But the 3 patterns I have all say December is crash part II, we will see, its developing exactly as it should
with this rally ( breakdown backtest) max upside should be 900-920'ish, and it should last ideally until mid-next week then capitulation move straight down, no more rallies to 550-650 area. The rally would then be jan-feb back to 950'ish, then a retest in march-jun.
I've got bunches of ST indicators saying the upside if very limited for the next few days, infact I short the close just for a pullback, maybe we can chop higher toward 900-920 with positive thanksgiving seasonality, but any gains I will be shorting...the best chance the bulls have to break above 950 will be after a pullback, lets see where we are by mon next week...I'm going away with my family/friends for the holiday, but will update this thread Sunday if I have time.
Where are we by Monday? where we ought to be according to my models as above. We couldn't even make 900spx, this is a great start.
As posted above I added shorts on the thanksgiving rally and haven't lightended up yet as I expect us to follow through down at least
to close the open gaps below...though the TRIN 10 close has me concerned as often we see a bounce...but if I'm right it will be minimal
if at all. I am encouraged the OEX traders were very bearish today, and Rydex bear funds actually LOST funds with this crash today,
put/calls stayed low, and general traders and media sentiment is pretty much 'its a pullback/buying oppertunity.' Pretty amazing,
considering the majority of 'bottom buyers' are now underwater ( majority didnt' buy in the last 10min last Friday/mon gap open) but
after...so this gap down/run smells like a bull trap.
So as it stands, the market has done everything as I said I was looking for, but it must confirm now by continuing to collapse the next few days killing off
the consensus 'bottom is in' talk, and ushering in a final 'give up' decline. Ideally ( and market rarely is) it will be continue down tomorrow in another
50+pt down day.
However, I always look at the bullish alternative ( or opposite to my trading position), and the best I can see is something like July 2002 ( see chart for Spec Osc below), with another leg up but only after a few more days sideways/down. So I will be looking very closely at action wed-thur to navigate that potential pitfall....will post if I change my position.
MarketNeutral asked for a Speculation Oscillator Update on FF - here it is. I have broadended the charts to include the 2002 bottoming period, to add some CONTEXT.
Couple of points -
1. It has moved to unequivocal BUY.
2. It is often EARLY because its an IT signal, hence my final washout scenario is perfectly feasable, but it does strongly suggest we are close to an IT rally.
Problem - there was a very large spike on Friday half day trading, and that is not trustworthy. So I need to see another confirming spike.
Two different views of Speculation Oscillator -
FYI - here is a couple of other charts that show storng resistance points i.e. why I picked spx 900-920 above.
comparison to 2002 for context -
Edited by entropy, 01 December 2008 - 11:05 PM.