There is little doubt that in the larger picture we are building towards euphoric bullishness if not already there. But 'locally' I think there is still much bearishness in terms of where the money is. There have been tons of puts opened up the last few days and that bear money in Rydex is still stubbornly sticky.

I still think the best bet here is up. Today strikes me as a powerful reversal day taking out yesterday's closing numbers on all the indices. IMO it is not a good bet to stand in front of this yet.

Thanks Burk, I seem to be in the minority in thinking tech makes a new high, but the way the SOX and some of the software charts are setting up I think its going to come.

LOL! Very well put TJ and not without a lot of truth. I can't draw or play an instrument so e-wave is my artistic outlet.-g

always find it interesting to find people feeling that
each up move has to have 5 waves.(If that is what you are
saying)

I certainly don't think that Larry. In fact 3 wave moves are far more common since we spend most of our time in corrective waves where 3 is generally the rule. However there are certain times when 5 waves are the rule. One of them is for 'C' waves which is almost certainly what we have out of the March low here (the brother wave to the October launch).

The bottom line is that if the impulse out of that March low was complete, we would have come off the top far stronger in a fresh move down IMO. We have pretty much gone sideways which is very indicative of 4th waves which lends credibilty to the idea of a 5th.

Its really basic TA, a sideways move at the top of a large up move is generally bullish. I let my stops do the thinking beyond that.

Thought you only looked at NYSE new highs and lows.

Interestingly some of us e-wavers are looking for what would be the 5th and last wave up on the SPX. This wave is usually met with rapidly deteriorating internals and breadth but nonetheless it makes a new price high which sets up a major subsequent decline. I'm in that camp.

MSFT looks like a bullish wedge out of the July high. If that thing breaks up we could really motor.

Like you say though, volume is missing.

I never got that bearish reading Zeev. But we use different numbers since I use an equity P/C ratio for ALL exchanges while I believe you use just the CBOE.

To this end, I have not seen a swing high in this bear without a sub 0.5 reading on my 10-day EMA of the equity P/C ratio. We are sitting up at 0.7 right now, not bearish.

Thanks. I'm just not getting any of the topping indicators I need to see though. My 10-day EMA of the equity P/C is a long way from sell territory, as is my TICK indicator. We also now have a proliferation of QQQ puts outstanding for September, many have been opened these last couple of weeks. I would also note the extreme amount of cash in the Rydex bear funds. Lots of folks betting on down right here. TA wise I don't see the structures I'd like to see either, especially in non-tech where a new swing high is virtually a lock for me as we make the infamous triple top on the DOW. Meanwhile in tech, the SOX is coiling under that 410 area and if we knock on that level again I doubt it holds.

I agree 100% on the volume though. Quite weak and it will have to pick up for any kind of push to materialize.

Retailers. The $RLX is on fire.

Zeev, I know you track the NYSE new highs/lows for indications of internal strength. I track the 'new highs minus new lows' and I noticed we had a smart advance in that number today despite the flat/down day. Was wodnering if you had any thoughts?

FWIW I am more bullish than you right here and I think we may be in for a real move up.

I agree for the most part. I find the equity P/C is pretty much neutral to bullish here, its certainly not bearish.

The structure off the top in most of the indices has been anything but impulsive, and there are many issues which look downright bullish to me.

I would also note that the TRIN today should have produced a larger decline IMO.

I think July will belong to the bulls.

Well I had to bail on those BSTE puts for a couple of reasons.

One, it did not behave as I thought it would this week, a good sign to get out. A small loss is a good loss.

Two, I'm heading into the woods for a month and I want to think about the fresh air and not some biotech.-g/ng

Cheers.

BRCM is one of my favourite longs still Jerry. Forming a beauty wedge off the highs here. That thing still has $30 written all over it IMO.

Have a good weekend.

Paul, looking at the 10-day EMA of the equity P/C for all exchanges, there is still room to go there. Major tops have not come before that MA has dropped bvelow 0.5. Its finally moving down after being quite sticky. Now at 0.59.

I stopped tracking it after those freaky QQQ leap plays which buggered the data, but it looks okay again.

Yes, so far so good on those BSTE puts. I also have some early down next week but I am still short-term bullish on the indices here so I don't think it will go down easily until the market has 'really' topped.

I have to say, this stock is a wild bronco and you play it very well no doubt. Its certainly the most volatile stock that I follow.

Yes you're right, it is presing its luck but the fat lady remains mute.-g

It still appears to me that the BSTE chart is hosed Zeev. After repairing itself it is now back to 'half-broken' as it is back inside the big wedge I have previoulsy posted. And that's a pretty impressive looking H&S on the dailies.

Yes, $40 is the line in the sand. I actually think below $41 and it dies given it is the lower wedge line.

I am now the proud owner of July $40 puts. Yes they're riskier front month options but if I have this thing right, it should be a hard fast fall.

Edit-Oops, I notice that its actually just sitting on the top wedge line. Still rescuable.-g

How can the flat be done when there is no 'c' wave down yet? If we are pointing up then it was no flat. I still think we are going down the next couple of days into another buyable low.

I'm not really looking for a sharp pullback actually aj. So many issues/indices I track look like they are building a flat off June 6. Just looking for a move to NDX 1160-1170 before the next move up. I like NDX 1350 for the top eventually.

Each time we've hit this point however on my TRIN chart, it has rocketed to the other exteme (1.7-2.0) so quickly that we get a bottom.

My guess is this will just be another simple retrenchment. I think that MMM chart may prove to be a good clue actually.

Yes, I feel a little more confident with MMM. The choppy mess off the May low certainly has the appearance of being countertrend. Shouldn't go much higher than this.

I also have a 40 hour EMA of the NYSE TRIN near 0.80. That's almost always followed by a retrenchment at the very least, even during the recent ramp. And sometimes much more.

Its a mental stop and it usually results in a 15% loss for me if it gets hit. I make my living trading the futures, options are for really good set-ups here I have had my share of home runs and my share of strike outs. Interesting about the short position though, certainly gives me pause.

For now all I'm really doing here is 'putting' the 62% retracement of the inital dump. I won't tolerate much more of a move up than that. (Same thing with MMM where I am in puts now too.)

I also like the BTK to have another wave down right here to go with the one off the blow-off top.

I only said it was half broken.-g My message yesterday addressed the liklihood of this pop which is why I was scared to buy puts yet and was willing to let it fall without me as I had been waiting for a better looking correction of the initial dump. Sure looks like a right shoulder has formed now. Entry is indeed everything.

Now I am looking for the "brother" down to the one from May. That initial move was straight and ugly, those never come alone off a clear top.

Indeed it is back above the wedge but I think its all part of the retest and likely failure. $48 is/was the spot to buy puts and that is why I will hit it tomorrow.

Its an intriguing battle on that BSTE chart, I hope it works for me. In any event my stop is $50.

I continue to believe BSTE is half broken as per last week's discussion. It has not given me a chance to enter my puts as I am still looking for another pop, it may not come.

I may just have to wait for the sucker to fall through $40 and then put the first reaction. Probably a safer play.

I agree that if the SOX drops much more the uptrend would likely be over. I've already seen enough there in the way of failures to make it a distinct possibility.

If we get that drop to SOX 353 as you say, then the entire wedge breakout becomes a total failure and I doubt we get back above that lower wedge line again. We could slip into extended Jell-O of course or we are poiting down.

The absolute clincher would be below SOX 340 which kills the entire trend off the Feb lows and puts it back into the all-time bear channel which makes that breakout a failure as well, no way that should go.

Bulls can save this of course, but I don't think they can let this ting sink to 353, they need to be buying from the bell.


http://www.ttrader.com/mycharts/display.php?p=12988&u=shack&a=ShackPack&id=335

I believe they break in the direction of the prevailing trend......and normal H&S patterns are to be "dissed" until the prevailing trend changes.


I agree which is why I asked your opinion about this one. It has already broken down. Its the first one we've seen to do this. It may just turn around and hound but it has my attention.

Really? TA on the TRINQ? That's surprising, but whatever works.

Any thoughts on the 60-min H&S on the SOX? Its the first one we've seen below the neckline in a long time.

I suspect that you believe it hounds from here.

Aj, I've done some recent studies on the NYSE TRIN and if you have the capability to overlay a 40-period EMA on the hourly, there are some nice signals generated as it oscillates between 0.8 on the low end (sell signal) and 1.75 on the high side (buy signal).

It doesn't tell you how much of a move you'll get but its a great place to try something. This is the best way I've found to make the TRIN helpful in my trading. It was also the only indicator I track which gave March 10 as a meaningful low.

LOL! Now I can't see it.

Must be the PPT-vbg

Of course you're bullish, you're OJ!-vbg

I'm with you, no major new short positons until the trend ends. If the SOX breaks 340, the uptrend is over.

Strange, I think you may be the only one Zeev. Maybe your computer needs a stiff belt after the long week.-g

I know I do.-g/ng

Interestingly the putative head and shoulders measures lower than that, which would be a failure as I mentioned.

I think we're going to learn about the underlying buying pressure of this market shortly.

That's weird, here try it again:

http://www.ttrader.com/mycharts/display.php?p=12988&u=shack&a=ShackPack&id=335

Anyone else having trouble?

Yes, the double bottom is effectively a head and shoulders too, which is a pattern that has failed time and time again during the rally. Perhaps something has changed here.

The most important level for the SOX is really 340-345, the level of the upper line on the all-time downchannel. If we are going to continue this rally it simply can't drop back into that channel. That was a big piece of resistance from which to breakout and failure is not an option.

That close put that SOX chart I put up right on the brink.

Bulls need to get it going from the bell on Monday.

I assume you mean SPX 950. Yes all those should hold if we are indeed still pointing up.

Hi Zeev. Thought I'd share this chart of the SOX with the thread.

While I too have my suspicions that any large down is beginning here, this chart concerns me that we are now pointing down:

http://www.ttrader.com/mycharts/display.php?p=12988&u=shack&a=ShackPack&id=335

If we fall back into the channel I think its lights out for a while. As it is if the lower wedge line goes I think that will be enough for confimation. At this point I would say that 340 simply must hold. As you can tell, I don't take failures lightly.

Intersting in that it is a very similar set-up to the weekly BSTE chart which we discussed last week (about which I think we disagreed-g)

And here's the BSTE chart:

http://www.ttrader.com/mycharts/display.php?p=12782&u=shack&a=ShackPack&id=335

Not that you asked,-g but I think BSTE is royally hooped Zeev. If you look at the action off the 2001 lows, it formed a bearish wedge which broke to the upside about 6 weeks ago which I took as very bullish. But since then it has come back inside that wedge and the breakout thus far smacks of a major failure. If the lower wedge line goes (the one connecting the July '02 and Feb '03 lows) I think it will be quick trip back to the all-time lows.

Diclosure, shopping for BSTE puts.

We've only tested $50 once after breaching it last winter, in May. Are you counting November?

I was apporximating. Yes, if A=C exactly it should see around $48. Somehow I think we may cross that $50 marker intraday, giving that May 2001 high a quick test. $50 was also major support for two years.