Thursday, February 11, 2010

Second update

Here is a one point, five box reversal point and figure chart of 24 hour trading in the e-minis. I like point and figure charts because they eliminate a lot of the "noise" found on bar charts.

Today I have been the yo-yo at the end of the market's string. Initially I thought yesterday's close would act as support for a breakout move today, but when the market traded 6 points below that close I gave up on that idea. But now it looks like the bullish forces have reasserted themselves. This morning's low point emphasized the pattern of higher lows seen since Friday's 1041 low. The rally from today's low has decisively taken out (the market just hit 1074) the declining trendline from the 1048 top.

Another bullish factor is that the sideways action we have seen across the 1060 level, accompanied by higher lows, is the longest period of sideways action since the 1148 top, and in fact is more extensive than the sideways action at that top. This suggests base building prior to a strong up move.

I think the ES is trading in 35 point boxes and that this morning's low at 1058 is the low of the second box in the uptrend. This means that the market is headed for 1094 before another reaction of 10-20 points develops.


Jack said...


YoYo is right... Whipsawed!

Thanks for your updates and market insights.


Win said...

I have been yo-yoed as well.

By the way, the dollar is up, and equities are up. This correlation existed earlier this year, from mid 1980 to 1982 and from mid 1986 to mid 1988, among many other time periods. Correlations don't exist for ever.

Kishore said...

Instead of correlations and racking our brains, tossing a coin may increase the odds of winning!

jeff said...

coming up towards my projected 1083 mark (i've been mentioning this area for days now), but i caution you not to drink the Kool-Aid and believe we have clear sailing.

Now that we have finished this triple zig zag formation, wave ii retracement is almost complete and a very strong wave iii down is imminent.

My sense is it will start once the details of the Greece bailout is transparent.

Once this starts, oil will resume it's downtrend pattern to the low 60's or even 50 range as Carl has suggested.

For those who are long, keep those stops tight as this juncture.


Jeff_in_CO said...

Time to play the whipsaw song:

Kishore said...

Many people have been expecting a wave iii of 3 down. If at all it comes, because the Elliott Wave structure may instead alter to a bullish configuration, it surely will again be a big surprise to many.

roguewave said...

what I see is three pushes down and then breakouts and pullbacks all week long guided by this weeks trendlines and next months trendlines. Forget the news and especially EW except of course use their sentiment. I love crash calls and people blogging about how they just went short and will add higher up but are keeping their core shorts etc. What the heck are core shorts and if you somehow "know" it is going higher then why not be long and why did you enter short knowing it is going higher? Besides if a bear inverted the chart and saw the Friday bar they would sell their wife and kids to get short but somehow the bullish price action bar reversal is given no respect as of course we just know that 3 3 3 3 3 3 3 3 3 is right here today and everyday!!!

Kishore said...

Jeff, I think we have just completed wave b up of wave B down. Now we should see a a wave c of wave B down.

The Elliott Wave counts have been progressig too slowly.

As they say, time moves too slow for those who wait.

As it is,most people as inherently impatient and jump the gun.

dcatlowpj said...

I have studies EW theory for five years now....they work well in trending markets but they break completely when there is a consolidating pattern...thus all the confusion we see here and elsewhere in Elliott-Land.

Carl has this correct: read the charts within time frames average ranges (for ATTEMPTING to find turning points) and be very careful to put in tighter stops...better to be stopped out with a few ticks than ram-rodded by point swings against you.

In the end, only price action and volume work for swings or scalps, guided by turning points within average ranges...when the average range is broken, then you got yourself a nice swing with a bit more on your side of a trade.

I have been trying to enter with the primary trend for years now and still make mistakes...that is because we are in a random walk some of the time and not really believing a trend when it presents itself.

AHHH, the life of trading. It is a very difficult and time consuming profession.

PM said...


Kindly note my lengthy comment to you regarding these markets in Carl's previous "Early Update."



Canadian Money said...

The picture appears a little clearer on the Canadian side of the border. The TSX Comp may be nearing completion of a bearish triangle pattern. It suggests a downward moving impulse wave is on the horizon.

pimaCanyon said...

Jeff, many EW counts are valid here which, of course, is the main problem with trying to trade on EW alone. If 1150 was the top of the bear rally, one count is that 5 waves down ended at the recent low at SPX 1045. IF that count is the correct one, then we would expect wave 2 to retrace 50 to 62 percent of the move down, which would take spx to 1097 - 1110.

'course, another possible count is that 1150 is not the top of the bear rally, which would make the drop from 1150 a correction. The drop does have a corrective "look", like an abc down to the 1140 low (wave A), a messy B wave in progress, followed by a C wave down to 1140 or lower.

Prechter himself must know how easy it is to get fooled with EW. He was calling for a super-cycle top way back in the early 90's, was bearish throughout maybe the biggest bull run in history, was bearish again during the 2003 - 2007 rally, and finally "called" the October 2007 (after calling lord knows how many "tops" over the past 20 years).

Kishore said...

The straight up buying today and the straight up ramp up of the Accumulated TICK implies that it was a coordinated buying effort through program trading by the market manipulators, to shake out the shorts. The normal conclusion of such fake rallies is an outright failure. We should soon see much lower levels.

Moreover, after a ferocious drop to 1041, it will take some consolidation at lower levels before a persistent rally can develop.

The media seems to be making a big bang out of the news about Greece, as if worldwide debt is new phenomenon. If the market will go up with every bailout, we should soon see Dow at 90,000. Only fraudsters need this market to go up.

The realists realize that the market needs to adjust to the harsh realities of economies buried in debt.

ga said...

pima and jeff ,

i can give you more EW possibilities to suggest anything your heart desires. I think it may be more important to look at a host of other internals and technicals such as volumes and various ma and ema crosses on various time scales daily, hourly etc. Stochastics, macd aroon crossses all can be helpful here too.

I would also point out that McHugh has a phi mate turn date on the 17th that can come a few days early or late, then there is delta that is looking for a short term top here =/- 4 trade days...

Trade the market action and not your EW biases. Knowing all the various possibilities is good if it keeps you from marrying any one scenario. i am looking for a wave iii of iii down also but am open to Carl's 1200 target potential as well

pimaCanyon said...

agreed, ga.

iii of iii is still possible, but if we go much above ES 1078 (62 percent retrace of i of iii), then that scenario starts to look less likely. Above 1100, it's off the table.

ga said...

pima, I find it harder to follow this site as I trade SPY options and watch the $SPX and not the e-minis so much but your target levels above are pretty fair. One thing to remember is a wave 2 can retrace up to 100% of wave one if it wanted to and .786 so .886 fibs are not out of the question either.

roguewave said...

We tend to believe what we see so be careful what you look at. You must in fact restrict what you look at in order to be successful. There are 100% available facts. This we can agree on. Now if we could know all 100% facts we would have enough equal bull/bear information to know that price is exactly where it is right now and it should be there as it represents the perfect level between all the buyers and sellers who have different opinions and beliefs of all the 100% facts. Decisions are made from these beliefs and orders are placed which creates volume which creates change in price and momentum. The last thing to change is price which is how divergence exists when measuring momentum vs price. We can track volume and we can measure momentum and we can chart price. Here we work to develope an edge and hone our skills and self-manage our emotional states. What we cannot do with any regularity enough to create an edge is predict when or if a robot is buying/selling or when or if Osama is captured or if and when a North East storm will have enough effect on oil to affect ES or any other market so it is best to stick to what we can track, measure and chart and leave the voodoo and the mystical for the traveling carnival which arrives at the edge of small towns and even still manages to always draw a large crowd.

jeff said...


I believe we need one more wave v up to complete this retracement, which should carry us to maximum 1085 on the S&P. I think, in this case, the blue boxes will prove irrelevent, but nontheless, will take it into consideration if I'm wrong.

After an initial spike up or final five wave count, I'm looking for some serious downside action as part of a wave iii down to 1000.

Any upside above 1100 will have me rethink my approach.

Curious to see what happens once that unfilled $NDX gap gets filled tomorrow.

Good luck all!

jeff said...


You're comments are duly noted my friend.

And I'm sticking with my conviction that a huge bear raid to start over the next couple days to start this wave iii down.

Speaking of your UPRO, you're down a lot since we first discussed our $500 bet.

I'll be bold and say we see 1000 before we see 1100.

PM said...


What is a UPRO? You may have me confused with another poster, I don't make wagers. But I do think we'll see 1100 before 1000, nonetheless.

My best,


khoekz said...


I am the UPRO poster you are referring to with the $500 bet - I estimate you will owe me the cash in 4-6 weeks, can't wait.

I have been buying UPRO all the way down, I started buying since 1090 and have bought every 10 or so points until 1060 when I ran out of cash. I am currently up about 1%.

I do have a stop on my UPRO around 1060 cash SP. But, I don't believe it will be hit. But, I will continue to proceed raising my stop (I use a 20 point trail of the SP) as we continue to climb.

I think it is possible we drop from here past 1040, but not likely. I would give it a 5% chance. I am bullish and that is the play I am making - but I will change my tune if we break 1060, especially if we break 1040.

Good luck to you all.

khoekz said...

Also Jeff,

I will make another $500 bet with you that we will see 1100 on the cash SP before 1000.

Do you want to put your money where your mouth is?

Kishore said...

A good trader could not care less whether the market goes to 1000 or 1100. Both would be seen as money making opportunities.

The only obstacle to potential profits is the trader himself.

In other words, opinionated quibbling, about what the market will do, does not make any money for anyone.

Instead, how to make money, no matter what the market does, needs to be the focus.