03
Nov
Here is a 30-minute chart of the S&P E-Mini Futures (ES) contract. Notice that the market has traded in an ascending channel over the past four trading days. There is also a descending resistance trendline that has developed over the past two trading days. Together, the support and resistance levels produce a tightening triangle. We should see a break, up or down, in the very short-term.
Here is my primary count:
Here is an alternate count provided by Jerry48:
What say you?
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November 3rd, 2008 at 6:27 pm
Wave 3(3)- have we declared it dead? I don’t think so. Significant risk to the downside still remains……GS looked very weak today.
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November 3rd, 2008 at 6:29 pm
We may have even have primary wave 3 to be done. This is probably wave 4, by the looks of a lot of small cap stocks. Nasdaq surely looks like a complete wave structure. Today looks like a bull flag on the daily. We need to see violent action soon other this is wave (a) of 4.
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November 3rd, 2008 at 7:45 pm
Here’s some comments from GS today.
COMMENTS
We got real surprises today – a much worse than expected ISM, horrific auto sales, frozen credit report from the FED loan survey, and a bigger borrowing need from the US government. Those that had expectations for a quiet and calm Monday were right – witness a stock market down 0.2%, bonds up ¾ point - but not because of the news. When the market can’t respond to either good or bad news then you have to assume that the market is broken. So the relative calm we saw in S&P500 or in bonds shouldn’t make people feel good – but rather more like victims of a hurricane with the roof ripped off but the sun strangely shining. Perhaps this is the end of the storm or worse this is the eye of it. So that fear hangs over the market still as we spent the day repricing hedges in EUR/JPY lower, AUD/JPY lower, USD/JPY lower. The risks in FX shine through today’s price action and suggest that we have a much longer week than many seemed to have expected. The list of events is worse than the Olympics – RBA, BOK, BOE, ECB and others – all about to cut rates or explain why they can’t. The acronyms for more programs to come may also be the spotlight – as the US Treasury, FDIC seem close to a deal on home mortgages. But the most important story comes tomorrow as the US election plays out after an endless campaign. The election seems set for Obama – and the coattails are the only question. How much of a majority the democrats take in Congress will set the tone for future policy on taxing and spending. The US budget deficit over $1 trillion will be a problem – and its likely to stick out as an issue for many markets other than bonds – as FX will grabble with the twin deficits. Expectations are for trouble – which is why today’s real surprise was in the market outcome and why the rest of the week may follow for trading in this environment is a play not on how bad it is but on how bad its priced. The election, the rate decisions, the unemployment report and the host of other data set to hit the tapes – what might really be happening here is that markets are in a holding pattern – waiting for the events to pass – as money that was yanked from funds has yet to land and won’t until we get a few weeks of relative calm and can determine if the storm is over. Bottom line: The best trades for markets like this if you have a clear view – sell the short dated volatility – buy the longer tails further out. The markets are tired and want to retrench but like all things when they do it will be ugly again. EUR 1.20, JPY 95, AUD .62 – the FX world suggests that it’s not over yet.
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November 3rd, 2008 at 7:59 pm
Fantastic. Where did you get this?
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November 3rd, 2008 at 8:03 pm
I get daily e-mails from them everyday. I used to be an fx trader for a major bank so I have some good contacts.
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November 3rd, 2008 at 10:45 pm
Please post more of your emails. This is excellent, timely and real. It accentuateds the reality the bulls are simply ignoring and what is to come. the only reason I can see for the irrational run up is greed and people buying into the value trap when they should be selling at these levels. This post is very Mohanish LOL.
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November 4th, 2008 at 8:08 am
No worrie Shanky. I’ll post them when I receive them.
Pete
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November 3rd, 2008 at 8:21 pm
What is the FX?
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November 3rd, 2008 at 8:35 pm
FX is foreign exchange where people trade currencies.
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November 3rd, 2008 at 8:43 pm
Just for the record, I favor Craig’s count as most likely, but this alternate count may be right, especially in view of the way the market has responded to elections in the past - see McHugh’s weekend newsletter for a revealing look at the market before and after the past nine elections ( https://www.technicalindicatorindex.com/newsletter/bpdf/TII_Newsletter_948A_10.31_7055475115.pdf ). In ‘76 when Carter was elected over Ford the market dropped 4% in 4 days and then rallied 10% over the next two months. When Reagan was elected over Carter in 1980, during difficult economic times, the market immediately rallied 7.7%.
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November 3rd, 2008 at 11:18 pm
This isn’t a normal election. It is far more left of center than ever before. (Both candidates.)
I’ll be surprised if the Senate gets to filibuster levels, now that the markets ’seem’ more normal, and this is the only conspiracy or holding pattern that makes the most sense. Check out (http://www.fivethirtyeight.com)… hands down, this baseball statistic like polling website has the TA of the year, great stuff, not much political stances either.
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November 3rd, 2008 at 10:51 pm
Craig, glad you jumped on the channel bandwagon. I was able to make some really good calls today on support, resistance and direction by following the daily trends withing the channel. The only question I have is can 3d be lower than 3b? If we have the fallout from GS that we should we may get the drop we’ve been looking for. The bad news is far from over and this news may be what the market has been waiting on to get hte bears back in control.
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November 3rd, 2008 at 11:01 pm
I’m not assuming the Goldman news is going to move the market. Chances are investors in the fund knew things were not going well a long time ago. This stuff leaks out easily.
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