Tuesday, February 23, 2010


Here is an hourly chart showing 24 hour trading in the e-minis. The market broke sharply on the consumer confidence news this morning. But so far it is holding just a shade above the lower bullish trendline and above the last low on the way to the high (red dash line). The drop from the 1112.75 high so far has also been just a little smaller than the last two substantial reactions in the up trend (purple rectangles).

I think the drop from 1112.75 is nearly over and I doubt the market will spend much if any time trading below 1092. Even if I am wrong about this I still would be looking for a higher low near support at 1076 (solid green horizontal line). This is not only the level of the top of the initial part of the rally but is also the midpoint of the entire move from 1040 to 1112.

Once this reaction is over I will be looking for a move to 1130 and eventually to 1200.


Kishore said...

It is interesting to see the conflunce of support for ES, that 1076 is a 50% retracement of the entire advance from 1041 and it is also 61.8% retracement of the wave 3 up from 1054 to 1111.

I agree with Carl that the "bearish" action so far does not alter the overall bullish scenario.

Of coure, the scenario may change if we continue on below 1076 and continue on to test 1041. Even then, because of the 61.8% retracement from the low at 1041, it unlikely that ES will not turn around or bullish scenario will change.

Once again, it will take a lot of inverted hammers to knock some sense into the heads of the bulls, especially in an overall political, social and economic environment where BS prevails.

perthx said...

There are many ways to count this decline today. It could easily the a wave iv of a C wave of 2 up, or just as easily wave 4 of a 5 wave first wave up off the 1044 lows.

hey jeff, can Iget one of those books you offered? You never have responded to the guys who asked...am I to assume you are a liar?

carl, why do you keep approving the posts of this guy if he is a proven liar?

Nick said...


Great Chart! I like seeing trendlines that are tested and true. There are good arguments for being bullish or bearish at this time.

my 2 cents:
A break to the downside and touching 1075 is my short term target (Target based on the time spent hovering at this level illustrated by your chart, and direction based on my spxu holding bias). I think a lot of bears want to take out DOW 10,000 again. Then, on the upside, I speculate that a retest of that rising broken trendline from the march lows is in order.

But only Liars know the truth 100% of the time.. unless they are telling the truth about their lie in which case the truth turns out to be a lie...? Can we retire that phrase already?


roguewave said...

... heard every time at a cocktail party..."I have changed the Elliott Wave count because...(fill in blank)

jeff said...

Perthx, Nick, Roguewave, and others,

Unless Carl chooses not to post my blogs and/or value other folks' opinions, I will continue to provide mine. Isn't that what trading is all about? People who have different perspectives, is a good thing for this site and the market.

Case in point. Earlier this morning, Carl went long one unit at 1103.50 and per his prudent risk tolerance, he sold at 1096.75 at a 6 point loss. Obviously, this means whoever was on the other side of the trade was in the 'green' and was 'right'. There is no difference between my posts and the person who took Carl's money. Carl won’t say it, but undoubtedly, he had some concerns about his long side approach, otherwise, why would he have sold? After some digestion, he has put back on his long trade. To me, this is very healthy.

That being said, I would love to hear each of your own independent bullish rationale for why we go up. And it’s fine if you don’t have the fundamental wherewithal and simply follow Carl’s trades. Nothing wrong with that. From my perch, I don't make a lot of trades, but rather, look for changes in the intermediate landscape to guide me. My intention is not to alter folks' approach. I like sharing my thoughts and why I don't subscribe to the long side. Is there anything wrong with that? And when I'm wrong, it's no different than when Carl takes a 6 point haircut on a day trade.

As for my intermediate term concerns, I have plenty. I also believe we will make new lows into the S&P 400 range in the next few years. But that doesn’t help me make money now. Along the way, there will be many rallies and mini-crashes along the way to make money on the long and short side. But overall, I'm looking for lower highs and lower lows to occur in the next year or two.

jeff said...

My short-term approach:

1. If we hold 1085, I'll conclude that we just finished subwave iv down and subwave v will take us into the 1115-1120 range in the ensuing days. If we are unable to hold 1085, I will add more aggressively to the short side as I believe a break will serve as confirmation that Wave III down is underway and will take us around the 1000 level. For now, I continue to have a little short position, but am mostly cash (been that way for a over a week now)

Intermediate term approach:

I believe the climb from the March 2009 lows is simply a retracement in the Grand Supercyle IV that started from the October 2007 highs. So what concerns me? Plenty.

1. Weekly MACD has rolled over and turned down
2. Many major foreign exchanges (DAX, FTSE) hit their respective 50 month moving averages and have all rolled over
3. Concurrent with #1 and 2 above, I can draw a line from the October 2007 highs, to the April 2008 highs to the January 2010 highs. There is plenty of resistance.
4. The March 2009 retracement was roughly 50% of the decline from fall that started from October 2007, occurred on declining volume, and there is a basic up-down-up formation. The decline from October 2007 occurred on a 5 wave formation and much higher volume, which means to me, the most recent climb was a bear market rally and definitely not a new bull market.
5. In Elliott terms, Wave A down was ~910 points from the October 2007 highs. If Wave B has ended (1150 is the top), Wave C will come down to at least test the March 2009 lows. Why? Typically Wave C’s either retrace the same as Wave A or can go as much as 1.618x as much. If you think I'm bearish, the Elliott folks think we could easily see the S&P sport a 200 or even 0 when this bear market ends. However, I’m not even that doom and gloom.
6. Per the monthly charts, I believe there is an uncompleted “M” formation, which points to 480.
7. Unemployment is still 10%, yet the Feds want to raise taxes? In addition, just last week, the Fed announced a 25 bps increase in the discount rate (a rate that is charged to banks who borrow from the Fed). True, this doesn’t impact you and me directly, but I believe it’s a message that the artificial stimulus that propped up this market is going away. Hence, better drink the Kool-Aid before there is no more.
8. The American consumer and now the fed are completely leveraged. Total debt, as a % of GDP is over 375%. We haven’t seen those figures since the 30’s. In the past 12 months, my work shows the debt has simply gone from consumers and business balance sheet to that of the Fed's balance sheet (a basic shell-game of sorts)
9. In the process of the Bank bailouts, the Banks simply wrote off the bad assets and in the process, wrecked consumers’ credit. To compound the issue, institutions have toughened underwriting guidelines (for example, try getting a 90% home loan with no documentation). Can you say deflation?

In sum, with double-digit unemployment, spoiled credit, tougher underwriting standards, increased government regulation of the banks and insurance companies, record deficits (go see ‘usdebtclock.org’), higher taxes, I welcome you, Carl, and other to please share with me your thoughts on fundamentals that will enable the market go higher when the consumer represents 70% of GDP growth.


Kishore said...

Jeff, sorry I could not read your entire post. Too complicated!

Jay Strauss said...

Hi Jeff;
Im glad your not as long winded over by Jaywiz

Is that REALLY Carl posting comments at the jaywiz blog?

If not, then Maybe Carl should log in as a member, just to THWART
the numbskull who is using his ID


Canadian Money said...

The DJUA and Nasdaq both have breakouts below their 1 year channels. The larger picture is warning of a possible important downturn.

fiz said...

Jeff.. why don't you start your own blog ?

roguewave said...

Jeff...I don't pay attention any longer to your posts although my handle at the top of your post caught my eye ..but in sum you just don't get it! You have zero respect here ...including from the host until and unless you pony up 5 books. Even then your attempts at passing on other people's work as your own will still completely keep me in the "ignore" camp and it would be absurd to think that anyone would feel as though you deserve their outlook since you have the habit of stealing information and passing as your own. Sorry fella but in the past multiple times you kept throwing out the term "liar" and it has come home to roost.

TA.Stockman said...


The only way I can see this market moving up is BECAUSE the system IS rigged.

Earnings are so low from last year that any positive earnings (even if they are lower that those seen in 2005-2007) could move this market back to those highs.

This system is not closed. If it were, the run-up from March would not have occurred with as much force and no significant pause. Furthermore, if the Fed can funnel play money to the likes of GS to buy equities to prop up the market, how CAN the person going short be confident of a down leg?

I continue to feel that while we are possibly in store for another down leg, there is no guarantee. Those counts could easily vaporize as the bulls (who have the governments' printing presses at their disposal) press us further up. Therefore, I will continue to trade what the market gives me and not rely on speculation of fundamental news. If what you say is true, then my indicators will reveal it eventually.

pimaCanyon said...


I read your post, not too complicated at all. Actually it all makes sense.

If you believe we're in a super cycle wave 4, then why an ABC and not a triangle, or a double or triple 3? Those wave patterns would not have the next wave down going to new lows but instead retesting the March low.

So many possibilities, so few certainties...

George said...

Jeff, you can find my analysis on my blog. just google black magic and its exposure and my name, and it should come up. you owe me a book; i was one of the first to take you up on the offer.

Nick said...

Nice post. I'm glad you brought up the fib lines since schwab doesn't seem to think it a useful tool to include with their charting.

In response to your comment. The difference is that Carl is a pro and his ideas are original. He does not copy and paste his information from other sites and coin it off as his own. case in point


and your post...


This is also the post were the book idea came up.


Wags94596 said...

Carl has "skin" in the game on pretty much a DAILY basis. I respect that.

Jeff (on the otherhand) appears to be one of those typical Robert Prechter "PERMA-BEARS" that cannot even fathom the possibility a "triangle" count, or a double or "triple-three" as PimaCanyon pointed out above that essentially puts us in one big sideways trading range for much of 2010.

In my opinion, anyone that mixes their interpretation of Elliott Wave along with the highlighting economic "fundamentals" is quite typical of someone that is not a very active trader, and who falls into the trap of trying to "fit" their BIAS onto the market.

This is very easy to do - - - especially when one doesn't have much "skin" in the game.

It's VERY safe to simply sit back and post on blogs about how bearish the economic back-drop is. I see this behavior by posters here, as well as over at Planet Yelnick, Kenny's Technical blog, and Daneric's.

They post, but they don't TRADE.

BIG difference!