Mother Market Setting a Trap

Mother Market is a fickle mistress, and seems to be setting up an interesting bull trap with a bear fakeout. The market appears to be finding a bottom, or will after a final jink and jive today. We have had a pretty clear five-wave drop off the recent high at Sp1131, as can be seen on this chart from EWTrends. This should be followed by a 50-62% retrace back up to test the 200 DMA at the gray levels indicated (Sp1103-1110), setting up a nested 1-2 formation which normally acts like a coiled spring with a mad dash down. On the way to that moment, the bulls will feel emboldened, as if the Hope Rally is still on, and the bears may take short positions prematurely, as the corrective wave should have a fakeout down leg before finishing up. plus take longer than the eager bears will expect. 

 
 

Comments

[Mamma Boom Boom]

I don't think it's a trap, .... but I am starting to think the 1150 right shoulder might be back in play.

[Mamma Boom Boom]

I assume 1061 will be the absolute bottom, but I have to leave the office. Try it again tomorrow.

[Bird]

Assumption based on 78.6% Mamma? So the current downmove must be corrective and should not break the May lows?

[Chabazite]

US economy can 'no longer drive global growth'. US Treasury Secretary Timothy Geithner has told the BBC that the world "can not depend as much on the US economy as it did in the past". http://news.bbc.co.uk/1/hi/business/10406463.stm Hmm ... track record with subprime, Lehman and all that didn't strike me as being particularly 'reliable'. However, WHAT AN ADMITTANCE!!!! The guy is almost chucking in the towell. Is Obama going to fire him too?

[Chabazite]

US economy can 'no longer drive global growth'. US Treasury Secretary Timothy Geithner has told the BBC that the world "can not depend as much on the US economy as it did in the past". http://news.bbc.co.uk/1/hi/business/10406463.stm WHAT AN ADMITTANCE. The guy(tner) is almost throwing in the towel. Will Obama fire him too? Bernanke is sure to follow :)

[Chabazite]

Sorry about the double post. I thought the article was interesting but got screwed up by technical difficulties. Seems to be a problem we Brits have. :)

[Mr. Panic]

Another parallel to the summer of 1930: US wins its first World Cup group since that fateful year.

[usdollar]

I would say that 1150 is gone with the wind. It would not surprise me to se 7500 dow before July is over.

[Paul]

I am on the fence right now. But more bearish than bullish - at least in the short term. Anytime the S&P goes down hard after dropping below the 200 day MA, I would be on the defensive. Yelnick, I remembered that you were bullish back in Aug of 08, so I'm going to take your comments with a grain of salt.

[OracleLurker]

I think you've nailed it this time Yelnick.

[Roger D.]

Time is up! the crash is just begun. The setup is in place and Asia will lead the way down. The Hang Seng has a monster top in place,with a series of 1,2's off the top. Japan is forecasting it's deflationary end and nothing will stop it.

Tomorrow the 3rd wave kickoff intensifies and next week will be all bear.

This topping process has taken a long time and these prices won't be seen for years again. Buckle up!

Roger D.

http://www.screencast.com/users/parisgnome/folders/Default/media/604596c2-54e1-4945-89c3-56a06e042fb2

http://www.screencast.com/users/parisgnome/folders/Default/media/fac9e097-bb94-4a8a-a3d4-24e584f47cfb

[DG]

The Hang Seng has a monster top in place,with a series of 1,2's off the top.

Nope. The second "2" retraces more of the second "1" than the first "2" retraces of the first "1". That's illogical if the market is weakening.

If anyone wants to agree with Roger's count, don't say you weren't warned.

[Roger D.]

DG,

Can you really read a chart??? I honestly don't think so.

This AAPL chart exhibits a really compact H&S pattern together with a large distribution triangle. This is the same pattern that traced out at the 1987 top. It signals a crash wave is to follow.

Roger D.

http://www.screencast.com/users/parisgnome/folders/Default/media/07e093fe-fbca-4360-93dc-5a8c98c7d9c1

[DG]

DG,

Can you really read a chart??? I honestly don't think so.

Then tell me how I am wrong. Obviously, I can read a chart enough to know that the second wave you are calling a "2" retraced more of its alleged wave "1" than the first wave you are calling a "2" retraced of its "1". Are you denying that? The numbers are right on the motherfucking chart. The first "2" retraced 80% of wave-1 (which, in itself makes your count crap, but whatever) and the second "2" retraced 91% of its wave "1". THAT IS AN OBJECTIVE FACT.

Saying "DG, you are wrong" is to assume the answer to the question "Is DG wrong?" without going through the process of proving I am wrong.

It is illogical for a wave 2 of a lower Degree to retrace more of it's wave 1 than the wave 2 of the next higher Degree retraced of its wave 1. It indicates that the market is strengthening (DUH!!!!!!!!!!!) when it should be weakening, in anticipation of the "3 of 3 down".

There, that is my rationale for saying your Hang Seng count is wrong. If I am wrong, it is because that logic is wrong. But, you can't simply assert "that logic is wrong" and assume that others will agree with you. Fuck, man, it's like your some kind of autistic kid who can't understand that there is a world outside of your own fucking head that has its own logic regardless of what you want the world to be like. Are you familiar with the concept of objective reality?

It's like talking to a brick wall trying to tell you just how wrong you are.

I only pray to God that no one is taking your counts seriously and trading them. Hopefully, my criticisms have at least that much of a good effect. Fortunately, I think you're the only idiot who believes your crap, so it's kind of a moot point, but still.

[BZX]

Inverse Head & Shoulders is pointing at that unfilled gap up near 1200

Uploaded with ImageShack.us

[BZX]

Major Rally Time here guys.

[Roger D.]

DG,

You don't exist any more, just disregard me and I'll do the same.

RD

This is a extremely weak wave in terms of relentless selling. All the stock has been sold and now the markdown has begun. Everything points to a acceleration down.

http://www.screencast.com/users/parisgnome/folders/Default/media/926a142e-9f20-45a5-b734-7f60cda04e5e

[BZX]

Declining Wedge from June 16 high ended today?

[BZX]

Wave E of a reverse alternating triangle may have ended today...

[Roger D.]

This market is just starting to come down. This top is bigger than 2000 and 2007, it is of GS degree.

The IBM top is 10 years in the making. Down,Down and Down next level is at 70.

RD

http://www.screencast.com/users/parisgnome/folders/Default/media/c1b923da-b432-4801-9e98-ca99fed7f51d

[BZX]

If the Hurst 5 week low bottomed today, market should rally for about 3 weeks from here before the next bear shorting window.

[yelnick]

Paul, me bullish in Aug08? I had two comments of relevance:
- that an election rally usually happens when the winner emerges, and that can be as late as Nov
- that Prechter may have blown a call .. here is the post:

The STU sent out an interim bulletin tonight, noting the obvious: their preferred count that we were headed down in the dreaded 3rd wave was blown out today.  So they see this as a wave 2, retracing 50% to 62%, meaning it will approach Dow12k.  Neely has had his preferred count lean towards a "D" wave in his count to the same targets.  And I think McHugh has also had the bigger wave 2 count.  But I also recall many many times in the past 8 years when the STU was poised for the Big One down, and missed the rally up.  Especially in Oct02, when they took weeks (nea months) to figure out that it was a major major bottom.  Has the Election Rallyarrived?  If so, the July15 bottom will be seens as a lasting one, the low for 2008. Comments encouraged: how count ye the waves?

Maybe this sounded bullish to you, but to me it was non-committal

[Roger's former bearoine addict sidekick]

Folks;

Take it easy on Roger D. it's just that he's trying out for EWI senior analyst status that's all.

Anyway, I joined him last Friday and it's gone pretty good this week; However, now I'm half out of my position as of close Thursday and have a tight stop on the remainder.

A little "bearoine" goes a long way but only if your timing is right.

Bearoine addiction; however, is the way to the poor house and that's not for me.

I also don't see signs of a GS3 coming up next. But if and when I do I'll get my share of the action. Trading Options and Futures you just can't afford to get wreckless or greedy there's plenty to be made without having to go on gut or premonition so often.

[bob m]

Chabazite - he won't get fired unless he speak against O. As for telling the world the US is on the ropes - THAT IS THE PLAN!!! He won't get FIRED for a market collapse; he will get a pat on the back. (Actually, I take that back. He COULD get "fired". But that would be simply for appearances. He would walk out of the press conference announcing his resignation looking forlorn and as soon as he is out of camera range - the head pops up, a beaming smile stretches from ear to ear; everyone starts patting him on the back, and they all have a good laugh. "Ok lets get back to work taking MORE of this country apart. We have a LOT of wealth to spread around."

[Roger's former bearoine addict sidekick]

"If the Hurst 5 week low bottomed today, market should rally for about 3 weeks from here before the next bear shorting window.

Posted by: BZX | Thursday, June 24, 2010 at 07:24 PM"

DOn't know anything about HURST but my proprietary work shows something similar. Don't know if that's good or bad but there it is for what it's worth.

[bob m]

Roger D,

I am certainly not of the caliber of you and others here, so if this comment PROVES that, be gentle.

I looked at your chart for IBM. My first impression was an ascending triangle and so I would expect an upside break out. For the record, I would certainly PREFER your conclusion.

[Account Deleted]

U.S. Markets view before opening bell
http://niftychartsandpatterns.blogspot.com/2010/06/us-markets-view-before-opening-bell_25.html

[Chabazite]

An extract from guytner's interview is shown here: http://news.bbc.co.uk/1/hi/business/10411167.stm I have to say I am astonished at his somewhat optimistic view on strong US and ROW world growth. Surely he is aware of the issues that are aired on this and other insightful bb's. His talk just comes across either as extremely poorly informed, or as bare face, complacent lying. Hell, I am a country yokel from 5000 miles across the Atlantic yet I feel I have a finger closer to the pulse than this!

[Mamma Boom Boom]

>Assumption based on 78.6% Mamma? So the current downmove must be corrective and should not break the May lows?

Posted by: Bird | Thursday, June 24, 2010 at 01:00 PM<

That's my view.

[JT]

Consumer Confidence just came out and it is the highest number since January of 2008.

[usdollar]

I am in RD's camp here. We have started the crash, where the worst part of it will come in Nov. This is the warm up, we are going down. I am not in P3 or GSC3 down, C1 down.

[Michael]

BTU is making new highs for the move. I'm Long BTU.
:)

[DG]

DG,

You don't exist any more, just disregard me and I'll do the same.

RD

No, I'll hound you until you stop putting up BS wave counts, if I want.

Your problem is that you don't want to use any rules in creating your wave counts, you just want to slap labels on that fit your fundamental views. Sorry, that's not how wave theory works.

[DG]

Take it easy on Roger D. it's just that he's trying out for EWI senior analyst status that's all.

Anyway, I joined him last Friday and it's gone pretty good this week; However, now I'm half out of my position as of close Thursday and have a tight stop on the remainder.

Well, Roger's track record of crappy calls over the past 6 months COULD be viewed as a fractal of Prechter's crappy calls for two decades.

It's not bearishness per se that I disagree with, it's the level of bearishness and the ham-handed way in which EWT is used as a rationalization for that bearishness. Roger clearly doesn't know crap about putting together a chart or technical analysis in general. Which is fine, in one sense, because SOMEONE has to be the worst technical analyst on the planet, in the same way that someone has to graduate last in the class of Harvard Medical School. I just would prefer not to be acquainted with either of those people.

[DG]

Well, Roger's track record of crappy calls over the past 6 months COULD be viewed as a fractal of Prechter's crappy calls for two decades.

Also, so I don't seem like a hypocrite, I find the frequency of Roger's claims that we are about to crash ludicrous and absurd. Neely's been bearish for longer than I care to think about, but in that time, he's only recommended about 20 trades whereas with Roger it's like every damn day is allegedly the day of destruction.

[Mamma Boom Boom]

POP QUIZ: Will there be a major 'incident' at the G-20 meeting?

[Roger D.]

Look this rally is feeble so far. We are correcting the 1st wave down here in the REIT's when there C finishes I expect a full blown 3 of 3 to start. Will it start today? If we take oot this morning low,watch out.

Roger D.

[Roger D.]

5th wave failure?

[Wave Rust]

fin reg is gonna save us all.

it will protect the consumer from the evil exploiters- them damn bankers.
we're safe now.

we're protected from our self-destructive "need for greed" and over-leveraging.

unfortunately, congress didn't include any consumer protection tools in the bill that would protect citizens from congress and the rest of the feds who created the damned "everything for nothing" mentality.

all we got is the vote.

so VOTE THE BUMS OUT.

wave rust

p.s. buy spx 1055 whenever you see it

btw, i'm entertained when 9 up days is followed by 5 down days taking back 5-7% ,,,, and all the grand super cycle bears come out.

crashaholics never quench their thirst for the worst of times.
their vision is poisoned by the lead their brains have absorbed by welding and soldering themselves into their bear cage.

the last thing they do when they find out they have built their own 'mental bear cage/trap' is to, first, deny the obvious reality, and, then, second, paint the cage with more toxins, black lead-based paint.

my, my, my ,,,,, the toxic and tragic lives of the permabear crashaholics.

if your current count isn't inside an overall bullish count, it isn't an elliott wave principle based count. it doesn't matter if markets go sideways to down for years (corrections happen! at all degrees), the count better be bullish long term.

[Roger D.]

This rally "c" wave has taken place in the financials when the Dow has been negative, tremendously bearish.

Roger D.

[Mamma Boom Boom]

Roger, let me ask you something: Since you are a fundamentalist, don't you think the market should have crashed weeks ago? The news has been terrible for quite a while. Markets don't wait for a special invitation. Markets are discounting mechanisms. I think your missing that.

[JT]

Crude rallying.
Euro firming up, and the place to be long is in the Coal and Commodity names. But too many people here far too interested in arguing about wave counts, instead of more interested in making money.

[da bear]

Roger D.,

This looks like an 'e' wave up for wave 2. the previous downturn retraced too much of the previous rally, so it probably was a 'd' wave. This wave 2 rally has been choppy and oddly shaped which is corrective in nature. This 'e' wave should be a short-burst. Nothing too fancy...

Yeah then 3 of 3 down starts. But first, gold needs to attack new all-time highs.

da bear

[DG]

If the QQQQ goes above 45.74 by 2:54 PM, I'll go long the SPY. Could have gone long from lower levels, but I am not trying to catch the bottom tick. I'm waiting for the QQQQ to confirm, but the IWM already has. When all three move in unison the requisite amount, the signal is stronger.

[Mamma Boom Boom]

>too many people here far too interested in arguing about wave counts, instead of more interested in making money<

We all have to face the fact, 'your just way superior to us, Dude!'

[Wavist]

I know I'm guaranteed to be on to a loser saying this here but how anyone can count this as impulsive is beyond me. I'm no Neelyite but these movements couldn't possibly be any more corrective. By Jove, what does it take for you people to call a move a correction???

[Jove]

By Jove, what does it take for you people to call a move a correction???

I'm with you.

Maybe I should throw some lightning bolts at these people. Maybe that'd make a light bulb go off in their heads that none of this is Impulsive.

[Mamma Boom Boom]

Wavist, drop by more often.

[Mamma Boom Boom]

>If the QQQQ goes above 45.74<

If the S&P goes above 1085.75

[Hockthefarm]

Chab wrote:

Hock - you seem to forget that this is NOT British Petroleum but BP. 39% of the ownership are US citizens and instutions. The board of 12 directors is split evenly between British and American nationals. But almost 23,000 of its other employees are American, compared to only 10,000 Brits. BP has 7,000 staff in Houston alone. So presumably the 'fucking arseholes' that you so eloquently refer to are largely US citizens. THAT IS YOUR OWN PEOPLE. This is an educated blog and generally the standard of comment and analysis is high; I had somehow expected a more insightful response in this debate.
Posted by: Chabazite

Sorry for the slow response. Guilty as charged on the language front. I'll try to do better.

First this is not about nationality. I could care less about where people are from in terms of bp's make-up. Graduate engineers need to be trained, all of them.

Hayward got the top job at bp because he played a key role in the most profitable area of the company: finding oil. He could look at seismic data and rock formations and tell people where to drill. No doubt he was good at it. But to put that guy in charge of safety is the same as assigning an accountant to the job. He didn't answer questions because he didn't have a clue.

Hayward in charge of safety, shows you how interested bp was in safety. Let's not even get into refinery or midstream treating. You can get away without safety until you can't. And that is what bp has learned.

Notice how the industry turned on bp like a wounded shark in a feeding frenzy. The industry understands what a huge liability bp is to their own futures.

I ran some dogs at trial north of Houston a few weeks back. A retired drilling consultant in our group had this to say:

Shortly after the North Sea fiasco, M. Thacher called the head of Oxy in to her office and said the following: "You know that you will require drilling permits to drill for oil in the North Sea in the future. I couldn't think of any circumstances where you would ever be able to get one." So the story goes, that was the end of Oxy in the North Sea.

His take was to wait for 10 bucks on bp shares and then take a good look.

To me the best message to the global oil industry in terms of safety would come in the form of watching bp shrivel into nothing much akin to someone suffering from inoperable bone cancer. It would drive the point home for good.

Let's hope the hurricane season is mild.

Hock