I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Thursday, September 30, 2010

Top? (10 reasons for 'Yes')

I am leaning very heavily toward yes.

1) 1158 is the target I have been holding for awhile, and that was met within 1 point
2) Happened on Sept 30, important Gann time relationship that Sugarman was mentioning
3) Exhaustion gap up followed by a move down on volume
4) Nice set of topping candles the last 4 days (remember topping is a process not an event)
5) Tons of negative divergence on the 60 minute chart
6) Sentiment reversal underway per my indicator (clear upturn on EMA 20 of the CPCE)
7) Huge negative divergence on NYMO
8) Trend change signal on the SPX/VIX (thanks toddy!)
9) 5 crystal clear waves down from the exhaustion gap
10) Close below the broken trendline on the Nasdaq Composite (which I have been saying is the signal for this rally to be done)

I would say that Friday and next week is shaping up to be a very down week IMO

No Longer a Wedge!

The Nasdaq broke the lower trendline. This means that the current wave is not part of the wedge (unless it is an expanding diagonal .... yeah. As both Kevin and I would tell you, expanding patterns as actual wave counts are 99.9% of the time fictitious).

I want to see where this current wave lands and then I will watch the retrace. But I am leaning toward this Minuette, Minute and Minor wave being done this morning.

Wednesday, September 29, 2010

Not Yet

I still think we are working on a top. And I am not of the opinion that today was the end of the move and we are going to start heading down tomorrow. I think it is still overlapping with a little more upside.

Tuesday, September 28, 2010

Impulse Up? Top In? ... I Say Neither

I am still sticking with my ED call. There has not been a 5 wave move up since last Thursday's low (I have seen a few counts try to force one in and I do not buy it one bit). Today's break down stopped right at support (and the bottom channel line on the Nasdaq composite). I was saying to watch for a clear break and close below that (not on the SPX, it has not been leading this rally). When that happens, then this rally can be over ... and not until.

This is very overlapping and highly indicative of an ED to me.

Monday, September 27, 2010


On Friday and Saturday I was showing one of my crazy idea counts (see More and Major League Divergences) for a short 5th wave ending diagonal on Friday afternoon.

There is a reason why I called it a crazy idea alternate count. Because they are low probability. It was idea that didn't pan out.

And like I said on Friday and Saturday, my preferred count is for a rally to 1158 on the SPX until the end of this week

From Saturday's post: 5) At SPX = 1158 we have some very nice wave relationships to the July and August waves especially if the rally runs out to Oct 1 (Gann time relationship). This is my preferred count

What is interesting is that from the low at the end of Thursday afternoon, we have three waves up. The second wave of the 3 wave move had barely a pullback (only 23.6%) and so I do not think it was a wave 2 and we are in a 3 up now.

Instead, I think that very obvious three wave move is quite likely the first leg in a Minuette degree ending diagonal. If so, it should take roughly 1 week to run and roughly take us up to 1158. This is my preferred count and I am sticking with it :)

Saturday, September 25, 2010

Major League Divergences

My last few posts give my preferred EW counts for this rally (More, Breakup, Breakdown? and Breakdown? (Revisited)). Here is the summary of my position

1) Looking at only the SPX will produce a garbage count. It is not a clean waveform and can be interpreted several ways
2) The SPX is also not leading here, so which index is?
3) It is obvious that the Nasdaq is leading and it gives a very clear impulsive waveform up
4) This same count also works on the SPX, and we have a winner
5) At SPX = 1158 we have some very nice wave relationships to the July and August waves especially if the rally runs out to Oct 1 (Gann time relationship). This is my preferred count
6) However there is a case to be made (and a supporting count: More) for the rally to have ended on Friday.
7) ***

I will explore point 6 in this post. There are some massive divergences taking place and I am doubting this rally will be able to continue in light of them.

First is the NYMO.

A rally or breakdown can continue in the face of a divergence. And it can get more pronounced even. But the 2% gap up rally on Friday is HIGHLY UNCONFIRMED by MOe. In fact the divergence is almost as sharp as it gets (the NYMO did print a positive value, but only barely)

Next is the Equity Put/Call Ratio.

Bullish? Check.
Is the setup supportive of a turn the way it has been for the past year and a half? Check.
Anecdotally, a number of sentiment surveys are between moderately bullish and extremely bullish. And with a very high ratio of calls to puts this week, we have the makings for a top coming into place.

Last is the 60 minute chart

Tons of divergence have been brewing for awhile. But like with the NYMO, Friday's rally is not only unconfirmed on every 60 minute indicator, it happened on highly negative divergence.

This picture is really favoring a very red week next week.

*** I still disagree with virtually every P2 done count that I have seen (a LD ending at the beginning of July because the wedge trendlines are not converging on almost any index, and the impulse down Minor 1 for 3 weeks followed by 3 months of a very complex Minor 2 looks utterly ridiculous and makes very little sense).

My thoughts on the next intermediate wave are summed up here: The Big Picture: Technicals and Macro

Friday, September 24, 2010


An update to go along with my last 3 posts. I still like the Fib relationships if the SPX goes to 1158 (nice, complete, proportional) and as Sugarman points out, will be at a very nice Gann time spot at Sept 30 - Oct 1.

But with the clear higher highs (and ending diagonals) being sported today, a case could be made for the end of the Minute wave here. I am already short either way, so I am a bystander (albeit a very interested one).

The trick will be to see if the next wave down breaks the channel. And NOT on the SPX. It has not been the leader this rally. All eyes need to be on the Nasdaq, as I illuminated here: Breakdown?. If the Nasdaq breaks its channel to the downside, then I think the odds favor the rally being done.

[Addition 3:55]

Here is my crazy idea count to support the top being done today. I only moderately buy it. But something about how crazy it is just seems to strike a chord ......

[Addition 4:05]

Same chart of the ED on the Nasdaq:


From my last 2 posts (Breakdown? and Breakdown? (Revisited)) I was forecasting that the move down was only a Minuette 4 pullback, and not the start of Minor 3. That forecast was confirmed today by higher highs on the COMPQ and NDX. The SPX is practically there as well.

Thursday, September 23, 2010

Breakdown? (Revisited)

I have been screwing around with the New blogger editor for 15 minutes. IT SUCKS!!!! Don't try it out if you have the option not to. I am still figuring out how to change back

My last post showed a Minuette 4 pullback. And it is what I am going to stick with. In this case, I will still be more than happy to be wrong **

But I think this breakdown will turn out to be a C wave of Minuette 4

** I have been short for awhile because I am focused on the bigger picture. If we break down here, I am happy and not doing anything different. If we go up to 1158 I will still not do anything different (i.e. I will not hedge long). I am of the opinion that we are near the top of this wave. So consider this an unbiased opinion (by that I mean I am not "wishing" for an end to this wave now, nor am I trying to be bullish as "wishing" the wave to go up. I am analyzing the wave purely from a waveform perspective. I have already made my bets)


I would love for it to be the case, but I honestly don't think so. Not yet.

The SPX count is most frustrating. It can support an impulse count or a double corrective. And it is not giving a clean signal for either.


If you look at the Nasdaq, which is giving a much cleaner waveform and use that to help inform the SPX count, then I think we have a winner. I think it is an impulse count and today was a Minuette 4 pullback.

[addition 10:30]

And as Jem and Diablos have pointed out, at 1158 then A = C. Which would be a very nice Fibonacci balance for this wave

Wednesday, September 22, 2010

Gold / Equity Correlation

If you look at a short enough timeframe (maybe a couple of months) you can find negative or positive correlation between *ANY* two assets: Dollar/Oil, Oil/Gold, Salamanders/Twinkies, even Gold/Equities.

The more useful question is what are the long term correlations between two assets. This will let you know if they are moving together in the short term, is it a confirmation (they normally trend together), or is it a *divergence* (they normally trend oppositely)?

Over the long term Gold and Equities are usually *not* positively correlated. I tend to think that this current move of positive correlation is a divergence. Which one is lying? I think we will find out soon:

Tuesday, September 21, 2010


continue to pile up dangerously

And we now have both a short term and a long term divergence on the NYMO for this wave. Looking and smelling pretty ripe.

So is it done? No idea. Just looking for a follow through day down with a confirming day after that. The indicator picture is perfect for a top, nothing to do now but wait for the price to finally weaken.


From my post Friday, here was my chart:

There was the possibility that the count could be done (my crazy idea from Friday morning: Time to Bust a Rhyme?, Time to Suck a Lime?). But since we had no follow through down, something did not feel right about it being a top.

So in typical Monday fashion, we got another pop. The divergence is now very pronounced:

Are we done? Could be. The are a dozen ways to count this wave.

I think we are near the top now, so I am just waiting on these divergences to manifest into weakness.

Friday, September 17, 2010

The Big Picture: Technicals and Macro

This will be another rambling post (probably). I want to talk about the big picture again, and why I still think the counts are much more complicated than most are thinking.

Let me go back to Ponderings:

Okay, as you know I have been doing a lot of thinking about the wave structure recently. I have a few posts that talk about the 'incongruities' that I am seeing:

1) There is no clear impulsive count down so far. This is the closest thing to a 1-2, 1-2 and frankly it is becoming less compelling all the time: Spurn. On top of that, the FTSE made a higher high than the August high (see Spiel). Because the FTSE and the SPX have been moving in tandem, with the FTSE slightly leading, this really hurts the 1-2, 1-2 case for the US indices.

2) The current LD count going around makes me want to barf. It is not a wedge. It is vaguely wedge shaped, but that's it. The trendlines are not converging. The more I look at it, the more I am convinced that the count is not right: See this chart from Spiel.

3) So is the count corrective down? I have been pondering a triangle option, Spurious. But there are a few major problems: the triangle is highly disproportionate to the down move and there is not a valid triangle on the INDU and FTSE (they are sporting wedges).

4) Could we still be in P2? ... Possible, but I seriously doubt it. Based on all of the macroeconomic and fundamentals problems I really don't buy that case. Plus April was a sentiment extreme: Everybody is a contrarian indicator!! What is the actual sentiment like?. The April top really looked and felt like a capitulation top.

.... So where does that leave us?

With no clear answers, that's for sure. But MTU has a great post up that might provide some clues: MTU Weekend Ed. - Moment of Truth (9/10/10 Close).

A proper LD that we are still in the middle of.

When you consider the fact that the FTSE has already bettered its Aug high, then the odds of a 1-2, 1-2 down for the US indices are greatly diminished. So I think all of them are still in a Minor 2. Even if the US indices do not better the August high (making a truncated C wave) I am now thinking it is still in the context of Minor 2 (not Minute 2). But there are far too many problems with a cleanly impulsive down count from the April high (I know, this is what I was pulling for, but the amount this wave is dragging on is forcing me to reconsider).

Lets revisit these. Because I think there are a lot of incorrect assumptions being made about the wave structure.

First, the obvious:

The 1-2, 1-2 count is dead for pretty much every index (which I had abandoned a few weeks ago: Spiel). Also in my opinion the 1-2 (Minor) count is dead. Whether it be an impulse down ending on May 25 with a very lengthy triple-three Minor 2 (which looks *ridiculous*), or the highly implausible LD count with the LD ending in early July (see this chart for why I completely disagree with that count). The Minor 1-2 does exist in a less obvious form, though (IMO). More on that in a minute.

Second, the macro:

I was questioned (accosted?) recently by a commenter with a smarmy (and unfortunately common) attitude regarding macro analysis and technicals. I agree that there are times when the macro and the technicals can move severely out of whack. The common assumption being that the stock market is "foreseeing" a recovery or move in the business cycle (which I call BS on: http://caps.fool.com/Blogs/market-still-deluding-itself/446288). But I concede that there can be significant countertrend moves between cyclical technicals and the macro environment.

But that time is not now. Here is why I think so:

i) The rally from March 2009 to April 2010 was an oversold bounce / fear-panic reversion / cyclical bear market rally in an overall secular bear market. It was not a meaningful valuation bottom in any historically significant sense: Is the Market Fairly Valued? Did the Market Achieve Any Meaningful Bottom Back in March?

ii) The reason for that rally was completely driven by monetary events. 2008 was primarily a Deleveraging, and more importantly, a Liquidity Crisis. Flooding the market with Dollar Swaps was by far the biggest factor: Bigger Fish to Fry, and update to Moving Some Macroeconomic Deck Chairs: The Dollar, Dollar Swaps, Bonds and LIBOR

iii) Through 2009 and early 2010 there were increasing fundamentals when compared to Q1 of 2009. This was due (primarily) to massive government stimulus which drove (secondarily) an inventory rebuild cycle.

iv) Yet the "cycle" never took hold. The way an inventory cycle usually works is that businesses begin an inventory rebuild, consumers respond to the supply and real final sales pick up, businesses respond to the increase in demand and continue production, increase hiring, increase capex, etc. Throughout this "cycle" there has been a tepid increase in real final sales and the trend has been dropping significantly the last couple quarters.

v) This is precisely why businesses are not (by and large) hiring or going forward with capex projects. They are nervous regarding consumer behavior. They are also nervous regarding the business environment (taxes, regulations, etc.)

So here is where we get to equities and especially now why the macro and the technicals are very much linked at this point in time

vi) GDP could fall off the face of the Earth and it wouldn't matter (which is not true, just using some hyperbole) to equities because what the market cares about when pricing stocks is valuation. i.e. what are the earnings justifying the underlying stock price.

vii) Since Q1 2009, earnings have been up. Which means that equities go up. Government stimulus spurred enough "aggregate demand" to increase earnings from their panic levels.

viii) Earnings have been continuing to increase. But there are two primary ways for earning to increase: a) organic growth based on a recovery (sustainable) and b) cost cutting / margin expansion (unsustainable). Notice what I said above, real final sales the last 2 quarters have been slowing considerably. Which means there has not been much of a). In fact most of the earning growth the last 2 quarters has been because of b).

ix) But that doesn't explain now. Analyst estimates are increasing. What that means is that analysts believe that the unsustainable portion of earnings will go away and be replaced by sustainable earnings

THIS IS THE RUB!. This is why the macro environment and the technicals are completely linked right now. Because there is an extreme disconnect between leading macro indicators and coincident and lagging macro indicators. By this I mean that there are a large set of leading macro indicators that are forecasting weakness at best, or another recession at worse.

- More On The ECRI Leading Indicator
- Market still deluding itself that it can escape the inevitable dénouement
- The Unfortunate Math Behind Our Economic Plight
- A Simple Explanation of the Great Recession and Why It Has Years To Go
- John Hussman: Valuing the S&P 500 Using Forward Operating Earnings
- What is the Consumer Metrics Institute Growth Index saying?
- Rear View Looks Fine, But The Macro Forward Outlook Is Deteriorating
- John Hussman: Recession Warning (Unthinkability is Not Evidence)

My point and contention is that the leading macro environment is forecasting weakness. This means the reason for the the increasing estimates from market analysts and the high valuation of the market (if one uses more reasonable earnings estimates) is misplaced. I think the market is overpriced and needs to correct significantly.

There are two parts to this observation: Did we top? and When will we correct?

So for this second main observation, yes I do believe we topped in April. Not only was it the peak of the inventory rebuild, I believe it was a capitulation top on a number of indicators: Sentiment.

This means that I believe that the April top was a major top. Whether it was Primary 2 or Cycle Degree X or a Primary subwave within a very large Cycle X, I believe it is a major top. This is precisely why I am not entertaining large count options that are forecasting another large run above the April high. BECAUSE I BELIEVE IT DOESN'T MAKE ANY SENSE MACROECONOMICALLY (and per my argument above, I think at this juncture the macro and the technicals are quite linked)

Third, the not-so-obvious

So from observation 1 above I don't think we are in a straightforward impulsive down count. And from observation 2 above, I don't think we are still in the cyclical bull market. I think the trend has changed back to down.

So what does that mean?

It could mean that the count is corrective down. This would stink because it would make this a very difficult large (Primary) wave to count, analyze and trade. But it is not without precedent. If you want to see a major world index that is in a very clear secular bear market, and whose wave structure is clearly corrective, look no further than the NIKKEI: Back at Support

There are a lot of very valid comparisons that can be made between the US situation and Japan. So this course of analysis is not without merit. In fact, I think it might be right on.

But before I go down that path, I want to stick with my preferred count, that we are in a Cycle Degree C wave down with the April top marking Primary 2.

Based on all the incongruities that I have stated above (no impulsive option that I buy) since the April top, and assuming that the April top is a major one (that no retracement waves will challenge it) what option is left withing the framework of Intermediate 1 of Primary 3?

A Large Leading Diagonal. And like I said above, I am *not* talking about an LD that ended early July (which I have said repeatedly is invalid).

Here is what that count would look like:

What this would mean (if this count is correct) is that for over 2 years, we will be in a trading range between 900 and 1200. This is my technical assessment but it also fits with a possible macroeconomic assessment.

Think about what this would mean: We have a failed inventory rebuild cycle. Yet we have been proclaiming the end of the recession / start of the recovery for months. Investors, as a crowd, are largely optimistic, and will not relinquish the perception of a recovery easily. As the over-estimation of analysts becomes apparent the next several months the market will correct to reflect this new reality. But we will be getting our results from mid-term elections, and I think it is quite likely we will see a lot of changes take place in the House (and maybe Senate). There will be a "second honeymoon" from an investor sentiment point of view, coinciding with an intermediate bottom at major support (900 on the SPX).

I think a 2 year trading range is precisely the type of confusion the market represents right now. (Like the 1 year trading range we are in now: Nowheresville). There is honest bewilderment amongst both bulls and bears.

In the past I have tried to rush counts. This one is a better representation of the confusion that exists in the market right now (IMO) and contains the idea that this confusion is likely to persist for some time without a clear "crash" or another gigantic rally.

... So that is my take on what I think the big count has in store for us.

Of course I will be wrong and have to revise this in a couple of months :). But when I look top-down at this point, these are the type of conclusions that I come to.

I hope the explanation of my analysis, if not the outcome of it, was useful.

For more discussion of some macro and fundamental thoughts (and why I see the macro and fundamentals as bearish for the next few years) see:

-- Long Term View
-- Bond Market and Yield Spread Update
-- What the Bond Market is Trying to Tell the Stock Market: A Look at the Yield Curve and Expectations
-- US Dollar Count Updates
-- Bigger Fish to Fry, and update to Moving Some Macroeconomic Deck Chairs: The Dollar, Dollar Swaps, Bonds and LIBOR
-- Moving Some Macroeconomic Deck Chairs: The Dollar, Dollar Swaps, Bonds and LIBOR
-- Of Modeling, Risk, Financial Innovation, and Liquidity Crises
-- Another Impulse Wave Study: A Look at the 1974-1975 Low and Rally
-- Not All Five-Wave Moves Are Impulses: A Short Treatise on Elliott Wave
-- Connect the Dots Before Financial Depressurization
-- Is the Market Fairly Valued? Did the Market Achieve Any Meaningful Bottom Back in March?
-- Debt Saturation
-- Global Macro Investor August Report - This is a Must Read
-- The Big Interview with David Rosenberg
-- What is the Consumer Metrics Institute Growth Index saying?
-- Rear View Looks Fine, But The Macro Forward Outlook Is Deteriorating
-- John Hussman: Recession Warning (Unthinkability is Not Evidence)
-- Buying dimes with dollars is bad business, government-funded or not

Time to Bust a Rhyme?, Time to Suck a Lime?

It's binv's Crazy Idea Time!

I will add to this as the day goes on:


This wave is done. And here is my crazy count. A triangle and a pop like I was saying yesterday: Limb. Also if you consider the crazy spike up and then back down in the futures, it looked like we had an overnight sentiment reversal and then the day crowd confirmed it.


Here are my supporting Nasdaq and S&P counts. I don't think these are 5 wave moves per: Limb. But that's just me (and I am perennially wrong)


Let's check in on sentiment. (see: Sentiment)

-- Bullish at the peak? CHECK!
-- Pattern supportive of a top? CHECK!
-- And speaking of sentiment: http://pragcap.com/small-investor-bullish-sentiment-soars-to-3-year-high


Well this is *very* interesting. I almost deleted this chart yesterday (the one from Break Watch) due to the triangle. But today *did* actually retest the broken trendline.

Nice :)

Thursday, September 16, 2010


Like I have stated and shown many times, tops are *processes* not events (most recently Limb). We are still in the process of hammering one out here


Well, so much for our break :( This this is breaking sideways and not down.

I have an alternate count going that has this wave as a triangle. And based on the move so far today, it really looks and feels triangle-ish

So IF today is a triangle, then I doubt it is in the context of a Wave 4. This thing (especially if you look at an index other than the SPX) is looking much more corrective up. It is sharp, but the wave structure needs to be really stretched/mangled to get an impulsive count if we have more upside. So IF today is a triangle, then I think it is the final B wave of a double zigzag.

Wednesday, September 15, 2010

Break Watch

Tuesday, September 14, 2010


There are definitely ways to count this wave that give more upside. I was really considering those today. But I really like this count. I am going out on a limb and saying it is done.

We do have a channel break on the SPX, at least the way I am defining the Minute waves, as well as the WLSH, NYA, and INDU (although we don't yet on the COMPQ and RUT).

Stick a fork in it? I hope so :)

And Topping Process chart for good measure:

And some Dow Support/Resistance Lines just to round things out:

Good night :)

Breakout? Not yet

What am I talking about? Gold of course.

So even though we got a new all-time intraday and closing high of Gold in US Dollar terms, why don't I call it a breakout? Because it has still not closed above the trendline for the Large Cup and Handle formation that I have been watching. If we get a weekly close above that line, then I think we have an honest breakout.

Also keep in mind, I am a huge Gold bull, and I enthusiastically share my views, but I am certainly no Gold tout.

I have not been screaming about Gold recently through the nice rally we have been having. In fact my last post on gold was when everybody was screaming "Gold has TOPPED!!". (see: My hat is old. My teeth are gold. And now my story is all told.) What I did instead was to show the progress of my bullish prediction on Gold. And what do we have now? A new all time high.

I *hate* buying Gold on breakouts, maybe not quite as much as the people who recommend that you do so. Gold is a momentum player destroyer and will shake you off so fast that you won't know what happened.

I much rather prefer to buy Gold when *everybody* hates it. Like at the beginning of February (A little early in Dec: GLD Chart and then in Apr confirming uptrend: binve's Gold Foil Hat Zone: More Thoughts on Gold's Massive Bull Market) and the end of July (My hat is old. My teeth are gold. And now my story is all told.).

It makes me feel all warm and fuzzy when everybody is screaming that Gold has topped :) My PM and GSM long positions are by far the largest in my portfolios, much larger than my equity shorts. I am quite content to wait for another large pullback (and yes we will get one) and buy Gold again when everybody, once again, screams "GOLD HAS TOPPED! THE BUBBLE HAS BURST!". I am in no rush and the Gold bull market is far from over IMO.


The dynamic of option investors being bullish at a peak is still in full effect. As I was saying in Everybody is a contrarian indicator!! What is the actual sentiment like?:

I could also drag out a bunch of investor sentiment surveys and they would say materially the same thing. But those are less useful, because they rely on what people say and not what they do. These are measures taken directly from the market, and are a measure of investors actions.

This is why I like looking at trends in the CPCE so much.

1) The April top still looks like (and certainly felt like) a capitulation top
2) the 100 EMA was downtrending ever since March 2009 to April 2010 and since April 2010 it has been uptrending.

This is another reason why I continue to think April marked a major trend change back to down.

And my updated 5 year sentiment chart for good measure:

I also think the NYMO is showing some large divergence (if you consider the recent wave up to be an effective double top with the August highs), much in the same way there was negative divergence on the May bottom to the July bottom.

More Evidence

Here is more evidence against the 1-2 (Minor) 1-2 (Minute) down count, besides the fact that it now looks quite ridiculous on the indices where it is technically feasible.

From Noted Divergences and More Ponderings I offered this evidence:

The NDX bettered its August high today. I was noting that the FTSE already did last week. Maybe you want to argue that the British index does not move like the US Indices (even though I noted that it does, quite a lot, and in fact most of the time leads the SPX slightly). Fine. But if you are maintaining a 1-2 (Minor), 1-2 (Minute) down count and ignoring the NDX, then you are doing yourself a disservice (IMO).

Okay. So maybe you want to disregard both the FTSE and the NDX. Fine.

But the NYSE COMPOSITE just bettered its August high.

Ignore that one at your own peril.

I think the count is significantly more complicated that many of us (including myself) want to believe. Which is why I am gravitating toward this idea: Ponderings. As I state in that post, I continue to *not* buy a LD ending at the beginning of July as a viable option.

Monday, September 13, 2010

Revised Squiggle

I am revising my squiggle count from today in this post: Noted Divergences and More Ponderings. The implication is that we are still near the end of this wave but with a small pop tomorrow morning. Max pain on SPY continues to be $105.

The Big VIX Wedge

Which one? There are many to choose from. But the one to be on the look out for is the dashed one shown below. If that one comes to fruition, then 2008 will look like child's play.

Noted Divergences and More Ponderings

I will be building off my ideas from yesterday's post Ponderings. See that post to put this one in context.

First major observation: The NDX bettered its August high today. I was noting that the FTSE already did last week. Maybe you want to argue that the British index does not move like the US Indices (even though I noted that it does, quite a lot, and in fact most of the time leads the SPX slightly). Fine. But if you are maintaining a 1-2 (Minor), 1-2 (Minute) down count and ignoring the NDX, then you are doing yourself a disservice (IMO).

Here is my count within the context of the Large LD from yesterday's post. This wave really could be done here.

I think we are within the target area for C to be done. It would technically be a truncated C, but I feel it is close enough to the Aug peak to qualify as a double top.

Also note that there are some substantial divergences taking place. Definitely on the 60 minute, but even cropping up on the Daily chart as well.