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.

Hitting Ceiling at 865 Now; Jan. 28, 2009

The S&P futures are hitting the cited ceiling level of 865 I mentioned last night in my previous post. I can't say for sure if it will hold or not, but breadth is extremely strong as almost no one is selling this morning. This has been typical on Fed meeting release days though. The key is what will happen after the meeting. Once the Fed hype is over, whether it be this afternoon after 11:15pst, or sometime later in a few days, the market will resume its downtrend to new lows.

One Last Pop Before Doomsday; Jan. 27, 2009

The market has been trading choppy and sideways and I've been patiently awaiting signs for a top to be in. I don't have them yet, but suspect they'll come soon, perhaps this week. The chart above shows the clear decisive smooth selloff downward and the very hard faught choppy modest ensuing rally. This screams out to us that the trend is still down. Losses are easily acheived, while gains are hard faught and barely achieved at all.

The big question is when? Well tomorrow the Fed meeting results come out, whoopty-doo. But as usual, people buy into the Fed meeting, and looking at the rally in the futures right now, this meeting is no different. Interest rates are essentially zero so I don't know what all the fuss is about for this meeting other than it's speculators pushing the market higher only to sell as usual shortly after the meeting. The bottom line is that this rally we're about to undergo should be short lived, and I'll be aggressively shorting it the whole way up. Once it tops, which could be in the S&P futures 865 area, it will lead to the next wave of fast and ferocious heavy selling.

The short term picture is unclear, what is clear is that this rally is a correction, and that the S&P low of 740 will be broken in the coming weeks.

S&P Futures Confirming Short Term Call From Last Post; Jan. 25, 2009

As you can see from the above futures chart posted early Sunday afternoon, the outlook I have from the previous post for the very short term has played out. The ascending blue trendline was broken through late Friday and then the market tried to rally above it again and bumped underneath it several times before the bulls finally gave up and sold off the market in the last few minutes of trading. Now we see Sunday has continued that selling. Now this is a very short term chart and indicator, only 5min, so it's far from certain this will continue throughout the night and into tomorrow morning's US session. If it does continue to sell off, then the 750-775 area are the immediate levels of support to watch for.

Short Term Bearish Setup; Jan. 22, 2009

Here's a 5min S&P futures chart showing an ascending blue trendline that held the rally above it all day today. Late in the day the rally then ran out of steam and started to fall, causing the S&P to break through the trendline and trade below it. As typical in breaks of trendlines, the index then rallied to try and break through above it again, but after several attempts (see red circles at top), the bears took over and sold the market off lower. This short term minor technical indicator may be a sign that this short term rally has ended and more heavy selling will occur, taking the index below 800. But again, this is just short term speculation so I can try and grasp where the market is going in the near term. My stance is solid that the market is in a corrective phase, and when it's over it will send the market well below 740 in the S&P cash.

As for the short term setup above, we'll see Monday how it plays out.