Sink Oh De Mayo

Big gap down at the open today bodes poorly for the bulls. The market pattern remains bearish, and with the problems in Europe widening when most everyone thought the Greek rescue would narrow them, the sands are shifting under the market. Oddly enough, market sentiment remains very bullish, which is bearish - it means we could have a lot of downside, as we have a lot of investors left to panic to the other side. EWI notes that a similar bullishness accompanied the last two corrections (Jun and Jan) in the Hope Rally. Tony Caldaro adds that the two prior corrections lasted around two to four weeks, suggesting this one runs into late May. His next target is Sp1146, then 1137, but notes we could to 1107. 

The nested 1-2 count worked this time like a charm. It worked so well, the STU has strengthened their count: rather than end the inside 1-2 down, today caused them to lengthen it. They have today's low as the end of wave i of (iii) down, with us in the wave ii bounce. This means the next run down will now be a triple 3: a little 3 of iii of (iii). This is the set up for a bigger gap down and a deeper drop. If we gap again at the next open, this is the triple 3. The wave structure is ambiguous, since the little wave ii could be breaking into an ABC first, and only has done A and part of B. C would be a small bounce back up before the fast drop. Given yesterday was a 90% down day and today was "only" 80% down, a small bounce is likely before the next 90% down move. 

A key issue is what it would take to confirm the drop as THE drop not just a B wave with a final run back up to new highs. The STU proposes to look at a drop larger than the prior two drops in both time and distance, which gives a target: lasting past May 20 and falling below Dow10363. Good stuff. Lots more in tonight's newsletter.

The STU count on Monday may have prejudiced some wave analysts to look for the end of iii or (iii) down rather than recast the drop today into merely wave i of (iii) down. It will be interesting to see if the students out-count the master. Let me highlight the two lead counts in this contest: 

• Daneric says that wave (iii) concluded today. After a wave (iv) bounce, a final wave (v) should carry to Sp1137-42. His chart:

   

• EWTrends has wave iii ending today. Wave iii is the inside wave to the larger degree wave (iii). We are meandering in wave iv, which could keep going sideways in a triangle with an apex around Sp1166. After inside wave v to complete wave (iii), we would have a larger wave (iv) and a wave (v) down blow a gap at Sp1124. His chart has slightly different numerology, with numbers 1 2 3 for the outside waves (i) (ii) (iii):

 
 

Comments

[nspolar]

It will all come out, as stated.

This just in: Becnel tells me that one of the platform workers has informed him that the BP well was apparently deeper than the 18,000 feet depth reported. BP failed to communicate that additional depth to Halliburton crews who therefore poured in too small a cement cap for the additional pressure caused by the extra depth. So it blew.

Why didn't Halliburton check? "Gross negligence on everyone's part," says Becnel. Negligence driven by penny-pinching bottom-line squeezing. BP says its worker is lying. Someone's lying here: the man on the platform - or the company that has practiced prevarication from Alaska to Louisiana?

http://vaticproject.blogspot.com/2010/05/slick-operator-bp-ive-known-too-well.html

Why did they replace the drilling mud and fluids with salt water, before pulling all the tools and drill pipe out of the hole? I would still like to know this. Why remove your last line of defense? At some point you have to I suppose, but before the drill pipe is out of the well bore, and only hours after the cement plugs were set? Do cement plugs have a cure time? Are they normally pressure tested, like by slowly lowering the specific gravity in the drilling mud and fluids, and measuring the leakage?

What they have now is a sub sea night mare. I do not give the dome a great chance. It will likely do some good, but .... let me see here. The pressure at 5000 ft is ~ 2200 Psi. I suspect downhole pressure is maybe up to 9000 Psi. This would infer the pressure at the wellhead might be pushing 5000 Psi at the no flow condition (if it was shut in). It in any event it is greater than 2200 Psi or no oil would be coming out. Given the amount flowing, there has to be a fair amount there, given the size of the tubulars. So the dome goes on. Pressure inside the dome is greater than outside so oil has to leak out. Initially it has a big hole in the top, before they connect the hose. So the oil flows out the hole. Then they connect the hose. Now we have line losses (if it flows up the hose) and there is 5000 foot column of head to the surface, maybe combined worth about 2200 to 2500 Psi. Any way I look at it the pressure inside the dome is still going to be quite a bit greater than at the sea floor. They gonna get a tight seal to the sea floor in mud, with one side setting over an approximate 20 inch riser? Does not make a lot of sense to me.

A Louisiana Prof was a bit skeptical as well. Said the performance depended on the chimney effect. I don't see a chimney. A chimney vents hot gases. This hose would be venting liquids it appears (might be a little gas mixed in). What I see is a dome, and any way I look at from what has been presented, the pressures inside the dome have to be greater than outside. Gonna work? I dunno but it looks like the chances for leaks would be pretty good. Maybe they can pump a bunch of cement around it, and over the top of it, after they get the hose connected. Who noz.

But of course we can hook a pump to the end of the hose on the surface so it can suck, right? Sucks the guts right out of the that dome. Wrong, any pump I know about that is readily available does very little sucking. This is a wives tale. Certainly no sucking to a depth of 5000 ft. from the ocean surface. If they could stick a submersible pump inside the dome and pump from the inside out, well another story. But that would be major engineering to do this, and would probably take a multi thousand HP submersible. No such thing is readily available.

It appears to me their best bet is to remove all the wreakage above and around the moon basin. But this is not easy. If they could and did, they could likely cut off the crap sticking out of the BOP and set new one on the top of the one in place. Not sure of this but would seem to make more sense to me than this dome.

BP .... only BP. Sarah Palin should have kicked them out of AK when they had the spill on the North Slope. It was imo no different than criminal negligence. I believe she could have done so, but she likely knew it would have would have wound up in a big court battle. So they are still in AK.

As you can tell I 'ain't' too impressed with BP. Their record of recent speaks volumes.

They are all about contracting, and then blaming their problems on the contractors, or trying to. Shove accountability else where. Do not take responsibility for your own business.

Digress to Apollo 13. Remember Gene Granz ... he was in total control in the movie, and I suspect that is the way it really was. At the end Jack Swigert was exonerated, the failure mode was built in to the capsule years earlier. But during the return to earth, Gene led a group of engineers very professionally to a successful outcome. Was a good movie, and something an engineer enjoyed watching.

Now imagine the atmosphere on the Transocean rig. Probably only a few engineers on the whole rig. Contractors galore, chawing and drawling, and all making decisions independent of a lead. Haliburton not even informed of proper hole depth ... could it be? You bet it could be. Maybe there was no lead for the the whole job. Various parties, all with contracts to fulfull, all quite possibly with different agendas. Big money rolling across the rig floor ($1M per day), performance bonuses likely at stake .... and well the perfect atmosphere for a chain of events.

Is this the oil patch as I know it? You bet. To a tee.

It used to work to a certain extent maybe. But it is not the best organizational set-up for a deepwater drilling rig. Deepwater drilling is hi tech stuff, very serious business, very risky, and with liability out the gazoo. The good ole boy system works fine, until it does not. Then it literally caves in.

All in my humble opinion.

I really do not see the Obama or Fed connect here. The best way to prevent an oil spill is to not let it happen in the first place.

ns

[nspolar]

More good stuff.

http://dailyhurricane.com/2010/04/bob-on-fox-news-talking-about-the-bp-well-blowout.html

As a sidenote it appears to me crude oil has put in a massive 'B' wave top. Technically however it 'ain't yet broke'.

ns

[Alex]

New Moon 7 days away which coincides with a Lindsay Low-Low-High count of 33 trading days than Prechter mentioned here:

http://yelnick.typepad.com/.a/6a00d8341c563953ef0133ec4f5c94970b-500wi

[Alex]

Dow 10950 and SPX 1176 need to be taken out on the upside today for this bullish new moon scenario.

Yelnick wrote 3/28/2010: "The 33 day turn pattern suggests a turn now, and another one in mid-May. The prior ones have been low to low; maybe this is high to high? We might see a pullback that lasts several weeks, then a final run up into May."

[Alex]

If SPX can muster a break of 1176 today out of this 1-2-3 low - watch for the "Ross Hook" entry...

http://www.trade2win.com/traderpedia/Ross_Hook

[nspolar]

"DOW JONES NEWSWIRES

BP PLC (BP) is considering a permanent fix to its oil well leak in the Gulf of Mexico that could be in place in two weeks, Chief Executive Tony Hayward said Wednesday, the Houston Chronicle reported on its website.

The fix, known in the industry as a "top kill," involves injecting heavy fluids through an existing piece of equipment now sitting atop the well some 5,000 feet deep. The method is commonly used to control wells on land but is untested at these depths.

"It's the shortest-term option, for sure, for permanently sealing the well," Hayward told the newspaper in an interview. He said the method had come "significantly to the fore" in the last two days.

Full story at: www.chron.com/disp/story.mpl/business/6991278.html
-Dow Jones Newswires; 212-416-2900
(END) Dow Jones Newswires"

Who is running the show I wonder? Boots and Coots?

ns

[nspolar]

For anyone interesting in shorting Gold.

My best estimate for a GLD top is around the 17th of May, a huge potential cycle high.

Have I a count to match? You bet.

I am only tippie toe short GLD, I would like to see the gap off the last high closed, at ~ 118. Plus a new weekly high here.

Commodities imo are heading down now. Too much traction lost and the Shanghai is going down. I was the first here to mention the connect there and the cycle high top on the 14th for the Shanghai, which was dead nutz. I am much more than tippy toe short commodities ($DJUSBM).

Gold is not going to go counter the commodity cycle. Just ain't gonna happen. A possible clue here is that the miners are lagging.

If I am correct on this, the general markets will really take a hit if/when the gold bubble pops.

But beware I am from the oil patch and use a good ole boy system.

ns

[MHD]

nspolar.... just read an article that said there are safety features on the North Sea rigs that should be on all rigs. Oil exs convinced our politicians that they weren't needed and the COST was too high for something that would not happen. Once again, our politicians have been paid, in one form or another, to save the corps money in return for contributions. With very few exceptions, all our politicians might as well have CEO titles. Corporations own America, not Americans!

[marketman]

CLF working on an intra-day double bottom at 56.80 which is roughly a 50% retracement of yesterday's HUGE range from 52.20 LOW up to 60.46 morning HIGH this morning. What a BEAST this stock is!

[Wags]

Anyone have 1142 SPX as a potential target for a low?

Essentially where (v) = (i) using 23 points as (i) down from 1209?

[robert]

nspolar nice oil (patch and rig) commentary. Oil took three shots at 87.50 and has swooned considerably this week. Someone I follow mentioned a monthly close below 78.06 would spell the end of this party for awhile. As for gold, that same someone is forecasting a high in late May or early June. Maybe it's coming sooner. I've also noticed the miner divergence (although I believe they are the only thing holding the TSX up today) plus silver seems to be exhibiting early stage divergent behavior. I have not shorted gold yet either but have been short silver for awhile and feeling little to no love for the position!

[Mamma Boom Boom]

Back in colonial days, America used to get all it's mayonnaise from Spain. One day a severe storm came up in the middle of the ocean. One ship, carrying tons of mayonnaise, went down. It was a very sad day.

That was the birth of Sink Oh De Mayo.

True story!

[marketman]

For those that are trading, CLF just hit the 50% retracement of yesterday's huge outside range at 56.33

[TC]

Gold is up at 1197 in yet another rally.
Prechter wrong again when it comes to the metals.

[DG]

Above 113.96 SPY is a long trade with a stop at 109.

[nspolar]

The best indication a top is in is the sentiment on Yelnicks blog as well as on some bull boards.

No previous perma bulls are hooping and hollering here. In general it means they did not go big short, but capitulated. And on the bull boards, well just a correction.

Imho.

I think Gold will top ahead of my ~ 17th schedule. Getting close. SMN to the moon baby.

ns

[DG]

Scratch that. Any .99 SPY point rally that takes less than 28 minutes is a buy. I would expect a short-squeeze at some point to trigger that, but today looks more like a forced selling day.

Nice.

The worst thing about being a bear is that you don't get to taunt people for months and months because things happen so quickly to the downside when leverage goes in reverse.

[Account Deleted]

DG !!

This is a clear sign of Trend Reversal.We havent seen anything like this since Mar09.I hope now this seems like a IMPULSE to u.Asking u just cos u had a view of a FLAT formation in mind thts why.

Regards
VB

[nspolar]

Wow, I can hoop and holler, cuz I posted my trades in Real Time. No paper trades either.

Probably be my best day ever. Neely eat your 'sellers' heart out.

The next biggie is GOLD. Don't follow Neely anymore. He may hit that one finally, but he already previously called at least one and maybe two gold tops.

ns

[nspolar]

A "C" wave should start with some emphasis, as previously stated.

Is this the emphasis?

ns

[Hank Wernicki]

Sorry if this is a second post, the first one is gone ? Just delete one of posts could be my PC or connection

THE WARNING :

http://www.elliottfractals.com/default.asp <<< the chart is here

ALONG WITH A "NO HEDGE" SELL SIGNAL

AND THE FRACTAL CHART

HANK WERNICKI ..... Happy Cinco de Mayo

I Might offer a free week soon ...............

[Wave Rust]

Hank,
tipping my hat to your fine call of a down move of 750 to 1,000 Dow. :)

reminds me of August 07.

wave rust

[DG]

VB,

Yes, that action is something I would classify as an Impulse and it does lend some initial validation to the Flat idea. This would be wave-.3 of 1. I noticed that the action today was really overlapping, yet continued to decline. I thought it might have been a Running Correction to the downside and the waterfall decline validates that idea as well. Doesn't bode well for the bulls when the .3 of 3 hits, that's for sure.

What I want to know is who stepped in and started buying and why?

[Hank Wernicki]

yes Rust , good be pretty bad !

[Mamma Boom Boom]

>Sorry if this is a second post, the first one is gone ? <

Same here!

[Sjaak Trekhaak]

BANG! That was amazing ... (on the downside)

And what a shame that I did not go long in the rise. Just could not think of it .... just call me a permabear :P I know.

With a starting decline i will be short again.

[yelnick]

Mamma, do you have another story for Miracle Whip?

[Account Deleted]

DG !!

I dont think this is a case of someone stepping in and buying.I think it just a case of panic selling with lack of sufficient buyers on downside.It was like selling in an empty market and as if it happened so all of a sudden tht there were no buyers ready with their buy orders on downside.Such panic selling usually leads to panic covering as well as it doesnt find further fall in price

regards
VB

[Forkoholic]

And the Oscar goes to Mike Yorba for predicting Stock Market Crash! "This looks like a crash pattern to me." http://ow.ly/1HRLJ

[yelnick]

ns, this is much more than a C. STU may have nailed the 3 of iii of (iii). Shrtly you will see posts overlay9ing 1987 with the Hope Rally. I will post if so. This time we have China real estate bubble bursting, European banks in deep PIIIGS Poo just like Creditanstalt in 1931, and Congress rattly Wall Street cages just as they did the week before the 87 crash. In a way, 1987+1990+1931 all rolled into one.

[Michael]

ADULT SWIM ONLY!

Thank God my data-feed was up to the task.

:)

[DG]

"STU may have nailed the 3 of iii of (iii)"

Yelnick, you've been doing wave counts for years. You know that count isn't "real".

It's the "Sasquatch" of wave counts!

[Mamma Boom Boom]

>Mamma, do you have another story for Miracle Whip?<

No Sir, I do not.

But I did say that I can imagine the number of trusted indicators that ended up in the garbage can, this week.

Ug-Lee!

[Michael]

Bad "prints" in PG ($60 - $40), CTL, ($33 - $10) and the "Little Guy" gets screwed again. Fat Finger???

My favorite company dropped from $88.50 down to $85.00 on a piddly 30,000 shares in 5 minutes. What a joke.

Bought $85.50's

:)

[Forkoholic]

And the Oscar goes to Forkoholic Serge
Apple AAPL is added to EWF's CRASH WATCH List 2010-2011 Charts and commentary 6:48 AM May 3rd via web

http://twitter.com/Forkoholic/status/13306200896

[Sjaak Trekhaak]

I also had problems, not with my downstream of data, but with my upstream of orders. Since I live in the Netherlands, by broker can easily handle it (not too many people here will be trading I guess), but to get the orders executes ... usually it is instant, but now it sometimes takes more than 30 seconds.

Well as longs as you are on the good side of the market, those seconds do not last too long.

[Account Deleted]

DG !!

Not necessary tht it could be worse when wave 3 of 3 kicks in.Cos there still is a possibility of a Extended 5 th Wave in this first wave and tht could lead to a continous precipitous fall.

We could have a 1 st extension Terminal forming as an Entire C Wave of this FLAT from08 onwards.I consider this becos since we have had a Triple combination in the B Wave it cannot be completely retraced so the only way mkt could bottom out and give a C Failure would be a TIME CONSUMING TERMINAL forming as a C WAVE.This would provide sufficient fuel to Start a new good strong new rally

Regards
VB

[Hank Wernicki]

Mike Yorba <<< CAUTION HERE ............... THAT'S ALL I'M SAYING.

[nspolar]

Yelnick, my count has this as the beginning of a C, of an ABC off the late 2007 top. I am sticking with it.

All C's are 5 wavers per classical Elliot and per my methods. Yet C's I think can vary a bit, in any event they are nasty, within the timeframe over which they occur. I do not believe this one will end until mid 2011 or so, and my target is ~ Dow 3000. The variance will be whether this C is a tight channeling C, or if it will break into 5 distinct waves of some variance.

Until I see reason to change my LT view I remain.

A quote by a seemingle intelligent fellow I read some is that this is a zero sum game, and in the end all gurus have their day in the sun. But only a day, maybe two.

I am no guru.

I have read here and elsewhere how great Neely is LT. And then there is Prechter. And there is this bull guru I am not going to name but who is very well known. I could tell by recently following him, and him alone something was soon to occur. All of these fellows are sellers.

The market and in particular this one likes to humble us. And it does.

In the end I think this market is going to give each of these gurus a small piece of what they want, but only a small piece. Just enough though that they can all later on say they hit this and that and will you know what I mean. This is how sellers work it.

But back to the LT Neely and whoever. Imho LT accuracy is the key to ST accuracy, in EW, more than anything else. If Neely is so on LT, why was he so off here? If I followed Neely and used his stuff, that is what I would have to ask myself.

But I don't follow him anymore for reasons previously explained. After another blogger here also described him as a seller, and why, I am glad I do not follow him.

Cheers. I better get some work done here.

ns

[vipul garg]

critical is what eurodollar is doing.

[Mamma Boom Boom]

Two (2) things, kids:

that is exactly what a washout looks like (total capitulation)

we put in an island reversal, mid-afternoon

[yelnick]

ns, no worries, at that scale this could be a C. It means you see the Hope Rally as done and the next big drop starting. I had read your comment to be a much shorter term C wave.

[Account Deleted]

DG !!

I sense a 3rd of 1st has gotten over and we will now witness a time consuming 4 th Wave.Most probably a Triangle.Cos I find a FLAT in the 2nd Wave position.SO hopefully no more fireworks for atleast a couple of days.

Regards
VB

[DG]

VB,

Yes, a 1st Extension Terminal is possible. One issue I would have with a Terminal here is that we're in the midst of a Triangle and I don't know that Terminals can end a leg of a Triangle unless it were the wave-E and you had a Terminal to end it. Even there, I'm not sure that's permissible.

[Account Deleted]

DG !!

My assumption of a Triangle in the 4th also stems from the fact that the A wave fo a triangle is usually the quickest.The recovery from Bottom has been very very rapid.

[vipul garg]

ns,
you must have followed some one to get hold of EW.who is that great one whom you followed ?
i can only say that no ewaver in his right mind will dismiss neely as a hype/seller and like.you can agree/disagree and not follow his trades and trading style but he is just about there with the best of technical analysis and certainly EW

[Account Deleted]

DG !!

I didnt understand your last reply.R u referring to my query to Yelnick and discussion with you on a possibility of a Triangle scenario in the larger structure since2008.Well if its so then I was just considering a Triangle as one of the possibilities with an option of a FLAT mentioned by u still open.

Regards
VB

[Michael]

I'm LONG.
here comes a big run into the close!

:)

[Sjaak Trekhaak]

Crap Im short and stuck atm .... orders do not arrive anymore ... should have listened to be carefull ...

But so far a nice profit ... lets hope for the best ;-)

[Account Deleted]

DG !!

Terminal as entire leg of a Triangle is not permissible.But terminal within the patterns(C of a Flat or a ZigZag) that form a leg of a triangle shouldnt be a problem I guess.Cos the presence of a Terminal within one of the parts of a leg of triangle doesnt make the entire leg impulsive cos Triangle is a corrective structure.

Also,If we consider a Terminal Impulse in the current assumed C wave the post pattern implication would just mean crossing of 11300 or 1220 on SNP and that would in anycase happen(even if its not a terminal here in C wave) if its a NEUTRAL TRiangle(since200) becos D of this Triangle could reach the point where B ended.

Regards
VB