How many trading systems do you see on this sixty minute SPX chart?
(1) Elliott Wave Model
(2) Blue Wave Trend Model
(3) ATR_TrailingStop Model
(4) False Bar Stochastic Model
(5) Oh what the heck, let's add a Renko Model:
More, you want more?
(6) Market Club Triangle Model
Prices hit their initial Sell thresholds from Saturday's analysis on the 30 and 90 minute charts. The Dailies are next, those are biggies. MC is on a Daily Sell, takes 980 or lower for Weekly to follow.
Things are getting pretty interesting again, due to a host of factors that seem to be converging and alerting us to some imminent changes. Both Glenn Neely and Robert Prechter are suggesting the move up from March has just about reached it's most likely conclusion, reaching or close to reaching ideal targets in terms of price (Prechter & Neely) and time (Neely). In addition, Arch Crawford wrote in his August newsletter that, "September is a truly ugly month right from the start - Overwhelming negative aspect count."
Let's walk through my most salient charts and analysis to see if we can't identify any triggers to nastiness, so as to be ready when Ms. Market yells, "Pull."
SPX- Monthly
On the Monthly chart, with one day left in August, 1029.80 still prevents the ATR system from flipping positive. Blue Wave is four months into it's Buy Signal and won't flip Short until the 830's.
SPX - Weekly
On the Weekly analysis, we still see a triple divergence on the False Bar Stochastic as well as a stubborn wave count and pattern from Advanced GET warning of new lows to come. I've drawn a trend line that is walking up with price and is sitting right now at about 963, almost exactly where both Blue Wave and ATR will flip Short. Take note.
SPX - Daily
A close up Daily chart further clarifies and provides new REVERSAL levels, basis Daily closing prices:
Blue Wave Daily flips SHORT @ 1010.87
ATR Daily flips SHORT @ 1000.71
INTRA-DAY CHARTS
SPX - 90 minute
The 90 minute chart shows an Elliott Oscillator on the bottom, highlighting a significant divergence between the oscillator and the recent new high in the SPX. Note also that while Blue Wave is still on a Buy on this chart, that ATR (solid navy line) is Short. Blue Wave triggers SHORT at 1023.04 and ATR triggers LONG at 1031.93, all basis 90-minute bars.
SPX - 30 minute
The 30 minute chart above shifts near-term focus to some tighter levels. Here, ATR is already on a SELL, requiring a 30 minute close above 1031.67 to flip Long. Blue Wave is again LONG here, requiring a 30 minute close below1025.56 to join the ATR being SHORT.
In summary, the SPX closed Friday at 1028.93. Our trend-following systems are mixed, reflecting indecision, distribution or accumulation, take your pick. A thirty-minute bar that closes above 1031.67 or below 1025.56 will be the first indication that both systems are in agreement on near term price direction.
More significantly, if Prechter, Neely and Crawford are correct on intermediate direction turning hard down, then these charts provide a series of price thresholds that will confirm that trend, our triggers to nastiness:
Here are my intraday charts with a SHORT trade set-up. Using SPX1040 as a stop, this short-termSELL could turn into the trade of the year.
Too early to tell, nonetheless, every intra-day SHORT is being considered by me as a potential trigger for downside fireworks.
SPX 5 min
SPX 10 min
SPX 10 min
SPX 60 min
Just shy of a SELL signal
As someone posted in the Comments of my previous blog, Robert Prechter did issue an interim alert this morning suggesting that the entire rally from March has reached his ideal targets right here, right now and to return to 100% SHORT.
For $20 a month, his Elliott Wave Theorist might be the best available bargain in subscription market commentary.
To recap, based on intra-day Sell signals, I'm SHORT and using today's highs as my STOP.
I wasn't going to blog today, just take a day off and re-charge the batteries so that I can keep this blog fresh, original and engaging. But Glenn Neely posted a new Question of the Week which inspired me to have this one on one with you guys:
The market has moved higher since you called for a top. Is that a failure of wave theory or did you make a mistake or misjudgement?
You can click on the link above to read Glenn's answer.
As for me, I posted The Bullish Case yesterday and already the questions are coming if I am turning Bullish. My outstanding forecast since March has been that after a brief relief rally, the market will turn down and make new lows. It's been five months, going on six and nothing I have seen has changed that forecast.
What does "brief relief rally" mean?
The market declined for 18 months, a relief rally that consumes 1/3 of that time as this one has can arguably be considered as longer then "brief." Or maybe a rally that retraces only 1/3 of the down move can be considered "brief." It doesn't matter. I could be wrong about the brevity of the rally, without being wrong on the big picture analysis. That seems to be what is going on here.
As for yesterday's "Bullish Case," yes, I could be wrong about the whole damn thing. That scenario outlined yesterday may be why. But as I sit here five days shy of the end of August, my forecast stands.
As Glenn points out in his answer, not every twist and turn of the market is foreseeable. Some patterns are clearer then others. Some stages of advances and/or declines are easier to predict then others. Almost one year ago, I posted Crash Warning which is why many of you readers have found your way to this blog. At the time, I thought a market crash was imminent. That consisted of forecasting a crash and timing it, the "imminent" part.
Maybe one of these days, maybe soon, I will post Crash Warning II. All I can say is that it is far more likely that I will post Crash Warning II then Buy, Buy, Buy.
In the meantime, this whole house of cards can come crumbling down without my posting either of the above-named blogs. That's why so many of my charts are designed to identify tradable trends. Like the one I will leave you with below.
Note the TREND. Note where the TREND REVERSES. Note what you will do if one......then the other.
This is the best I can come up with, but there is a certain symmetry to it and in light of the proximity of a Buy signal from the Monthy ATR indicator, it's worth a shot:
The above chart illustrates the past 25 years of pricing in the S&P 500. Annotated upon the chart is a 10 year corrective ABC that bottomed in March of 2009. Also presented is the ATR which as of the last day of August, suggests that any S&P close above 1029.80 is a BUY SIGNAL, reversing the SELL SIGNAL given in January, 2008. The S&P 500 closed today at 1028.00
Here is a close up of the ten year long ABC correction:
What do we make of this? Looking at the previous signals generated by the ATRmodel, grudging respectIF1029.80 is exceeded on the close next Monday. As for the wave count, geeziz, I had to use a Monthly chart going back to the end of the last century to come up with anything resembling a bullish EW pattern. Nonetheless, it's there.
This whole idea of a a "huge irregular corrective wave," comes from Don Wolanchuk, King of the Perma-Bulls.
A week ago I posted a Monthly chart using an ATR_TrailingStop strategy brought to my attention by one of the readers of this blog.
Below is the same indicator on an intraday chart:
DJIA - 30 minute
One week of trades using the ATR_TrailingStop system. Can you make money trading this? If you can't, you might be in the wrong business.
Here are two even shorter time frames:
DJIA - 10 minute
DJIA - 1 minute
Combined with the False Bar Stochastic, this is a powerful indicator. All of this because one of you was considerate enough and generous enough to share a trading idea.
I think most of you get this, but from a few Comments, some of which never saw the light of day here, there remains some confusion about my charts and analysis.
The above chart is a Weekly SPX with two analysis methodologies applied. First, an internal Elliott Wave count which is suggesting an uncompleted cycle down, i.e. a Wave 5 is still to come to new lows.
Also included is an ATR_TrailingStop indicator (LONG/EXIT-SHORT), that signals price bias without regard to the EW analysis. These are longer term signals, not trading signals, but they do a pretty good job of staying on the right side of price direction. Meanwhile, EW analysis is suggesting where prices are in the cycle and what to expect next.
Here is the same chart, only I've replaced the ATR_TrailingStop indicator with the Blue Wave Trend indicator. As with ATR_TrailingStop, Blue Wave does a decent job of getting the prevailing bias in price direction right, but does not use EW in any way, shape or form. The are two completely different methodologies, useful in their own special ways.
I have been providing both indicators in almost all of my charts as I believe both views provide valuable insight into where prices are and where prices are going. Drilling down into smaller time frames brings commensurate insight into current and future price action.
Some of you get this, some of you are confused by it and some of you manipulate the information provided to submit snide remarks about this free commentary and analysis. It takes all kinds to make a market and I need only review the nature of submitted comments to differentiate between the winners and losers out there.
Those of you in the middle, who find yourself fascinated but confused and want to learn, hang around and be patient, it's coming.
"We will be watching sentiment and momentum closely for divergences and other signs of exhaustion in the days ahead; the decline that follows the next peak should be one for the record books."
If you ever considered subscribing to Prechter's services, this is the time to take a look because in the next few weeks the trade of a lifetime is expected. You can click any of the Elliott Wave International links on this page (in which case I get credit) or you can go to their web site directly.
The quote above is from tonight's Short Term Update, used without permission, but I don't think they will mind in light of my nice plug above.
I'm not sure who "Punisher" is, but his explanation of where the markets are right now is pretty much the prevailing view of Robert Prechter and other mainstream Elliott Wavesters.
On the above chart and according to this view, the markets are completing Wave 2 Up before a Wave 3 Down in what is a multi-year bear market, with Wave 3 ending sometime in the 2011-2012 time frame.
"EW is based on the price action of the market being fractals that build upon each other. 5 waves in the direction of the trend, 3 waves against the trend, and then again, until you have done that 3x. You now have an even larger 5 wave pattern and so you get an even larger 3 wave pattern against the trend. Do that 3 more times, etc. etc. These patterns build on each and form 'degrees of trend'. The larger degrees of trend are:
"The last grand supercycle correction that we had was the south seas bubble in 1720. It lasted some 60+ years. According to Prechter, we have finished our last grandsupercycle and have started another correction that could last 40+ years. Certainly there would be many bull rallies or even bull markets within that time period. However, prices would continue down over the long haul. The last two supercycle corrections were the Land Panic of 1830's and the Great Depression. So that should put things in context. Prechter's long term target for the Dow is 400 at the end of it all. This next leg down should be deeper and longer in % of terms then the first primary degree wave down we had that ended in March. So we should look for a 60-75% hair cut to the indices once this primary wave 2 finishes (which it may have already, but we won't know for sure until price confirms it). I hope that helps."
Previous high in SPX is 1018 a couple of weeks ago:
Meanwhile, the False Bar Stochastic is showing a nasty set-up if 1018 is not exceeded on this run up. Either 1018 is taken out, or entire rally up from Wave 3 low is retraced.........and then some.
This is a Weekly chart and Weekly analysis, not for short term trading, but for big picture outlook.
A
PS: An alternative count (very similar to Robert Prechter's count):
Here, a completed five waves down into March low as Primary Wave 1 Down and now close to completing a Primary Wave 2 Up, to be followed by critical Primary Wave 3 Down.
"First, we will have an economic depression. If the CAR, or "attack rate" (the percentage of people in the population) who get the flu is in the typical range of 40-60% of the population, then a CFR of 2-3% means one million or more dead Americans this fall and winter, or more succinctly, somewhere around one in a hundred. If your kid goes to school with 1,000 other people, 10 of them will die (on average.)
"This sort of disruption in the economy, given where it is now, guarantees a contraction of GDP of 10% or more from the top, which is the definition of economic depression. We can argue about "how bad of a depression" later."
Note it will take a move back up over 999 to return this chart to Bullish mode.
About my time frames:
They all work, commensurate with trading styles. I use 30 minutes and under for intraday Scalping, 60 minutes and over for Swing trading and Daily/Weekly for Intermediate Trends which usually govern what side of the smaller time frame charts I trade. Thus, there are multiple "Sell Signal Thresholds" that are discussed here. Needless to say, a Daily-based Sell (as per above chart) is significant.
Here is a chart you won't see anywhere else, a Monthly S&P chart using an ATR_TrailingStop indicator:
Prices broke below the indicator in December, 2007 and have stayed below it ever since. It will take a Monthly close above 1030 for this indicator to issue a Buy.
Shorter-term, here is the 30-minute chart of the SPX posted earlier today:
It will take a drop beneath 986 to suggest a drive significantly lower has begun.
This may be a far cry from orthodox EW analysis, but my focus is glued to entering Short at the right time to reap the rewards that have been so elusive for the past six months.
I was just informed by Elliott Wave International that one of (edited by APH) the latest Elliott Wave Theorist[s] by Robert Prechter is online free to all.
If interested (and you are) look for this box in the right margin, under my profile, and click it:
*Edits inserted by me an hour after original post, as I mistakenly assumed it was Prechter's latest newsletter, the one that said it was time to get short again, the most important issue of his in years and the one they should be giving away, instead of an old one and a sales pitch. My bad, apologies all around.
I came up with this possible wave count this morning. It is not an Elliott preferred count, but, a hard down finish today, Tuesday, makes this my leading candidate and suggests much, much lower prices and in a hurry:
SPX - 120 minute
To reiterate so there is no misunderstandings, this very bearish wave count on the 2-hour chart only becomes a serious consideration if that wave 3 low gets taken out with a powerful wave down, sometime later today or at least no later then Wednesday.
It was forty years ago this weekend that I traveled from a hot Detroit summer between my sophomore and junior years at Michigan to New York City, where a couple of friends picked up Claudia and me (Claudia was my first) at LaGuradia and the four of us drove their little blue VW bug up the New York State Parkway to Max Yazgar's farm.
Jerry Garcia from the Grateful Dead is dead, as are The Who's bassist John Entwistle and drummer Keith Moon. The band's guitarist Pete Townshend, 64, after years of "Tommy Can You Hear Me?" is mostly deaf.
David Crosby, 68, had a liver transplant and former band mates Neil Young and Stephen Stills, 64, have survived brain and prostate cancer, respectively.
Twenty-one years ago Saturday, 19 years after the 3 Days of Peace and Love, my first child, my baby daughter Sarah, was born. My wife had gone into labor the night before and I had been up all night with her and the assorted medical personnel at Northside Hospital in Atlanta, coming and going, worrying and relieved, then worrying again, all culminating with me along side a drugged out split-open and conscious spouse, as Sarah Michelle Harris slipped out into the light of life, with smiling, loving faces and hands all around.
To celebrate the 21st anniversary of this seminal event, Sarah and her friends are flying out from South Carolina to Las Vegas this weekend where I will meet up with them from Phoenix for another 3 Days of Peace and Love, Drinking and Debauchery and a Father & Daughter moment that will mark the beginning and an end, a cathartic phenomenon of my own life, my own living, breathing, feeling and all to human, Woodstock Nation.
Already there are persons that were a part of life long ago who have passed. Some I just knew from afar, others nurtured and taught me, getting me ready for the 40 and 21 year cycles that no one knew would come, and then one who but for the grace of happenstance would have been the mother of my children, who passed too early, inexplicably and alone.
Those were reckless days, we were reckless people and our time was filled with reckless wonder.
Swooosh....... What was that? That was your life, mate. Can I have another. No.
What stays with us along this understated path? Family, memories, mysteries, happiness and sorrow. So we cling to vestiges that keep us connected, photographs, music, the Detroit Red Wings, headstones, Thanksgivings, tears and of course, the rain.
Can you imagine us Years from today, Sharing a park bench quietly? How terribly strange To be seventy. Old friends, Memory brushes the same years Silently sharing the same fears.
This will probably be my last Blog for a few days. Bigger themes demand my attention, a spontaneous romp with a younger generation, balanced all the while by the common celebration of this group, many of whom weren't alive, or even contemplated, in the time of those muddy fields of peace and love, some 40 years ago. All brought together by my first born daughter who for awhile, maybe longer, will be the center of our universe.
Life can be wondrous and innocent, it can be tragically dismissive and so full of sadness I can hardly breathe. As it was in a rain soaked field in New York in 1969 and in a bustling hospital in North Atlanta in 1988, life can be a sublime adventure, filled with the beauty of spectacle that reaches deep into your heart, into your soul.
But the ending always comes at last Endings always come too fast They come too fast, but they pass too slow I love you, and that's all I know That's all I know
Notice how prices dropped out of the Wave 5 up channel on Tuesday and then came back to kiss the channel one more (or last) time Wednesday.
Note also the Blue Wave derived reversal level of 990.02 which if breached, would constitute an Intermediate Sell Signal.
Finally, although the False Bar Stochastic is in Trend mode (for now), one can't help but take notice of it's precarious position and the ramifications of price weakness in the next few days.
Press Release Source: NanoViricides, Inc. On Monday August 10, 2009, 7:00 am EDT
WEST HAVEN, Conn.--(BUSINESS WIRE)-- NanoViricides, Inc. (OTC BB: NNVC.OB) (the "Company"), announced today that the herpes simplex viral load was reduced by 99.99% or 10,000 fold in in-vitro studies by nanoviricides(TM) drug candidates. The studies were performed by Thevac in Baton Rouge, LA, in collaboration with the Division of Biotechnology and Molecular Medicine at the LSU School of Veterinary Medicine under the supervision of Dr. Gus Kousoulas.
Four different nanoviricides showed greater than 10,000-fold (>99.99%) reduction in virus quantity compared to untreated controls in a cell culture assay employing the LSU proprietary green-fluorescent-protein-tagged (GFP) modified HSV-1 McKrae strain.
These nanoviricide drug candidates are designed to act against all herpes simplex virus strains, including HSV-1 and HSV-2. The Company has commissioned additional in vitro studies to confirm the results. Animal studies have also been scheduled.
"We are very excited with this success against HSV-1," said Eugene Seymour, MD, MPH, CEO of the Company, adding "and expect this to lead to a topical skin cream against herpes cold sores and genital herpes. This opens up another significant commercial opportunity for the Company."
Herpes simplex virus (HSV) causes "cold sores", the incidence of which is second only to the common cold (100 million recurrences annually in the US alone). In addition, genital herpes prevalence is 67 million infected individuals in the US alone. HSV also causes keratitis, a disease of the eye (250,000 US cases/year).
Existing therapies include acyclovir and drugs chemically related to it. These drugs, nucleoside analogs, act by inhibiting viral DNA synthesis. However, there is known drug toxicity due to interference with human metabolism. Currently, there is no cure for herpes infection.
Nanoviricides act by a novel and distinctly different mechanism compared to existing drugs. Nanoviricides are designed to mimic the human cell surface to which the virus binds. Our results suggest that a nanoviricide could become a highly sought after drug against HSV.
The market size for herpes simplex virus treatments is in excess of $2 billion annually.
Let's bring current the view of the market from the perspectives of Renko and 3-Line Break Point charts, using long-term Weekly charts, intermediate-term Daily charts and short-term Hourly trading charts
Renko - Weekly
Last signal a Buy on July 13 at 881.49
Point Break - Weekly
Last signal a Buy @ 761.75 on April 27th - Sell stop @ 899.52
Renko - Daily
Sell signal August 6th @ 1000.87
Point Break - Daily
Sell stop @ 986.56
Renko - Hourly
Last Sell August 7th @ 1014.05
Point Break - Hourly
Sell August 7th @ 1012.37
Commentary
Are these signals tradable? Those are some very impressive trades across the board, from Weekly to Daily to Hourly. Labeling these trades in retrospect on a Sunday afternoon with a ballgame on in the background is one thing, trading the actual signals in real time with CNBC blasting and multiple models singing, well, that's quite a different situation.
To be termed scientific, a method of inquiry must be based on gathering observable, empirical and measurable evidence subject to specific principles of reasoning. A scientific method consists of the collection of data through observation and experimentation, and the formulation and testing of hypotheses.
Well said. So my ongoing research is in part based in turning these two charting methodologies into a real time real money algorithm. Coming soon to a blog close to your hearts.
Oh yeah, something else from John Stuart Mill:
Mill's On Liberty addresses the nature and limits of the power that can be legitimately exercised by society over the individual. One argument that Mill develops further than any previous philosopher is the harm principle. The harm principle holds that each individual has the right to act as he wants, so long as these actions do not harm others.
