I am still leaning towards a last hurrah

I went over my notes and I still can't find a good reason to deviate from my plan.. the thrust in SPX was greater than I anticipated, but the model in INDU is still intact (at least so far). 1) I expected the first few salvos of this earning season to be similar to the last 2, that is 'sell the news'. That has occurred. I also anticipate the participants to continue expecting this to be 'sell the news' but within a week, it would catch them off guard and rally up instead as the market surprises by doing something different. 2) All downside projections were hit. Recall I was looking for SPX 1020 ish on the very first leg down, but it never got there before rallying upwards. It confused the hell out of me and I assumed my target was just barely missed so it was headed to the next target. But it turned around and completed the target objective after that wave 4 ended. 3) It had been rallying from the bottom and hit my target top and did a corrective dance which finally broke down and hit my target on the Dow but overshot on the SPX. Most traders that are not perma this or another or not long term minded are now entering a psychological state that I find supportive of a trading zone. Which is, flopping back and forth in IT sentiment. This suggests to me that what my model was predicting for this area is STILL INTACT. There will be a battle in this area. I am not convinced the uptrend is over and an IT downtrend has started. This area should be a trading zone for a few weeks. That means I am expecting a rally monday, perhaps some down tuesday, another rally wednesday, down thursday/friday.. etc. If what I think is correct, then the low is not much lower than Dow 10,000. Not higher than last high at Dow 10,400. And furthermore, after this battle is over, as I said, the bulls will come out on top and we head higher into august some time or later. I don't know about time.. I only have price projections and this retrace sucker rally can take us to 1170 area based on my current projections. Caveat is I never trade based on longer term projections. Its a guide, not a trading plan. How I trade on this guide is simply waiting to see if technicals confirm on a day by day basis, then take the trade in the bias of the plan. I have been shorting the last few days per the plan, and will try to go long per the plan with stops on the bottom end of the trading zone. Because SPX fell out of the model, aggressiveness of position size will start smaller, then add on confirmation. I am also trying to keep the macro in mind. European debt thing is old news. I am confident the next crisis will occur with the US government as they are stubbornly holding out from 'doing the right thing'. But I think it won't be evident until we get closer to election time. Its likely the US public is fed up with the policy of unchecked spending and vote in politicians that will keep spending under control. This reminds me a lot of what happened during Clinton era. The initial enthusiasm from Clinton being elected after the Senior Bush's recession in 1992 was followed by Newt Gingrich and a conservative movement that took control of the house back to republicans. A lot of senate seats are up for election this year, so that maybe where the key battle takes place.

if u look at last 3 rally attempts in this correction since april, last rally was most robust..vol was little low but serial closing on high & gap ups..

if u look at last 3 rally attempts in this correction since april, last rally was most robust..vol was little low but serial closing on high & gap ups..

Yes I know. This is a corrective rally. It is a gigantic sucker rally but I expect it to be a big retracement. It shouldn't exhibit strength at all and be fully of retracements and take a while to get to 1170.

Also, despite my bullish sounding rant... AAPL is still on life support. It looks like it may crater big time. That news about free covers sound like a dud to me. AAPL being a large % of NDX, may cause that index to crater hard, taking a lot down with it. So you got to be cautious. But I bet its earnings rock.. so if it drops on news disappointment and it gets bought.. its earnings is tuesday. Pop for earnings then really drop?

Edited by dcengr, 17 July 2010 - 11:12 AM.

if u look at last 3 rally attempts in this correction since april, last rally was most robust..vol was little low but serial closing on high & gap ups..

Yes I know. This is a corrective rally. It is a gigantic sucker rally but I expect it to be a big retracement. It shouldn't exhibit strength at all and be fully of retracements and take a while to get to 1170.

I wonder if you took a look at price vs volume vs time as i had been doing as on my priority signal system i had mention on my mails to you WE HAVE ONE PROBLEM, the volume vs price vs time that my system generated produced the lowest strength among all the three initial rallies. That how i measure the uptrust as i believe the NYMO model is invalid in the current trading system in bear markets.

AD, ADX, DM all dont work so. In that context i came up with my own signal. THE CLOSES reference i had in the last three years that match this current context was the christmas rally in 2008 When it broke it lead to new lows.

attached is the chart:

http://stockcharts.com/h-sc/ui?s=$NDX...id=p08738949645

The point about the 50/200 set ups. I notice the people are not buying the news. If i am not wrong we see a strong opening rally that will probably sell off to 1040s.

After this lows are tested either they break to 1000 to 980 levels. But once the 980s are take out 900+ would be seen. THAN they turn flat for a week or two. than we rally to 1120 or even to 1170s. that area needs extra caution.

The rally to 1120 could than take months a very slow move forward. It would probably spend another month consolidating in the 1000-1040. Than the "real" bull starts in mid to late Aug moving forward all the way to the end of year. maybe til January.

The reduction in Jobless claims could bull the people for a couple of months. Than big move downward to 600-650 in 2011. which will mark the FINAL bear market lows for sometime. by 2012/2013 they economy would be in gradual recovery a real
Bull could have started by than. which would be a slow rally.

In the current context the real lows will be hit in one or two months away. There will be lots of correction up as what you said.

Also, despite my bullish sounding rant... AAPL is still on life support. It looks like it may crater big time.

That news about free covers sound like a dud to me.

AAPL being a large % of NDX, may cause that index to crater hard, taking a lot down with it.

So you got to be cautious.

But I bet its earnings rock.. so if it drops on news disappointment and it gets bought.. its earnings is tuesday. Pop for earnings then really drop?

Yes, likely but the pop is worth no more than 20 nq points, it be just 7 points or less. i wont try luck on it esp given that the people are not reacting to the news.

Also, despite my bullish sounding rant... AAPL is still on life support. It looks like it may crater big time.

That news about free covers sound like a dud to me.

AAPL being a large % of NDX, may cause that index to crater hard, taking a lot down with it.

So you got to be cautious.

But I bet its earnings rock.. so if it drops on news disappointment and it gets bought.. its earnings is tuesday. Pop for earnings then really drop?

I still say AAPL will hit its flash crash day low near 200.

You aren't wrong, DC. The structure here is clearly that of an ABC (AGAIN) which I'm sure you noticed. When it completes, back up we go-the move is corrective in structure, nuff said. Any huge move down, like many here are looking for, won't begin with an ABC of A, LOL. I think your double zigzag take is spot on.

Edited by thespookyone, 17 July 2010 - 08:44 PM.