Big Tease is On!

Our three scenarios (and a wildcard) have resolved to the Big Tease: a run up to the range of Sp1120 - 1150, then a drop again. Today was a 90% up volume day, so this could be the kickoff of a run to hew highs, but that seems unlikely, as volume remains larger on down days than up days, and was the second lowest in the past three weeks. 

The prime count is captured in this chart from EWTrends, which also supplies fib targets of 1107 (50% retrace) and 1122 (62%). Given that the market believes we will see a promising unemployment announcement Friday, partly based on temporary census workers but also including a broader increase in employment than we have seen in a while, we seem likely to run past the gap at 1115 into the 1120 level. 

 

As I have commented, often the EWI alt count provides better guidance than their prime count, which tends to be the more bearish view. Today's STU continues with the prime count but has elevated the alt count to higher visibility. In the alt count, the recent bottom is seen as the end of the first wave down, and the Flash Crash becomes the end of wave iii of 1 down. This means the current correction is retracing the whole drop from 1220 to 1041, and gives different fib targets than the prime count and targets in the chart above:

• 50% retrace: 1130 (not 1107), near where a=c of this bounce (1133)
• 62% retrace: 1151 (not 1122), near where the head & shoulders targeted (1140)
• 4th of the prior 3rd: 1160-1174, the fourth wave of the Flash Crash

Neely still has us in a contracting triangle B wave, which allows for new highs later this summer. His count explains the anemic upside volume, since it wouldn't be expected to kick off until the C wave. We seem to have finished his leg c of the triangle, and are in leg d. His leg a was the Flash Crash and leg b the Flash Bounce. Given the pattern of a contracting triangle, he would expect leg d to finish below leg b, meaning not get back to 1174 but end around 1150; and drop in leg e to below 1040. Hence his view would be consistent with the Big Tease - a bull trap fake-out around 1150 - and would be followed by the Little Tease - a bear trap when we break 1140. A double fakeout trap! 

Comments

[marketman]

Anyone buy stock today?
Anyone long???

http://online.barrons.com/public/page/9_0210-investorsentimentreadings.html

:)

[usdollar]

There is also a possibility that Wave 5 down from March 2009 was wave B, I happen to believ that, and the latest top was a wave C of an elongated flat wave X. Now what we have seen is an abc down A', with a 61.8% retrace up of the whole down movement B' before we turn down again in wave C' of A finished in the end of JULY 2010.
Wave B finished to the end of October 2010, Next leg down starts in the end of October wave C, how far down? anybodys guess, but it will be far enough down so that the second wave X will not cross March 2009 low.Guessing considerable lower than 3000 on the dow. That will give us ABC, X, ABC down. From there it will look crappy, b/c USD will go from 98ish or so down to approx. 60 on the index, most likely in an ending D to the end of 2011 or beginning of 2012 (March???), which makes the last correction in the tripple ABC, X, ABC, X, ABC, on the dow and SPX starting sometimes March 2012. The final ABC down will start when the USD starts its upleg of the bigger ending diagonal which started in the beginning of the 80s, and which will tripple or quadrupel the value of money. Here it is unsure if it will be the dollar or silver that will take off, or both. Why this incredible takeoff of real money? B/C all the 100 trillion in IOUs will implode together with most banks in some serious deflationary crash. I would bet my money on silver, from the end of 2011. Weissratings.com gives you an uppdate how strong your current bank is, since the weakest link most likely will be the bank in which you store your money. Forget 401 K and FDIC, and to big to fail.

Here is a little snippet:
Is Your Bank on the Ropes?
We have around 8,000 banks and thrifts, and about one-quarter of them don't make the grade with Weiss Ratings.

Weiss gave 2,259 U.S banks and savings and loans — including some of the biggest names in the industry — a grade of D+ or less in its new survey. These institutions, which control nearly 44 percent of industry assets, are considered vulnerable to further financial difficulties or even failure, Weiss says.

Among those getting a low grade: Bank of America, Citibank, Wachovia Bank, HSBC Bank USA, Suntrust Bank, Regions Bank and RBC Citizens.

Only 962 were considered strong, receiving a grade of B+ or higher. These include Woodforest National Bank and World Financial Network NA, which both got an A; and GE Capital Financial Inc., Nationwide Bank, Bank of The Ozarks, American State Bank, Broadway National Bank, Burke & Herbert Bank & Trust Co. that all got an A-.

Of course, deposits at failed banks are protected by FDIC insurance. But Weiss says consumers can miss out on interest income or be inconvenienced when a bank fails. The rating agency suggests consumers stick with a bank that gets a grade of B+ or better.

Weiss will send its list of strongest and weakest lenders to consumers who supply their email
Thanx Yelnick for a great blog.

[min]

"Anyone buy stock today?
Anyone long???

Posted by: marketman | Wednesday, June 02, 2010 at 04:33 PM "

No. But my QQQQ calls got closed after hours for a 50% gain.

Will look to reload tomorrow if possible.

[OracleLurker]

just a little but then i was almost 200% long going into today. congratulations to my fellow bulltards. probably the first target for beginning to scale out should be just under 1120.

[min]

Bulltards?

[Gooner70]

An interesting Summer ahead ..... With regard to the big Tease, the price action on the S&P over the past year looks spookily similar to the price action though Mid 2006 - Mid/Late 2007. There is a chart towards the bottom of the following link showing this. -- http://hometraderuk.blogspot.com/2010/06/eurusd-interesting-juncture.html

[Mika]

So,

http://4.bp.blogspot.com/_Wt9bhJccdPw/S_xijQSsb4I/AAAAAAAAL0A/DwKFoGhXUk4/s1600/spx.png

Something like HS at least, market seems to follow that chart at so far.

Enjoy your summer market wonders, OIH ETF is more interesting as SPX now but thats just my opinion.

[Gooner70]

Mika .. FWIW I feel that that something along the lines of the scenario you have posted is probably more likely. I can not rule out stocks re-testing the high as they did in 2007, however that was the tail end of a strong bull market, whereas the move of the past year is most likely a bear market rally, and therefore may lack the rigour needed to re-test the highs.

[Account Deleted]

DOW JONES Resistance line in daily chart
http://niftychartsandpatterns.blogspot.com/2010/06/dow-jones-resistance-line-in-daily.html

[Molecool]

And again - who was the first to warn about the bullish potential in equities - almost 10 days ago? ;-)

[Mamma Boom Boom]

>And again - who was the first to warn about the bullish potential in equities - almost 10 days ago? ;-)

Posted by: Molecool<

Why, I do believe that was I.

[David Peterson]

I disagree. I don't see us breaking above the 200-DMA. My current short-term count, slightly revised from yesterday (sorry about erasure of part of the date):

http://img231.imageshack.us/img231/425/dfvjgk4t120grph3nfbb.gif

We'll see. There are still plenty of possibilities.

[DG]

My current short-term count, slightly revised from yesterday (sorry about erasure of part of the date):

http://img231.imageshack.us/img231/425/dfvjgk4t120grph3nfbb.gif

Wave-e can't be larger than wave-d in a Triangle, unless it's an Expanding Triangle.

[min]

Now reloaded on more QQQQ calls. Now on my third quick swing trade since May 25th.

Props to MoleCool and Mama, hopefully they are also profiting from their spot on insight.

[Steven_737]

"who was the first to warn about the bullish potential in equities - almost 10 days ago?"

molecool do you mean this ?

May 26th, 2010

I’m watching today’s gyrations with keen interest. Based on what I’m seeing there are
three scenarios
– two high probability and
two low probability ones –
I call them my three little pigs as they all have the same eventual outcome:

Let me precede the following with a warning: Counting Minuettes is a bit of mental masturbation – just too much tape banging going on to count on such small scale. Which is why I usually don’t but today’s an exception so I’m throwing this at the wall – not sure if it’s going to do you any good but seeing various possible scenarios may aid your trading decisions. But remember, all this is short term stuff, so don’t sweat it.

hehe;

don't become bullish so early, unless you have good reasons!

In any event,
this fellow posted a detailed description of how price action would likely evolve, on May 21st 2010;
and two alternate counts; - one of them happens to be the "Big Tease" -
along with the condition required to become bullish (if price action indicates that one should become bullish).

http://steven737.typepad.com/blog/2010/05/es-spx-analysis-5212010.html

cheers :) :)

[yelnick]

steven_737, molecool, mamma, min - I love seeing the bulltards return! I have been watching Mole develop the bullish soylent pattern for a while, and have been enjoying steven_737's scenarios.

I would like all of you look forward to the chart if we get around Sp1150 in Aug on modest volume - a classic head & shoulders will have emerged between the Jan high (1150) and Feb low (1044), and the recent May low (1041) and this possible summer high (1150). The head in between at 1220 is 180 pts above the neckline, and this suggest a drop to Sp860 at least in Sep/Oct.

Why Aug? If you read the screeds from prison of Martin Armstrong, he has a interesting pattern back to 1929: 34.4 months to the peak from the 1929 start, almost precisely the same from the 2005 low to the 2007 top, and then 34.4 months to the bottom. In between we had a 17.2 month false rally (1931) that is little recognized as everyone focuses on the 50% rally in 1930. The Mar 2009 bottom is 17.2 months from the Oct 2007 top, and the 34.4 moment comes this August. He therefore is suggesting that this time the 34.4 point will be another false rally top.

[Mamma Boom Boom]

>I would like all of you look forward to the chart if we get around Sp1150 in Aug on modest volume<

Could be! But, my model is expecting something stronger than that.

[Mamma Boom Boom]

Another thing, since we don't really know what happened in May, and can not trust the data, I've decided not to use it in any technical work. That tosses out any H&S thoughts.

[Steven_737]

"look forward to the chart if we get around Sp1150 in Aug on modest volume - a classic head & shoulders will have emerged"

Good Grief!
you envision 2 months of price action like November & December 2009!

I suppose you have sketched the wave b triangle - shape and parameters - already!
( i.e. the triangle in position b of the a-b-c sequence in wave 2)
:) :)

[Steven_737]

Do you think that the pattern of pumping the market overnight will also take place?
leaving day-traders to play the gaps?

[min]

Yelnick;

Am familiar with Marty's most recent essay. His market action forecasts jive with what I came up with but from a totally different timing perspective. I like when disrelated studies end up with similar outcomes.

However he does say that if June is down August will be up so I'm still cautious about my longs and taking worthwhile profits as they present themselves —this month is still young.

I'm off again, today's trade is already up 20% and I wish I could stay to enjoy it some more. My business schedule is going to be my biggest problem to milking this market at this time but I won't complain with so many others out of work.

Take care all.

[yelnick]

Steven_737, yes, I expect this Big Tease to toss her clothes off slowly. Probably a more rapid summer rally in the middle but otherwise it will feel like a trading range trending up. In the end it might look like multiple tests of the right shoulder, bumping up and grinding down, then up again. Of course, I could be shown wrong very quickly!

[Mr. Panic]

The market hasn't gone anywhere in 10 days at best. If one wants to argue 11 days, then its still below the level then. But I do like to see the super-bullish comments. June 3,2002 scenario isn't playing out today. (the last close before that date was May 31st at SP 1067 before the plummet began so watch the 1067 level). We are approaching a critical trading day level off the top tomorrow and a key cycle came into play either yesterday or today. 10 day average of positive breadth should hit an extreme overbought level as the May 20th numbers get removed the data set. Meanwhile cumulative tick hit an extreme yesterday.

The Critical Milestone keeps getting delayed. Maybe we'll see it tomorrow. We are right on the brink.

[min]

Possibiity of a nice gap-up tomorrow. Hope my sell limit doesn't get filled it's close. Back to work.

[Mr. Panic]

Actually, May 20th numbers don't get thrown out until tomorrow. Forgot about Monday's holiday. Tomorrow is probably another doji.

[yelnick]

Panic, if you buy Daryl Montgomery's "four days in June" view, tomorrow is critical to confirm a Big Tease vs a June Swoon. Tomorrow's unemployment surprise seems to have been baked in yesterday. Today the positive end may follow good news from BP. Min's gap-up tomorrow?

In a Bifurcation view, we fell down from 1174 and hit the plateau May 17, where we have languished ever since, in a range of 1102 to 1065 with one break below. We may confirm the break above tomorrow (by rising and not falling back inside the range).

[Mr. Panic]

I can see the possibity of a gap up open and the SP finally tags the 1010 area and then reverses down and forms another doji. It has a precedent in one of the scenarios I am hinting at.

Cobra via Sentiment Traders has seasonality figures from June trading dates and the first four days of June have a positive bias with the third day (today) have the least positive bias. Days 5,6,7 all have negative bias. And June during midterm election years have a decidedly negative bias aka 1930 and 2002 for example. (of course those Junes did start off immediately with a negative bias)

[Mamma Boom Boom]

Most likely scenario: 1085 tomorrow.

[usdollar]

I believe we most likely will hit 860 or lower in the end of July.

[anonymous]

As always... lots of predictions but no one appears to live in the "here and now" with a position on. Seems to be quite typical of this blog.

[DG]

As always... lots of predictions but no one appears to live in the "here and now" with a position on. Seems to be quite typical of this blog.

And yet you keep showing up here and reading the comments.

I assure you there are blogs and other forms of online community out there that suit your needs. Seems to me that the logical thing to do is for you to spend your time there, rather than here. You're like a guy who loves basketball hanging out in a baseball forum trying to get everyone to talk about how great basketball is, when all they want to discuss is baseball. Is any of this getting through that thick, multiple-personality-encapsulating skull of yours?

But, then again, I don't view my role in life as trying to ruin online communities by constantly complaining that they don't act the way I want them to act, rather than the way they want to act. Clearly, you do.

[usdollar]

Dangerous times to go long:) 1150 spx June 25-28 top and 10700 on the dow.

[Mr. Panic]

I read about Ned Davis commenting on the 1962 analog. The 1962 market peaked on April 23rd, dropped 17% into late May, then had a bounce before making a late June low. Of course 1962 another mid-term election year.
20 day average is still downsloping and for the SP currently stands at 1111. Dow and SP might need to tag that average before heading down again. Russell tagged its 20 day today and Nasdaq has penetrated it.
At this stage off the Feb lows, the stock averages had already penetrated the 20day average and it had rolled over.
It's doubtful that the CRITICAL MILESTONE can be achieved until Monday at the earliest as the indicator went the other way today but the good news is is that it is providing a lot of firepower for the bears now as it resets (reloads).