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Saturday, February 27, 2010

Weekend Charts and Stuff [Update Sun 2 PM EST]

[Update Sun 2:PM: Global DOW chart.  The extended 5th wave high loos right out of EWP. I am sure there are some price violations but I think the wave structure captures the spirit of an extended 5th.
Junk's weekly candle could be hazardous. It has also formed another trend line that is a textbook wave 2 short trendline.]
[Update Sun 11:20AM:  Did some more work on BIDU and potential price targets based on 3 methods.  The good thing is that the price target range from all 3 is in the same ballpark from $520.06 to $533.47. There is an upper target that resides at $537.59.   If its an ED, perhaps Friday was the high as I have a max $523 price on that pattern. The ED pattern doesn't look good at this stage so I don't show it on the chart.  It rather fits either an ascending triangle or contracting triangle for Intermediate (4).

The ascending pattern had a big breakout then a dive back deep into the triangle which is kinda goofy.  So the contracting pattern may actually be the ticket here. And that gives us the lowest possible price target of $520.06 which you could say its there already. We'll see Monday. Key pivot support is $495.

Also notice if its a contracting triangle as shown with the black converging lines, the apex spot may mark a major turning point which is roughly last Thursday or Friday at the latest.

Obviously market direction plays a big role here. If the market dive bombs in a nasty Minor 3, then BIDU should follow.]
The transports are very frisky and has retraced 76.7% back to peak.  The 78.6% Fib resides a scant 10 points more at 4153.5.  Some potential bearish developments on the hourly though including negative divergence and a potential shooting star for a candle pattern.  There is also non-confirmation with the Industrials. But you can see that the Transports really shouldn't be tracing much higher. However, if they do make a new P2 high sometime this week or next and the Industrials do not, that would be significant non-confirmation in DOW theory and be bearish.

Not sure of the count but I do count 11 waves back up. 11 waves is a corrective count. It also could be a contracting triangle smack in the middle of the formation which could be an X wave of a double zigzag.
The squiggles backs up the shooting star potential. I have them in an Ending diagonal move. A price collapse back to iv would be the next guess for this chart.   You can see how the move from low to high counts very well as the final five waves.   I know a lot of people say the squiggles are useless, however the nature of the "pushing" in zigzag moves that overlap on the final hours on low up volume on the final day of the month for potential window dressing is very much reflected in the squiggles.

Friday, February 26, 2010

Elliott Wave Update ~ 26 February [Update 7:20PM EST]

[Update 7:20 PM: The Wilshire count below.]
The squiggle count looks bearish any way you slice it. Pushing prices all day to the end in a zigzags.
Count is basically the same. Lowest volume of the year and end-of month window dressing. Monday ramp job probably has people eying a big breakout over resistance.I think the tables are going to turn and if Monday pops higher, I think there is an excellent chance it sells very hard in a wave 3 move shortly after any pop-up. Technically, it looks ripe.
Here is the VIX daily. Notice the perfect downchannel on the Ultimate Oscillator that has faithfully tracked the VIX retreat from the peak in 2008.  It hit deep in oversold territory. If this is still P2, then this is the first time prices have diverged.  So that leads me to believe its not P2, and that indeed fear is ready to ramp much higher.

E-minis

Overnight looking bullish. Hourly candles all bullish. Lighter volume red candles. Stochs and MACD support move higher.  How high and how strong is the question.  Closing yesterday's gap down seems a given.

Bears must stop hoping for bad news, what they really need is good news.

Thursday, February 25, 2010

Elliott Wave Update ~ 25 February [Update 9:30PM]

[Update 9:30PM: Although the market seems to be stair-stepping lower perhaps in some kind of leading diagonal move, the 'ol brain (and price action and up reversal volume) rather tells me its perhaps a wishful count.  Particularly since certain sectors show a distinct "three" correction over the last few days and maybe are making new wave two highs tomorrow (see DOW transports and IYR). Sentiment ticked up today again even though a red market. 

Looking at this bullish percent chart, the RSI for this wave 2 (It probably is of Minor degree if its a wave two) has not yet reached any kind of expected stopping point at least at looking at how a wave 2 came off the top of the cycle high in 2007. Very rarely does this indicator get stopped at 50. It usually oscillates much more both higher and lower and peaks at a different point other than 50 RSI. I think that reflects the general swings in sentiment so once it crosses 50 RSI either way, it'll swing toward the other extreme in some way before turning again. Kind of like how sentiment works I guess. 

Taking some comparison arrows and you can get a visual picture that perhaps sentiment is not yet corrected back up enough for a wave 3 to commence.  The comparison seems valid because sentiment should generally react in the same way for Minor wave twos if its coming off a cycle top or a primary. And so far remarkably everything is very comparable. We had an early bullishness prior to actual market price top marked by black arrows.  We then had a secondary lower BPSPX reading top marked by blue arrows that showed negative divergence at the actual market price high. Then an initial fall in a wave 1 and now a retrace marked in green arrows.  

I am guessing about the need for at least 72.4 reading on BPSPX because that might be resistance. However the RSI should be probably higher toward the green marker at least around 68 RSI. So add it together and the market probably requires some more day(s) of higher prices or at least elevated prices in order to bump sentiment even more. Closeout Friday near the high or some such stuff leaving an apparent setup to break out higher next week. Then gap up Monday and crap down hard on big volume on some wonderful news. (yeah right)

We need GOOD news to go down, not bad. And this week has been all bad...Easy money for the MM's. 

Sentiment is again the key. And its going up which is good for bears despite red days (twice now this week). So rather than fret about everything, focus is on sentiment and this chart helps.  

This chart is one reason why I think P2 looks just fine where it peaked in January. This chart will help us determine if thats not the case.
Primary count in a nutshell below. The DJIA is making good 5 wave structures down. It was lagging today on the rally.  I'll post a squiggle chart later.   The upper blue trend-line is perhaps a key bear line.


People email me all the time asking for a more bullish count. The best I will do is show this chart of the DJIA. Basically, you see the channel and the long-standing inverse head and shoulder target. If its stays in the channel, well then it works its way to the target (11375) probably by late Spring 2010.  What would the count be? Well since X waves of any kind are usually zigzags, you can see the two prominent correction areas (July and the recent one) that look like...zigzags. I suppose if this count played out to target, it will crush the wave community which is probably a good thing for a bearish market in the long run. Some would go bullish calling a 5 wave move, others would quit or not care.  At least you'd no longer have a majority on the bearish side of the trade. I had to get that off my chest.

Regardless, the channel is the key. Hold the channel and its possible. Break under the channel, and its game over in my opinion. I think thats why its so important to the market that she stay away from it if possible.  To break up and away its going to take a big up day and soon. We'll know it when we see it. We seen one big day so far since the 1044 low with some ok follow through. However thats not enough to take it over resistance. This is not low-volume Christmas.  We need the the rest of the cash and liquidity anyone can possibly muster up and throw it all at the market.  We would truly need everyone and the public (as much as he/she will do) "all in" to get the most one-sided trade ever to make it to 11375. Then P3.

Do I think it can do it?  It sure would wreck a lot of good work and some near-perfect waves and  time ratios.  So no, I don't off the top of my head and I can give a zillion reasons but I don't feel like res-hashing it all at the moment. One reason it could go up? Because sentiment may not have reached the ultimate extreme that it needs to support a huge crash/P3.  Although by any way you measured it, that too likely has already occurred considering we are living in a nightmare Ponzi financial system held up by abstract numbers in Skynet. And most people are slowly realizing it. I believe Kenny refers to it as the Matrix which is appropriate.

I just wanted to get that out of the way. 

E-minis [Update 2:30PM]

[Update 2:30 PM:  EDIT: Actually, as pointed out in comments, the Wilshire doesn't technically overlap but the other indexes do.] This would be the most logical spot for a leading expanding diagonal triangle. They can start at the top of a major decline when you can spot them.  If this is a wave [iii] or 3, it would qualify for that. They can also have a deep retrace (closing the gap say tomorrow - or not - and then big crap to the downside. We'll see.]
[Update 12:30PM: Updated dollar chart. Something should happen hopefully and it breaks upwards. I have an ED count here.  It could of course be some kind of running correction and the ED is wrong.]

Ok I had the channel wrong yesterday.

Wednesday, February 24, 2010

Elliott Wave Update ~ 24 February [Update 9:03PM EST]

[Update 9:02PM: The RUT probably has the most obvious Head and Shoulder pattern. (As an aside, there has been not much talk of H&S patterns even though they are all over the place.  I guess the July fakeout H&S dampened those spirits a bit.  Probably why its so desperate to make a new high) .  We see it has already had one doubletop area. Just playing around with trendlines and stuff on this chart.]

[Update 8:25: Notes on chart. 1100 level has been traded through 27 different days now.  Familiarity and comfort at this level.  Breeds complacency. 3 unclosed gaps since the recent 1044 low. Are they going to need a fourth gap up to take it over resistance for a day or keep gapping to a new market top? (resistance will be a bitch) Ponder that one.]
[Update 6:52 PM: A couple of articles here I'd like to comment on: First the short sale rules that were implemented on stocks that fall 10%.  This is just another small step being taken to dismantle the underlying apparatus that allowed the market to leverage up to 14K DOW and remain elevated.  The ironic aspect is that they think their actions are actually protecting the market when in fact it will ensure that stocks that fall hard never bounce up quite as high as we seen what happened in March 2009. Of course if they ALL fall hard, then, well, there you go.   And that fits with the overall theory that once the ultimate bear market bottom is hit,  you can forget about a mega-bounce.  

There will be many more "rules" all in the name to protect the investors. But in the end, they will all help ensure the market drops to astounding bear market lows and never gets up (quickly).  I suspect they know this to be the case, but the movement to dismantle the underlying financial apparatus has its own inertia and seemingly cannot be stopped.  Everything from the "Volcker" rule to derivatives will be dealt with in time. And all will exacerbate the decline in the stock markets.  

If you want to look at it in a simpler way, just think of the phrase "everything the government touches turns to sh_ _ eventually." And they are just getting started.  Any rule implementation done in the name of "stability and confidence" is usually put to the test soon enough in a big way. And it usually has unintended consequences.


The next one is the banks.  The best thing the banks can do to arrest non-payments and keep their cash flow going is to offer low percent interest on already outstanding loans.  Yes it seems counter-intuitive to banks but I think its obvious. Because the more they squeeze the consumer, the more likely they will hasten their own self-destruction.  Lured into taking 10's of thousands of $$ of easy money, and now sticking it to the consumers who were not only encouraged and duped by the banks to take out credit, but by government itself and indeed the President.

The banks will get even more non-friendly and the people will naturally react angrily by sticking it to them every step of the way and pulling their cash if they have any. Oh and naturally the rules changes were of course the result of a law that Congress passed all in the name of "protecting" consumers from bank abuse.  Yet all it did was give the banks cover and an excuse to rape the public who got trapped with debt. Sure credit was out of control and needs to be restrained in the long run, but screwing over the people by making them perpetual debt slaves when they are overloaded in debt obviously will have a bad outcome for all.

We don't need rules to protect against the next debt bubble, social mood and a generational change in spending will ensure of that just fine!

What we do need is an effort to keep the already outstanding loans from going into default by not making the people perpetual debt slaves with high rates that were not there when they took out the credit or begin with. The banks could easily do this with one click of a button but we all know they will do the opposite. So screw them.

And social mood will deteriorate even more. That you can be certain.


[Update 6:10PM:  There is still a very decent bearish count off the top of the Wilshire in existance.  Notice the waves up today certainly overlapped in every which way.  

Looking at this simply from an EW perspective: Since the high a few days ago, what wave structures have been impulse-looking and which have been corrective-looking?  The simple answer is the down waves have the impulse look and the waves up look overlapping and corrective. Sure we can make fancy counts out of the up waves to turn them into some form of impulse, but at this stage of the structure we would be very much forcing things (although the DJIA squiggles look better). The down count still has the upper hand. Today did NOT retrace the entire down day from yesterday.  

Also note the expanding shape which is generally bearish.  

It is this way of looking at things that presents a very bearish case.  If we get a new squeaker recovery wave [ii] high, then so be it. And there could be a lot of non-confirmations between indexes just to throw more confusion into the mix. Regardless, both the primary and alternate squiggle counts has the market heading down after this peters out.

[Update 4:51 PM: The VIX daily had the lowest oversold reading on the daily since early 2003 on the Ultimate Oscillator indicator. Not sure what this means but thought it was interesting. Bounced up today. But its a setup to show positive divergence in this indicator]

The move from the low seems, in a way, to be behaving in a big 5 wave move-type structure.  Going back to the DJIA is always the best because it always seems to follow the trendlines the best and at critical moments has the best structures.

It seems the market really worked itself back up to get one more crack at a true breakout so I will respect the price action and give it a potential count.

The chart below is my favorite count for the moment in just about everything. And before you say to yourself "well that cannot be because of such and such", well all I can say is that no matter how you count it, its not going to be perfect assuming that this is just a retrace wave [ii] or 2.  This also supports the notion that we are only in a Minute degree sized wave.

E-minis


Tuesday, February 23, 2010

Elliott Wave Update ~ 23 February [Update 8:17PM]

[Update 8:17 PM: The SPX daily shows the 13/34 situation. A cross seems inevitable unless a hard move down occurs which is what the primary count is at the moment.  Even if it does cross it could turn out to be false. You can see 1113 resistance is the key.  Challenging this mark in A/H's on the futures and then a couple of times on the cash index.  Bears would hope any retrace higher holds under 1100-1104 and then it drops hard on a failure to take back support.

BPSPX, or S&P bullishness actually ticked higher by .02 rather than go down even though the market dropped some 1.2% on average. Thats good for the bears.  That indicates a good deal of people believe this is just a pause or a correction in the charge higher. They may be right. At least bearishness didn't increase.

And finally I think they are voting (or just holding a meeting) on SEC rules for shorting stocks tomorrow.  If there is one piece of news that I fear as a bear, it could be that because that directly affects "the game". But ya never know how the market reacts to such things.  If this is a wave [iii] or 3 down, then its going down.  

The market is always an opportunity.


[Update 7:52 PM: I know I am having no luck with the BIDU trade so far (I'm holding for a Google announcement - which might go against me - who knows), but I like HD's chart wedge pattern.  High volume could indicate an exhaustion if this is a wedge. At the very least, I think they fill their recent gap up. Disclosure I shorted HD today at $30.77 for a long term short trade. Stop is $32.38  based on 5 being shorter than 3 (wedge pattern) Price Target: $22.

Smaller CMF peaks helps confirm the wedge in my view. Short interest on HD of course has dropped to a low in quite a few years.  They squeezed it out.

I know it looks like a breakout and maybe it is, but the waves up are not forming an ascending triangle in my opinion. Rather its a wedge.
You could say HD could hit its blue box target. Remarkbale over 61% retrace since the Housing bubble high. But a constant squeeze will get you there. Of course reality is not that good.  Big resistance overhead.  I don't think it holds it.

[Update 5:57PM; According to EWI, the dollar daily sentiment readings are very high which means it could turn down soon. What I don't like as a bear is that equities have been following the inverse path of the dollar lately.   So add all that together, if the dollar turned down hard, and equities went up, that implies this is not a wave 3 down but a correction in the market and it will attempt new highs as the dollar gets crushed and the Euro gets squeezed higher.

Doesn't mean it will play that way of course with the inverse relationship. The markets and the dollar could both tank at the same time for all we know which is just as likely perhaps now that we have been "tempered" for a positive equity = down dollar relationship for a bit.  As a commenter showed last night, the 1987 crash saw both the dollar and equities plummet hard.

Anyways I try to make sense out of the dollar chart.  Lots of a-b-c's up which may be an ending diagonal triangle.  And since currencies can have extended 5th waves according to Prechter and Co., I drew this one up as one. Here is one potential count. Yes some things look retarded I admit but the currency charts usually do. After all this is a basket of currencies we are talking here!

[update: I actually think I have the degrees wrong and we are looking for the top of Minor 1 not intermediate (1). Sorry too lazy to change it]
And the all-hours hourly chart shows the final wedge potentially forming.  If this played out, then the retrace target area is about 78.  We'll know in a few days if this is correct and how the market reacts.
There is a lot of action going on obviously. Currencies are swinging wildy and the e-minis all-hours has a double-top at 1112.75.  Both e-mini highs occurred in A/H's which means the cash index hasn't traded at this e-mini high yet.  The 1100 line is the battleground area. The e-minis sold off twice through this area in big down red hourly volume candles.  One was last Thursday on the rate hike news.  Today was on the consumer confidence and bank news.  So needless to say, 1100 is an important area in the e-minis.

Yet important support beneath the 1100 area was held firm today.  And you can see the reversal candle occurring as I type. Whether or not it holds I have doubts. Technically there is no positive divergence on this e-mini chart so there is no reason to believe that a near term correction or low has been set, at least using that method or clue.

The down volume bars favors the bears on the e-minis the cash index is not quite as bearish for today.  The SPX closed under the 50 RSI and the DJIA and NASDAQ and Wilshire did not.
The Wilshire index did impulse down in a very nice wave structure today.   But there are a lot of cross-currents going on as we'd expect.   Its a battle right now.

E-minis

Vigorous action going on in the futures. The combined MACD and RSI on this hourly shows negative divergence.
But there will likely be a battle as the much touted 13/34 EMA lines look in position to cross positive again.

Monday, February 22, 2010

Elliott Wave Update ~ 22 February [Update 8:32PM EST]

[Update 8:32 PM: Minor tweak on the IYR chart. I propose an expanded flat for 2.  [c] wave has bounced 2.618 exactly times the length of [a]. Second chart has a zoom in view.]
And a closer look at what that expanded flat may count like. You can see that the upleg from the recent low probably counts better as a 5 wave move so it could be the [c] wave of that expanded flat.
[Update 7:41PM:  Sentiment strengthened today even though the market closed red.  Also the VIX closed lower which also is a bullish sentiment. Price action and time = relax, the-bull-is-on-again-type-thinking-no-need-to-worry.  Its a very good sign for bears as this complacency and lack of fear is whats needed to set the market up for another leg down of course.  

So we can say that today finally produced some relaxation in the bulls even though the market turned red.  Another up day will produce even more bullishness no doubt and complacency.  But another up day is certainly not required.  However as I showed on the WILSHIRE chart, one more day would fulfill a time ratio and there may be some more targets that need hitting like JNK.  Also if BPSPX hit above 72 would be nice as its a backtest target.   There exists a small unfinished business gap on the SPX at 1115.49- 1116.48. That was my target area when the SPX was rallying earlier a few weeks back.  Sometimes targets get hit in a roundabout way.  If it does get hit, I suspect it will be short-lived is my guess.

But again, its nice to see true bullish tendencies back in vogue and the proof is a down VIX and up sentiment reading even though a red market.  
[Update 6PM: I think stockcharts screw up the high price on JNK. I remember it going over $40.  It has done this before. Anyways, the target box is near. Very steep up trendline that has yet to break.

Expanding waves off the top is a place we would expect to find an expanding pattern.]
[Update 5:40 PM: The NASDAQ counts well as an impulse off the top. And then a corrective zigzag, albeit a long-drawn out one, back up to the afternoon high.]

[Update 5:17 PM: Keeps pushing to the upside in zigzag type moves.]

Time-wise, the Wilshire could use another day of trading before it reaches its ideal retrace in time for wave [ii] or 2.  Doesn't mean it has to. Sideways day today which is usually indicative of some degree of wave four action.  The next option is its rolling over.  Technically it seems like its rolling.  But will there be a blow off top coming?  Minute or Minor wave twos have been known to do that. I do expect overseas markets to have some more retrace in a few markets likely Japan and Australia. Not sure about Europe as the FTSE has done a fine retrace.
Financials reached their blue box retrace target zone, then had a bearish close.

E-minis [Update 3:41 PM]

[Update 3:40PM The NDX 100 minis.  Looks like a classic ED wedge.  We'll see soon enough this week.]

1105 is the key pivot support to hold. Volume bars overnight slightly favor the bears. Doubletop at 1111 so far.

Friday, February 19, 2010

Weekend Charts [Update Sun 7:45PM]

[Update Sun 7:45 PM: E-minis.  Best count I can come up with short term.  Should be making a new e-mini high by this count.
[Update 12:00PM: A lot of people are comparing the 1987 thing. So I guess I'd throw 1987 up there so you can see how the crash of 1987 unfolded.  Yes eerily similar to today.  I am not saying a crash like 1987 is going to occur. However a wave [iii] or 3 down will be quite painful regardless. if it happens.]

[Update 11:10AM: The RUT is leading the charge up.  It has corrected exactly 75.1%. It resides just under top resistance.  This should be more significant resistance than anything so far.  Seeing how the RUT behaves the next few days will be interesting.  The 78.6% FIB resides a point or so above if it does have another squiggle left in it.  Anything higher is really calling into question just what the heck is going on. But the subwave count looks good so we shall see.

If anything, the RUT argues that a Minute sized wave down occurred and not a Minor.]

[Update 10:30 AM: I have largely ignored the Wilshire and NASDAQ because they both had questionable top areas and this the start count points were open to interpretation.  This is actually quite normal for a major top area to show non-confirmation between indexes.  However I actually put a great deal of faith in the Wilshire counts because they make very nice waves and are pretty much the entire market.  

Back on 2 February I kicked out a chart that http://1.bp.blogspot.com/_TwUS3GyHKsQ/S2iCzCLu5iI/AAAAAAAADy0/1Rr7e4SFa3s/s1600-h/wilshire.png that took into account for this top sideways wave area in the Wilshire (and NASDAQ has the same for that matter) and called it a Minute [ii] mostly due to the length of time it took.  

The SPX and DOW admittedly make a better looking ABC down rather than a 5 wave pattern and yes its looks a lot like August 2007 (even the credit scare is the same storyline)  However its acceptable to count them as 5 waves down particularly when viewed in the backdrop of the larger market count.  

In addition, there is a 38:1 down day that people are conveniently overlooking.  This strong downside day shows that people are willing to sell and dump. This cut a wound in the market that has yet to fully heal of course. Yes we have had a great burst up the last few days, but when the upleg is over and needs consolidation, that will be the real test. 

So again looking at the Wilshire, if one were to count it in a simple manner, you really would have no choice but to paint it as 5 waves down and 3 waves up (so far).  So why anyone would be arguing at this very point where a wave 2 may peak that the bears have it all wrong is beyond me. 

The perfect time ratio between peak, wave 1 and wave 2 would actually be closer to this coming Wednesday morning or late Tuesday. Perhaps this extra time would be needed to shake out more bearishness and have everyone abandon the bearish wave down count altogether.  We cannot abandon this count between now and Wednesday or even Thursday because the WILSHIRE 5000 rules all.

Is it a Minor wave or Minute?  At the moment, that question is moot. Only time will tell.  

[Update 5:20 PM:  BIDU's weekly shows that, like Apple, Amazon, IBM, etc and a lot of other tech stocks that have enjoyed all time highs these past few months, the long-term charts betray the moves as likely 5th-wave type moves. The last of the asset mania craze is borne out in a select few stocks.  Crowding and herding behavior yet again.
Bidu monthly shows the volume patterns.  Also the ultimate oscillator is diverging. Look at the candle moves on this thing. One possible stopping point is the top of the monthly BB at $511.  Keep an eye on that if it ventures that high this week.  Stochs have been overbought for a while now.

But like I said, I am gearing up for a market wave 3 down and assuming BIDU will follow and that its in an Ending diagonal pattern.

[Update Sat 4:00PM: The DJIA has the best trendlines. If this is indeed a wave [ii] or 2, then prices shouldn't be hanging out and slowly rolling over in a big way.  It could, but wave two tops are not a consolidation area or the top of an intermediate zigzag where you can expect that kind of price action or "distribution". 

So what we have is a sharp rally that has reached the underside of a significant trendline. In addition, it is overbought on the hourly showing divergence with overlapping squiggles at the top. http://3.bp.blogspot.com/_TwUS3GyHKsQ/S38Nj2H6YJI/AAAAAAAAECU/bx24eIIHRVA/s1600-h/djia.png It is also sitting under big resistance and has retraced over a healthy 62%.  In addition, an RSI trendline break is imminent. Its also post-OPEX. 

The Ultimate Oscillator is oversold on the daily. It doesn't often get that high. Volume has retracted every day  on the DJIA for the past 5 days. The daily BB was pierced on Friday.  McClellan's is also at a trendline and more overbought at 56.23.

All in all, its the perfect setup for a wave 3.  It has the look, it has the technicals, and it even has a news "event" to mark the wave 2 price high.  

In addition, the obligatory anti-wave talk is peaking which I like to see.  And that is ironic because EW theory is about 5 wave structures. Yet even though this makes a near-perfect wave 2 in price and time, the doubt and "laments" about the theory having so-so usefulness right at the top amazes me.  Yeah we can bitch about the squiggles.  And yeah, I could of waited more patiently for cheaper prices.  Rear-view mirrors are always clear. However all that does not change what is presented before us now.   And some prominent wavers are actually thinking the March 2009 low is the end of the bear market completely.  I mean based on what? A sharp Minor wave two rally? I too think thats a good sign.

It doesn't even pass the common sense. And although financial markets do not operate on a lick of common sense, we are still in a bear market and people are getting angrier every month. And the government is not doing anything but making things 10 times worse.  Now I read where five select states are getting housing  aid. Oh that'll go over real well in the other 45.  The political payoffs, cronyism and open theft continues unabated.  The CEO of Government Motors gets a $9M "package" and we are supposed to be just fine with that. After all , its not the usual $25 million they have been siphoning off for the past 10 years. The coming fiscal deficits, pension shortfalls, and public union wars are just beginning.

Oh the bear market is certainly not over by any means.  

So yes, someone asked me that stupid phrase "trade what you see". Well, the above paragraphs is what I see this weekend. And I also see a market thats seems desperate to not drop ever again just because it would be ruinous to the entire world.  Which means it surely will in a very big way. 

Yet the market is floating on a pack of lies (fraud and accounting tricks) and massive debt loads (that everyone knows in their heart we will never repay) and leverage.  Slowly but surely they become unraveled by the very people who don't think their actions will have that type of effect. Social mood will demand changes. And dismantling Ponzi financial markets is an outcome that seems to have its own inertia and cannot be stopped even if we wanted it to.

After all, everyone knows we cannot repay our debt. Everyone.  At first it seemed "doable" and rational. Then it took asset bubbles to keep it going. Then we rigged the system so that we cannot shut the monster off even if we wanted to (see pension funds that cannot be altered by law, public union packages, massive government social programs, military commitments).   And finally we just pretty much said "screw it", lets see how high we can rev the debt engine. Some in power want to collapse the system for a further power grab anyways. 

So everyone knows the money will never be repaid.  So I guess an 80 year bull market is starting. Yup.  Makes perfect sense.  Good luck with that.  

I revamped the overall counts on BIDU a bit.  I still think its going to reverse big time.  I still think the ED pattern fits best.

And here is the squiggle count of the post-gap move.  I actually think a smaller ED may be forming for the high.  But maybe I just want to see it because I am short BIDU. However, that sure is a nice chart yes?  Now we must see a $1 overthrow (LOL - it can drop in premarket for all I care heh) and then BOOM, the bottom drops out.  Maybe Google announces a big settlement deal in China. 

Of course this largely depends on having the market count correct in that the SPX is ready to go down in a 3rd wave.
And finally a quick comparison of Google and Baidu.  Notice they pretty much follow each other in performance over the years until now.  Now there exists a huge performance divergence and I think this divergence is flashing danger to Baidu.  Either Google must rally hard (and it might) or Bidu drop or both to close the divergence.