Squirrely Market, Pullback Still On

We hit the classic Fib 50% retracement today in the S&P, a good indication the pullback will resume tomorrow.  We *might* edge up to the 61.8% retrace first, so if not a drop at the open, watch for a small intraday high around SP857. To pour some fuel on this fire, Neely sent out an emergency bulletin for his traders to lighten up on the long position at the current futures level (June 842).  The STU last night also went through a long analysis of why we are in a pullback for several weeks, to be followed by a continued rally into the summer. 

The wave pattern so far looks like a zigzag wave [2] correction off the Mar6 lows.  We have completed wave A of the zig, and the pullback is wave B.  Wave C will go to new highs, but rise slower than wave A.  Hence after this current selloff, expect a lumbering, somewhat sloppy upwards rally into the summer, maybe as far as August.  A typical wave [2] would retrace 50% of the whole fall since Oct07, and crest Dow10K.  Sentiment during a wave 2 is often an echo of the bubble peak, so expect shockingly bullish sentiment.  Don't be surprised if Obama gives a "Mission Accomplished" speech, saying his Porkulus Stimulus worked, and we don't need another one; and that the recovery is on.  That is the point to go short!  Stay tuned, this could be fun.

Comments

[Forkoholic Serge]

f you look at da $SPX foocherz, last 2 days action may qualify your for a grand prize of 5 waves aka impulse down( A or 1?), which makes today as A of B(or 2) or B(2) with C(or 3) to come soon
f you look at da $SPX foocherz, last 2 days action may qualify your for a grand prize of 5 waves aka impulse down( A or 1?), which makes today as A of B(or 2) or B(2) with C(or 3) to come soon
http://forkoholic.spaces.live.com

[Account Deleted]

Mr.Yelnick !!

If the corrective rally post March06 Lows is developing as a zigzag and we have just completed A of this Zigzag and the current fall is B then this B(875 to 826 to .....) should take more time than A(672 to 875) which means it has to take minimum 29 days consolidating sideways or downwards which looks near impossible task right now.Have a look into this aspect.

So the Contracting Triangle count of NEELY fits in better here if 875 is not crossed.Since this would be the D of Contracting triangle it would take slightly more than 12 days to fall below C wave start (783).

This could then be followed by a slightly lengthy sideways E wave followed by a Drop down of serious magnitude.

Regards
VB

[Mike McQuaid]

XLF made a strong statement bouncing at 9.41 and coupling that with a range evident to 11.33 the stage is set for a further bullish statement as XLF exits the range and motors toward resistance at about 12.50. This action by the financials should progressively demonstrate the March low on SPX was a reversal.

[vipul garg]

DG, since the market is not falling fast enough , my count till now is :
A leg from the march lows to 833. from 26 th march we are in a corrective B leg which is drifting upwards.. the triangle ( not a zig zag) was a b wave within B leg.and the current down move is a small c wave to complete the B leg.
The C leg of this zig zag A-B _C then will open up
the one major problem with this count is that it will mean that sp500 will rally very hard and will cross 1000 also ..

[vipul garg]

but as mr neely will say..wait for structural clarity to return..

the reason i say sp500 rally to 1000 above is a problem is bcoz this upmove since march lows is e leg of the expanding triangle which was drifting downwards..hence sp500 can just brush 1000 but not sustain and remain significantly above..

[KRG]

DG/VG

Have just started reading Neely and subscribed to his service. Have a question for you guys who are obviously good at this.

The logic for a Neo-wave different from the earlier EW is that EW is continuosuly evolving. In which case why the rigour of exactitude in evaluating the pace and extent of the wave or pattern. I am a little foxed by the absence of flexibility and the "science" vs subjective element in neo-wave. I also remember En mentioning that he had studied NW under Neely and now uses his own system. May be he could throw some light

Cheers

[Glenn Loser Neely.]

EMERGENCY UPDATE
LOSER HOURLY TRADERS ONLY

Two days ago I went to the bathrooom and I smoke some pot after that I went Long the S&P around 833.00 Jun. Even though the S&P has rallied and we are in profit, the rally is just not what I would have expected because I am a loser.
I also noticed that my buddy Von Hochberg is bearish short term, since my service sucks....lets cheat (again).

We may be getting out early because I am a coward, but I prefer getting out at a certain profit than hanging on and risking to loss more subscribers. Let's go ahead and exit immediately (currently 842 Jun.). We may get in again later, but I cannot be sure at this point because I have not gone to the toilet to speak to the waves again...Lets also wait for the wenesday STU of Von Hochberg to see what he thinks.

Please be patient I willl feel the need to go to the bathroom again. And I will "speak" to the waves agaim

Mega Glenn Loser Neely
NEoGarbage , Inc.
(toilet incorporated)

[vipul garg]

u mock someonce it may be humorous ..secong time it becomes a chuckle ..third time its irritating.. beyong that its .....
especially by someone who subscribes to/tracks neowave faithfully...

i personally and taking liberty, most others will like to hear your views on the market and any technicals , and not views(read garbage) on neowave /neely..

maybe you need to go to the bathroom, smoke and talk to wave s and then write

[EN]

I have not studied Neowave. I took Neely's trading course. He persuaded me to forget wave theory for trading. That was two years ago.

Since then, I have adandoned some of Neely's concepts in the trading course and kept some, adding my own observations to the mix, which is largely based on trend-following, pivots points, moving averages and Lucas/Fibonacci time relationships.

I have been trading since 2004 and have learned the hard way not to fight a trend. Best to keep it simple.

Good luck to all.

[NeoMan]

I did not take Neely's trading course way back in October 2005 and have not been an avid student of his ever since. I find his many insights to be particularly useless, especially when traditional Elliott Wave Theory falls short or is ambiguous. I would not recommend Neely to those who are looking for a system that encompasses and embellishes on Wave Theory and heartily do not endorse it for people who are just plain curious about NeoWave.

I have found NeoWave to be an extremely useful tool and vital component in my trading at no times in my life and suggest that those who would criticize Neely should first neglect to examine his methods as they may not be useful at all.

[Kevi Smith]

I track Neowave trades in a spreadsheet. Since January 2009, following the weekly traders timeframe, he has made $20,000 if you are a futures trader. Going long/short SPY & SDS, $10,000 would now be $16,600. Using leveraged ETF's $10,000 would now be $26,300.

kevin

[Ron]

Wow-- Neely gives specific investment advice and not just market predictions?

[Kevin Smith]

Nelley does give specific trade recommendations if you subscribe to his trading service. Pretcher on the other hand, leaves it up to the subscriber and the updates are often very subjective. Hence personal performance with EWI can vary.

kevin

[DG]

Vipul,

It's funny. You are saying the market is going down too slow and Neely is saying it is going up too fast slow. We must be in the middle of a correction.

KRG,

Yes, Neely's hypothesis is that new formations can emerge as EW becomes more widely known. However, he has not said that any of the old formations' rules change as a result, only that the wave analyst needs to determine what the rules for the new formations are and they can't be the same rules as the old formations. Also, it is unlikely that any new types of impulse patterns will emerge or that there will be "quadruple threes" or "quadruple combinations" in the future. Outside of those limits, the analyst needs to keep an open mind as to what the market is doing.

Right now, in a multi-year, perhaps multi-decade, corrective environment, Neely is skeptical that anyone will consistently get the wave count right, so he is relying more on his River theory to keep him on the right side of the market. Once the entire consolidation is over (assuming that we don't see "the end of the world" first), I'm sure Neely will look back and put a wave count to it, although the more important thing at that point will be to get on board the next impulsive move up.

[Tom CZ]

Have to agree market poised for s/t fall - we got crossover on MACDs on yest on INDU and may get one on SPX soon. Natural target lies around 740-750 and we should not get below 700. In that case market would retest the low before another upside.

Tom CZ

PS makes ntg to my 2009 year peak target around 1100.

[Kevin Smith]

New Neely recommendation today. BTW, one of the things I like about Neely's trading style is the attention to risk control, and his willingness to patiently stand aside until a low risk entry point emerges.

Kevin

[vipul garg]

DG,
when i said market is falling too slow, i meant that it was not faster than the B wave decline as in mr. neely's count..hence it is not the end of the formation..
if market continues to decline below 820 odd then it will be asign of sp500 topping at 875 odd.

[DG]

Kevin,

I read this article yesterday on the number of traders that go bankrupt (10%).

http://club.ino.com/trading/2009/04/10-of-traders-go-bankrupt/

It contained this nugget on risk management:

"Whenever I think of risk management I always think of an article I read on 925 CTA programs between 1974-1995. It essentially confirmed what I have long held to be true. To summarize the report, of all the CTA’s who managed funds, the most consistently profitable were the ones with the best risk management systems."

I swear I read an article referencing that same study in "Stocks & Commodities" magazine and it has always stuck with me, even (especially?) when I failed to practice good risk management myself. I just have never been able to find it again.

I agree that Neely is very strong in this area and his style has definitely taught me to trade much more patiently.

[Martin]

DG,
Congratulations, looks like you were right with respect to holding onto to Neely's first count, seems that 872.25Jun will have a lot of resistance and can be the line in the sand, risk management is important else one can get dizzy or even greedy to add to positions as we near that resistance..who dares wins!

[DG]

Vipul,

Yes, I figured that is what you meant. I went back and calculated that we would have needed to take out Monday's low today to have a "further and faster" decline than the B wave.

Given the drop in the last hour today, it is possible that the C wave ended at a lower high and the D wave has begun today.

Need to test this decline against that B wave for confirmation, as you imply.

[DG]

Martin,

Yes, it's great when a line in the sand is nearby because you can buy more of whatever you're trading and have the same "value at risk" as with a far stop. You only need a few trades like that to make a month or year truly profitable.

I think with the end of day drop we might have seen the trend change. It's kind of too bad that Neely's hourly sell-stop didn't get hit, but he might tell Hourly traders to get short in an Emergency Update.

[Rob]

If I know Neely he's going to tell Hourly traders to hedge with close stops and maybe get long (provided no head-fake) on a daily basis. Probably an emergency bulletin but maybe an extra-urgent supersecret message.

[DG]

Rob,

You sure it's Neely sending you those "extra-urgent supersecret messages" or is it the voices in your head?

[Kevin Smith]

I like the way Neely states that he is uncertain about the forecast when he is baffled as opposed to confidently sticking to his previous opinion and making up excuses as to why the market did not behave like it should have.

kevin

[vipul garg]

DG,
it seems more likely that c ended at a lower high.to me now wave c looks better as a reverse alternation contracting triangle ..but today then should be a day of tremendous follow through atleast a 300 point drop on dow..
further if wave c ended here , then d will retrace whole of c wave and also e wave cannot exceed this high made ..

[DG]

Vipul,

I agree that the last few days market action looks like the end of a reverse alternation triangle. I will be shorting tomorrow based on that count, since the obvious stop is so close by.