Rally Good Shorting Opportunity; Feb 24, 2009

Today's rally makes a nice 3 wave rise following a clear 5 wave decline. As long as the 800 level, and especially the 815 level in the S&P cash stay intact, I'm shorting this rally.

This morning, the market did not sell off hard creating a "wash out" like I would expect if a major bottom was in. Instead, it trickled down slightly and then rallied all day on strong internals. We may see some follow through tomorrow, or even the rest of the weak. But gains from here should be hard faught and eventually reversed.

I am now half short again and am stopping out if the S&P rises above 792. The fact that the market didn't "wash out" today and rallied instead is the worst the bulls could hope for. In means that most likely this market will absolutely tank in the near future bringing the S&P into the low 600s.

Market Requirements Satisfied, but a Bottom in?? Feb. 23, 2009

The market has continued to decline as expected, and I've been pounding the table in the past few dozen posts over the past few months saying that new lows will be achieved in the indices. The Dow certainly has, the S&P is inches away, and the Nasdaqs have a little ways to go. However, this is the final move in a large almost two year bear market, so I do not want to get caught heavily short when this thing bottoms and reverses. If the market continues lower from current levels, I would be very cautious of a bottom and huge "rip your face off" rally that will immediately ensue and last for most of 2009. It's because of this I'm not short at all right now and have closed ALL of my short positions. If the market rallies from here, it's quite possible it's just gearing up for another charge lower so I will probably short the rally. I do have a gut feeling that this final segment of this long leg down will finish itself with a huge wash out selloff, i.e. Dow loses 500+ points in a day, or loses 200+ points a day for a week. Until that happens, and wave structure supports it, I will still be looking to short rallies.

If no rally occurs, then the next major opportunity will be to get heavily long. The rally from the bottom should be fierce and quick and should last several months.

Market About to Make Big Move; Feb. 18, 2009

The market internals suggest a huge move coming most likely Thursday. The market closed flat today but the Dow was up with the S&P and Nasdaq Comp. down as well as the NYSE. NYSE breadth was negative with more than 2-1 decliners to advancers. Various indices and sectors were up and down today illustrating an unstable and fractured market. Usually when this occurs, the market moves violently the next day. My wave count above suggests that-that move will be to the downside. However, in case I'm wrong, I want tight stops on up to half my position to protect myself from a violent temporary rally. I plan to start stopping out my positions on a solid break of 802 in the S&P. Most likely if the market is going to move violently to the upside then it will probably be due to some kind of news event. So I'll be watching for news releases out early in the morning and watching the markets' reaction to that news. If nothing comes out, and the the markets tank, then the next heavy downward selling phase should be underway.

Bottom line: a violent stock market move should occur tomorrow, either up or down, so I'm prepared to protect myself to the upside and profit big on the downside.

Possible Alternate Interpretation Calls for Rally; Feb. 15, 2009

After looking at this structure over the weekend I have come up with an alternate count which is just below the count listed in my previous post. The reason this count I'm showing now is not on equal footing is because of the heavy selloff that occurred minutes before the close on Friday which may signal what will happen first thing Tuesday morning in preparation for the stimulus bill reaction; and also because the decline on Friday is very very choppy and not impulsive. Now we've seen this same choppy widening structure just before the October selloff which I chalk up to extreme volatility as the market gets real shaky and panicky before it tanks, but it does not really fit into an EW count. So my alternate count calls this choppy decline a "b" wave within wave (2). So a strong "c" wave rally should ensue soon. A break of 841 in the S&P futures will confirm this is in fact occuring. However with momentum indicators so weak and suggesting further weakness, along with various internal technical indicators suggesting weakness, and the the projected wave count being a large wave 3, a sharp "c" wave rally will be nothing more than a golden opportunity for the bears to add or establish strong short positions. I am currently only half short, and will short much more if a rally on Tuesday occurs. On the flipside, a break of 804 in the S&P futures will cause me to add to my shorts as well because that will confirm the downtrend is in fact underway, and it should waste little time breaking the 2008 low of 741.

Bottom line: any rally above 841 I'll add to my shorts and any decline beneath 804 I'll add to my shorts.

S&P Needs to Selloff HARD Early Tuesday; Feb. 14, 2009

The wave structure is running out of waves 1 and 2 where it now needs to collapse in basically a straight line down in a wave (3) of 3 of (iii) immediately. The choppy decline seen yesterday and Thursday does not fit nicely into a wave count however we've seen this choppy widening downward movement in the past. Right before the October crash the market did the same thing for weeks before it finally made a straight line down that month. So we'll see if that happens again. 841 in the S&P futures needs to hold otherwise we could have a week or so of more rallying. I'm uncertain of the near term so I took half of my positions off and will re-establish them on a rally above 841 or a drop below 804. The fact that the Dow has traded and closed beneath the key 8000 level most of the week is very very encouraging to the bearish case.

Expect wave 3 of 3 of 3 to do a straight line down early Tuesday, if not, it's possible we'll have a sharp rally that lasts a week or two before that happens. But overall, I'm aggressively bearish and there's little doubt at all that the larger trend is down and the bears have control of this market.

Gold 5 Wave Decline; Feb. 14, 2009

Here is a 15 minute chart of gold futures which shows a 5 wave decline followed by a choppy corrective looking rally that has haulted fiercely at the 50% fibonacci level. Gold is bearish as long as it trades beneath $954.

Gold Looking Like it Will Fall off a Cliff Soon; Feb. 14, 2009

I have been wrong on gold for so long I haven't posted much on it. But I do see a severely weakening up trend here, and add that most of the TV and news I hear is bullish on gold and I can confidently say that this metal is in its last throws before a massive selloff. Look at the above daily chart of gold futures and you can see the RSI and MACD momentum indicators have failed to make new highs since December, even though price has continued to push higher. This doesn't tell us where or when the uptrend will end, but it does tell us that this rally won't last long and when it reverses it will be a fierce fierce selloff.

5 Waves Down, Now a Correction; Feb. 12, 2009

The market dropped in a nice 5 waves from the highs but hit a wall late today with another garbage government plan. However the wave count shows that it's just a C wave in a "flat correction", which ended right at the previous 4th wave extreme. I don't expect this rally to continue much at all. Ultimately 873 in the S&P futures must not be exceeded, but a strong break of 840 would warrant caution. The market counts to be in a large 3rd wave right now, so if that's correct then this market should charge lower very very soon. Any further strength for a day or more might call that larger count into question. First significant resistance is the 840 area and ultimately, 873 is the ultimate breaking point. But I don't expect that level to be tested any time soon.

I expect a flat or down market tomorrow.

All Indices Confirmed 5 Waves Down; Feb. 12, 2009

All the major indices' futures have now made new lows on the week which makes 5 waves down across the board. With the market opening in 10 minutes it's more than likely it will push the cash indices down to new lows as well. The S&P futures is bumping down on the that blue ascending trendline I drew in two posts prior so a solid break of that combined with 5 waves down from last week's high tells me this market should accelerate in downtrend over the coming weeks.

No time for a chart....

Only Nasdaq Futures Make 5 Down SO FAR; Feb. 11, 2009

The Nasdaq futures have made 5 waves down as seen from the above 30 min chart, however the Nasdaq 100 cash market has not, and only the S&P cash has also done soe. The S&P futures just touched the wave 3 low, but did not make a new low to consider it a 5th wave. This fracturing of wave structure in various markets is not good for the bearish case. We need all the indices to break through to a new low and follow the S&P cash and Nasdaq futures. Otherwise this is a non-confirmation which can lead to a sizeable rally.

Major Decline Phase Underway, 5 Waves Down Will Confirm It; Feb. 11, 2009

Can't talk long, but with the major selloff yesterday and most of the government nonsense out of the way, the market is now free to fall. Still waiting on a 5 wave decline which appears imminent, as well as a break of a trendline formed from the entire rally established at the 740 bottom (note blue ascending trendline in the 30min S&P futures chart above). 740 in the S&P cash is the first and minimum target.

Corrective Rally Ending/Over, Huge Selloff Coming; Feb. 4, 2009

The above S&P 1hr futures chart shows the rally possibly over as it bumped against the 61% fibonacci level and reversed this morning. Plus, as you can see the MACD is showing a bearish divergence as it never made a new high after the initial surge early Monday. So far, there is very little follow through from yesterday's big rally. Plus, yesterday's breadth was not impressive at all with not even 2-1 NYSE advancers to decliners and now today's rally has the same composition. Also, I noticed the last two huge selloffs were preceded by a huge astonishing surge in the Nasdaqs a few days prior to that happening. Monday and today have seen the Nasdaqs absolutely surge just like the times before. The setup is right, a top is in, or is coming very very soon and a massive selloff that should easily break right through the 2008 lows is coming.

I'm fully short right now.

Short Term Correction then More Heavy Selling; Feb. 2, 2009

Not much new to add, the bigger picture tells me quite clearly that new lows beneath those established in 2008 will be broken, most likely in the next couple weeks. The 15min S&P futures chart shows a clear corrective looking rally which means 805 will be broken at a minimum. With the larger picture so strongly bearish and heavy heavy capitulative selling just over the horizon, I'm shorting this rally with my remaining available cash.

Again, the S&P cash index low of 740 will be broken soon, most likely within just a few weeks.

Top is in; Feb. 2, 20009

A top is in the stock market and 876 S&P futures should be tested at all before 2008's low is broken. The wave count suggests a 3rd wave could be unfolding now. So I'm aggressively short and will add to my short on rallies until 741 S&P cash is broken.

Top Probably in at 876 S&P Futures; Jan. 29, 2009

A top is probably in as today's reversal after our brilliant government came out with a double whammy yesterday with the Fed announcement and Congress passing a stimulus plan that's finally out of the way. Breadth was solidly negative today on the NYSE so after all the hype, nothing but sellers essentially entered the market today. The decline so far appears impulsive, but still has some sub-divisions to go before it can be confirmed. Plus, it appears yesterday's high is around the 50% fibo level from the previous decline (see 15min S&P futures chart).

Bottom line: most likely a top is in for the stock market, so the S&P will break its 2008 low of 740 before it even thinks about breaking the 876 futures' high from yesterday.