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Explosive down pattern continues


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#21 Entropy3.0

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Posted 04 December 2007 - 12:13 AM

..and while i'm here so to speak, I might as well throw my currents thoughts out here. Were in what I call a 'decision window' here, for about the next 5 trading session I expect. This is where the market will give strong clues about whether 'the bottom is in' for several weeks/months, or whether new lows are coming. Based on my indicators, I don't believe we will take off in a major way in the next 4-5 days, we will either go sideways/a little higher or down. Here is the 'state of play' of the indicator groups I look at - [Note on a term I use - down pressure = large upside upside very unlkely, sideways or downside more likely, up pressure obviously the opposite.] For Tomorrow - waves - favour down early, then neutral ( no help!) Internals(volume/AD/New highs/low etc) - down pressure Sentiment - neutral Price momentum - down pressure For this week - waves- neutral i.e not alot of help here. We completed a clear 5 wave up from 27Nov thru 30th, so was that 1 up, A up, or C of a corrective...no clues right now, reexamine in a few days. Internals(volume/AD/New highs/low etc) - down pressure until around end of week. Sentiment - neutral Price momentum - down pressure around until end of week. So, overall I'm looking for a 'flat to down' week, at best on upside SPX to retest stiff resistance in 1490-1500 area and fail. IF correct, this will give time to look at more data on the bigger picture, If the market takes off to the upside closing above SPX 1500 then I'm wrong. fyi - ill probably start a new thread soon, as this one is about month old and getting out of date, title wise at least. Mark

Edited by entropy, 04 December 2007 - 12:20 AM.

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#22 iloli way

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Posted 04 December 2007 - 03:48 PM

Thanks for the charts goflow. Yeah.. it makes total sense that falling rates are bearish, since rates are falling to stimulate the economy i.e. falling kitchin cycle, and the market tends to anticipate recessions by about 6 months.

What maybe short term bullish, are the initial rates cuts, as we saw this time, but the effect doesn't seem to last. But the length of decline is vary variable from very short, to very long like 2000-2002. which saw 50% cut in market, 90% drop in Nasdaq, so called 'pushing on a string', but of course eventually the rates took effect, mainly by inducing another credit based boom. So the challenge is that at some point the rates cuts will stimulate the economy, and the market will also anticipate that by going up.


Mark.

Thanks, Mark,
Very much what I have explained to myself why there seems to be quite a lag time for the effect to emerge. The more liquidity good for economy and stock market is obvious, just that 'by the time' market reacts, it's the time to raise rate again to fight overheating. Yes, with this correct thinking, market reacts also VST favorably. :)
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#23 Entropy3.0

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Posted 20 December 2007 - 12:06 AM

Just a quick update, because I don't have time for a detailed one right now, will have time by end of week...nothing has changed really, just more and more confirmation, but maybe less and less bears it seems..hmm

Short version is as follows -
- I am even more confident now of my November 1st bear market call ( see first entry of this thread) and the pattern behind it, things are shaping up here for the confirmation, my work says that will come likely mid Janaury'ish.

- Technicals and sentiment never supported a intermediate low - I gave that near zero odds and it wasn't - as now many sectors are back testing they're lows. ...and they still dont' support one.

So the consensus is we rally over xmas period ( see trader polls of any kind!) , but there is a very strong fractal signature in the market, and if it continuous i've shown the next step below i.e. for tomorrow, topping below spx 1475 ( or at today close) and heading down to test August lows in purging plunge of 80-100pts! - unlikely but the pattern is very strong so I wanted to show it. We would then see the 'xmas rally' for a few weeks into new year, back to 1470 'ish.....then the 'real' down move would occur, to 1300 and below in January.

More to he point, technicals and sentiment agree with this down price pattern, so even if the fractal ends here, my work says the best the bulls will get is weak sidseway chop perhaps to spx 1500 area over xmas - there is very little 'bullish' to see that I can find now.

Chart

http://img179.images...650/dec1zi6.gif

Mark.

Edited by entropy, 20 December 2007 - 12:13 AM.

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#24 Entropy3.0

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Posted 17 January 2008 - 11:53 AM

My last update was Dec 20 (above) - and things have developed as outlined there. I targetted 'mid-Jan' for 'Confirmation' and I also used that term in the first post back in November at the top, so since I believe this is occuring RIGHT NOW, as in the last few days, and in todays action, I will explain what I meant more. A term that is thrown around in 'waves' is the 'recognition wave', which is wave 3 in most cases, not always. The confirmation I refered to was that of a bear market, but everyone has different measures for that. So what I really was talking about was the 'recognition wave', that the confirmation of the bear market, would be a powerful down move occurring at the moment a big jump in acceptance of the down move occurs i.e. recognition. I have held off posting until I see that point, which is write now as I type. I am now seeing a SURGE IN RECOGNITION - in many area. For example the put-call, poll sentiment,Ryders, and also the turning of smart market observers who had remained bullish until their models forced them bearish. So this is the point at which PRICE can confirm, the key price area is 1345 to 1355 we are at as I type. My confirmation will be in, if we do NOT rally strongly in this zone, and especially if we slice though it in today/next week in a very sharp down move ( wave 3 charateristics). I had targetted 1300 and below in January - and were pretty close now...so I am looking for a bottom to this initial down move, but I do not see it yet, but were getting close in TIME. ( day to few weeks). Here are some key things missing, that I will need to see before switching to long bias - 1. Trin spike coinident with low. 2. VIX/VXN spike coincident with low. Mark.

Edited by entropy, 17 January 2008 - 12:00 PM.

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#25 PorkLoin

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Posted 21 January 2008 - 02:44 PM

Mark, kudos! Foreign markets down 5, 6, 7% today. Yeah - "point of recognition" for sure. Best, Doug