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Friday, July 9, 2010

E-minis [Update 12:50AM]

[Update 12:50AM:]
I have a backup count here in case things go horribly wrong for the Minute [ii] of Minor 3 count. Hey we need to be prepared! The alternate count is that Minor 1 low is at 1010 SPX in a leading diagonal count off the top. Some subindexes may differ.

Here are my reasons off the top of my head on why:

1. Sentiment, sentiment , sentiment - it may be too bearish. (Kenny showed some of this stuff today) Unless sentiment gets sufficiently bullish without a big price move over the next week or so, then prices need to get higher to get sentiment corrected.  There has been some major possible washouts in bearish sentiment that suggest an extended rally is needed more than a Minute [ii]. But we cannot be sure. We need to see how things go over the next few day(s)/week.

2. I have the same basic count (beneath primary level) as EWI and that bothers me greatly. I have most success when I do something different. I hate the Minor 1 low placement at 1040SPX!

3. If this is Minor 3, its not that impressive yet. For that matter the overall wave pattern is muddled.

4. Big VIX divergence at the 1010 low. Also big VIX gap that maybe gets filled down to 20.

5. I seen a non-financial blog post the H&S target.  It bothered me that this pattern is recognized by the masses.

6. GS just suggested not to chase the rally which means their front-running asses are going to buy it big (and then dump at higher levels)

7. The recent low took three whole days to bottom amongst the sub indexes. That is perhaps indicative than something more than a few days bounce. This is the biggest thing that bothers me perhaps. Why the multi-day divergent low?

8. Seasonality.  Summer lower volumes in August could produce a low-volume rally such as we have seen over the last few years.

9.  Everything in P[3] should be bigger than P[1]. That includes likely time factors.  I can see an 8 month Intermediate (1) of P[3]. Minor 1 should therefore be bigger in price and longer in time than what was in P[1]. If we consider mid January 2011 for Intermediate (1) low, then Minor 2 high in early or mid-August seems more than reasonable.

10. Earnings season gets "bought".

11. Team Obama declared this the "Recovery Summer" and I fear the contrarian position that they'll be hailed as correct.

12. Some simple technicals (such as MACD signal lines) are suggesting a multi-week rally. If this is Minor 3, they will be wiped out soon enough.

13. Dollar and Euro need further correcting in their Intermediate wave (2)'s.

Some of these reasons are (weak) and due to fears of being "wrong" and some are very important (sentiment and technicals). Its up to the market and if it cannot overcome resistance or not.  I had to get this off my chest. Its a blog and letting my fears show is part of the game. Now that I said that, lets get this market selling!
[Update 11:30AM: Here is the general count I've got so far.  The upper black line is indeed resistance as you can see how all the other previous candles behaved around it.  The Wilshire5000 hasn't touched the top of the bear candle yet.

The lower heavy black line is near term support. In the SPX this is about 1048 more or less or a 38% pullback from here.   That would be a (b) wave. Then a (c) wave next week to try and break through and it should but then gets beat back down.

But thats an ideal scenario and it never works that way.  A break under 1040 again would be indicating bigger weakness and danger for bulls. A break above 1075 and holding it as solid support again is danger for bears.

 The big market players see this all the same way for the most part no doubt.

Now its up to the market and sentiment. If the masses wish to take the market higher (back again to above 1105 SPX) then hey, how can we argue? I contend that even if that happens, even if all the way to 1170 again, the market will keep creating big bear days that eventually overwhelm the bull days...the cat is out of the bag.

[Update 11:00 AM: The conviction for prices to keep going up is strong as it has been in a while. ]
[Update 10:51AM: If this was an ED move, then a price drop back to below 1070 should be forthcoming. SPX gap is closed also.]
[Update 10:37AM: Pushing to the top of the SPX gap at 1074.57 in what looks like an ED move]
[Update 9:25AM: E-minis actually count well. The final wave fours and fives subwaves are likely playing out to what may be an (a) of [ii] peak.  Then (b) pullback, then (c) wave next week. Thats about the top count thoughts for now.]

Developing neagtive divergence
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