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It works, doesn't it? Just watch. That is a monster warning sign. When the EMA is moving down below the SMA - undertanding what the EMA is screams out at you that something is up. The beauty of that as an indicator is that it's nearly impossible to see in the charts unless you really look closely at each candle and how they each close compared to the previous ones. The EMA/SMA crossover does it for you automatically.
Personally, I think the reason for the gaps is obvious. Too many short with obvious double risk of both losing your short profits and seeing each resistance level break forcing all the quant funds which trade technically to come in.
But don't be fooled!
I know it's 1999 all over again with Cramer (who at SPX under 700 re-affirmed his 'get all your money out of the market if you need it in the next 5 years' call). This rally is indeed different in breadth than the previous ones. The last one was from Dec to early Jan which took the SPX up 200 points in 4 weeks or so. We're now up 170ish in the same time with absolutley every indicator overbought.
Like I said, I don't really put too much into most indicators because they are mostly lagging and stay overbought. The key to timing larger reversals is mean reversion and looking at these charts using both the 20 day SMA as one indicator to give you a '20 day mean average over the last 3 months' as a guide to overbought/sold and specifically the linear regression channel which not only gives you a more scientific mean average (center) but also the 1 full standard deviations from that based on my 3 month chart, you can clearly see how overbought or extended the Russell 2000 is and the specific stocks like PPG, BRCM, etc....
(remember, you get an 'average' price via a moving average or regression by trading around an up AND down price - that's why these things will pullback)
Those regression levels (the actual numbers, not the upper and lower lines) are you reversal targets.
Can you believe Cramer is trashing his critics as having been wrong about him. Is he crazy? He's been DEAD wrong MOST of the time as proven by numerous sites that follow him and especially as shown by Stewart on Comedy Central and he's using this rally as a way to prove them wrong now? Huh? What's he smoking?
So, when the market falls again later, what will be his excuse? Why does he have a show anymore? He's made such a fool out of CNBC other than his call to get out at 10k. Stewart proved you probably wouldn't have much money left if you followed his advice over the last few years.
What a dumbass.
TNA has a gap to fill with a break below $19.75. If it starts to trade below that level, then it surely will fill the gap back to the $18s. That's when the summation line above in the SPX chart should turn south. That's the signal for the pullback. But that should be used to set up buys.
You make money on them? If so, be glad.
Another move is coming. Just not now. Look at what happened today -- the market up supposedly on the mark to mark thing? The banks didn't even really go up % wise that much. Also, what about the VIX? Still held 40. On a day like today, that SHOULD have fallen over 5 points. Didn't budge. Why? Because the big boys are buying puts hand over fist to protect these gains. That means they don't believe.
The SPX's combined earnings will still be under $70 this year. Let's say $60 the most likely number. At $60 and a PE of 12, that puts the SPX fair value at 720. At $70 and a PE of 12, that's 840. But I think everyone will think that $70 is wishfull thinking. So, either the market is currently fair valued or way overvalued. And, those EPS numbers could be as low as $50 or worse. Geez, at $50, the SPX is worth 600 or less. A PE of 12 is a gift in a monster bear market. It should be 10 or lower.
So, before everyone pulls out the party hats, keep it in perspective. The idea is that the future is brighter next year. Well, not so fast. A big problem coming down the road is the inflation genie. If we get oil over $70 or $80 next year (which is almost a sure thing) and inflation climbing over 6% with all this money they are pissing away, exactly what do you think is going to happen to the market when they try to pull it back? It's like giving a drug addict drugs to relieve their pain and then taking it away just when they get used to it. Huh? You think that's going to go over well????
BTW - Kevin Haggarty says there's a small cycle low coming in next week.
833 was the 1st swing high from the March rally point. That taken out means this isn't a new leg up but rather a continuation of the 1st wave. However, I'm with someone else that says, 'wait a minute, everyone is counting this wrong'.
This is a B wave rally off the larger first decline being an A wave down. B waves are corrections made up themselves of an ABC. So, that makes this a A of a B. Make sense? That's why we didn't get a fibo pullback.
But that's all speculation. Personally, I don't really trade that way anymore. I read Larry Connor's book 'Short Term Trading Strategies That Work' from Tradingmarkets.com in which they backtested all kinds of strategies to 1997 and basically came up with one that does work -- mean reversion.
Simply put, it's trading against the trend. The key to making it work is timing the entries. They came up with an RSI of 2 on daily charts and 5 for indexes for bottoms and 98 on tops.
But I use that only as one. The other is linear regression. The idea is the same as using extreme RSI readings being that prices can only go so far on each leg up or down before they need to pull back.
The trade is to trade for small gains the other way. Using options, you magnify that.
Here's 5 PUTs I'm going to buy tomorrow. Maybe even put spreads.
CHG
BBOX
JNPR
RVBD
ELON
Go here --- http://www.prophet.net/analyze/sc.jsp?size=468,400&pricedisplay=3&duration=3m&frequency=0&log=1&redbars=0&showSpreads=&hidevolume=1&hideevents=1&ustudy=&lstudy1=&lstudy2=&lstudy3&MA=&MAPars=&studies=CCI=14,,;LRC=100,,&scheme=blugray ----
Enter those stock symbols and you'll see how each have their prices at the upper end of that channel on the 3 month charts. The key to timing these types of trades is to wait for those extensions to get reached before even considering trading against the trend. That way you know you're not early.
Let's go with $1000 into each of those trades:
SHORT:
23 shares CHG
38 BBOX
59 JNPR
65 RVBD
118 ELON
Let's see what happens!
Oh, of course short BRCM.
SHORT BRCM -- look at that weekly chart above!
Outside the upper Bollinger Band. WEEKLY RSI over 98!
Yeah, I agree. Picking tops is a dangerous thing to do. But one thing that stands out is this -- isn't the reason the banks all got into trouble in the first place was because of them making all their values up? IE - mark to model? When forced to accurately price everything, then all of a sudden they were worth nothing.
Now, Obama and the Dems in congress are faced with a huge problem -- if they didn't relax the mark to market thing, then the market keeps going down not allowing them to pass anything. Now, the market can go up on this fantasy again like the old days and they can cram their agenda through.
The problem? It just sets up another monster bank 'issue' down the road. This time though the market will smell it out.
This is one of the most irresponsible things I have ever seen. The Dems and Obama are acting out of pure fear. This is why you have split government.
They will. By the way, look at this chart of the NASI (summation) Clearly hitting extended highs
That said, right now the futures are up 10 points to 819 which translates to the SPX around 823. I think it's running because of the mark to market decision tomorrow. However, I think it sets up a sell the news event for this pullback that will eventually come.
Tomorrow could be that big reversal. So, look for shorts tomorrow in the ES on extended moves.
In quote tracker, open 3 charts - 30, 10, and a 5 min chart. Open all with only 1 indicator -- regression channel. When ALL confirm together an extension move to either the highs or lows of the channels, go the other way and play it for at least 1 point. It's so safe, you can go into an all in trade. I use 10 contracts on each trade and capture at least 2 a day gaining between 1 and 1.5 points.
The symbol in Quotetracker for the ES is GLOBEX:@ESM9
Also, look for shorts on BRCM around $21.70
BTW - I shorted 2 May $30 TNA puts this morning for $12.50. The idea is to average into them with a goal of 30 to 40 with a basis over $15.
Well, I'm not recommending the calls because of the inherent risk. I'm doing the short put way. But don't fall for this rally. today's SPX high could be the Gann angle that sets up the continued drift lower (lower highs/lows).
If we're in a 2nd wave pullback, it needs to go lower than this. Not until you get above SPX 833 will it confirm a bigger move - in which case if that happens without a pullback here, then we're still in a wave 1.
Remember, 'sell in May and go away'.
The Jan effect should set up a MONSTER selloff later this year.
I think the SPX chart is screaming a bear flag. 740 to 760 being the target. Around that level, I'd start buying (or shorting the puts) the TNA. I'm going to short the May TNA $30 puts. The next leg up should be a 3rd wave which could take the TNA to the high $20s
Anyone see a bear flag on this chart??
That's a hard chart to count. It's really an issue right now of that gap getting filled. If it holds today, then gaps up on Monday through it, it leaves a MONSTER island bottom. That would be very good.
I think Kevin Haggarty has it right-->
http://www.tradingmarkets.com/.site/stocks/commentary/khview/Geithner-and-Obama-Strike-Again-80758.cfm
Here's my problem right now with trying to predict the market and getting into all this happy talk: the charts. Specifically the 'mean' averages.
Larry Connors of Trading Markets wrote a book where they scientifically went through millions (I think it was 7) of trades over 12 years and basically came up with really one astounding conclusion -- mean reversion works.
If you look at that lower TNA chart above, the lined channel is the upper and lower 100% linear regression extensions with the center line the average, or 'mean', price point for that time period. In that case, it's the 3 month. Simple moving averages are basically the same thing.
The point is, any stock's price is going to 'average' a specific price point over time. When it gets too far in one direction or the other, eventually it will revert back to the mean. If it goes high, obviously that mean price point will be higher also as that average mean price rises with the stock.
Looking at the TNA chart, you see that it's trading at the upper 100% regression extension - which is rare for any stock and especially an index. The SPX is also in that territory. So, the assumption is that we have a big pullback ahead of us.
The 20 day MA for the SPX is 753. We're 9% higher than the MA. So, the expectation is that the price and MA will converge now before any big upside run happens.
The MA is rising fast now, so that level could be around the high 700s.
Yeah, as I said, it's looking like it's 'rolling over'. But don't get too excited about a big fall.
Read this --- http://www.cnbc.com/id/29918571
At .40 for the $52 calls, that would put the Russell over 500. But the TNA would be well north of $30. I don't know why they didn't buy the TNA calls and went instead for the IWMs.
Something is up though. And remember, those are for May. Just 7 weeks away till op-ex.
I didn't listen to him tonight. But I watched the market all day and I can tell you what happened - and what's happening. The market is obviously way overbought. I mean, 666 to 824 in 2 weeks? C'mon. But today, the selling began and was looking to make a big reversal candle. It sold off right to the 50 day MA which I think many that wanted to short it sat back and waited to see what would happen. Well, the dip buyers came in and the shorts scrambled. It was nothing more than a small short squeeze when the 50 held.
But don't be fooled. This current rally is about to fail. Now the talk is that we're at quarter end. The quarter and year began with SPX around 900 with a yearly high of 943. So, the assumption is 'they' are going to try and jam it back there by Tuesday to show quarterly statements 'not so bad' like the 25+% loss in 2008 quarter ending.
That means any upside from here will be strictly manipulated BS. That's why the VIX is NOT going down. Pete Najarian on Fast Money has been screaming it the last two nights. Look at this chart of the VIX:
The market goes up almost 1500 points in 2 weeks and the VIX barely budges? Huh?
The volume on BRCM for example on Monday's late day surge from $20 to $21.50 was incredible. Why? Obviously stop losses for short positions. That's why the bigtime selloff today. There's no more buyers. It was all forced buyers. If there were truly 'real' interest, it wouldn't have sold off the way it did.
Look at the volume on the TNA today. I think it was a record. Why? Short squeeze. Not in the TNA itself but the $RUT as a whole. The shorts sense the end of this. Today they didn't get the SPX selloff on the 50 day break. However, that has been now tested and will be even that much bigger a deal on the next test if broken. If so, 741 is the big target.
If Moe is correct about the wave count, then the selloff will be fast. But that should be a big buy opp. SHORT TERM. I am looking to short TNA $25 PUTS as a bullish play. Shorting the MAY puts.
The goal is to get them short around $11 to $12.
These charts are starting to roll over. However, the SPX futures are now up 7 points, so I think there will be an early morning attempt to jamm the market tomorrow. But that could fail by mid to late day. The true breakdown probably won't be until Friday or Monday. The question is, how much higher here will it go?
Okay, looking at the WEEKLY charts, we're now bigtime overbought on the semi stocks, which should mean downside on the market overall. Moe was saying last night that he thinks we're in a wave one on the hourly charts that just completed - setting up a wave two down. Those of you who've followed me through the miserable MRVL days know that wave 2s many times retrace as much as 70% of the wave 1.
Notice the 2 period RSI on that. All semi stocks look the same. However, this is end of quarter and up is the trend until otherwise proven wrong. But I wouldn't be buying anything now. The volume is weak which supports the 'melt up' theory of funds jamming the market to post better than real life quarterly statements. Frauds.
However, this apparently is a B wave beginning which means the SPX target is around 1000.
Then watch out.
let's see if this chart works
But here's the problem with the conventional thinking these days -- this ISN'T THE 30s! Some 92% of every homeowner is paying ON TIME. That means this entire exercise is regarding the 8% of those who are in trouble and I bet it's better than half of those were flippers who got in trouble at the top of the market.
So, here we are with banks in trouble because they are stuck holding bad mortgages they thought they could sell and insurance companies who insured that garbage without the collateral/capital to back up those bets.
But the question is, over 75% of all banks nationally are doing just fine, thank you and last week a spokeman for the smaller banks association said many of them saw this potentially coming and saved for it.
So, is this talk of doom and gloom REALLY for real? Or, is it a more sinister ploy to scare the public into agreeing on government spending proposals to pay off donors under the guise of a crisis?
I'm betting the latter.
When my wife and I go out, it's still standing room only at restaurants. Hardly soup kitchen line times out there.
There is going to be hell to pay one day when the general public figures it all out. The bad thing is that the way they'll be figuring it out is when they realize that like the 1970s, over 60% of their income is getting pissed away in taxes.
Oh, do I see it coming. Reagan was born out of this garbage. The question is, who's the next one? I have no doubt that the way Obama is going, he's going to trump Carter in spades. The Democratic party is going to be stuck with the tax and spend liberal label for decades just as Carter did to them.
Boy, if there ever was an example of how the emperor has no clothes (in this case, the Messiah), Obama is it.
I talked to him yesterday and he thinks that because these indexes all made outside day key reversals on the weekly charts as I pointed out above in the Russell chart, the likelyhood of a major selloff in a major leg down 5th is minimul. So, the thinking now goes that this will be a 'flat' 5th wave leg down that just refreshes the market as a pullback - or this was a wave 1 up.
This is the problem with Elliotwave. So many of the wave counts can change and makes your previous count void.
But the trade is to buy this dip/
Yeah, Cramer really has been off his game lately. I get the impression he's forgot about his trading days and now is spouting off too much of his emotional feelings about things. I mean, you have to take what he says with some seriousness because the guy is worth $200 mill and did it in the market (of course, not so much trading as was from fees from his hedge fund). He's been dead right from Oct. But lately he's been a coward when it comes to calling out Obama people and their shear incompetence.
That said, regarding the market, today looks ugly. It does appear that this expected 5th wave down is starting. This 'could' take the SPX lower than that 666 low. But 741, then 720, then 700 first.
It's amazing the way everyone has completely turned on the Fed 'happy talk' from Wed. You would have thought that Bernanke solved every problem we had on Wed. But now it's nearly the complete opposite.
The trade I think is now TNA under $5 on the July $10 calls
MRVLreader, this is the trade I'm thinking --
Let the TNA come in a little (fall) and try to get those July $10 calls as close to $5 to under $6 as possible. Then, I think we can sell the July $22.50 calls for around $1 or better. What happens?
You pay say, $6 for the $10s. Let's say we buy 40 for $600 each. That's $24,000
Our net basis then on the TNA is $16 between now and April. By then selling the $22.50s for a $1, we get paid that $100 per option which lowers our net cost on the $10s by $1, or down to $500 each. So, instead of paying $24,000, we only pay $20,000.
What happens? If the TNA is at $20 on expiration, those $5 calls are now worth $10. So, you double your money.
Or, at $22.50, the max level you can make, you're up $7.50 on them, or $30,000.
However, another way to play this is to buy the July $10s, then sell the April $20s. Then again, sell the Mays. right now there is now May contract. But they will add it in the next few weeks.
That way you collect month after month hopefully bringing down that $6 basis even more than $1.
'Roll' it.
This $24k investment could make you (and I) $50k by July.
Stockcharts.com doesn't have linear regression, but if you look at it, the DOW, SPX, and BRCM are all reversing right at the upper line of the max 100% regression level. That tells you it's 1 full standard deviation above it's 'mean' price level. I'm using the 3 month daily chart.
It's a pretty good revesal indicator on both the lows and highs. It's rare you get prices in anything at those levels. The lower level reversed the SPX and DOW twice last fall. Both major 20% rallies were bounced off those levels. So, it's time to short BRCM and the SPX.
You see, the main problem I think most economists that are trashing what the Fed is doing are having is that they are convinced - with history clearly on their side - that the Fed will fail in their attempts to pull all this money in when they need to to prevent the mess that it could bring - ie, the 1970s. Imagine everyone getting used to living with the rules the way they are now and the cheap money and things the way it is now and then a year or two down the road saying, 'sorry, I need it all back'. Huh? What will that do? It will kill the economy because everyone will again pullback their spending and hoard money because they won't know what will happen and will want to sit back and see.
805 is the 50% retracement level on the SPX from 944 (jan high) to 666 low. So, that's the 1st target that we're now having trouble with. It 'should' reverse here for the 5th leg down.
However, 838 is the 61% retracement level that could also be the point of a turn. That said, anywhere around here is the point to be SELLING, NOT buying.
950 to 1000 is the target for the eventual high and the SPX lows will be tested again.
You are already hearing numerous commentators and economists trash what the Fed is doing and I heard Art Laffer yesterday make one hell of a case as to how the Dems and Obama are making the EXACT same mistake Carter did in the 70's. He explained point by point the similarities and how they led to the huge inflation/stagnation mess that gave us Ronald Reagan who turned it all around.
Gold up $65 today after being up $50 yesterday. Wow. Commodities now jamming on the falling dollar. Yikes. 4.25% mortgages? Great. But at what expense? Yeah, I think the market is absolutely going into crash mode later. But for now, be careful and nimble.
Look at this chart of the Russell --
Look specifically at the 5 RSI. It's at a top. That means expect this pullback. Remember -- use a 5 period for indexes and 2 for stocks.
MRVLReader, per our conversation today, I think that another good way to play this is to in-fact buy the TNA straight out and just sell month after month 4 or 5+ strikes out calls. For example, right now, if you buy the TNA at $17.80, you can then sell the April $20s for over $2.50.
Here's the other part of this trade I didn't mention. If you're able to trade and not stuck in a job and/or broker that limits your ability to do this stuff, days like today are to be taken advantage of. I, for example, today sold those long ES contracts at the close for 776. I bought them at 765.50. I expect the market to pullback and most likely selloff in this 5th wave I've talked about. But not get greedy.
Just now, tonight, I bought back the ES contracts for 773. So, I just locked in another 3 points per contract. Remember, those March 650 calls I never covered.
When you are in a covered call, the idea is to use that trade for income. If you're able to trade it, do it. That means when you clearly see an extended run, sell the long position and hold the short. Try to manipulate it even for a small gain. Trust me, it adds up at the end of the year.
Now, what I didn't mention is that when you do this with ES contracts, you want to always go long the contract that expires FURTHER out than the call options. In this case, both the March ES and calls expire this week. So, I went long the June ES. The reason? The longer dates contracts will typically trade CHEAPER than the near term ones. Huh? The June ES is now trading about 2 points lower than the March. Why? I don't know.
By shorting the near term call options, you're locking in that spread between the longer dated ES and the options that are pricing on the near term expiration contract.
But as I mentioned in the last post, the trade now I think is to focus on the TNA. It trades 3x the % gain of the Russell 2000. The Russell 2000 will lead this next rally. The TNA could run to $30+. Looking at the June $10 calls, right now they're trading at $7.70 on the offer. But expect that to fall. Look for an entry around $5 or better.
The wave counts are basically right now we're in a weekly 3rd (ending it) and about to start a weekly 4th wave rally. That takes us into summer and then the final 5th wave low in Oct-ish.
The severity of that low will be determined on the economic news.
The daily charts though have bottomed and the hourly charts are now ending with their 5th waves starting to the downside.
That downside will be between 650 and 740. The strength of the market will be how it reacts at those upper 700 levels.
The good thing is the strengtt of the Russell and Semi's.
With those clearly leading, the market is poised to run heavy on this rally. Expect BRCM to be north of $22. The Russell to possibly 500+.
So, the trade here is to average slowly into this next decline that will probably start tomorrow. The next two weeks will probably be down to end this.
I think it's leverage time. Start buying the TNA call options for JUL.
We bailed on the Aprils for a 40 to 60% profit depending on where your entry was. But this time I think it's getting better. Those calls should be targeted between ($10 calls) $4 and $5. Today's rally was on very light volume. So, the previous day's key reversal down is probably still intact. However, these indexes are showing a weekly key reversal up from last week. What we get now will be simply a retracement of that, not a violation. So, again, start to buy slowly the May TNA $10 calls. Maybe 1 or 2 a day.
I was just listening to Moe's show and he's saying we're going to go down into the end of the month or the 1st week of April. That will end this A wave. Then we get a 2 to 3 month big 'spring' rally. But then it's down bigtime one last time into the end of the year.
Today's rally was probably the last 'hurrah' on St. Patrick's day.
I was doing something today that I do every month for income and realized I never explained it here. Afterall, this board is for making money and I try to help everyone when I can.
You want a near sure thing month in and month out?
Here's the deal - First, you need:
1)Be able to trade e-mini futures
2)Have probably at least $20k. $15k will do.
3)Make sure your broker allows you to trade e-mini future options and allows you to short them.
What you're doing is a covered call with these. What makes them great for income is the spread. Emini futures - specifically the S&P 'ES' have options that trade two times a month - the typical 3rd Friday of each month like everyone else and the last day of each month. What you want to do is wait until the 3rd Monday (like today) and then do this trade. There are two ways to do it -
1)if you're a trader and have the skill and ability, then you wait for that 10 EMA to cross the 10 SMA UNDER to give you a short setup. To carry a future overnight, it will cost you about $3k of tied up capital roughly. When you get that short setup, pull up the option chain in your broker's option chain window and look for the ES call that expires that week and go between 70 and 100 points IN THE MONEY. You should have a large bid/ask spread.
Sell short the call, but put in a limit order with at least a 3 point spread over the current price of the contract. That will most likely be 3 to 4 points over the bid price of the option.
Give it a few minutes and most likely you'll get filled if you wait it out. Then, do the math and make sure that the price you'll pay for the ES is at least 3 to 4 points under your net basis in that short call.
It really is a trade to establish unlike normal covered calls. You have to 'game' it a little.
The trade I did this morning for my March 'paycheck' was when the ES was moving north, but peetering out, I pulled up the March 650 call for it which was bid at 115 and offered for 121. The ES was at 766. So, 766 - 650 = 116. I was gunning for 10. So, 10 x 1 point = 10 points. Each point in ES land = $50. 10 x $50 = $500. So, had I just tried to sell that right there and then I would have locked in a $500 profit for the week. But the spread was $115/$121. I put in an offer for $119. As the ES looked to be inching up, but not spiking, the spread didn't change, but they filled me. It works like that everytime.
So, I was naked short the March 650 calls at $119. Now, I needed to get those ES contracts as cheap as possible. At the time they were trading between 767 and 768. 119 + 650 = 769. So, anything under 769 makes money. I use this for income. So, the more the better. The 10 EMA crossed the SMA and sure enough started to move down.
Not being greedy, I bought the 10 ES at 765.50 eventhough it was clear it was going down more (and did it!). So, my basis of 769 - the 765.60 I paid for the ES nets me a profit of 3.5 points per contract x 10 contracts. $50 x 3.5 = $175 per contract x 10 = $1750.
Get it? It's very simple, very consistent. You just have to understand the trading aspect of timing it.
I use Interactive Brokers. I don't think there's a better, cheaper broker out there.
I see what Moe's looking at. If you look at a 60 min chart of the SPX, you can pretty clearly see a 1,2,3, and now 4th wave move. When you look at it on a daily, it's not so clear. So, the expectation is that it now turns south to complete this wave count. THEN it move up in a new full B. The move down should be this week. The expectation is for the month of March to be that key turn.
The way 'they' play this is many are giddy now again about the market. So, they are going to let all these market orders hit the morning open. Then, about 30 min to an hour into it, they'll start selling it off into that buying.
650 is the target on the downside. That's where you start you buying in whatever stock you're looking at. I suggestd strongly the TNA around $10 to $11 if you can get there.
Even the triple financial (FAS) could be a big winner. But I like the broader index.
BRCM has broken out officially now. But if the market moves back down in one last swish, BRCM is going down too. How far? Probably no more than the $17s because that's the breakout point of the declining trendline it gapped out of. So it should only do a retest of the breakout point.
At that level, BRCM options should be your play.
In other words, this rally once we get this swoon should be used as a leveraged play because you don't get very many chances that are so clear to bet big on a very low risk play.
I gotta tell ya, all these little ones running around actually didn't turn out that bad. It went actually very smooth.
That said, I think what Moe is saying by suggesting we get another drop to 650 on the SPX is if you look at the hourly charts, it looks like this was a 4th wave rally and he expects the last 5th on the hourly. The daily charts though look ripe for a run. That weekly chart of all of them look the best. That's the setup. To trade this, you have to look at what Moe is saying and know he's been damn good at his timing. So, expect a big drop. Then it's party time/
ALERT! ----
Okay, anyone listen to Moe Ansari's show on Sat? He's been pretty right on. Here's what he says for the next two weeks ---
The way I see it, that outside day key reversal on the weekly chart on the Russell portends a move up of bigger scale. BUT! -- Moe says this month we hit the bottom of this A wave. But not yet! He says we go back down at or below the 666 SPX low to wipe out all the hopefull longs. He's looking at the daily and hourly charts to make that assumption.
What to do?
I'm long the SPX e-mini futures as a covered call with the 695 calls. I'm bailing on those Monday. Nice profit anyway. Now, the long TNA I'm in and have reccomended I'm trying to decide whether or not to just sell out and buy lower, or sell the $11 calls which puts my basis in a locked profit because those are trading higher than my long 10 calls. Hmmm.
I think I'm leaning toward selling out the long calls.
You have to listen to him because he's an elliotwave guy and he manages billions of dollars, not just a commentator. And, he's been right.
However, this NEXT leg down IS the buying opportunity.
He also mentioned he has a long term in-house buy/sell strategy that is very accurate. It's only given 8 signals in the last 100 years. In order to get a buy signal, the SPX has to close over 780 by the end of the month. That's two weeks away and he thinks it looks like it will.
But between there and here, we go down big. 100 points on the SPX these days is 3 days of trading. But be careful.
So, if he's right, that key reversal candle on the Russell could be right for a bottom, but within two week's candles. It's still active if the Russell trades within that candle range next week and then goes up.
Hey BBQ, good to see you back. You remember my girl's birthday? Can you imagine they're 3! You guys were here (MRVL board) when they were born! Yikes! Next I'll be buying them cars! We got them a 15' trampoline. (it's more of a present for us to keep them busy - hehe)
They're party is tomorrow. We are going to have 22 little 3 and 4 year olds running around. Can't wait - (geez)
Anyway, look at that RUSSELL chart above. That's a weekly chart and that weekly candle is the mother of reversals. It's a weekly outside day key reversal. The most reliable of candlestick (engulf inside a key reversal) reversals. Most look for hammers. But that's the best. And it's on a weekly. That means the market is set for a B wave to SPX 1000 to 1100. I think the Russel could run to 650. But I'd look for 500 which would be a TNA price around $25+.
I think most funds are going to gun for the Russell stocks because the % return is so much higher. Many are going out of biz this year if they don't get that lost money back. This is how they are going to do it. High beta stocks.
One thing I've learned about wave theory is from Moe. And that is, fibonacci is useless without understanding elliotwave. They work together. The reason why is because obviously you don't get a retracement without a completion of a wave. And because patterns repeat over and over, wave lengths and patterns also do.
The reason so many got beaten this last 6 months is because although now in hindsight you see those wave patterns clearly and they do conform pretty well to all wave rules, it's the magnatude of them that has thrown everyone off. No one thought the market would fall as far and as fast as it did and therefore many bought at higher fibo levels thinking those were the bounce points, yet the projections contintued.
The biggest reason for the large selloffs (again, now in hindsight) is because of a market mechanic thing that has nothing to do with fundamentals. When the fed let Lehman and Bear Stearns go, what they obviously didn't understand was that a large part of their bizs' was as market makers and specialists. What a market maker does is 'make a market' in a stock. In order to do that, they have to have stock to sell to buyers. Therefore, they take 'inventory' of a ton of stock in order to make a market. Well, if they go bust, they then have to dump all that stock. Hence, you get a selloff of massive porportions. That then leads to the false impression of a crash and then that leads to everyone piling on on the selling. Combine that with no uptick rule for shorting and it just gets worse.
So, had they let LEH and BS remain in some capacity, then we probably wouldn't have seen the level of the selling we did and probably wouldn't be here today at these levels. Much of the S&P's earnings levels are directly due to the pshycology of investors out there. It just piles on. So PE ratio levels on the SPX are really bogus now because it's an anomoly. Normalized earnings are what's important to focus on and that's probably more around +$70 a share, not $50ish now.
That said, LOOK AT THAT RUSSELL OUTSIDE DAY KEY REVERSAL FOR THE WEEK! NICE! ANY pullbacks are buy opps now.
My brain must be good because I found all of them in seconds. Without the mouse.
I get most of my info on it from Moe Ansari on the radio. You can listen to back shows at his website at 'marketwrapwithmoe.com'. Register and then listen to the archives. Or, you can listen to him live everyday at 4pm PST on KFNN in Arizona or live on the web.
He is very good with cycle timing and wave projections. But you have to listen to his show everyday to get those as he mostly talks about general market stuff.
I count the 2007 high as the beginning of wave 1. I just showed a chart that didn't go back far enough to show the entire thing.
Now Doug Kass is making a major call in that he says yesterday that we've seen the low of your lifetime. And this from one of the biggest bears out there who's been dead on in terms of not only the timing of this entire debacle but in its projection. He runs a short selling hedge fund by profession. So, couple that with his being dead right for the last 3 years and you otta take that seriously. Add to it Robert Prechter of Elliotwave Internation calling this the end of the A wave and you have to be long here.
But the final projections look like the 'C'wave comes in in 2010 to new lows. But for now, ride it!
Look at that chart of BRCM. Breaking out? Or head fake? We'll see!