you see dishonest intentions on my part where none exist. (What would I have to gain by being dishonest?) Your hyper-criticalness says everything about your psychology, but nothing about mine.

    I made an honest, well-intentioned effort to convey to this blog the essential points of the Bloomberg article, and I provided the link so that everyone could read the original.

    If you personally would have done it slightly different, fine. But for you to presume to accuse me of dishonest motives is untrue and unfair.

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  18. Wags's behavior makes a lot of people dislike her.

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  19. WT,

    Price action is looking a bit choppy, if this is a 1-2-1-2 its a lot of 1-2-1-2s.

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  20. btw. great call again yesterday!

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  21. and btw, what exactly is a 1-2?

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  22. WT,

    Thank you, my call has yet to be fulfilled until we get the 3rd of 3rd or this is a pretty pathetic B wave to form an complex correction which might just look like a channel. Its great working together on this blog WT, and EWT!

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  23. WT,

    A 1-2-1-2 is a 3rd wave extending, The count would be Minute wave 1, minute wave 2, then MINUETTE 1, MINUETTE WAVE 2, then subminuette wave 1, subminuette wave 2. It is what we experienced in Minor A where the 3rd wave kept extending.

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  24. OCO, does this look like a possible zz or combo?

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  25. OCO, thanks for the explanation. so in this case. we possibly may see the 3 down coming up here right?

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  26. SRS - I appreciated your post.

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  27. WT,

    Yesterday's price action could be seen as a ZZ, so another ZZ could happen but would this be minute iv or Minor B? If we get a double ZZ without much of a retrace, then I believe C wave will be protracted, making only 50 points or so.

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  28. WT,

    Yes in case a 3rd of 3rd is coming, but it doesn't seem so by watching price action, 1) yes we are making new lows 2) waves are overlapping meaning it could either be corrective for Triangle/Flat/Combo behavior or 1-2-1-2 for Zig Zag behavior.

    A 3rd of a 3rd should be the easiest to identify, and in my experience if we haven't seen it, chances are it might not happen.

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  29. SRS - I'm not being hyper-critical. I'm simply being accurate, which to me accounts for a lot in this business. Why you would choose to misquote Peter Boockvar's rather simple comment is beyond me...

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  30. OCO,

    not sure if this make sense in the analysis, but i attempted to plot channel lines assuming this was an abc correction. if i used the following price points to to draw the channel lines to project for wave c. however, price broke out of lower channel line.

    i used a wave a start at (996) and end at(990.35). b wave end (994.66)

    would i be correct in thinking that the price action currently as we see it is not part of a full abc correction yet and is more indicative of an impulse, perhaps only the first 5 waves of subwave a for minor b since it broke out of the channel?

    does that make sense?

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  31. i still think this pattern needs watching it's typical of a market that has gone to far to fast and i was never happy with the july 8 low

    http://stockcharts.com/h-sc/ui?s=$SPX&p=60&st=2009-07-02&en=2009-08-10&id=p47286713366&a=174161092&listNum=12

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  32. im seeing 980 as an area price may be attracted to for iii

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  33. actually it is better to say, price may be attracted to this level (980) next. what wave at what degree TBD.

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  34. WT,

    I have the same count as my alternative as well. But I have my doubts as the bulls seem to be invincible right now.

    We might actually be tracing a WXY right now as ABC from yesterday's ZZ and X wave triangle.

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  35. Max,

    I saw your chart yesterday, it does seem feasible, but that is a very long extended wave 5. If that happens Intermediate Y might end up as a flat, as extended 5th usually means dramatic reversal ahead.

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  36. WT,

    Let me clarify ABC from yesterdays ZZ forming W, and an X wave triangle now.

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  37. The Bears will be seeing an LD Wave-1 going into this morning's low.

    Yet, pullbacks since July 23rd have been between 14 - 14.75 handles on the ES, as the Bulls look to an ED pattern. If we go below 979.00, the Bears will have more food to chew on. Thus far, the 50% retracement at 979.50 has held.

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  38. OneChiOnly, w 4 ends at 953 w 1 starts on july 13 ends at 905= 30 pts, w 3 moves 60 pts if 3=5 the diagonal tops out at 1013 which is about .38 of the entire selloff from 0ct 07 if fits, so does alot of other stuff.

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  39. Max,

    Is your count for Minor Wave A for Intermediate (Z) of Primary 2?

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  40. OCO,

    thx.

    "
    WT,

    Let me clarify ABC from yesterdays ZZ forming W, and an X wave triangle now."

    this could make sense. if x is finishing up now near 989 (this will have TBD), i have Y = W @977 and Y= .618xW @ 979.

    there was fib cluster at 980 as i mentioned previously.

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  41. To Andy and FTLOG:

    Thanks for your supportive comments.

    To Wags:

    You falsely claim to care about "being accurate," but your inaccuracy about me is far worse than my inaccuracy about the analyst's quote.

    I was essentially accurate to say that he sees the RSI level of the Nasdaq 100 as being "dangerous...in the very short term." I was only inaccurate to omit that after a possible pullback, he expects another leg up. I assumed most readers here already think that.

    And I was inaccurate to omit the analyst's name. But why should I be required to name him, when I was merely making a brief mention of his main idea: the danger, short term, of a pullback after a two-week rally? (Don't be so picky, pendantic, and prickly.)

    But most of all, your "inaccuracy" about me is much more serious and offensive. You accused me of being intentionally dishonest and misleading, when you have no valid reason or evidence to slander my intentions or motives.

    If you care so much about "being accurate" as you (falsely) claim, you need to take a long, hard look at your own intentions and motives before you "inaccurately" and unfairly criticize others' intentions.

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  42. that would also make it a 61.8% retracement of yesterday's thrust.

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  43. WT,

    That would make Minor B which means the bear squeeze will continue until all shorts are destroyed for P2. 980 is a pathetic retrace, but if we get a retrace in time it should suffice for Minor B.

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  44. OneChiOnly, my count
    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=2&mn=6&dy=0&id=p32774362755&a=160553275&listNum=12

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  45. OCO,

    r u seeing wave e of X triangle in now or only c of X triangle?

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  46. WAGS is a PERMABULL and thinks anyone who is not, does not have valid reasons to not be no matter what they are and probably thinks even neutral people like me, are conspiracy theorists as we dont see the market bursting into a full recovery anytime soon.

    He also blindly believes there is NO market manipulation (LOL) and GS with their supercomputer and major capital cant affect the markets and thinks anyone who sees this most obvious fact, which has even been admitted but was quoted as not being illegal, is just making excuses for some bad trades (which I have no idea where he got that idea, clearly more permabull thinking)

    WAGS may I suggest possibly hanging around those who share you views, rather than those who oppose them, why fight the trend?

    Why not start your own Blog, it could be called, "Running with the PERMABULLS". You could then focus on those things that are important to you, and others will SHARE the same views.

    - How well the economy is recovering
    - The trend is up, and will stay that way
    - Cyclicals are the leading indicator of everything
    - How to interpret what analysts say, positively no matter what
    - Why the analysts are important
    - CNBC, the bible of investing

    and on, and on,

    Just a friendly suggestion :)

    Personally I like to listen to both sides of a story, but will ignore obviously falsely propped up facts, like how housing sales are up, even though they are selling for 30% of what they use to sell for. etc etc

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  47. Dan thanks for all the great charts and Analysis.

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  48. spy is showing the triangle for X is just about ready to wrap up

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  49. Dave & Wags - Take it somewhere else, you're not helping anyone

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  50. Sorry Geno - wags is continuing to piss people off here, did you not read what he stated above about SRS?

    He has been disrupting the blog since he arrived and I think Dan is too nice to say something, which is why others are speaking up.

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  51. this may only be an abc, c ending on a triangle?

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  52. could this be a nasty wave iv triangle?

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  53. I am learning here WT, nasty to the upside?

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  54. upon further examination it can't be a wave iv triangle because there would be a 4-1 overlap. sticking to the x wave tri for now as primary.

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  55. Sorry Dave - Just tired of the banter

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  56. ok, triangle wrapping up now. down some more

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  57. 980 is looking pretty solid right now for wave Y of minor B:

    - fibonacci projections clustered at 980
    - thrust projection places it at 980
    - Y=1.618 x W =980

    that would complete a dbl zz correction.

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  58. With the dollar testing support right now and the possible breakdown we could see equity indexes move up pretty good.

    I have the dollar in wave 5 down push since middle of July. It still has another 2-3 weeks potential down move.

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  59. The Cut,

    sorry, i just meant in terms of it's position in the structure. it didn't quite look right. i have since rescinded that comment as well.

    it still is a tri though and should thrust lower.

    but in terms of expected direction, it would be down. triangles will thrust out in the direction of the previous trend. in this case the previous trend as it relates to this particular tri is down.

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  60. Geno and Dave S:

    I, too, apologize for taking up space in today's thread. I felt slandered by Wags's false accusations, so I felt compelled to defend myself.

    But going forward, I will ignore Wags's way of provoking others -- now that I know how "inaccurate" and unfair Wags's thinking and speaking are.

    Peace.

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  61. Yes on the Elliot Wave!

    Where the hell are we in the count?

    This last week has been a load of crap IMO, the sucker is overbought, just let it fall!

    Who believes 5 of A is not completed, and who thinks we started the next leg down?

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  62. dave,

    OneChi has this an minor B down now, but it looks like it may only retrace 61.8% of A down to 980. at least that is the appearance right now.

    i have this as my primary count right now as well.

    980 could be just the completion of minuette a of minute A for minor B. something to keep in mind.

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  63. Hang on now, 62 percent of Minor wave A would take us down to about 920. Wave A started at 869 and went up to 997.

    38% retracement would take us to about 950. ?

    Maybe you are talking Minute waves?

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  64. Dan:
    Mish likes you!
    -p.
    http://patmcneill.blogspot.com/

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  65. WT, EW, OneChi, many thanks with the very diligent close updates with the chart and the market. I am not very good in technical chart reading, but I read every post of yours trying to digest and understand the best I can. I used to trade on news and momentum mostly with very limited knowledge of chart reading. Really appreciate you guys. Keep up the great work.

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  66. dave,

    sorry. let me clarify. 980 would be a retracement of yesterday's thrust only.

    i'm thinking 980 completes minute A for minor b

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  67. Just seems to want to bump along the previous close...

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  68. Ok thanks WT. It sure looks to me, and most charts I've seen confirmed, that wave 5 of Minor A completed but this sure has been some 'weird' action.

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  69. we then see a minute b correction, and then minute C down. we wont be able to project any further until we see the end of b.

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  70. mandy,

    thx for thanking me because a i'm very green with this and i am trying to call it like i see it. (most of the time i'm very wrong!) its good to have everyone else on here contributing because i am certainly learning a lot! cheers to all!

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  71. and, i will say, i was a little premature on calling the triangle thrust. it is obviously still trying to work itself out.

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  72. Dan do you still have a even more bullish count? my intuition tells me we are about to see another push up.

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  73. U da man, C ya, start your own blog since your the expert with 28 years of experience and 'still' trading.

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  74. and an overall bullish count? i mean no dreadful 3 down. because as everything is going up at the same time means that this is a monetary move, followed by "tax inflation" no matter what Mr. Pretcher says. Inflation/deflation has nothing to do with herding but with the money you are printing.Look all hege funds that went bear last year are now betting on inflation.

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  75. Dave,

    I'm only going to respond to your rant this one time, and then I'm going to let it go . . . just as you had announced and promised earlier this week to concentrate on EWT and the market - - - until you went off on yet another one of your personal attacks on me today.

    First off, you strike me as someone that isn't really interested in BOTH sides of a Bull/Bear case. You only wish to listen to those that agree with your views that this current rally is a house of cards and has been full of manipulation and Goldman Sachs and CNBC conspiracies, has nothing to do with the poor economic fundamentals, etc.

    As a former floor trader that took pride in his ability to TRADE both the Bull and Bear trends, I find it downright laughable that you would characterize me as a PERMABULL, or even spend the amount of time that you did trying to cast me as such in one of your previous posts. In fact, Paul Tudor Jones would have never hired me back in 1986 had I not been able to TRADE BOTH SIDES of the market. I must admit, your obsession with me is rather flattering, but it also strikes me as not very constructive or healthy, either. At the very least, your personal attacks towards me are certainly not constructive to this blog. That's been your choice, not mine.

    For what it's worth, I trade BOTH sides of the market and don't really need to defend the points that I have made on this blog other than the fact that I have been correct in how far and how long this rally has lasted and have also observed that the market has come nowhere near violating any important support levels or moving averages that I am aware of. Moreover, I'm not alone in having observed this.

    As opposed to others that probably don't TRADE nearly as much as I do let alone TRADE the sectors that I do, or do the kind of technical analysis that I do based on 28 years of trading experience . . . I DO NOT spend my time "anticipating" tops or bottoms as I know far too many people that have gotten CRUSHED trying to do so. I simply look for a TREND to be confirmed and follow it. In this way, I am able to take out a nice big chunk of the TREND allowing the market to do the majority of the work, rather than go through the emotionally exhausting exercise of fighting the TREND or building a case (and bias) towards a market turn that may or may not occur.

    Apparently, this approach to TRADING the market appears to have upset the likes of "Dave_S" who embraces the latest media chatter about Goldman Sachs and their automatic high frequency trading analogs that only generate 1% of their annual revenues.

    However, I would hope that the majority of the members of this blog find my posts helpful, knowledgeable, valuable, and insightful.

    To that end, I wish everyone the best.
    :)

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  76. P.S. The post and "comment" at 1:35PM was not made by me. Someone appears hell-bent on attacking me and has hacked into the blog. What a shame that someone would go to such great length to do something like that.
    :(

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  77. its safe to say this is not a triangle

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  78. WT - safe to say we're still in A IMO. Wave iv of v of V of A

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  79. this may be that funky zz for minute iv after all.

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  80. it looks almost exactly like the formation from 7/23-30!

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  81. Crude Oil reverses on the collapse in the USD and the SPX follows the crude and OIH back up. The correlation between the SPX and CL is amazing.

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  82. this another abc with a c diagonal

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  83. You really dont take a hint well, unfortunately.

    Since you appeared here and were kicked off Kenny's blog for being a nuicance, then came here and slandered him foolishly, now insulted the whole board, insulted SRS and I dont know how many others since you think you are the only expert around, you have been mostly unwanted and were told so several times by several different people yet you remain.

    Do us all a favour please

    Dan I apologize and I apologize to the board for having to put up with all this crap.

    I try to standby and just watch mostly but with the BS going on and Dan at work, I have a hard time staying quiet

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  84. Wavetrader - How about an Ending Diagonal for Wave 5... What do you think?

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  85. wags, starting from around today?

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  86. the only thing at this time that i can make out is from 10am est - 2:15 est, is an abc formation, b wave took on a triangle and move higher was c.

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  87. Wags, I watched the price of crude oil started taking off from around $62 based on consistent over supplies of crude inventory reports while GS came out pushing the price of $75 as this summer target. Even they are trying to use up the oil to make gas and created piling up gas inventory that is running out of place to store it. At what level of oil price that you would consider based on the real supplies and demand? Do you see GS succeed in pushing the $75 target? Last year, they tried $250, but col lapped before it got to $150. I do see the SPX is following the price of oil today as you say. If GS determines to push oil price towards $75, we will see SPX goes much higher over 1,000.

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  88. Yup.
    With (i) being yesterday's highs around 10:40am and the (ii) being this morning's opening.

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  89. I do like to see GS to fall on their flat face though. Oil has no place to be up at $68 a barrel today. It is purely speculation rather than the real supplies and demand. I started nibbling QID today. As Dan said earlier, QQQQ is so overbought that eventually the bubble has to burst and when the bubble burst, it will take the entire market down quickly.

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  90. wags, i'm not sure. she's looking to go lower and the correction has had a downside bias vs looking like it should be going up?

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  91. Oil price has just gone higher after the market at $68.91.

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  92. OCO,

    my best count at this time is i have minute wave a starting from yesterday til today's low (982.85), b working out a triangle and then c working lower. that is the best count i can make right now.

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  93. i take that back with minute B being a triangle. b was just a regular 3 wave

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  94. i told you so....nobody listens...

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  95. and what about kennys count??? stinks right?

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  96. Mandy - It looks like the OIH reversed along with the Crude Oil as soon as the US Dollar Index broke early morning support at the 78.93 level. The USD made new lows for the week and Crude simply responded.

    It's interesting to note that U.S. Commercial Crude Oil inventories (excluding the SPR) were running at 16 year highs at the beginning of March with Crude trading at $42 per barrel.

    And yet Oil traded as high as $73 at the end of June and that was when inventories were at 19 year highs!(374 million barrels).

    In my opinion, Crude trades inversely to the dollar and is being used as a new "currency" by speculators. But at the end of the day, crude is priced at the margin, meaning that it is priced at the spot market. China has been stepping on the accelerator and this is what oil traders and players have been "leaning" on.

    Let's face it...

    "Shovel Ready" in China has an entirely different meaning than "shovel-ready" in the United States. China's stimulus package was 16% of GDP while ours was a small pin prick, by comparison.

    I've been listening to some of the conference calls by various U.S. coal companies and while worldwide steel production has dropped 21% for the first 6 months of 2009 compared to a year earlier, the coal companies like BTU (Peabody Energy) have been saying that China's steel production has been incredibly strong this year, with year over year gains. India too.

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  97. Mandy - Yup, September Crude took out Monday's weekly high at $68.45 and is +$2.48 on the day. Up about $7 from the lows of Wednesday! It went out real strong on the charts. Next week should be interesting for sure!

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  98. Wags, while the oil is getting traded as the 'New Currency'. You can see how the global market responded to the rumor of tightening monetary policy. We both know that speculators play with the oil inventory by sitting them between the harbor and lands. It makes me think how much coal and steel really get used up from the shipments that have gone to China in the past few months or they are also sitting at the harbor.

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  99. Wags, I expect the price of oil goes down next Monday. Traders learned their lesson the last year. I can't believe that they will see the profit rose from $64 to almost $69 in 3 days without taking it. Of course, it also depends on the price of dollar movement. I appreciate if you have some input. Thanks.

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  100. WaveTrader - Looks like the ES just ran out of gas at the 78.6% retracement, eh?

    Did we finish off an LD at this morning's opening as Wave (1) and then go into an (a)-(b)-(c)-(x) and then another (a)-(b)-(c) Wave (2) to the 78.6% retracement?

    This would be the Bearish count.

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  101. Oil refinery has come up a lot in the last 2 days as the price of oil jumped from low $64 to almost $69. I am thinking to get ready to short oil refinery stocks.

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  102. along with the oil service stocks.

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  103. Mandy - I've read some reports on the Peak Oil website that claim that most of the tanker capacity for storing crude has been used up. But, I'm really not completely sure. I read one report that said that there were 14 million barrels of North Sea crude being stored on 7 tankers off the coast of the UK.

    Traders have obviously been profiting off of the "contango" nature of the spreads between buying the spot month and storing it, only to then sell one of the back months that is trading a lot higher, off the contango.

    A consultant for JBC Energy in Vienna (Alexander Poegl) claims that there could be as much as 90 million barrels of oil stored in tankers worldwide. A sustained decline in crude oil would obviously bring this oil into the market place and take prices down dramatically further.

    Time will tell.

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  104. Interesting to note that the OIH is trading right at several significant MA's. The 40 day MA contained the sell-off of last week at 99.43 and today's low bounced off the 21-day MA at 101.00

    These will be KEY levels to watch come next week, in my opinion.

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  105. Thanks for posting the NDX/QQQQQ here..

    it is the ONLY index w/ a truncated wave 5 of p1
    when the ndx runs out of steam, the market is toast...

    http://erikmarketview.blogspot.com/2009/07/short-term-sentiment-change.html

    weekly dogi backtesting the triangle.... tells me next week LEANS bearish
    .....

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