Saturday, September 26, 2009

At the precipice of atonement

This weekend's Daily charts tell quite a story, so let's get to them:

SPX Daily

As anticipated on Friday, a Sell signal was generated by both BWT and ATR.

NDX Daily

A Sell signal was also triggered on the Nasdaq 100 by BWT and the index is only 1 point above the trigger level for an ATR Sell.

RUT Daily

The Russell 2000 is already two days in to a Sell on the ATR and a fresh BWT Sell was triggered on Friday.

The take away from the above three charts is that the market has entered a down trend. As long as these Sell signals are in effect, the path of least resistance will be lower. Next major hurdle will be Weekly Sell signals which will come at lower levels.

Market Club Triangle Daily

The same message is being displayed on the Market Club S&P chart, currently under the influence of a Daily Sell Triangle, but with still outstanding Weekly and Monthly Buy Triangles.

Again, the take away is that all intra-day through Daily models are on Sells, but longer-term models have yet to turn bearish.

That said, Prechter's forecast that this is the beginning of the worst of the bear market in terms of severe market declines is beginning to take shape. This doesn't prove his forecast is correct, only that if it is correct, the market is behaving the way it should.

We all want to make a killing on the next market crash. The best way to do this is to be SHORT when the next crash occurs. The market should be weak enough in the days and hours going into a crash that if we are following the trends, we indeed will be short. What we don't know is when the crash will occur and in fact, we don't even know if there will be a crash. How much money have you lost over the years betting on a crash that never happened?

This is the beauty of using tools like those above to identify trends. They have a knack for placing the trader in the right place at the right time. In other words, we are not guessing that a crash is imminent. We trading a trend that is pointing lower. Wherever that path takes us will be our fate.

True atonement is learning, healing and loving.



Richard168 said...

Allan, as always, great charts and commentary.

I notice that the BWT buy and signals for SPX Daily are different from the one you posted on Sept. 1, 2009. Did you change the BWT Sensitivity settings? If yes, what are they?



Anonymous said...


I went to cash with a partial short position on Sept. 22, and by some stroke of luck we turned down at that point. I have the luck of the Irish.

In big turn arounds, all market are correlated and we are seeing that, big time. Despite my previous posts, observing that the USG would do anything to save this rotten rally, and there was a large number of people in cash who could join the bulls in this tug-o-war, the USG is powerless and the sidelines sitters aren't interested in joining the party. This time it is different and the party is over before the euphoria sets in. I was wrong, utterly wrong. A good trader bends when the market proves him wrong.

Hats off to Prechter and Allan.


Anonymous said...

Hi Allan, great chart and TA again. Your reasoning is in line with Yelnick and a few other blogs I have been checking periodically, but yours is still the best! Yesterday evening I had a conversation with my 83 year old father in law and he was concerned about having his money in the bank and asked me where’s a safe place to put his money? I really didn't have an answer for him, and responded I assume my money is safe in my scottrade acount??? He asked me is it? I was like a deer in the headlights, so I will pose his question to you. Do you have any recommendations or specific accounts to park ones wealth, I am leaning toward short term U.S. treasuries?

In close just for fun, I read a blog from Prosperousdude on the SLV board who follows Elliot Wave. He blogged the best thing Americans could do to get even with the “Banksters” is to pull all their cash out of the banks and just leave enough in your checking account to pay your monthly bills. I thought this was “Priceless”! Look forward to your response,

Rob from Chesterfield MI.

Wayne said...

Hey Allan, Jews (myself included) are also "at the precipice of atonement" .... tomorrow night begins the Jewish holiday of Yom Kippur (Day of Atonement). Coincidence?


A said...

Richard: changed sensitivity to 1.9

Wayne: La shona tova

Rob: This where $20/mo to Prechter could be worth a whole lot more, yes, short-term Treasuries for now

SmiddyW: Good analyis, as usual

Bryan Matthews said...

Happy New Year to you, too, Allan.

Short /ES from 1058.