03
Nov
StockTock.com discusses the various scenarios that could play out in the S&P. I remain very cautious in the short-term. The market has not violated the triangle pattern and I am very suspicious of claims that 3(3) is over. The VIX pulled back into support. XLF, GS, C, DB, and IYR all look weak. The light volume lately does not support the bull case. It looks more like the calm before the storm than smart money getting in. Also, I am surprised how quickly market sentiment has shifted to the bull camp. When everyone on TV is telling you to buy, it’s usually time to sell.
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November 3rd, 2008 at 11:35 pm
Not related to the video but I found this to be interesting:
New 3x leveraged ETFs.
http://www.marketwire.com/press-release/Direxion-Funds-916219.html
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November 4th, 2008 at 12:01 am
Hey,
Can I get a shoutout if the truncated wave works out? hahaha
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November 4th, 2008 at 12:05 am
Great video
On your alternate count, just move wave 4 over to the right 1 peak…and it looks ok…basically an abc correction in wave 4 (satisfies the alternating wave thing) and you can easily find 5 subwaves from there down to where you have 5 ending.
I am leaning to the above being the correct count also. My main problem (with your main count, which was the same as what I had) is that if you keep pushing wave 4’s starting point to the right, the channel thats created doesn’t look right (connect 2 and 4 with a trend line, then draw a parallel line through wave 1 end point.) Too much of the graph is outside the trendline. Then again, it does bounce off appropriate places and hugs portions of the channel…
Regardless, I am still short
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November 4th, 2008 at 12:17 am
Great post. Thanks.
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November 4th, 2008 at 12:55 am
For you crazy EWT nuts…
Roadmaps or GPS? Lessons in Elliott Wave Analysis
http://www.sfomag.com/article.aspx?ID=1253&issueID=c
THINK OF INVESTING AS A TRIP
Here’s my advice: View the wave principle as your road map to the market and your investment idea as a trip. You start the trip with a specific plan in mind, but conditions along the way may force you to alter course. Alternate counts are simply side roads that sometimes end up being the best path.
Elliott’s highly specific rules keep the number of valid interpretations to a minimum. The analyst usually considers the “preferred count” to be the one that satisfies the largest number of guidelines. The top “alternate” is the one that satisfies the next largest number of guidelines, and so on.
There are only three hard-and-fast rules with the wave principle:
• Wave two cannot retrace more than 100 percent of wave one.
• Typically wave four does not end within the price territory of wave one but may do so from time to time in highly leveraged markets.
• Wave three is never the shortest wave of an impulse.
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November 4th, 2008 at 8:25 am
This German site puts the 4th one to the right like you suggest. The guy, ELLI, is well known in those circles for using Elliot waves
http://translate.google.com.au/translate?u=http%3A%2F%2Fwww.dasgelbeforum.de.org%2Fforum_entry.php%3Fid%3D50639%26page%3D1%26category%3D0%26order%3Dlast_answer&sl=de&tl=en&hl=en&ie=UTF-8
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November 4th, 2008 at 6:51 am
On Evil Speculator blog he talks about a possible Inverse H&S on the S&P.
http://www.evilspeculator.com
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November 4th, 2008 at 6:56 am
Again, for all the bulls who managed to take advantage of the recent moves, here is another potential evidence for some more move upward - we just had an “inside day” just above 18 day average which seem to fit the description below.
http://www.investopedia.com/articles/forex/06/BBInsideDay.asp
Also, I think the discussion here may have just missed the fact that we had the bottom on the day when there was limit down. There was a sell off at the beginning of the day but the remnants of sellers who still survived Oct 10 were not able to push market down, even with very small contingent of buyers. Just look at Small Caps and you can see a dip down and now those indexes rebounded and violated short term downward trends. In fact, most indexes sit or are above 18/20 day average, ready to go back up.
Additionally, low volume may actually work to the advantage of the bulls. If there are no buyers and yet the sellers cannot push the market lower, think how weak the bearish sentiment has become. It may take very few of buyers to push that market higher.
For capitulation, I believe you need to look at individual stocks. Just pick CBS, CHK, AKS, to name the few. There are many others which had total collapse and hit to bottom, and now trend upward on the low volume - the sellers are sold off.
Well, just want to suggest again that in my opinion it is more like 50/50 if the market goes up or down and I would advice everyone to always hedge with options - these babies are really exploding now as the volatility subsides. Pick any stock with large swings and you can see 2x/3x multipliers within a week (ex. AIG, WFC).
Hope that helps and good luck,
Andrew
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November 4th, 2008 at 7:34 am
futures are way up right now.
looks like the triangle pattern definitely gone today.
looks more like to the upside.
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November 4th, 2008 at 7:46 am
Deepak, you have to check the close.
Remember that often the market goes in the opposite way you are expecting.
So think now:
- All shorters are waiting S&P 986 to go out from their positions.
- Few buyers can easily increase the market to these levels using the electoral period too
- After 986 they will sell quickly their assests using the bull feeling just created, generating panic in sellers and buyers.
i don’t want to say to not exit, a mental limit should be always used in these cases.
But if possible try to increase a bit your limit, maybe 996 or 1000. It should be enough to see what happens.
Good luck
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November 4th, 2008 at 7:57 am
Good advice. Market Makers love to hit tight stops. We are topping so if you are short you need to protect your position.
Futures are coming down a bit, 990 on the SPY. Possibly under 986 near the open.
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November 4th, 2008 at 9:10 am
Obviously from the early morning action the break was - up. Its nice to trust the charts but in the background you need to have some fundamental opinion to justify big moves. You need a fundamental catalyst to trigger the big moves.
My feeling is that most market investors are calling for a bad recession of 6 to 9 months and the buyers of this up move are buying in anticipation of a good second half 2009 and a better 2010. The thinking is that this is just like the other recessions, though maybe a bit worse. Perhaps similar to 2001.
However, at the same time these same people are calling that this was the worst crisis since 1929.
These two opinions can not be correct at the same time. I tend to believe the second case and hence one way or another I believe we have not seen the lows purely on fundamental thinking. The charts will tell us how we get there.
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November 4th, 2008 at 6:24 pm
I totally agree with combining both technical and fundamental analysis. Moreover, I think that one should actually trade individual stocks because they seem to behave way more predictable to me. I have observed today 9x increase in option prices on PRU - this is absolutely crazy but actually was quite predicateble! If you can strike such change, then you can forget any analysis at all, hahaha.
As for today’s crash and 1929, remember that after 1929 crash there was at least 6 months bull market. What created the DEPRESSION was the government action, or rather, inaction. Thus, the same people who call this crash second only to 1929 can both say that we have a potential to repeat the mistakes from the last century, thus we are certainly at that point like in any other time our history. However, given the agrressive government action and increadible drop in housing prices (which I believe will ultimately bring equilibrium to economy), the same people can say that will will avoid the depression. Basically both the Fed and Treasury seem to be pretty clueless how to deal with the problem, but they really throw everything on the table and sure enough, something will work.
Check interesting blog related to the subject:
http://www.funnyeconomist.com/
Enjoy,
Andrew
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