Powers That Be Declare Victory as Market Starts Fall

I am over in London, and saw several articles celebrating the recovery (in the FT, in the Euro WSJ, and so forth).  At the same time other sections asked whether stocks were now too high. A funny juxtaposition.  Dollar, Dow and other indicators all reversed today.  Tonight's STU says the rally itself is not over, but time for a major pullback.  The pause that refreshes. Others are less sanguine. 

In the meantime the secured lending field is shell-shocked over the strong-arm stunt pulled by the Obama Administration in the Chrysler bankruptcy.  Even back in the Great Depression, FDR did not get away with this.  Obama has pushed the secured lenders down below other interests.  Now what is the value of a security interest?  Financial markets continue to be stressed; why lend even with collateral to a company in the clutches of the Obama Administration?   

The means of production are being turned over to their "rightful owners," as explained by Obama himself.  In the case of Chrysler, those rightful owners are the proles in the form of UAW getting 55%, the Euro Zone in the form of Fiat getting 30%,and the Government taking the rest.  American lenders get squat.  

This bodes very poorly for any recovery from the private sector. Some of my favorite commentators are freaking out . 

Comments

[Upstart]

In the DOW, I thought yesterday's high might be "b" of a small expanded flat. Today didn't collapse like many "c" waves of flats, and in fact contained a tiny bearish triangle that lasted most of the day, resolving to the downside late. The decline could still be the 5th wave of "c" of a flat to below Thursday's low, or it could hold above there and be "c" of a running triangle that began at Thursday morning's high near 8580. In the latter case, it would be an example of a triangle where "c" contains another triangle. In any event, flat or triangle, the final rally should be imminent that pokes up to the 200dMA as EN mentioned. Perhaps that would fit well with the date of 5/19 that Forkoholic and others offer as a possible turn. Then the major pullback...

[da bear]

DOW needs to start rallying soon...

that May 20 turn date could be key. just a hunch.

DJIA would have to make a final spike higher soon if it is to keep up with the Spring 1930 parallel. i think it is following the last great Spring Wonder Rally...

check out a chart of the Spring 1930 rally compared to today. the technical formation looks similar...

anyway go to chartsrus.com and scroll down to find it...

da bear

P.S. Oh yeah, does STU have a level where the DOW needs to stay above for this 'pull back' to be a pause instead of a end to Intermediate Wave 2?

[anon]

The market had a pullback today and every bear is excited, shall we say, in very personal ways. Its like I said over the weekend, if the market were up 20 pts, no one would even care because it is such a normal event. But when it relieves an extremely overbought condition, like today, the bears come out in full force calling for the beginning of a new "crash"..

i am thankful for this dip as we continue to go higher, with the wind of Bernanke's freshly printed cash at my back.

[Tom CZ]

S&P DSI reached 85% bulls last week. Technicals are overbought and we got to negative price season. Risk/Reward turnes strongly to the downside. We just need down break of rising trendline to get confirmation. On INDU it stands around 8 300 lvl.

Tom CZ

[Glenn Loser Neely.]

What a boring blog!!

I am firing Yelnick!!
No more free subscriptions for him!!

Glenn Loser Neely

[DG]

anon,

You're making a lot of very subjective claims in your posts and have absolutely no data. If anyone's got a "personal" stake in the market at this point, it would seem to be yourself. Merely take the inverse of what you ascribe to others and apply it to yourself, i.e. if the market goes up 20 points you're blase because it confirms your bias, but if it goes down 20 you freak out because it could be the beginning of the end.

I trade price behavior, wave structure and time and nothing else matters. The trend has been weakening since Thursday's high. That is not an opinion or subjective, it is based on the relationship of the daily highs and lows to the upper channel trendline drawn across multiple tops. If we don't take out Friday's highs, today will be another day of weakening. Notice, I said "if we don't" because unlike you, apparently, I don't know that just because Bernanke wants the market to go up (I think we both agree he wants it to), that it will go up. There is a certain "Zen" to trading and it relies on simply watching what the market does and reacting. Notice that I didn't post anything bearish today because under my trading rules, the only point at which a short-term bearish trade would get triggered was if we took out Thursday's low (actually, took out SPY 90.35). When you've got rules that precise, who needs opinions about non-chart-related news?

You are making money now and that is nice, but from the naive attitude you display, you are going to give it all back buying the dips all the way down.

[wait til]

anon,

most people are not impressed by your $1200, $1400 profits in S&P. I understand Several analysts also forcast year-long rally.

But, do us a favor. Wait 1-2 months whether you are right or wrong. Nobody wants to hear the same thing over and over again.

[Mamma Boom Boom]

--------------FAKEOUT?-------------

Or has the crumbling actually started. Please alow me to ponder (it loves me, it loves me not .. it loves me, it loves me not)

http://www.bushongbusiness.com/opinion.html

[vipul garg]

market has time and space to go up without violating neowave rules..so wouldnot try to impose any count ending this E wave ...structurally and behaviourally there seems no weakness to warrant a short trade. .

anyone has followed dale woodson in recent times ??

[anon]

DG: agreed, the price action is weakening a bit, but during this entire uptrend, after the initial thrust, we have see a repeated pattern of strong upward moves, followed by shallow consolidations..i believe this is another such consolidation before the next move higher. If it breaks down, it was still a nice run and I will begin shorting. At this point, there is no evidence that is the case.

Wait Til:

I can tell by the way you type that you are a semi-literate, lower caste Deshi..and as such, i will tell you in the manner to which you are accustomed:

arey BHENCHOD, tera BAAP ka GAND main $1200, $1400 S&P profits hain, mera MOTA LUND 1-2 months CHOOS, saala MADARCHOD gandoo..

HAHAHAHHAHA

[Tartan]

Using NeoWave principles, I have been counting the waves within the final E wave of the large expanding triangle that has been going on since last October. The E Wave itself started on March 6. Please check out this URL for a plot of my count: http://img21.imageshack.us/img21/9826/neowavesp500090512a.jpg

I would very much appreciate any constructive input that anyone can provide with regard to this interpretation. I really struggled with the placement of wave b of (C) within this count. I settled on the April 23rd low since I feel that the acceleration out of this low was faster than the potential alternative placements of wave b. How do people feel about my interpretation of an (A) (B) (C) wave with wave (C) being a contracting triangle with reverse alternation.

What alternative counts do others see?

[dealing with an idiot]

anon,

It is obvious that you are not only arrogant, but an obvious idiot. I am a lot more educated than you are (two masters' degrees) and probably a lot more experienced than you are in many areas. But that's not the point. point is real trader or any intelligent person do not brag about small profits like you do.

Do not forget 95% of traders like you go default after making several $1400 profits in the beginning.

[DG]

Tartan,

One thing to consider is the (A) wave of that Contracting Triangle should probably be more "violent". I realize that's a subjective term, but I think Neely means that the movement should be faster than the more recent market price action.

I have been counting the move since April 1st as a diametric and we're currently in wave F, it would seem. Sorry, no chart, but wave A went from April 1st to April 2nd, wave B (a triangle) went from April 2nd to April 8th, wave C (a zigzag) went from April 8th to April 17th, wave D (a triangle) went from April 17th to April 23rd, wave E (a diametric) went from April 23rd to May 7th, wave F (an irregular neutral triangle?) still ongoing. We'd be in wave d of that triangle, which could go a bit more, then a relatively short-lived drop for wave e of it, then a final ramp for wave G of the diametric.

This move would be wave (C) of a Contracting (or Neutral) Triangle with Reverse Alternation that started at the March low, to be followed by wave (D) down, wave (E) up, then the huge drop Neely's been forecasting, just a little later than he expected. I am still not giving up on that count because I just don't see an expanding triangle starting from the March low. Although, if this were wave (C), it has become bigger than wave (A), which is OK, hence the Neutral Triangle option. The relatively slow pace of (C) compared to (A) and (B) makes sense in a Neutral Triangle as well.

Anyway, hope that's not too hard to picture with the way I've tried to spell it out. This would mean that we've still got more upside, same as your own count implies.

[KRG]

anon:

I feel that there is no need for such obscenities on this non-desi blog. Yelnick probably won't understand what you had written but there are some of us who can. It sure hurts to see such native obscenities coming from a fellow global (!!) Indian. I will take illteracy any time over obscenity....

[KRG]

Vipul:Reposting a comment you might have missed on the previous post

On Dlr/INR pls try these links. My own feel is that a spike to 51 should offer a good shorting opportunity

http://sites.google.com/site/krgishere/files/DLR-INR-Weekly10yrs.gif?attredirects=0

http://sites.google.com/site/krgishere/files/DLR-INR-Daily-5yrs.gif?attredirects=0

[vipul garg]

KRG,
i did see it the last time you had posted it.. but charts are very long term and we need interpratation on a short term spike..i dont track and trade this market, but will try and see from charts i have
.but from whatever i see on charts u ve posted ,spike is coming soon.i d buy here with a stop of 48.15 . for a move to near previous highs..and besides for very short term trades , i'd be long on this market than short till confirmation is achieved...there is absoltely no weakness in this chart for a short trade as of now

[vipul garg]

Tartan,
since you have asked for a comment on your count on a chart , so here is one!!
placement of A and B looks okay.
as far as small a, b ,c go i really wouldnt place them.. a is very subdued advance for a leg of contraction and c:a have no good fibonacci relationship..if it were to be a reverse alternation contraction, d leg will have to retrace huge amounts of c wave and not just be slightly bigger than wave b say 840-region.
my count will be A and B where they are in you count.. and wait for C to end with a drop which is bigger than wave B. thats the only time structure will clarify.we can only say wave C is corrective .

[vipul garg]

just as a thought . to add here, one cardinal rule of the market is that any move in the direction of trend should be so fearsome that few people can enetr and ride it.
the rally initially was that nature in sp500 and almost all major world markets. now the move is such that it is giving time for everyone to enter( AND FOR POWERFUL HANDS TO CHANGE HANDS) but is till advancing , which is really the sign of a trap.
market can hand over notional money not free actualised money.

[Upstart]

Is this an ending diagonal in the XAU, in its 5th wave?

[KRG]

Vipul : On INR, agreed. On the longer term charts, does not seem to be a case for shorting. However, the shorter term action may interest you. Thought the structure may have completed or will complete with the next spike

http://sites.google.com/site/krgishere/Home/DLR-INR-Daily.gif?attredirects=0

I think there is a good linkage between equities and currencies and AUD/Stg/Euro/KRW et al have started looking good agst USD and Yen

Cheers

[vipul garg]

KRG:
what structure in short term gets completed in the daily chart you ve appended?
i am missing something there?
to me the chart shows that a upmove is coming pretty soon to previous highs..this upmove will determine whats in store..
theres definitely a correlation with currencies and equities.. but one market lags or leads and that is a difficult nut to crack.. say whether INR starts appreciating or equities start recovering first is difficult to say..

[Mamma Boom Boom]

>>--------------FAKEOUT?------------- Or has the crumbling actually started.<<

So far, all that's happened is a little froth has been blown off the top.

(but be on guard, the spooks are coming to get you)

[DG]

At the lows of the day, we are very close to that bottom channel trendline drawn from the April 1st bottom across the April 21st bottom.

In the context of that count I laid out for the action since April 1st earlier in the thread, a strong rebound from here would be expected. However, we may have seen the highs.

[Tom CZ]

we crossed the uptrendline - should be enough for confo
b/w "Ned" - your "r" type idea (i call that bull trap) fitting great to recent market action...

Tom CZ

[Tartan]

DG / Vipul,

Thanks for the input. It's very helpful to get feedback on my wave counts as I transition from using Elliott Wave to Neo Wave analysis.

[Mamma Boom Boom]

>>we crossed the uptrendline - should be enough for confo
b/w "Ned" - your "r" type idea (i call that bull trap) fitting great to recent market action...<<

I take that as a compliment, Tom. Thanks!

[Wavetrader]

"The size of wave-b makes it clear the
post-a-b-c trend in Notes will be very
weak. With the S&P on the verge of
collapse, and Gold near a major top,
this suggests deflation will be “the next
big thing” to hit Wall Street. Therefore,
the only place to be is cash, which is
something we have been taught to
avoid all of our lives"

Quote from Neel'ys T bond review

[Mamma Boom Boom]

>>In the context of that count.... a strong rebound from here would be expected. However, we may have seen the highs.<<

Actually, I would love to see a test of the high. It would fit nicely with what my in-dick-ators are telling me.

Yip, uh-huh, uh-huh!

[Upstart]

Absolute confirmation of top will come with break of 7938-ish, where wave E of triangle ended.

[KRG]

Vipul : I was looking at completion of 5 waves as the intra-day price dipped down into the Jan-Feb 2009 consolidation zone. Or alternatively an expanding traingle starting March 08 may have ended with the upward trendline broken. The spike I was expecting would be a 2 or a B within a new downward cycle, essentially a test of this trendline. Mind you this is on traditional Eliiott and not on Neo-wave. I am yet to understand the same and have made only a small beginning by subscribing to his service. Totally agree with you on the leads and lags between different markets. Still I am essentially interested in the broad trends in multiple markets and not much into short term trading..
Cheers

[vipul garg]

KRG:
it is not expanding triangle for sure.
whether it s corrective or impulsive needs to be seen in detail . however in any case if its impulsive then a rally to new high is coming for INR.
if its a corrective structure then also a rally is coming to new high or near new highs , thats to be seen
also no new downward cycle has started for sure, so the spike will not be a b wave or 2 wave , it ll be more of a c wave or something else.

[DG]

At the lows of the day, we are very close to that bottom channel trendline drawn from the April 1st bottom across the April 21st bottom.

In the context of that count I laid out for the action since April 1st earlier in the thread, a strong rebound from here would be expected. However, we may have seen the highs.

Posted by: DG | Wednesday, May 13, 2009 at 10:39 AM

OK, we hit that channel nearly to the penny today and rebounded. My own count, based on but not exactly the same as Neely's, says we probably have seen the highs but we could meander up toward the 91.50 area on SPY. Taking out today's lows should get one short with a stop at today's high.