What's happening?

First look at the indicators on my $$ H SPX - Daily - One Year chart and the box I drew. Indicators at or approaching trend lines that with the current wedge/double top formation should cause a reversal. I think my $$ I SPX - Weekly chart tells the best story. Look at the indicators not the chart. If RSI breaks the LT trend line a real rally will be in place (this was learned/borrowed from Master Kenny). If not, then the down trend continues. For this reason I'm not gonna place calls on individual equities this week. I will update trend lines etc, but no calls. We're entering a brief period of uncertainty that if you gamble you could lose big. The rising wedge, 60m overbought and the daily indicators at trend lines should cause a ST reversal will throw us down Monday. As for 4.5 playing out and exactly where we are in the wave count is a mystery (sorry, but all the EWT counters are going in different directions now and the trend there is breaking down). I still like the 771 to 807 target for another turn down. Things have improved, but don't get too excited just yet. Let's see how earnings do this qtr.

Gotta go play the Wii with the kids for a while. See my VIX weekly chart with a possible STO bottom and other indicators turning that confirm the trend down.

Looking for the bottom

After looking at Daneric and Kenny's stuff, I started looking for the bottom. In my post below from 3/10 Why am I perplexed I noted some strange things that may have proven to be more right than wrong. I was perplexed because of being blinded by bearishness when the charts might might have been telling me to be bullish. I built this chart and then added the wedge and count. It is quite possible that the E touch is in on the falling wedge. I have not given up on my What's Happening post wedge from below. So many points to consider. In my search for the wedge I have two counts now. One will be right, just will have to let the market tell me. Fortunately we have the ability to play it either way! The whipsaw on the weekly MACD indicator had me confused as well. Well, maybe the bottom is in and that was a signal. At least now my keys for breakout and bottom marking can be better defined. We still have a long way to go to get out of this mess globally and the bullishness of this run may be just another head fake. If wave 4.5 violates the blue dashed top channel line, I'll most likely assume the bottom is in. I'll point his out now and here - REMEMBER THE BACK TEST if it does break. That may set the ultimate bottom on some type of capitulation move. The charts will tell us. Like Craig says, trust the charts and keep emotions out of it. Have a good weekend.

EEV

Based on the post below, the sell off and falling wedge and the indicator's positions, I purchased EEV at $49.30. This is not a recomendation to buy or sell. Just something I did with my $$. Trade at your own risk. don't be stupid and do what someone else does. Do your homework and keep stops tight.

IMVHO We turn tomorrow.

SPX at top of rising wedge and all indicators in the cheap seats. I'm thinking 5-3-5 to the top of 4 at 774 and we're due to pop off some steam. We're at a good resistance point.

Oh, how bout that falling wedge on the VIX? 60m indicators topping out, but dailys still look good. Don't get to excited about this reversal. This is not the big one. That will happen next week.

Good luck and keep your powder dry for 5.5 down.

UPDATE: I added target lines on the charts at stockcharts. Thanks.

How 4.5 might play out

UPDATE: I have updated this chart at stockcharts and have drawn some dashed lines as possibilities. There is a blue dashed that forms a steeper rising wedge. If the weekly and daily SPX indicators keep rising I think 750 SPX gets taken out. That is pretty bullish. Above 741 I'll begin lookig to leave longs. At this time I think we rise off the pullback this morning. Still in longs. As I have noted if we take out the 712 range and you are long I'd be very careful.


Of course this is a pipe dream, but as many of you know I like to try and find the patterns and possibilities as early as possible. I found this triangle that works well with what 4.5 (or iv.3.5 as Craig (who's Craig?) pointed out on Stocktock last night) needs to do and with something that will throw the market down when the pattern ends. The rising wedge that is forming is too wide and would requite quite the run up, so I went this rout. A throwover on the e leg to DE's 741 would be just fine. This still works in my Whats Happening? scenario post below since E can come up short of the trendline.

Good luck.

Why am I perplexed?

This is all based on the assumption that 4.5 would be a brief one to two week recovery and not protracted over a significant period of time. Let me start with the VIX. If the VIX breaks down from the triangle then the pattern is broken. This bull pennant (with significant violation) becomes the red channel for the most part or possibly a descending triangle. Or on the other hand do we call it a bear pennant that is breaking down which might lead to the assumption that 5 is over and the 666 bottom on the SPX is in? I fully understand that all this can turn at a moments notice (and it will have to as you will see in my conclusion), but the daily indicators on this chart (combined with other factors like CPC and SPXA50) are showing a potentially significant move North for the market. So what happened to wave 5? Why is it not the VIX bouncing off the lower black trend line and up thru to the gaps at 54 and 71 that should mark the ultimate end? The potential failure of this triangle bothers me.

One last point on the VIX. On the weekly chart there is a positive divergence on the MACD histogram, the S Sto is turning up and trying to cross the ema 20 (one of my fav indicators for a turn), ROC is at 0 and RSI is at 50. This would indicate a bullish turn for the VIX which I'm assuming is going to whipsaw a weekly chart? This actually fits with the VIX remaining in the wedge. Go figure in this market. I guess my solace is that Kenny proved he is human and so did Daneric at the bottom of 5.3.5. Even Dano after a magnificent call all the way down was looking for the VIX pop to the first gap. Maybe he was left a little miffed as well? I have no idea how either of them do it. They are incredible.

Now lets look at a longer term chart of the SPX. This channel is widely accepted and has been seen on many charts. I assumed the back test of this channel would mark the top of 4.5 and the turn to the bottom. SPX paused at the channel and in the last hour today made the push to close in the channel. That is a big powerful move. Another unexpected event in a weak market. This move opens up a door of opportunity for SPX to climb away. The rising wedge should pull the SPX back some and then guess what forms on the next move up? A pretty impressive H&S pattern that would throw SPX up to the 770 range with a roughly 50 point move. I have mapped out on the SPX chart how I see the zig-zag playing out to my perceived 774 top.

So why am I so confused? My pretty picture that I had all worked out in my mind blew up in my face and now I have no clue as to how this will play out. Maybe being a perma bear got me in this mess and I am missing something. I thought the back test of the channel and the VIX bottoming out at the wedge would make for a nice situation to cause the reversal for 5.5, but NOOOO. Now were going into uncharted waters that really make no sense to me.

Based on the potential move of the SPX into the channel and the potential breakdown of the VIX, I believe that it is going to take a spontaneous move by the markets that will cause a capitulative move that no one will be ready for. Something external will have to drive the market to lower lows or we have an extended 4.5 and 5.5 that takes another three months to play out. That can't happen. So what's gonna blow up the market? We'll speculate on that another day.

Guess I'll have to keep the learning hat on for a while longer and rely on Daneric the great and Kenny to guide me thru the troubled waters again. Comments and suggestions or any therapy ideas are welcomed. Keep your powder dry and good luck.

What's happening?

Sorry I have been away, but work life and play have had me hostage. The falling wedge play looks good to me. This may be a pipe dream, but the more it plays out the better it keeps looking. At one time I had his as a decending triangle, but the wedge it became. The current bottom is also touching a falling channel that has been in play since wave 1 bottom. We climb up for 4.5 then the fall for 5.5 to the bottom of all bottoms just looks right. As we continue the pattern trading ranges narrow and to come off the bottom we need a catalyst and what better catalyst than a falling wedge to propel us back up. Ah, don't forget the back test! As for my target of 4.5, 774 to 807 is it. That is too high according to Kenny, but he's only 10pts under me. I like the intersection of the upper trend line with the 38.2 retracement and resistance as the target. It does not have to touch this line it just looks good (maybe too good to be true).

On a side note I am struggling to believe that 3.5 is over. While it most likely is and the positive divs look really good, the indicators on most charts still look like crap. The pop for 4.5 should be a pretty quick ABC or zig-zag. Have your powder dry for hte fall of 5.5. Good luck!!

Sorry

Between the snow, kids projects and baseball I have not been able to post. I am looking for 3.5 to end tomorrow or Wednesday. I am assuming the size of the recovery will be larger in time than points. Pay attention to my first chart at stockcharts. When the price exceeds the ema 10 and the ema 20 crosses STO then the ema 10 crosses the bb 20ma recovery will be in full swing. It could be violent and have some power coming off severe oversold positions. I'll be playing TNA and QLD. Good luck today.