Monday, September 20, 2010

9/20 Daily Commentary

The stock market moved impulsively today instead of stopping at or near the SP futures high last week. 
I came into today 10% SDS.  I shorted DJ futures 10,620, so I'm looking at 40 points in the hole there.  I bought SDS 5% at 30.05 so I'm looking at 36 ticks in the hole there.  I bought another 5% and stopped out at close to that amount.  The market traded up all day and is vulnerable to reversal.
Bottom line, by going in at the SP re-test I held for another 10 SPX points before the market turned around.  The market did complete a 5-wave up which completed the wave c from August.  After-hours it moved some more.
XMI stopping right at it's August high.  DJI, SPX exceeded theirs.  So DJI and SPX formed diagonal triangles off of their July lows.  My count is that a leading diagonal formed A, the August low B, and the 5-wave off the bottom completed the C wave at today's high. 
In my estimation I1 did not fail, having held the market back for 5 sessions.  There is a great deal of bullish sentiment.  This pop was from a 4th wave rectangle so therefore should be the end of the move.  I'll be posting the technical composite tonight. 
So, what are the bulls talking about? 
a) the recession is over
b) the Fed will do some fresh QE
c) the housing market is recovering
Anyway, the count from the low of last Wednesday in the cash market:

Now, the futures count.  I will be the first to admit that I mis-counted the downwave last Thursday evening as a 5.  Obviously it was not.  Counting it as a 3 allows a prettier count:
Finally, I have been working on a precious metals gauge with the same validity as I1 is for the stock market.  I think I have succeeded.  Here is the PM1.


  1. Hey Steve... thought you'd like an update to the chart I posted awhile back...I just noticed that the buy signals are almost perfect (4/5 or 5/5 depending on how one traded it) - good job!

    I started nibbling short today at EOD. Tomorrow is the 21st - dead center of the "esoteric cluster" of 19th-23rd. Could be the high is in, or we get a touch higher tomorrow. Another possibility is up through the 23rd or even the entire week. 1170 would clear out a lot of stops - but ... change is in the air...