Wednesday, October 20, 2010

10/20 1:15

The stock market 5-wave down yesterday was either wave (i) of a downtrend or the completion of the abc from last week's high. 
If wave (i) then currently we are in (ii).  This is a personality of a carnival huckster with misdirection to make us believe that God is behind the move.  Wave (ii) can retrace 100%.  The abc up count is complete.
If the down move was just completing abc then either there is more abc action, possibly ekeing out a nominal new high or the bull returns in force and blows by the old high.
I believe that with I1 going down that the huckster has enthralled us.  I put a stop at old high 11,151 + 27 points.  If DJI beats 11,178 then it is real. 
The DJI hit the outer envelope of critical support exactly yesterday and until this falls I can't get more exposure than I currently have.
5 down in the Comp:
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4 comments:

  1. AnonymousOctober 20, 2010 at 10:33 AM

    The 5-minute SPX appears to have completed five waves up; looks like a 1-2, 1-2 to me. Cha cha cha.

    ReplyDelete
  2. AnonymousOctober 20, 2010 at 11:13 AM

    is your work all short term or do you have a longer term view of the market, i.e 3, 6 9 months from now? If yes, would you share those. Thanks.

    ReplyDelete
  3. CharlesOctober 20, 2010 at 12:02 PM

    Jack,
    good question as to why I was pondering that outcome. Here is what was rolling around my head: 1) looking back at major tops, in 2000 we had a march high followed by august double top; in 2007 we had the July top followed by slight overthrow in October; could we see similar this time since Steve is projecting subpar 5 years? 2) looking back at the April/may timeframe this year, it seems similar: persistent rise overcrowded sentiment in one direction, only the big money prop traders and hedge funds are playing so one wrong turn and they will all try to exit simultaneously, potential catalysts in QE size disappointment, the Dems retaining Congress, the banks having to rebuy toxic mortgages, the euro bailout still lingers 3) seasonality, late October is traditionally rough, plus it is almost 6 months since that crash happened and I don't think the market is any more stable now than then 4) Jeff Cooper has been raising this possibility in his work which is mostly a paid subscription but you can read some of it for free at Minyanville, 5) technical divergences are starting to arise and 6) I'm talking my book here as I'm following I1 like the rest of us. What do you think ?
    Charles

    ReplyDelete
  4. SteveKotelesOctober 20, 2010 at 1:41 PM

    Anonymous
    My work goes out 3 months. I posted an I1 chart yesterday
    http://animalspiritforecasts.blogspot.com/2010/10/1019-920.html

    ReplyDelete

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