Wednesday, May 12, 2010
Wednesday 5/12/10 wrap up
Steady and very orderly ramp up today, extremely bullish feel to it. The Sell line bottomed today and will give a sell signal when it ticks up from its lows. That trade should probably be taken but cautiously, with todays rally the bear case is in considerable jeopardy.
Elliott wave count is open to question here as well with today's action. The rally today could be counted as a 5th wave to the whole rally from last Thursday, in which case we've completed or are close to completing the first wave 1 in another longer term sustained bull move, and the sell-off that ended last Thursday was it for a while. One thing notable in today's pattern is the hesitation in that same ES 1169 area. Alternate bullish count follows the next chart.
I did a write up at HOB a couple weeks ago http://hotoptionbabe.com/2010/05/06/some-long-term-possibilities/ which laid out three alternate long term ideas, the last of which was that the rally up from the Mar '09 lows will be an "X" wave separating two major bear markets. An X wave is part of a corrective sequence, so it should move in 3 wave patterns. The next chart is a possible wave count for what we've had so far since Mar '09, and proposes that the sell off that ended last Thursday was the C leg of a running flat correction. If that is true, then we have in fact embarked on another multi month rally path.
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I am going to play as if this is the end of a minor 5th at ES 1170. So any move above 1170, I will fade out of my TZA. Below, I will re-instate shorts. Thanks Al for those charts. They make lots of sense.
ReplyDeleteThe X wave idea is one that nobody else has proposed that I know of, but from my POV fits the economic and situational background - our Fed gurus have bought time with massive debt, but it's a Ponzi scheme that eventually could be quite deadly for our economy. Look at what's happened in Greece - don't think the US is immune. Yes the dollar is the world's reserve currency which gives the US extraordinary leeway, but the amount of $$'s being consumed by US Treasury offerings is mind boggling, and no barrel is bottomless, even that one.
ReplyDeleteBorn and raised in Wisconsin, currently reside in a little cow town called Richland Center in SW section of state, originally from Kenosha (south of Milwaukee). Moved to RC in 1991, in no small part because I didn't want to be near major municipal centers because I could see the way things might go. Watching the clips out of Greece last week reminded me of why I came here.
The X wave idea is one that nobody else has proposed that I know of, but from my POV fits the economic and situational background - our Fed gurus have bought time with massive debt, but it's a Ponzi scheme that eventually could be quite deadly for our economy. Look at what's happened in Greece - don't think the US is immune. Yes the dollar is the world's reserve currency which gives the US extraordinary leeway, but the amount of $$'s being consumed by US Treasury offerings is mind boggling, and no barrel is bottomless, even that one.
ReplyDeleteBorn and raised in Wisconsin, currently reside in a little cow town called Richland Center in SW section of state, originally from Kenosha (south of Milwaukee). Moved to RC in 1991, in no small part because I didn't want to be near major municipal centers because I could see the way things might go. Watching the clips out of Greece last week reminded me of why I came here.
As per my comments last night and looking at AL's charts, it looked like a minor top of wave 5, market did not breach 1170 by much and when it did, by the time I was about to sell, it came back down - so I am still short via TZA.
ReplyDeleteShorted ES today, wasn't liking action and then suprise out of towners showed up so covered and went to cash.
ReplyDelete