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Wednesday, September 5, 2012

Wednesday, 9/5/12 update

The Chinese water torture continues.  It's been said that markets actually spend 80% of there time drifting sideways and only 20% trending, sure has been that way of recent.

The ES is building some type of wedge structure, on Monday it looked to be a 4th wave which possibly only needed one more stab down to be completed.  On Tuesday Voila!! the ES stabbed down and possibly put in the last move of the correction:

To be correct this count requires the ES to rally up and away from Tuesday's low in a 5th wave impulse, which it still may do.  However, the pattern since Tuesday's low has been a continuation of the meandering seen recently with lot's of short term 3 wave moves.  So it's possible that the 4th wave is not yet complete.  It could be that the wedge is actually wave "b" of a zig-zag with wave "c" just starting:

Either way the ES should be breaking out of it's sleep walk very soon.  Which will be a relief.


  1. Amen brother.  Either way is fine with me.  I don't think I've ever seen the signals as mixed as they are today.  Currencies say "risk off", the Russell says "risk on".  Bonds say "the market should have been tanking for the past 10 days" and the SPX says "what day of the week is this, March or January?"  It hasn't got a clue.  And I don't believe anybody else does either.  If a person was smart they wouldn't be in the market at all right now... which is why I'm short, lol.

  2. Very very tough to call the short term right now.  As far as not being in at all right now, the problem is that this low volatility is probably laying the groundwork for an explosion one way or the other, and it's  impossible to say when that might commence.  If experience is any guide, my guess is that we'll see a head fake in the direction opposite to that explosion to set things up.  Currently I'm long Sep ES from about a week ago but I've been hedging with short Dec when I get very short term sells, actually been doing decent by jumping in and out of the Dec shorts.  Longs are underwater at the moment however.

  3. "If experience is any guide, my guess is that we'll see a head fake in the direction opposite to that explosion to set things up.

    I was thinking the same thing Al and I have no doubt it will happen that way.  I'm short and a bit underwater with those positions but overall have done very well lately playing it both ways.  That explosion higher in the Russell caught me a bit off guard because the S&P didn't go with it.  Actually I don't think anything else in the world went with it, which is why I'm so convinced the action in the Russell has JPM's fingerprints all over it.  I'm going to just hold my positions for another day or two or for however long it takes to see which way it breaks.  I wouldn't be surprised at anything right about now although I don't see how it's possible that any more QE is coming anytime soon.  That would be the Fed's last bullet pretty much and I don't think they're going to waste it on a phantom.