Dec 15th, 2010: Update 4 – EOD
Posted by pugsma on December 15, 2010
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4:55 pm EST: More weakness today for the SP-500 with a new low of 1234.01. The move off the top of 1246.73 so far has a corrective look and means my alternate count of a minute degree wave (4) is still very much in play.
Primary count is that the top of major degree wave [1]-P3 ended at 1246.73 on Monday 12/13. The move off the top is a i-ii, 1-2 for minute (a) of A-[2]-P3. Looking for a target of 1228 to complete iii-(a) and 1219 for v-(a).
The alternate count (blue) is a Double Zig-Zag corrective for minute degree wave (4). The second ZZ got underway this afternoon today after a x-wave bounce to 1244.25 this morning. I’m looking for a target off 1230 (23% retrace) to complete this wave (4), with a worse case target of 1219 (38% retrace). The pivot support at 1229 should hold the decline and if not then the pivot support at 1219.
SP-500 5-min chart (EOD):
SP-500 15-min chart (EOD):
SP-500 60-min chart (EOD):
Will said
A lot of bearish blogs are looking for one more higher high… my guess is that they do not get it. It is all very ironic is it not?
pugsma said
No, it’s not ironic. It’s typical. The bear blogs have been consistantly wrong since March 2009. They are gun shy to call any “Top” now.
Will said
Agreed- Tongue was firmly in cheek. Typical is truly what it is. We seem to be at a near mirror image of 3/09…. no idea where we go long term and I guess I could not care less but sentiment has certainly done a 180. Everyone seems to be looking for a reason to get long and it seems as if retail is done buying puts.
Although I am fully aware that business conditions are better and we are perhaps in a legit recovery for now. This topping scenario fits the description of a cyclical bull in a secular bear. 1930′s or 1970′s, you choose, one of those eras seem to be the next few year’s map.
frank said
Hi Pug,
Any ideas on the odds for the primary vs alternate? Thanks.
pugsma said
Nope…just have to watch and see if the 1229 and 1219 pivots hold…if they do it’s the alternate…if not it’s the primary…realistically one of two more down days will seal the deal on the primary as the daily RSI and MACD are realy starting to roll-over now.
Bob said
Monday should be the big down day. Horrible seasonals the day after OPX experation. We are still in OPX week. Sideways at best……ignore the noise imo.
Radrian said
Interesting, Bob. Jeff Augen wrote a book where he talked about the indexes being “pinned” to specific prices at OpEx because of the massive liquidation of stocks,ETFs, and options during OpEx week. He also pointed out that, after expiration, the indexes will often move sharply away from their “pinned” prices.
Bob said
Totally agree…
Denali92 said
I am not so sure about those horrible seasonals on the Monday before xmas break…. last year we bottomed on Opex day and then ramped in to the holiday….
As I am still torn between whether we had a Monday top or a Tuesday top due to the SPX not making a higher high, but the SP and ES making .03 higher highs on Tuesday, the only thing I can say about history is that the most recent Tuesday Opex week tops (there have been 2 in 2010, 0 in 2009 and 2 in 2008) brought Friday lows, a little relief on Monday and then a final low on Tuesday and then a nice rally.
Ever interesting,
-D
Radrian said
ES 1230 has held so far; if it breaks, it should drop to test 1219. Assuming the ES makes it down to 1219, the blogs will once again be chattering about an H&S top in the making.
gann360 said
Update on the $XBD Daily Wedge:
http://www.screencast.com/users/chartwiz/folders/Jing/media/6b4321c9-7972-4757-955d-18cc17c14cca
pooch77 said
Just for kicks went to Danerics site and he says need to move,higher,higher,higher
LEA said
hello Pooch77, just visited daneric’s site – his count basically looks like PUG’s alt count.
pooch77 said
you must have gotten his 7:37 update,which would be 6:37 cen
jeffyla said
Hey John B or anyone else, can you post todays $CPC chart or those other technicals that you put out yesterday? Wanna see a follow up day to those.
john-b said
Give me a minute. Just got back from skiing. The analysis went pretty well last night and was pretty thorough. Even convinced myself to sell longs early today. My lead-in comment today is that if there is any upside left we will see it after the Tax bill is passed by the end of this week. Many were/are counting on that to give the Santa rally some real guts and then the 17B QE on Monday and 10B on Tues. So I am guessing next Monday and Tuesday we will see if the market can move to a new high or not. If not much movement then there is no alternative and just down. I am holding from placing shorts until I see reaction to the Tax bill. So far tonight the Senate passed with 81-19 margin – very powerful and Futures did not move yet.
jeffyla said
Thanks. Don’t want you to spend too much time, just a quick chart or two. I live an hour from Grand Targhee and Jackson Hole…great snow so far this year.
john-b said
OK here is my charts and brief analysis. yes I heard about the good early snow this year. And you live in one of my favorite places on this planet.
$BPSPX – started down today – need 1-2 more days for confirmation. but caution flag is noted.
12/15 – more flat today – still hope.
http://stockcharts.com/h-sc/ui?s=$BPSPX&p=D&yr=1&mn=1&dy=0&id=p10318767820
$CPC – Blue line 13 day MA – turned up today, need one to two more days going up for confirmation. But caution flag is noted.
12/15 – no confirmation – went down instead of up, options still thinking positive Santa rally yet.
http://stockcharts.com/h-sc/ui?s=$CPC&p=D&yr=1&mn=1&dy=0&id=p74779861636
$NYHL = Blue line turned down 3 days and touched red line – red flag.
12/15 – Blue line continued down and increased its cross of the red line.
http://stockcharts.com/h-sc/ui?s=$NYHL&p=D&yr=1&mn=1&dy=0&id=p12606787280
In addition number for new lows for last three days has gone above 40 for three days in a row and continues to rise – 49-84-113-89 (The internal rot is accelerating.)
12/15 – 89 today. 4 days in a row above 40 so red flag early danger decay continued.
$VIX – is starting to nibble up on flat to up market days. Nothing really demonstrated yet so caution but no real fear increase yet.
12/15 – nibbled up some more today. No panic yet just increasing caution.
http://stockcharts.com/h-sc/ui?s=$VIX&p=D&yr=0&mn=6&dy=0&id=p78157501190
JNK (Junk high yield bonds) – one of my sentiment indicators – Fed made bond people feel better for today only. Previous days were down. So likely JNK will go down again soon after the Fed effect wears off.
12/15 – JNK turned down as expected today. The Fed effect wore off and people’s appetite for risk is going down. Started down before the market.
(This is actually one of my most important indicators as it often gives and early signal.)
http://stockcharts.com/h-sc/ui?s=JNK&p=D&yr=0&mn=6&dy=0&id=p51920633412
Bottom line: We are probably still in some sort of complex topping pattern on hold until OPEX is done and the Tax bill gets settled in. After that we could crash. But IMO not as likely before those things get settled. Of course many like to see a crash now and are planting shorts now. Feathering people are probably going to do well. But I will mostly wait until next week to start feathering in shorts. It is a time and price thing. I do not think we have run enough time yet to resolve the topping issues. And major tops often have more issues to settle in.
john-b said
PS. Make your own analytic decisions based on my charts. If we go down much below 1229 say to 1222 I think the top is in. Certainly a break of 1219 to me would indicate the top is in.
At this time I am not calling for the need for a higher top only another attempt at it. Gee that would be a wave 2 and that is usually where I load my shorts. A failed rally that does not make a new high.
jeffyla said
Thanks!
jeffyla said
BTW, every website I go to talks about ’1 more high still to come, bla bla bla…’ I think were done and the bears won’t get in cause they are looking for one more high…this thing may just melt down within days.
jeff said
You could be correct Jeff. At this stage, I think the two roads very fairly obvious. I see no need to play hero and only get short at another high. Right now, I’m 50% of my desired hold position and will only add to it on a break below 1219. Personally, I would prefer to see one more high so I can get more short.
Per my readings of the 90 and 180 cycles(Jim Curry does great analysis), the next decline will the largest one since August. Per Jim, he’s looking for a 7%-10% pullback, which we should all buy the F@&ing Dip for another 90 day move up into April.
TJC said
FWIW Mahendra says buy thurs new weekly highs next week
john-b said
Could be possible – new highs next week. The bulls have it all on the line next week. This weekend I am warning family members to be ready to pull their 401k growth stock funds or other stock funds to safe/stability (non-bond) fund likely on Dec 22 or 23.
Lunker said
hey you guys are smart….why is the 10yd yield soaring? sell the news? stimulus will add 1% to GDP which means hotter economy? a correction to test resistance?
john-b said
Actually I think there is the potential that bond yields will reverse to the up side for a short 1-2 months during this market correction down. Not that I would bet on it, BUT Bernanke is looking like a fool with his QE and rates are going up a lot. He will try as hard as he can to create a equity drop to send the bond yields back down and bond prices back up. The bond yield rates can only go up a little higher and then they are at critical Bernanke = “fool” levels. So I think one of the main reasons for the coming stock correction is to drive people back into bonds. The bond people are all pissed and they have a lot of power. So a 1-2 month stock correction driven by bond people’s interest will help the bond people and then they can save face – for a while only.
john-b said
Error: bond yields may drop (not up side, price up side) for a while.
john-b said
Does that mean I may go long bonds soon with TLT could be?
This chart sure looks like 5 waves down are almost done. Time for a 3 wave UP correction pretty soon.
http://stockcharts.com/h-sc/ui?s=TLT&p=D&yr=0&mn=6&dy=0&id=p03924825489
Add a few Stock short index ETF’s and the TLT and that may be my portfolio for this correction.
jeffyla said
Got a nice bullish divergence as of now on the tlt rsi too!
Lunker said
John I thought the same things so I’m glad to hear you saying them too. Twas a quick hard bond sell (no bid) to shake the tree. Would seem like 2.9% could stand a retest.
Lunker said
here’s a related article FWIW…. http://www.pimco.com/Pages/JohnCummingsandBobFieldsonDevelopmentsintheMunicipalBondMarket.aspx
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