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The markets aren't rigged, there are just so many MIT types writing auto-trade programs for high-end hedge funds that only trade the technicals, they apparently are all trading the same way. And as you say, 80 to 90% of the daily volume is made up of these quant funds/computer traders that it's almost inevitable that the market is going to go haywire because they are most likely all competing against each other in the same trades.
The market won't go down or up in a sustained big way until the mutual funds get back involved. Apparently most are just sitting on their hands and buying puts for protection. However, as I've pointed out numerous times, eventually they can't buy puts any longer for hedges because the cost eventually eats away at their cash positions/profits. So, they are setup to sell.
I called today's selloff perfectly not because I'm some genius, but because the elliotwave pattern is near textbook. The question now is going to be how low will it go on this final 5th wave of this larger wave 1 down? $43 or $42 on the Q's? Then we get a pretty strong ABC to $46.50 to $47?, and then the big decline. I'm thinking end of quarter (end of this month) will see that high area. But we also have earnings coming in July. That suggests to me a new catalyst for this 3rd wave down as today's employment report proves the economy is a sham.
It's truly unbelievable the idiots running the country aren't even considering doing what's been proven throughout our history to work -- CUT TAXES to near zero and LET THE GUYS THAT HIRE PEOPLE RUN FREE! Geez. You'd think you're in the Twilight Zone now. Boy was Obama a mistake of epic porportions. All talk and no experience.
This country needs more makers and less takers. Problem is, the clowns in DC thrive on more and more takers.
Oh no. BRCM pretty much though will trade with Nasdaq. What I'm thinking though is that if BRCM sets up for a selloff pattern, then the most likely scenario is that the market overall will go down. Not because of BRCM, just that BRCM being the 2nd or 3rd marquee stock in the 17 $SOX stocks is telling you a lot about what Nas has in store.
Just look at the daily chart of the Qs. We're holding this rising wedge which looks to me as a 4th wave. I think the setup is for the market to go down big tomorrow. Or Monday. Break the wedge down to the low $40s and then rally hard into month/quarter end, then setup a major selloff in July.
We'll see what happens by week's end with this rising wedge. If the Q's don't break out of $47, then the wedge breaks down and you get a quick shot/test of $42 to $43. THAT is most likely the scenario to buy into month-end.
I just don't know right here.
Okay, very interesting setup in the Q's. I base everything off the Q's. Currently, it's still in a rising wedge with tomorrow's high potential (staying within the wedge) being around $46.50. A CLOSE above that level suggests the possibility that this decline off the April 26th high of $50.62 was an ABC and that this is a beginning of a new last and final leg higher into July? $47 is the 50% retracement, so that could be a hard resistance.
The bigger picture is basically a setup for mutual funds to keep the market at least from going down to possibly continuing up into month end which is also quarter end.
The interesting trade though will be Friday. Everyone knows the jobs number will be big. Will they short it? I most likely will for a personal trade.
We'll see. But I think the trend is now up until July sometime, which I will seriously consider PUTS on BRCM. If BRCM starts to trade near $40, I'd be a short/put player. The trade will have to set itself up though. The possibly setup will be a false breakout over $40
Okay, now I'm really conflicted here. I'm staring right at a daily chart of the Q's and after drawing a few lines, it's clear as hell that it's tracing out a rising wedge/bear flag. Not good.
Now, if you want to get really technical here, the setup to me at least looks like it breaks down because this last little rally looks like a wave 4 bounce within a larger wave 1 decline off the $50.62 high.
Now stay with me. Zoom out a bit and you can see how a break of that wedge we're in sets up a decline to 'retest' the $42 area.Remember how I said a few weeks ago that the move down to $42 would be the buying op around Aug/Sep? Well, it looks like we might just do that a few months early.
Now work with me people. A move to $42 would complete a small 5 wave impulse move down. That almost assures the beginning of a larger 5 wave move down. So, we get this small 5 wave move down to $42 over the next week or so, +/- a buck or so, and then a big rally to guess where? The 50% retracement level, which magically puts the Q's right at the projected right shoulder level of about $46.50.
Then a reversal right at that level would guarantee a break of the head and shoulders neck of $42 that projects to the low $30s.
Okay, fine. But there is a competing larger inverse head and shoulders that is a very bullish pattern that I mentioned before that uses the same $42 area as an inverse right shoulder. A upside reversal of that level projects through $50.60 neck to well into the $70s.
So, what's it gonna be? Huh? I don't think I've ever seen anything like it. Two major competing head and shoulder patterns. Wow.
Now Cramer says DOW 8200 coming. Reason being the politicians are too stupid to get it right. Not hard to doubt that logic. But what to do?
Today, the Q's look to be setting up a bull flag over the next few days, probably setting up for a breakout up on Friday's job report? I'd be a possibly call buyer of the Q's for that.
Well, take a look at this:
http://www.decisionpoint.com/TAC/MCCLELLAN.html
A few stocks on the radar for this month:
VRTX
NIHD
TCK
CBST
All longs. Specifically I'm watching TCK and NIHD. Both look to have made near perfect 5 waves down and BC has both moving big later in the month. So, I'd watch for 2nd wave pullbacks, and then we'll maybe go long the calls for 3rd wave runs?
Pull up a 4 year MONTHLY chart of BRCM. Look at that candle. What does that suggest?
Yikes. Niles might be dead on.
Well, what your site shows is basically what BC shows and that is we top out next month looking like in a big way with some kind of blowoff run possibly to $40ish? and then we short it because July looks UGLY with neg % returns like those. I would say go long the Aug $35 puts with a step in approach. We'll see?
I just did some quick math and looks like the $10k account is now as of today worth $17,414, or up about $160 for the year. We have about $1000 left of decay to go on the June $7 short TZA calls. Then, if my timing is correct, TZA should roll back up as the market falls from a June/July high into the fall back up to over $10, possibly around $13, making us some good money into the $20ks, and then we'll see. I'm eyeing a short/put on BRCM very seriously.
Look for QQQQ to run to the combo resistance at $47.50, which should be the area of the downtrend resistance from the $50.56 top to now and also a major reflection point based on prior levels. I'm right now standing with the idea that we run to DOW 10.750ish as a right shoulder to setup this large head and shoulders using now 9815 to 9850 as the neckline. 10k was a nice round number, but using the Feb 8th low of 9835, that actually is the swing point. So, that's the gameplan.
Remember, I think Cramer is absolutely right here about today being nothing more than fund managers jaming the market for end of month. The problems with Europe and China are going to drag on and this country's problems are in no way over. With Europe in trouble going forward, how in the world are all these tech companies going to come through with their projected growth/earnings? No way. SPX EPS $80+ DREAM ON. That puts the valuation of the market under 1000 easily. Oh, it will.
The ultimate goal here is to get TNA again under $20.
Well, read this,
http://www.thestreet.com/story/10766421/1/cramer-the-dows-worst-case-scenario.html
So, DOW 8500ish. The problem with his assumptions though is that they reley on current earnings not going down too much. Well, we saw what happened in 2008, first the stock market went, then the earnings. So, the market yet again proves to be the tail that wags the dog.
I agree with Niles. The entire thesis on tech has been more productivity due to so many layoffs. More productivity means more use of tech with the workers you have. All that computer buying means more chips needed, right?
Well, considering nearly 40% of most tech companies' earnings come from Europe, well, enough said?
So, how in the world are these chip companies going to make their 50% growth rates with that mess?
The funny money is now going away that's propped up the market thus far. No one has any money to buy stocks anymore. Plus, Mr. Elliotwave says we have more downside to complete this market selloff in terms of wave counts. Probably another two years of this mess before you find a true bottom.
PErsonally, I plan to try to get TNA again under $20,then load the truck for the long term and just sell calls for income
Net, just stick with these. There's no reason to waste your time with the NYSE as an index.
http://www.proshares.com/funds/
I'm wondering if today ends up being a reversal day? It just has that feeling of a capitulation, if only for a short term. Seasonally, we should get a low about here, then run into Aug, then that's all she wrote until Nov.
Hmm...
Exactly. hehe. Read this-
http://www.nytimes.com/2010/05/23/world/europe/23europe.html?hp
Looks like the arogant prisses across the pond are now in a bit of a bind. I remember the case Micheal Moore was trying to make in his documentary, "Sicko", where he used these country's lifestyles compared to ours as a reason why we should be socialists. Hey, Mike, where are you now?
hehe
After that, then read Fleck's take....
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/europes-dilemma-print-money-or-cut-debt.aspx
No, he was asked what he's doing. Remember he runs a hedge fund, so most likely he's been in this trade for awhile. But his point is very timely in that if you look at the fact that the customers for these semi companies haven't even yet had their earning's cut, this trade hasn't even begun.
All you gotta know is that with BRCM over $30, semis are over-priced. When you get BRCM under $20 is when you know it's time to get in.
I'm thinking SOXS, the triple inverse $SOX. Not yet though. Listen to what Steve Hotchberg of Elliotwave said to Moe yesterday, and you get an interesting predicamant here. If you look at a one year chart of the DOW, what you see setting up almost to perfection is a large head and shoulders with 10k being the neckline, 11,200 the head, and 10,750 or so the shoulders. That would mean that right now, the DOW should run to that level (10,750ish) and then turn south again in a month or so and then around Sep break through that level and fall to DOW 8800? That's the textbook play. Now according to Prechter and Hotchberg, we are in a 3rd here of a larger 3rd that should bring the market down right now below 9000 on this leg. But within a channel, which we're at the lower end of. So, a rally here to the upside of that channel could be in store. Would that be DOW 10,750?
The fundamental backdrop for all this is that the US = 20% of world GDP and Europe = 23%. Combined, if you have 43% of world GDP falling, then oh sh$t for the market.
WOW - Dan Niles on Fast Money says SHORT THE HELL OUT OF SEMIS. His thesis is that most semi stocks have forcasted growth of 50%, but most companies they sell to are only forecasting 20% or less, and those are very optimistic.
Hmmm....
BRCM looks lke a screaming short to me.
Pretty interesting read ---
http://www.cross-currents.net/charts.htm
10k looks like a neckline on the DOW for a large head and shoulders. So look for a nice bounce here for a right shoulder.
Today on CNBC a guy said that there is about $17 TRILLION in leveraged positions still sitting out there. That means that that's $17 TRILL in margin positions requiring interest payments. As the market goes nowhere, all of those positions slowly become liabilities, not assets because the interest expense eats aways the profit. So, as the market drifts, let alone declines, many will be forced out of those positions to protect any profits they have.
It was the 2008 collapse of LEH that forced margin calls via hedge funds. This guy said it would only take the destruction of 4 or 5 heavily leveraged hedge funds to blow up the market again.
After yesterday's monster hammer, I thought today would be a big up day. What an ugly day
Look, all I know is that if this isn't the top, we're really close to it and being long inverse etf's will pay off big. Just sit tight.
In order to have a big selloff, you need to get a rising wedge or bear flag. So, for that to happen, I think we see the Q's trade around $47.50, which is clearly a major inflection point, in order to make that flag. So, expect some very weak climbing over the next few days.
The weekly charts control everything. Most don't look at weekly charts. But remember, the daily chart of the Q's (which I base everything off of) are not bullish. You had a clear head and shoulders break through $49, and now a rally to retest it, a failure just below it at $48.86 and now the 3rd wave down most likely. This should be a 3rd of a 3rd, so it could get ugly real fast. I'm not at all in the camp right here and now that says new lows coming, but technically from a strict Elliotwave perspective, that's exactly what it could be. Considering the mess the world is in, it's completely possible.
Hey MRVLReader, read this....
http://www.cnbc.com/id/37022686
Greg knows this guy and told me their basis for AAPL getting cut in half is based in conjuntion with this guy's math. Small world in stock land.
If the Euro continues to fall and the dollar rises, then GOLD is screwed. There is no way the fed will allow inflation to take off. Add that to the dollar rising and you can see how the gold bugs are in for some trouble.
I put that in assuming it would get filled. It didn't. I'll fix it now to reflect the non-fill.
I think so.
Did I say put? I mean short the calls, but didn't get it.
Talk about desperate....
http://www.cnbc.com/id/37054713
They're trying to beat the hedge funds from piling in and on. But at what expense? You see, 'they' know that the only way to rebuild the economies of the world is to create the impression of market stability. Last week screwed that up and exposed problems.
I think every hedge fund in the world is going to try and short tomorrow's open. We'll see who has more power.
You guys see what's happening here? Why did the EU come up with $650bill instead of the $150 or so they needed? They are attempting a Bernanke where you throw in the kitchen sink all at once to avert hedge funds and short sellers and all the quick buck guys from piling on. However, where the hell is the EU getting $650bill? You think the value of the Euro will stand? Clearly this will devalue the currency, which if falls to parity with the dollar, will basically drop 30% off the value of US stocks because of the currency trade in exports.
The world markets are screwed with these clowns around the world running things. Expect the typical short cover rally tomorrow as the futures are now up 27 points. Maybe DOW 11k again? Then watch....
No, not this fast. It normally doesn't work that way. This is different. Something bigger is at play. Did you listen to that Moe show I posted with Hotchberg? Here, LISTEN to him explain why they think the market is just beginning a 3rd wave down to new lows. Very interesting stuff. Makes a ton of sense. It starts about 5min in.
http://www.marketwrapwithmoe.com/
Go to the MAY 6th show with Steve Hotchberg.
I was at the beach last night cooking marshmellows with my girls. I live walking distance and had such a good day with my e-minis, I had to go out and party. But now with twin 4 year old girls, 'partying' means that kind of stuff. hehe.
But tonight the wife and I are dumping their asses off with my sister and we are going out on a date to see Iron Man. I made no trades today.
Did you listen to Moe's show I linked to? Did you hear what Hotchberg said? They at Elliotwave International (him and Prechter) are counting this entire thing as the decline from Oct 2007 to March 2009 as a wave 1 down, the rally off the March low to last month's 11,200 high as a classic 61.8% fibo 2nd wave corrections, and this the beginning of a new wave 3 down. If so, then we are just beginning a wave 1 of that 3. We'll get a nice 2nd wave bounce, but that only sets up a bigger 3rd of a 3rd. Remember, if they are correct, and they NAILED the selloff last year and the long dollar trade this year, then looking at 1 year long 2nd wave rally, this 3rd should last over a year. A slow persistent decline. Then a 4th bounce and final 5th to end it sometime in 2014 to 2015?
In other words, NEW LOWS. I've heard them say before DOW 2700 final target.
His fundamental arguement scarily makes a whole bunch of sense. Debt bubble explosion. Greece and Portugal are just the iceberg.
Yeah, but remember, most small people today trade options/futures. All those options trades? What happened to them? What about those that got literally killed on the e-minis? How many got stopped out of vertical spreads by their brokers?