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Tuesday, January 31, 2012

Tuesday, 1/31/12 update

There's no push behind this market from either side as witnessed by the flat line in the Vindicator Buy/Sell for the last few days.

The expectation was for a flat or triangle type correction in the ES, this looks like a triangle developing - and the lack of bull or bear conviction fits that scenario pretty well. So the most likely path is more choppy and uneventful action for the next few days or so followed by a shot up towards the highs of last May.

Monday, January 30, 2012

Monday, 1/30/12 update

Sell signal on the ES overnight and on SPX this AM. But we are oversold on very short term momentum indicators on a number of time frames and from a number of different standpoints, so a short trade right here is riskier than waiting for a bounce IMHO. Of course, momentum indicators can go oversold/overbought and just stay there while the market runs, but I (generally) prefer waiting for a retrace.

Saturday, January 28, 2012

Saturday, 1/28/12 update

The bull move that started at the lows of Dec 19 appears to have concluded at Thursday's highs. We should see a continuation of the corrective selling that's occurred since then into the middle to end of next week, but the most likely Elliott counts at this juncture indicate more bull market ahead.
Two most plausible Elliott counts at this time:

Alternate #1 (ES daily)

Alternate #1 (ES hourly)

Alternate #2 (ES daily)
Alternate #2 (ES hourly)

A quick look at the LIBOR rate and the TED spread lends credence to the near term bullish scenario. On a macro-economic level LIBOR rates and the TED spread are an indication of liquidity, higher numbers mean less liquidity and lower numbers mean more. Both have formed a top in late December after a run up that started at the end of last July.

TED spread


Thursday, January 26, 2012

Thursday, 1/26/12 update

Have we seen a near term top? Could well be, the ES hit right in the middle of the target area and promptly sold off. We're bouncing at the moment, if the ES can't mount a rally past this morning's high then things could get nasty.

Wednesday, January 25, 2012

Wednesday, 1/25/12 update

The ending diagonal proposed in yesterday's post is unfolding close to what was anticipated. Target for the ES remains in the 1326.25 to 1331.25 area.

Tuesday, January 24, 2012

Tuesday, 1/24/12 update

With the price action last night and today the ES appears to be forming an ending diagonal for Minute W5. Target for Minute W5 and thus Minor W3 is 1326.25 to 1331.25, and a top should be achieved some time in the next two days.

Monday, January 23, 2012

Monday, 1/23/12 update

Equities continue to grind out the bull.........sausage. Bull markets have a way of grinding ever upwards and destroying all the bears in the process. And then, when the bears are exhausted - boom. This one is no exception.
Market hit a little air pocket today, but if my count is correct it's only the "a" wave of a 4th wave correction, with a 5th wave close by and yet another wave 4 - 5 sequence after that before a more significant top. Best guess as to current count (ES hourly bars):

ES 1368.75 was the high of last May and the ES is getting within spitting distance of that mark. There are two most possible alternates medium term IMHO. The first looks for a very significant top in the area of those May highs followed by a deep sell off, the second envisions an energizer bunny market. Doesn't seem to be a lot standing in the way of this market at this moment in time, so the bunny might be the correct read. But surprises are the way of the world, so hang loose.
Alternate #1

Alternate #2

Wednesday, January 18, 2012

Wednesday, 1/18/12 update

Solid up today in equities, doesn't look good for the most bearish alternate that's being tracked. The ES is right at a downtrend line connecting the highs since the top of last May, if prices don't turn lower almost immediately that bearish alternate can probably be ruled out.

ES hourly
ES daily

Monday, January 16, 2012

Monday, 1/16/12 update

The alternate Elliott counts being followed all show that the ES is in the 5th wave of the move up from the lows of Dec 19. There is always the possibility that the rally will lengthen in a 3rd wave extension. However, buying pressure as measured by the Vindicator Buy/Sell has been diverging since Jan 6 and showed a drop off at the end of last week, so the chances of a 3rd wave extension occurring appear slim at this point. So looks like some type of top in the ES is in the near term future.

Vindicator Buy/Sell
(buying pressure - green line, selling pressure - red line)

Saturday, January 14, 2012

Saturday, 1/14/12 update

Candy for the bears:
ES Daily
ES hourly - alternate #1
ES hourly - alternate #2

Candy for the bulls:

ES Daily

Candy for both:

ES Daily

Friday, January 13, 2012

Friday, 1/13/12 update

Two possibilities right here:

Alternate #1

Alternate #2

I'm not committing just yet, watching counter trend rally currently underway. Next week is op ex, those weeks have tended towards a bullish bias, plus HATE to go short on a Friday, so we'll see.

Tuesday, January 10, 2012

Tuesday, 1/10/12 update

Snapshot of current Elliott count (red dotted lines are projections drawn in on Saturday - couldn't resist a little bragging)

Saturday, January 7, 2012

Saturday, 1/7/12 update

The ES has clearly been losing momentum since the blast off from the low of Dec 19. Prices were essentially flat this week except for the gap up opening of Tuesday. So right now Alternate #3 below would seem to be the most likely outcome.

Alternate #1

Alternate #2

Alternate #3

Thursday, January 5, 2012

Thursday, 1/5/12 update

Short term sell signal on the ES this morning, could be bogus as the pattern down since Tuesday's high looks more corrective than impulsive. ES 1260.50 is a key level, if prices push below that it puts an entirely different light on the picture.

Tuesday, January 3, 2012

Tuesday, 1/3/12 update

Today's rally in the ES has ruled out the triangle alternate from yesterday's post. But don't despair all you bears because there's another possibility along the same lines. It could be that there still is a medium term double or triple zig-zag bear market formation in the works as per yesterday's Alternate #3, but instead of the "X" wave being a triangle it is itself forming a double zig-zag. In that case, the ES can be counted as being in the "C" or last leg of the second zig-zag. If true, a possible termination spot would be at a trend line connecting the highs from the May top (blue line in chart).

Monday, January 2, 2012

Monday, 1/2/12 update

There are three alternates right now in the ES. The first two are identical in their very near term implications but very different in their medium term outcomes.

On the medium term, Alternate #1 outlines a 3-3-5 flat type bear market structure dating back to the top of last May, with the "A" wave complete at the early October low and the "B" wave in progress. The "B" wave should top at or near the May highs over the coming weeks and usher in some pretty serious "C" wave selling. A likely target for that "C" wave would be the .618 retracement level of the Mar '09 to May '11 bull market at ES 936.

Alternate #1

Alternate #2 also has a medium term 3-3-5 flat type bear market, but that flat is an irregular flat that is marked as starting at the highs of last February and concluding at the October low. In this count the ES has completed an Intermediate Wave 1 & 2 off that low and is in the early stages of Intermediate W3. The expectation in this alternate is for a strong and extended bull market from here forward.

Alternate #2

Alternate #3 is near term bearish and the most intriguing of the three. In this count the pattern from the May high into the October low is the 1st 5-3-5 zig-zag in what will eventually be a double (or triple) zig-zag type bear market. Since the October low the ES is labeled as having formed a triangle type "X" wave with the "E" wave of that structure complete in last week's trading. If correct, that would mark the conclusion of the "X" wave and the ES should immediately tip over into the 1st leg of the 2nd zig-zag of the bear market. A likely eventual target here is the same as in Alternate #1: ES 936.

Alternate #3

Alternate #3 has the edge as of this moment due to the situation at the end of trading last Friday. At that point there was a sell signal in effect on the ES/SPX under the Trendline/Oscillator system. Further, the Vindicator Buy/Sell has been oscillating, which it tends to do at market turns, with the Sell line close to crossing above the Buy line. A cross of the Sell above the Buy would be an initial confirmation of a turn down.