Weekend Update

I haven't been able to post in a few days because I have been very busy.

But in my past update, I said it was possible that we could get to 1114 to fill that gap down we have. This would be the perfect target for wave [ii].

Wave [ii] however seems to be taking the shape of a triple zigzag. We could get one last up push for wave (z) early next week. The target is between 1114 and 1120.

Even on the daily charts, that gap looks like it wants to be tested.

However, if we close the gap up of that large up candle on Thursday, it could imply that wave [ii] may have already ended. So 1068 is the important number to the downside.

We also seem to be finding support at the 200 day moving average. If we break the 200, the next target could be the 20 day.

Currently, the 20 is at 1125, but it is falling pretty fast, so it could be lower within the next few days.

The monthly charts are also painting a very bearish picture.

I think the chart explains itself.

Market Update - 5/26/2010

A very volatile day today. We opened up higher and then reversed down at the end of the day.

The primary count is that wave (a) of [ii] has completed, and we are in wave (b). I have a feeling wave (b) might have also completed, since we have already retraced about 50% of (a).

The next couple of days are very important. If we break down with strong bearish internals, it could imply more downside to come. However, the primary count does suggest that we bounce in a wave (c) to perhaps 1114.

The current bottom looks almost identical to the one in early February. So perhaps a bounce is coming.

However, the bounce will be limited this time. I doubt it will have the same strength.

Key pivots for tomorrow 1080 and 1090 to the upside, and 1060 and 1050 on the downside.

Market Update - 5/25/2010

Looks like Minute wave [i] completed today.

We had a powerful thrust down this morning, and then we basically spent the rest of the day climbing back up. These types of quick reversals usually indicate some type of bottom. So for now, this primary count is that we have a bounce over the next few days for a wave [ii].

Ovbiously it's too early for a target, I do think the gap at 1114 will be filled. This would also put us between the 50% and 61.8% Fib retracement, which is common for wave 2's. I also expect wave [ii] to be a sharp zigzag. So far we have 2 waves up, an we seem to be in the 3rd wave. This is wave iii of (a) of [ii].

The key pivot tomorrow to the upside is 1082 and 1090. Downside is 1060 and 1050.

The daily gap is at 1114. This gap will most likely be filled before we come down again.

Market Update - 5/24/2010

Choppy sideways action for most of the day today. In my update over the weekend, I said that if we had choppy waves, it would most likely be a wave (iv).

For now, my primary count is that wave (iv) has completed, and we are starting wave (v) down now. In wave (v), we could have completed subminuette wave i with the down move late today.

We could get a quick bounce early tomorrow for wave ii if wave i is complete, but then we would sell off in a wave iii after that.

Wave i of (v) seems like it could be a Leading Diagonal. Here is a rough sketch of that.

It looks "complete" but we could get a finishing down move early tomorrow if it not complete.

So basically, it is very likely we get a pop then a drop tomorrow.

Despite the SPX being down today, the VIX had a down move.

This could be a follow through of the bearish engulfing candle on Friday. If VIX does not confirm this down move, wave (v) may not be as powerful as we think.

Weekend Update

No video this week.

My primary count is that this move up from our 1055 low is minuette wave (iv). So far, we have a wave W and X that have fully formed. We could get an up move early on Monday to complete wave y. The target for the up move is between 1095 and 1100.

If we break 1103, I think this count could be wrong. 1114 is the low for wave (i), and as we know, wave (iv) must not cross into the price range of wave (i). So a break of 1103 would imply a deep wave (iv), which doesn't make sense at this point.

Any deep retrace would most likely imply a wave 2 of some sort. I don't think we will break 1114 on Monday, but do watch for 1103. Key pivots for Monday are 1095 and 1100 to the upside and 1070 and 1055 to the downside.

1114 is also a very important number on the daily charts. This is the level from where we had that huge candle on Thursday.

As you can see, there is a pretty large gap to be filled there. Only a Minute wave [ii] will fill this gap.

The USD is also in pullback mode, which may help fuel the SPX to retrace in a wave (iv) or wave [ii].

I have the retracement levels marked in boxes on that chart.

So it will be interesting to see what happens on Monday. It will be key to watch the momentum to the upside on Monday. Choppy waves may imply a wave (iv), while a strong up move might point to a deeper retrace coming, perhaps wave [ii].

Market Update - 5/20/2010

We continued to sell off very hard. The bearish alternate count was that we were supposed to get a decent sell off, and we sure did get one. Internals were at an extreme 172:1 at the open, hung around 80:1 to 100:1 for most of the day, and closed around 80:1. This is very impulsive.

The best way I see it, is that we are in the heart of a wave 3. The current wave count is that we are in a wave [3] of iii of (iii) - the heart and center of this current wave, which is minute wave [i] of minor wave 3.

If this count is correct, we should continue to sell off tomorrow, perhaps taking out the lows at 1065 and going lower. After that, we could chop a little higher. Remember, we are in an impulse down. The waves down will be much more clearer to spot. 5 down - 3 up.

Aside from the wave theory, today's market internals action tell me that we could bounce very sharply just to wipe out some bearishness before falling again. Just like the crash a few weeks ago, a lot of shares were sold and/or shorted. So just because of the breadth action, we could get a short squeeze soon. So beware of that.

Key pivots to the upside are 1080, 1095 and 1100 to the upside, and 1065 and 1050 to the downside.

Even from the daily charts, we are clearly in a downtrend.

The key trendline currently lies at 1065. So this is a huge number going into tomorrow. Selling could accelerate even more if we break 1065. Or we get a sharp bounce if it holds.

Market Update - 5/19/2010

Looks like we may have completed minuette wave (i) and (ii) on the SPX, and are in the starting stages of wave (iii).

The move from the past 2 days certainly looks like it could be the start of wave (iii). We seem to have a nice impulse pattern down, followed by a corrective wave up.

The corrective wave up doesn't look complete yet. We seem to have wave [A] and [B] complete. Perhaps we get to 1125 tomorrow to complete wave [c] and subminuette wave ii. After that, we could get a sell off. If we break 1125... 1134 is the next pivot. So anywhere between 1125 and 1134 is a good target for wave ii if it has not ended today.

Bearish alternate is that wave ii is over, and tomorrow we get a decent sell off for wave iii.

The USD made new highs today, but it also formed a bearish engulfing candle.

This could trigger the start of a minor correction for the USD.

As a result, the EURO has a bullish engulfing.

The EURO is also oversold, so it could be healthy for it to have a little bounce before selling off again.

Market Update - 5/17/2010

In my video over the weekend, I said that there was a good chance of us testing that gap fill at 1112 today. We got within 3 points of that by making our low at 1115. I also said that whether Minuette wave (ii) started right off the open, or started after we made our lows for wave v, expect it to be very sharp and powerful to the upside. We had a 20 point reversal on the SPX.

So far, things are going just as expected. I think it is almost ovbious that we are in Minuette wave (ii), and it doesn't look complete yet.

For now, the exact targets are unclear, as we are just in the start of wave (ii). As more waves develop, a more clearer target will be available. But for now, my rough estimates expect a rally to somewhere between 1150 and 1160.

The bearish alternate is that this bounce back this afternoon was all of wave (ii), and tomorrow we start a new downtrend in wave (iii). I doubt that this is the case though.

Even the daily charts had a reversal candle.

I expect a retest of the top of Friday's candle, which is right under 1160.

The USDollar also had a possible reversal candle today. As we know, the USD has been in a very powerful uptrend in the past few months. It has been looking a little extended and overbought.

For now, the range for retracement is between 84.17 and 84.50, as indicated by the yellow box in that chart. I have 2 possible retracement boxes marked there.

Weekend Update

Looking at SPX, EURO and USD.

Market Update - 5/14/2010

There is a good chance that Minor wave 2 is now over. Today was a pretty hard sell off, with the internals to support it. A classic impulsive down day. At one point, breadth was almost 50:1! Yes. 50:1. Remember, during the crash on May 6, the internals were 55:1, so we were pretty close to that. We hung around 30:1 for most of the day, before closing right around 21:1. But regardless, that is still a strong move.

For now, it looks as if we have 4 subminuette waves down from our highs for Minor wave 2. It is unclear at this point if subminuette wave iv is over, we will find out Monday.

But regardless, whether it is complete or it completes early on Monday, I expect subminuette wave 5 to fill the giant gap @ 1112, and this would mark the end of Minuette wave (i).

Breaking below 1121 will be bearish and breaking back above 1150 could mean a retest of 1160.

The daily charts also look like they are starting to rollover.

The current daily pivot is also at 1121.

I will have more over the weekend.

Market Update - 5/13/2010

We got within 3 points of the 1176 pivot today. The past couple of days have been very choppy to the upside. A lot of overlapping, so for now this implies that the move up is still corrective.

The primary count is that we could be in an ending diagonal for the final stages if Minor wave 2.

I have it marked as today being the top due to the down move at the end, however interals didn't reall suppor the strong move in price. The alternate is listed there as today's low being the end of subminuette wave iv, with wave v coming within the next few days to perhaps test 1176 or 1181.

Again, just keep an eye out for the key pivots for tomorrow. 1150 to the downside and 1176 and 1181 to the upside. Breaking either of these will set the trend.

Sorry for not posting much, I have some things going on. Thanks!

Market Update - 5/11/2010

Another very volatile day today. Big swings in both directions. We were down this morning, rallied to take out yesterdays highs, then closed nearly flat for the day.

My pivot at 1167 nearly held today. We slightly broke above it by making our high at 1170, however we closed well below it. We also had a decent down move after making our high. Though it was not very impulsive, it could be the start of a new down move if we break some pivots. The primary count for now is that today was perhaps the end of Minor wave 2. Breaking below 1147 will help the case. So for tomorrow, the key pivots are 1147 to the downside, and 1167 and 1175 to the upside.

I also have an alternate count on that chart. The alternate is that this move up from our lows last week is only a Minute wave [a] of 2. If that is the case, any down moves in the next few days would be a wave [b] instead of the start of Minor 3. So let's watch those pivots for now.

The daily candle stick today is also a doji.

As you can see, the body is very small with long shadows on each end. Indecision is still in the market.

Google also found resistance at its 520 pivot today.

We may bounce around 500 and 520 over the next few days.

Market Update - 5/10/2010

Certainly an unexpected surprise to the upside today. This basically cancles out that wave [iv] triangle I talked about over the weekend. However, on Thursday I posted a possibility that this was perhaps Minor wave 2. Because of the triangle, this count didn't seem right as of Friday, but with today's strong up move, a wave 2 bounce seems logical for now. Internally, today was also very strong. We also have come back almost 100 S&P points from our intra-day lows on Thursday. That's 100 S&P points in about 2 days. This is a huge move.

For now, I will label this bounce as a Minor Wave 2. Upward correcting Wave 2's are supposed to wipe out a lot of the bearishness from Wave 1, and try to make it seem as if the uptrend is back. Certainly that's what seems to be going on right now. It looks like we have 4 completed waves from Friday's low. Perhaps the 5th is to come tomorrow. Minuette wave (v) that is.

So I don't think this wave 2 is over yet. Yes, we almost perfectly retraced 61.8%, but there could still be one last move up coming. We may get to somewhere between 1167 and 1176 tomorrow. If we have a hard reversal from these levels, it could possibly mark the end for wave 2. We must not break 1186.

We also have a pretty big gap left open from Friday's close.

Although today was a giant up candle on the major indices, the ETF's have a different picture. You can see the massive gap up, but then take a look at the body of the candle. It is a spinning top. This means that there is indecision and on top of that, the actual trading range today was very small.

Weekend Update

Looking at the world markets this week.

Sorry for the small screensize, I don't know why that happened.

Market Update - 5/7/2010

Another volatile day today. As I said yesterday, the next few weeks/months could be very volatile with violent swings in both directions. We were down over 200 points on the Dow, nearly turned positive, then sold off again nearly 150 points. Volume is also picking up very strongly to the downside. Market internals are also pointing towards bearish action.

I posted a few possibilities yesterday. One of them was that this bounce back up from yesterdays low of 1065 is a wave 4. We could be forming a triangle for wave 4.

If this plays out, we could open a little higher on Monday to finish the (e) wave, then have a very hard sell off as the thrust out of the triangle could take us to at least the lows at 1065 maybe even 1050 or 1044.

The other count I had was that this is bounce from 1065 is a Minor wave 2. With today's choppy action, I doubt that this is the case. It seems more like a wave 4 triangle. However, if we break back above 1130, I would have to re-evaluate this count.

The daily charts are still painting a very bearish picture.

I find it very hard to look at that chart and be bullish. The trend is down until proven other wise. Breaking below 1095 will be very bearish.

I will have more stuff over the weekend. Perhaps another video.

Market Update - 5/6/2010 (Black Thursday?)

Wow. What a day. The Dow was down nearly 1000 points intra-day, but quickly recovred and closed down about 350. The sell off seemed to accelerate after more riots and panic broke out in Greece. It will be interesting to see how the world markets will react to us tomorrow. The EURO is getting crushed and the USD is soaring higher.

As far as the wave counts are concerned, we weren't supposed to get to 1065 this quick. :) And really, there is no other way to count the sell off than labeling it as some type of wave 3. On all the time frames, the waves are extremely hard to count. But I do have some possible rough counts. Again this is just pure speculation. It is nearly impossible to count these waves. But here are a few alternates.

First alternate is that we open up higher tomorrow and make our high somewhere around 1142-1145 before selling off again. Remember, corrective waves either correct in time or price. This is a sharp price correction. The waves back up do look corrective.

I have this bounce back up labeled as a Minor wave 2. 1142 is the 50% retracement of the move from 1220 to 1065. 50% retracement for wave 2 seems logical. After a retracement, we should start Minor wave 3 which could take us much lower.

An alternate to this is that Minor wave 1 isn't even over yet, and today's low was a Minute wave [iii], followed by a very sharp Minute wave [iv]. If this is the case, wave [v] could start very soon. The target for wave [v] is anywhere between 1044-1065 - this would end Minor wave 1.

Bullish alternate? Sure. This was just a one day event and tomorrow we start a new rally. Or we could get a deeper retracement of this down move to perhaps 1150, 1165 or 1180.

But let's look at the fundamentals. Europe is in big trouble. Greece is in panic mode. There are 3-4 other countries in Europe that are in the same situation as Greece, maybe even worse. If the Greece bailout is triggering a sell off like this, just imagine if the other 3-4 get bailed out too. Plus, is there enough funding to bail out half of the EuroZone?

Also, I remember a while ago that I said that this Expanding Diagonal shape we were in on the daily charts was dangerous even though it looked bullish. I remember saying that prices could collapse down once we made our highs for wave 5.

If we break this lower trendline that we are sitting on, prices could crash all the way down to 900 in a matter of weeks. 900 is the target of this diagonal.

Also, despite this huge sell off, we are not even oversold yet on the daily charts.

There is no divergence on the MACD or RSI.  We also closed below the 100 day moving average, and were below the 200dMA intra-day.

The next few days/weeks are going to be extremely volatile and fun to watch. It will be interesting to see which way the market heads now. Bearish sentiment could be rising.

Market Update - 5/5/2010

We made new lows for this down move again today. After that, we had a nice bounce and then another small down push.

For now, I will label today's push back up as a subminuette wave iv. This means the down move in the afternoon was the start of wave v.

If this is the case, we should test our lows at 1158, or go lower to perhaps 1155 or 1150 for wave v.

Here is a rough count for that.

If wave [5] is to equal wave [1], the target is a test of todays lows around 1158. If it extends, we could get to 1155.

An alternate to all of this is that today's low was the end of subminuette wave v, thus ending minuette wave (iii).

If this is the case, we should get a choppy to slightly higher bounce tomorrow in wave (iv). However, if this is wave (iv), it must not break 1181. Breaking over 1181 could be a victory for the bulls, and it could create a move higher to perhaps 1186 or 1191.

That is the alternate count on the Nasdaq in a little bigger view.

The US Dollar met and exceeded its inverse head and shoulders target today.

On the daily time frame, the next pivot could be at 84.75. 84 and 83.30 should be some support to the downside if it pulls back a little bit first.

Google also tested 500 today. It held and then bounced up.

Again, Google is getting oversold, but it could test 500 again real soon.

Market Update - 5/4/2010

The bearish counts are now in play. We sold off pretty hard today, which is what the bearish counts called for. Internals supported the down move, and so did volume. We also had confirmation with the European markets selling off, as well as a down move in the EURO and a very bullish day in the USD.

This expected sell off is a possible subminuette wave iii. The minimum target has been met, so it is possible it could have ended today.

However, if wave iii is going to extend, we could get a further push down tomorrow. So for now, we'll wait and see what happens. If we chop around sideways tomorrow, it could indicate that wave iii has ended and that we are in wave iv. I expect wave iv to be sideways since wave ii was sharp.

The alternate bullish count is that this move is an a-b-c down and we push higher tomorrow in a new uptrend. 1187 is a key pivot to the upside now. To the downside, the key pivot is 1165, like I talked about in my video over the weekend. We came close to it today, by making our low at 1168. Breaking 1165 could mean a possible move down towards 1150.

The daily charts also seem to be rolling over.

1150 is the next major daily pivot.

The US Dollar had a very powerful up move today. As I posted last week, there could be a possible inverse head and shoulders on the USD.

The target is currently around 84, about .50 from where we are currently.

Google also broke 520 today.

The next pivot is 500.

Market Update - 5/3/2010

We broke over 1200 today. However, the waves still look corrective for now. If we break over 1205 and 1210 tomorrow, it could mean that this up move is not corrective.

On the bearish side of things, today basically had to be the top for subminuette wave ii.

If the bearish count is to play out, we have no room to the upside. We need to sell off tomorrow.

If the Nasdaq breaks over 2515 and the SPX breaks over 1210, we could get a run back towards the highs.

Those are the key pivots for the upside.

On the SPX hourly charts, there is a clear topping pattern. Most tops are usually rounded or very choppy, as opposed to bottoms which are more sharper and more of a "V" shape.

NOW

This pattern is a classic distribution pattern. Strong money handing over to weak money. Smart money giving to dumb money. If this is a topping patten, we could chop around a little more to shake out all the weak money, then we could possibly fall hard, similar to January of this year.

JAN 2010

As you can see, we had a very similar pattern in January of this year. Chopping around in a topping process, then falling nearly 10%

There was also a very similar pattern in October of 2009.

OCT 2009

We chopped around in a topping process, then fell nearly 6%

So these topping process always like to fake people out. Watch for our current low at 1181 to be taken out. If it gets taken out, we could fall hard after that.