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Tuesday, July 7, 2009

What happened to Green Shoots?

I like to use/read/watch Marketwatch as a source of headline-type news for sentiment and other odds and ends and even simple quick checks of the markets. They are hype site no doubt. Lots of bearish headlines in downturns.

I see no more 'green shoot' stories. They are quite enough bearish tonight.
The SPX bullish percent chart hit my RSI trendline support. So its a nice place for a bounce perhaps. Or not...as always buyer beware! I like to point out stuff and let you decide. I of course have an opinion on things, that's why I do this.

Regardless, would you go "all in" at this stage for a short based on this chart? Or would you take your foot off the pedal a bit and maybe take some short profit? Would you open a short position with sentiment on this chart corrected low and sitting at RSI of less than 22?

Are you "all in" on a big H&S breakdown to 810 or so? All that support, all that buying from 800 on up will just get swept away?

Is P2 over?

Was Cramer bearish on tonight's show? If yes, that alone is something to chew on.

Here is something I like to watch on TOS futures charts with e-minis: If your bored at night or wake up and check the charts look at volume bars. Set the chart to 1 hour or even 15 minutes. Try different time scale settings. When the up volume (green bars) is greater than any pullback moves (red bars) then beware of shorting. When the red bars trumps the green bars in volume, think twice about trying to play a bounce.

Just throwing that tip out there. E-minis are always useful. They show a constant sentiment reading if you agree or not. Yeah they can be manipulated by certain entities, but those entities are human too and also exhibit sentiment.

The government can own 60% of the market but they cannot "control" 60% of the market. They can issue no "edict" to a fund manager in cash-strapped California to "hold" market shares. So he will sell when he feels the fear. Or he will buy when he feels the greed.

I don't sweat that stuff. In the end the market never lies. It may fool us for a long time (2003-2007) but it always comes back and reaps what man has sown.

Is there one more big summer rally left? Will we push the (false hope) envelope one more time?

Its fascinating stuff yes? I'm hooked.

32 comments:

  1. Dan,
    I have followed you for few months now as a silent reader and always look forward to your comments...very well thought out and even when you are thinking our loud it is just a pleasure to read...tried many blogs but yours is undoubtedly the best...

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  2. the MA20 is crossing under the MA50 on all major indexes...in the entire 2 year bear market, there has never been a "re-cross" back above.

    So P2 is dead for now. Now, as the MA20 moves deeper under the MA50 in the coming days, the sell-off will get steeper. You are starting to see that on the FTSE...but its much more clear on the charts of C and AIG, which had their cross weeks ago.

    Now yes, those are just stocks...but it still gives you an idea how the price will move as the MA20 heads deeper under the MA50.

    I still feel we will go to 800 - 880 - 740 - 570 - 666...etc...

    I will eagerly wait in fascination as Dan and Kenny plot the upcoming moves into an Elliott Wave form that makes sense...

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  3. There is lot of talk of a head and shoulders top, a true head and shoulders top in Elliot Wave would be 5 down for the top or "head" a "2' or a right shoulder wave 3 breaking the neckline which is the low of "1" wave 4 tests but does not break the neckline (4's cant overlap 1) then a 5 down. The question is, the move from 956 could be an "A" the rally to 930 a "B" and we're in a "C" down if that is the case, this is not a head and shoulders and the neckline will fail.
    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=4&dy=5&id=p09282410494&a=170558197&listNum=12

    Max Cherry

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  4. by fail you mean head further south?

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  5. no we have already broken below the neckline when the retest comes it breaks above the neckline that would be the failure in Elliot Wave, wave 4 can not go higher than the wave 1 low some counts have 888.86 as the wave 1 low.
    Max Cherry

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  6. considering the close yesterday it looks to me we have at least a day or 2 more of follow through selling. unless I am misreading. where do you think SPX is headed short term?

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  7. tsgd4619 disregard my comment. your chart is down right scary!!!

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  8. I am a little skeptical of the head and shoulders top this is why i love trading it's better than being a detective at a crime scene
    Max Cherry


    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=3&dy=27&id=p94256603848&a=160196411&listNum=12

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  9. looks like wave c of the extended flat is in progress...we will c

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  10. grand.would that mean 901 or 910. also if it's extended I assume we wouldn't hit that until tomorrow?

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  11. Technically we should have an expanded flat, so we should be in a rally today or tomorrow. Once C is complete, a 5 waves down would make sense then.

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  12. A perceived good earnings report from Alcoa will give the excuse for a rally to 903-910.

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  13. EWT my next question for you. I don't currently own calls. sold those yesterday at .60. looking to get them back around .35 or so. if we rally today and tomorrow will we make it back to 875 or lower before then end of next week. looking at the chart I believe we should. your input appreciated. thanks.

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  14. That's a tough one. I don't trade options because of that time limitation. The theory calls for a retracement to at least 900. But given the fact that we have traveled down too far too fast imo, we could get all the way up to gap support at 914. So is very hard to say at this point, took us 5 trading days to get here so if we take another 2-3 days to bounce then possibly you could see 875 mid or end next week IF the expaded flat plays out AND there is indeed a 5 leg down. Right now everyone is so bearish that we might get a double Z up or a 5 wave up instead after ABC.

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  15. thanks, think the aug calls will be a better choice then.

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  16. right now I have only a small piece of skin in the market. took it all off the table yesterday until things shake out some. call me chicken little :)

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  17. damn looks like she won't test the 900 if this keeps up.

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  18. aaron, i'm on the same page with EWT.

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  19. i'm seeing a smaller expanded flat play out from yesterday's low so far today. this makes sense to me since i counted 5 down from the 892.31 high yesterday. so this exp flat playing out is correcting that 5 down. i hope so...EWT what r u seeing?

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  20. on the 15 min chart, i have wave 'b' of this expanded flat extended a little longer. i count 5 waves down from yesterday's 892.31 high. today's sideways move as wave 4 and the low so far at 874.47 as wave 5. if that is the end of wave 5 it would be 2.618 of wave 1 (wave 1 is approx 892.31 to 888) by my count. for my sake it better be the correct count.

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  21. ok. now can we please begin wave 'c'!

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  22. This is my short term view 3 wave low at 872?
    Max Cherry



    http://stockcharts.com/h-sc/ui?s=$SPX&p=5&yr=0&mn=0&dy=3&id=p78095734909&a=170665840&listNum=12

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  23. ok so where will we end up late today and tomorrow you think? Im thinking we may close toward the low end.

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  24. ok, do we now finally start wave 'c' of this expanded flat? not sure what this formation is now. one other way i'm looking at it is taking the move from the 931.92 high on 7/1 to today's low 870.05 and calculating the retracement of that move down. a 38% retracement takes us back to 893 and a 50% retracement takes us to 900. i think we can see 880 at the least.

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  25. This has been one hell of a B wave! it's almost like panic selling.

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  26. this is a reply from ewi about 'b' waves:


    Question: is it highly unusual for a wave B in an expanded flat to trace out 2.618 x A? thanks!

    Answer: It is. Our in-house wave counting program, E-WAVES, starts assigning negative points when B equals 1.4 times wave A, and it eliminates the count altogether at B greater than twice the length of A.

    so i guess that expanded flat we were hoping for could certainly be ruled out (i think that was already the thought, but i'd say confirmed from ewi).

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  27. From Max Cherry,
    It is possible that the entire move from 956 is and ABC correction finishing up by July 13, 89 days from the Mar 6 low A=C at 864

    http://stockcharts.com/h-sc/ui?s=$SPX&p=60&yr=0&mn=1&dy=20&id=p20166419598&a=162598973&listNum=12

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  28. i agree with you max. this is move like it. it would explain the impulse-like nature of the waves i'm seeing as we progress lower for C. at the 60 min level, i only count 3 waves for C so far. man, if that is correct, lower we go.

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  29. P2 not reached its high.....and the fed and ppt still in control with GS as their conduit.....you are fighting a losing battle trying to short P2......they will grind you into hamburger....we are in asset deflation NOT real deflation.....and the dollar WILL get wiped in the long term....play this game of shorts in P2 at your own risk.....dano look at auy gg ssri slw...makes a lot more sense .....especially if they push gold down here and strengthen the dollar.......gl on the waves......

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  30. Market may go back up to 890 tomorrow...

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  31. A bounce to 38.2% reatracement will be a good shorts entry point....

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  32. Since Dan did not post today I'll mention that I have a July 7th-8th chart posted.

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