Regardless of your opinion on this, admit it was interesting that exactly when the S&P violated the Minuette (iv) CANNOT CROSS line, the market exploded higher on strong volume. Looks like too many people were on one side of the trade and there was a mass exodus out of the short camp. I repositioned my trading account to a neutral state until I figured out what the heck was going on. When the market does something you don’t expect, you must get smaller and reevaluate the situation.

After some reflection, here are my thoughts. This is the type of post that gets readers annoyed and even angry. I cringe just hitting the Publish button because I know  most people will say I’m ignoring the price action and simply using creativity to find a count that fits my stubborn outlook. If there was one day in the past 3 years that I have been tempted to turn bullish, it was today. And that is why I know it’s time to be more bearish than ever.

This count is borrowed from DanEric who is a stubborn Bear just like me. It shows Minute [i] finishing shy of its 1010 target, sporting an extended fifth wave. Sure, it’s not ideal, but it’s a valid wave count with no rule violations. According to Prechter, corrections after extended fifth waves usually complete near wave two of lesser degree. Well, that’s pretty much where we are now indicating Minute [ii] is just about done. This target lines up pretty well with the 50% retracement too.

Please note: This is a rough road map for the market movement I expect based on the rules of Elliot Wave Theory (EWT).  There may be several valid counts at any given time, but I am only presenting what I consider the most likely count based on my own objective analysis.

1:08pm
It looks like we could have a reversal in the EUR/USD forex as the dollar is strengthening. to confirm a true reversal, we need to see 1.2795 breakdown, and then a new low below that of 1.278.

12:08pm
The bears have not really showed any conviction yet, this does give the bulls another chance to shove us higher… right now, no reason to short this market at all. I’d rather stay on the sidelines or buy on any small dip in individual stocks.

11:06am
One of the most overbought stocks in the market RIGHT NOW is … CRM. If you look at the weekly chart below you will see why. Alerts & Analytics has it’s reasons for taking it short, if you want to join in, you might consider an october put spread.  The chart is below.

10:46am
GS really not participating here.. after hitting the $140 for a few times, it’s now moving down.. a break of $138 will be very bearish for GS and will lead us to new short term lows near the former lows of $129. I also expect the XLF to pull back from levels in the 14.10+ area with GS’s breakdown. This should put a lot of pressure on the SPY. Rememeber the SPY between 106-110 is in NEUTRAL territory, not bullish, not bearish. I rather stay back and watch.

9:50am
Sure the SPY  is still very likely to complete a nice inverse H&S formation on the daily, but the XLF can’t, why? It made a new low… and now it’s in a bearish expanding triangle formation:

9:47am
USO potentially breaking it’s 32.75 intraday support… if the real jump up happened from china, then the USO is a great way to reflect global growth in general. A break of $32.75 is not looking good for the US, even though 32.45-32.55 is some strong support as well. Here’s the 10 minute:

9:37am
on the SPY 1 minute we can see how 108.50 is finding already some support… and we keep bouncing on it.. other intraday support levels to watch today is the 108.00-108.05 level… resistance however, not many until 109-109.15. We are waiting for housing numbers and a bunch of other data at 10am.

8:45am
GS finally a buy? I think so… if it rallies above 140.. I will be buying it, and have a trailing stop. While it might still fall into the 120-130 range, it’s definitely got the market momentum to move higher. A break of 140 will turn me bullish on GS and i think it’s likely to rally up to $146. Here’s the 10 minute resistance:

8:32am
Jobless Claims come in slightly better than expected (right around consensus) @ 472K vs 470K consensus. Productivity comes in right around consensus. ES hasn’t moved much on the news, but Eur/USD fell a little.

What stocks are you trading today? It looks like the market is still pointing at a potential continuation of the shorterm uptrend, the only thing that could possibly change it is jobless claims today and employment situation tomorrow. There is also a WHOLE LOT OF DATA today.

Poll of the day!

10:59am
I had problems accessing the site for a little bit but i wanted to show you that GOOG is back above 460.. which makes it a buy.. if it can come back to 460-461 on a back test i recommend it as a great entry point with a tight stop right under 460.

10:06am
There is still a possibility that the SPY daily is forming an inverse H&S formation with a neckline around 113 -133.20… we will have to see what type of rally we’re going to get over the next few days to see if we complete it or fail:

10:01am
ISM data much better than expected… construction not that great.. but the SPY is now rallying above the bear flag area… i don’t recommend shorting here at all… 108 will be strong resistance, if we break that.. i recommend buying 108 on support of a retest.

9:44am
Here’s the channel that I see on the 30 minute SPY right now… it’s still a bear flag currently but it could turn into a full blown rally if rallied above 107.30 and ascending:

8:06am
Tons of data coming out between 8:45-10:00am including the ADP report, very important. Futures are up significantly, we are above the 106 level, but i first want to see what happens after 10am before i consider covering my shorts which i took at around 108.00 SPY. In any case, i would like everyone to look at Craig’s elliot wave projections  below cuz they are coming to fruition really well.

S&P 10-Minute

S&P Daily

According to EWT, Minuette [i] should advance prices beyond the Minor 1 low, just as Intermediate (1) should advance prices past the Primary [1] low under 666. Notice the large head and shoulders pattern on this chart. The negative sloping neckline is very bearish.

Please note: This is a rough road map for the market movement I expect based on the rules of Elliot Wave Theory (EWT).  There may be several valid counts at any given time, but I am only presenting what I consider the most likely count based on my own objective analysis.

2:43pm
Incredible market action here to the downside.. it’ll be interesting to see where we end today another test of 104.65 within the day will be very bearish for tomorrow.

2:21pm
The reversal time is here.. and now the bears are trying their hardest to push the market down with a H&S on the 5 minutes as the bulls fail to break 105.80-106.00.. a break of 105.30 is needed to confirm the H&S:

1:42pm
Everyone is waiting to see what FOMC minutes have to say.. even though we’ve heard Bernanke already… you never know whether FOMC agrees or disagrees. My guess is FOMC will move markets mostly because of a potential 2pm reversal rather than the actual news, but nonetheless interesting to hear what they have to say.

11:35am
We are going to get the FOMC minutes at 2PM today, that should be the last game changer for the day… it looks like we can break 105.80.. we’ve hit it 3 times in a row already… 106.00 is the next resistance but is not a strong as 105.80.

Second Poll of the day – How do you trade?

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11:00am
Market getting closer to 105.80-106.00 levels.. if we break above it.. i will cover my shorts (puts) with about 15-20% gain and play “wait and see” . Until then market is still undecided as to where it wants to go today.

Poll of the day – Are you trading with or against Idan??

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10:05am
Consumer confidence gives an additional bounce to the markets now in the green surprisingly more than expected at 53.5

9:50am
PMI comes in worse than expected, still get a rally off the numbers right as we hit 104.65 again. We are waiting for 10am, with tons of data on confidence.

9:38am
We are getting ready for 4th hit of the SPY’s 104.65 area here… I have my XLF and SPY puts both close to 50% gain right now… i’ll only cover if we rally past 105.80-106.00. I have taken profits before.. but i want to hold the rest for a break and a potential collapse in the markets. Dsavil and Sam obviously have the opposing trade right now and think we are going to 110.

9:32am
My thoughts currently are to remain bearish unless we break back above 105.80-106.00… there is no reason to be bullish here yet… we’ve hit 1040 three times already… and keep falling towards it… my intuition is to pile in short even more here.

9:30am
In the pre-market session the SPY hits 104.50-140.65 yet again. This is the third time we hit this level… i think fourth time IS the charm. We can very well break it today. We did get some good news from housing prices due to the tax credit, but lets see how 10am data comes out!

6:10am
Take a look at this EUR/USD dollar chart on the daily. There is a CLEAR head and shoulders formation with a neckline at .2750, we then fell below it.. and for 3 days we formed a nice bear flags in which we retested the neckline now as resistance. That was a perfect entry for a short. We then got yesterday’s strong down day, i’m guessing we continue down from here:

Counting corrective moves is challenging, and counting triangles is especially difficult, so I don’t really care exactly where we are. It will become clear soon enough. I am having trouble finding a count that supports a Minuette (iv) flat or zig-zag, but that possibility does exist. The alternate count is that Minuette (iv) already topped out  -  see DanEric’s expanding triangle count.

As a trader, I want to be prepared for (v) down, which should be a decent size move. Given that (i) = (iii), both about 60 S&P points, it suggests that (v) will be an extended wave, moving greater than 60 S&P points.

Please note: This is a rough road map for the market movement I expect based on the rules of Elliot Wave Theory (EWT).  There may be several valid counts at any given time, but I am only presenting what I consider the most likely count based on my own objective analysis.

2:58pm
SPY 1 minute descending channel right now:

1:01pm
GS continues to fall here just as we predicted. Even $140 didn’t form any support, it formed resistance (consolidation) and opportunities to go short for some more downside. I see GS going to new lows and hitting $120 very very soon. $140 should have held if GS were to try and make new highs anytime soon. Here’s the 1 hourly:

10:53am
The market (SPY) saved itself at 106.40 allowing for another rally to take over… if we break 106.40 though, it might be a good shorting opportunity.

10:28am
SPY 10 minutes looking like it could be starting to lose steam. If the market were to really rally, it would need to find support at 106.40 by the end of the next 10 min candle. Otherwise we fall to 106, if we fall below 106 we are due to hit 104.65 again. Here are the two support levels:

6:12am
Futures are now flat after being up almost 1% earlier today. Even though friday looked like a great bottoming candle with 2 nice 10 minute candles closing right around my infamous 104.65 area. The futures action so far also looks like a topping candle. It’s hard to say where we’re going to go this week, this week is usually low on volume but high on data, and can be VERY volatile.

Todays most important news comes at 8:30 am  - Personal Income. After that the whole day we won’t have any significant news, which means that personal income will dictate the mood today as well as the charts.

Who said this market would be easy? It felt like there was lots of short covering today, which might have been needed to alleviate some of the bearish sentiment.  Here is what Bears are looking for on this 10-minute chart of the SPX. There are few catalysts next week until the Friday employment report, so a choppy triangle next week does make sense. Today’s rally makes a nice 3-wave pattern, which suits the a-wave of a triangle.

EWT Lesson: Today’s rally looks like a bearish wedge but those can only be found in fifth or C waves. It is not the c-wave of a flat because subminuette ii is already a flat, and you cannot have two flats in the same 5-wave pattern. Subminuette ii must be a flat for this bear count to work. Otherwise, subminuette iv would violate the price territory of subminuette i.

Notes
This is a rough road map for the market movement I expect based on the rules of Elliot Wave Theory (EWT).  There may be several valid counts at any given time, but I am only presenting what I consider the most likely count based on my own objective analysis.

Poll of the day – Open till 8:30am
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5:45am
Here’s a daily chart of AAPL… we talked about what happens when $240 breaks. And we are right on the verge of breaking it again. The first time was a strong fakeout due to a reversal in the markets, this time we might be ready to fall all the way to the daily 200 SMA at $231+. The only thing that could save AAPL after the break is if it comes out with news about the new iphone sales. For now here’s the chart: