The Final Market Top 1/11/10

[The Thinker]

thursday jan 28

shaping up to be a very bad day in the markets.....

today is what we call an "outside day"...... this means we broke yesterdays high and low, in the same session today...

if we close under 1078.50 in the SP futures, we are set up for another leg down.....


this market has looked especially weak to me, as we were not able to make a run back to the 1120's..... i expected a run back to 1120 and then a failure... we failed just over 1100 (1103.50 to be exact)....

i think we should pay attention to todays action and particularly todays close...


this is going to show us that we are not in a minor correction.... people are not buying the dips, they are selling the rallys... you need to know the difference or you will get hurt... market sentiment has shifted on you..


all of this is due in part to the Gap at 904 and the natural flow of the market...

once we get to 904, ill re-evaluate and post again, there is no need to talk until then.. we must simply sell the rallys..



i am short from 1124.75, i added more today at 1078.25.... there was a huge sell signal there... unless you can read a chart, you probably didnt see it...


as i said, pay close attention today and at the close... the market is showing its hand today...

Falcon

 

[The Thinker]

im going to try and drop into the thread for a while... over the course of the past 12yrs, i have developed a sense of how to read a chart... it is of my belief that a chart will tell you everything...

it is not past events, the chart will leave indicators of direction... today there is a huge indicator in place right now... there was a massive indicator placed in the market on Jan 12... the move came to fruition on Jan 21...

the close today, will be crucial... if any of you can pull up the quotes for the march emini sp 500 (ESH09).... simply check the final price at 3:15 pm cst today... if that price is under 1078.50... the next leg down is happening...

there is almost no doubt in my mind that we are going to 904... (let me say that i hope that im wrong)... i can make money in either direction....

all im saying is that........... i can read a chart, the chart tells you things that have a very high percentage of happening in the imminent future..

i am not a doom and gloomer.... i knew the bottom was at 660 last march, as the signals were there, specifically a true 1-2-3 bottom... we now have a true 1-2-3 Top in place (at 1148)... we also have a Gap that will 100% be filled at 904.... this all adds up to a move there... i cannot make it any plainer than that..

ill be back to ramble later..

Falcon

 

[The Thinker]

looks as though the emini sp futures closed at 1078.75...

if you want some insight into friday...

we must stay above todays low of 1074.75...

look at wednesdays low: 1078.50
look at todays low: 1074.75

for a rally to occur on friday, we need to place a low between those 2 numbers.... if we can, we could be in for a friday bounce.. if the 1074.75 low of today cannot hold.. we will be in for another leg down...

im talking about a bounce, not a return to the up trend... i will remain short, until we have a technical reason not to be...

Falcon

 

[joelatti]

Falcon...My guess is we are getting a little bounce after GDP crushed the 4.5% people were expecting coming in at 5.7%

I know you and I have talked about this Type of news already being "baked in" Does it matter if the Actual results are so different from the expected? One way or the other??

Also I don't think we will put in a low Between those two numbers as was posted in ur previous post...What does that mean for the charts

Thanx and GL

Hope your daughter is doing well and the rest of your family

Recently had a baby girl myself!

 

[DeathEatsaCracker]

The first two results of a Google search say it's untrue that all gaps get filled.

And you thought this was the last certainty that you could cling to. For is it not true that battle-scarred old traders whisper through their nicotine-stained teeth, uncleaned for lack of funds, that the only certainty in this world is that "gaps* are always filled, usually sooner rather than later"?

And is this not an attractive idea, the notion that impetuosity or irrational exuberance in the market is always sooner or later replaced by sober analysis, bringing the market back to its senses?

And lo, we have only to pore over our beloved charts, like a Roman seer over his steaming pigs' entrails, to see, incontrovertibly, each and every gap on our charts filled, in time, and mostly within a few days. So is this not scientific proof of the almost god-like infallibility of the Gap Law?

Alas no, my friend. What is happening is that the gaps on your charts are becoming invisible because, as they age, you look them up over longer time-spans : for example, a gap on a day chart disappears when you look it up on a weekly chart, which you will tend to do as the day chart ages. If you have access to daily charts going back years, and you have the patience to trawl back through them, you will find gaps in daily charts that are ten years old or more. Like solidifying Aero chocolate, some of those 'bubbles' that we call gaps become trapped forever in the charts. Others, probably the majority, do indeed get filled. But if you hoist your petard to this mast, you will surely lose your shirt sooner or later, because everything is in the timing - many gaps take three months or more to get filled.

 

[joelatti]

Looking like they are still selling the rally

 

[kuwlness]

US future econ growth seen mirroring GDP data-ECRI

Fri Jan 29, 2010 10:57am EST


NEW YORK, Jan 29 (Reuters) - A future U.S. economic growthgauge fell slightly in the latest week and its yearly growthrate slid to the lowest level since August 2009, though thedata still points to continued strides in the recovery, aresearch group said on Friday.</PRE>
The Economic Cycle Research Institute, a New York-basedindependent forecasting group, said its Weekly Leading Indexread 131.4 for the week ended Jan. 22, coming off the priorweek's 83-week high of 132.2.</PRE>
The index's annualized growth rate declined for the seventhstraight week to 22.7 percent, from a revised 23.5 percent theprevious week.</PRE>
Though yearly growth has drifted from its October all-timehigh to its lowest reading since Aug. 28, 2009, ECRI ManagingDirector Lakshman Achuthan maintains the group's projectionsthat there is no double-dip recovery in sight.</PRE>
"With the WLI staying near the previous week's 83-weekhigh, the U.S. business cycle recovery is set to keep going inthe months ahead," Achuthan said.</PRE>
He also pointed to government data released earlier onFriday showing that the U.S. economy grew at afaster-than-expected pace for the fourth quarter.</PRE>
"With GDP growth rebounding 12 percentage points in justthree quarters, the V-shaped recovery foreseen last summer bythe WLI is coming into focus."</PRE>
ECRI's annualized growth rate figure sometimes moveinversely to the WLI level, as the latter is derived from afour-week moving average.</PRE>

 

[The Thinker]

congrats Joe, congrats on the birth of your daughter..

my daughter is a freshman in college this year.. thank goodness, she is on a full ride...

Joe, u know i think the charts (technicals) will tell the whole story.. i think i can trade a market by looking at charts, without even knowing which market it is... in fact that is how some traders were taught..

DEAC, there has never been a Gap on the SP 500 that wasnt filled... im sure maybe in some markets but i havent traded anything but the SP in years... to me, there is no other market..

its also very easy to pull up daily charts, who told you otherwise... i hand chart the SP daily, so i dont have to pull up much of anything..


Joe, your right, they are selling the rallys.. Market sentiment has done an about face... not hard to see this..

this will be the pattern, until the SP reaches the 904 GAP... at that time, i hope we get a reversal back to the upside.. until then, i am assuming that we will be selling every rally..

and remember 904 is a 50% retrace of this entire upmove... fib numbers will come into play as well in this one...

Falcon

 

[joelatti]

Thanks Falcon....for your thoughts and efforts!!

 

[joelatti]

Falcon

What do we look for to Break that Downtrend, even before it reaches 904

So today we stand aroun1075...If it gets to 1100 does that mean anything??

 

[The Thinker]

Joe

for the downtrend to be broken, we would have to trade at 1148.25 on the march SP futures... this would take out the (1-2-3 TOP) that was formed on Jan 11.... this top also coincided with the FIB retrace numbers of 61%...

so i knew it would really be strong... then you have that added GAP at 904 that will be closed at some point in time (guaranteed)...

that is the big picture...

until we break 1148.00..... any rally should be called a bounce...

now lets look at a BOUNCE.... we should meet resistance at 1178.50-1181 area... if we can take this out, there is a chance that we could move back to 1098-1103 area...

it would not surprise me to see a run back at 1100...

off the initial move down, i was surprised that we didnt push back to 1120..

after 1100... the key area is going to be 1125...

honestly in my opinion, i dont think we will trade back over 1128 until we fill that Gap at 904...


that is kind of my rough sketch.... for the downside, anything is possible.. i thought this move could take until June (to reach 904) but it could come must faster...

my best read, is a slow grind down to 904, that takes a few months...

TOP: 1148 (would end everything to the downside and continue UP move)

Key area: 1128 (i do not think we trade over this)

Good guess: 1103 (i would expect this number to be threatened again)

1st Res: 1081 (if this were to hold, expect much more to the downside and faster)...

ill pop in later

Falcon

 

[kuwlness]

Falcon

What do we look for to Break that Downtrend, even before it reaches 904

So today we stand aroun1075...If it gets to 1100 does that mean anything??

Chart guys are looking for a break of S&P 1112 for confirmation the down-trend has stopped. Too far away for me, should have confirmation this week. Not seeing a lot of selling into the rally right now, just seeing a lot of money coming in. Lets see where we are EOD.

 

[joelatti]

Correct, there was NO selling this rally, but it may not mean anything....let's see what Falcon says, but I'm sure until it breaks 1110 it means nothing

As alot expect it to test 1110 before it kicks back over

 

[The Thinker]

right Joe, this doesnt surprise, i was surprised when we didnt retest 1120..

i think we will only make it to 1103....

lets see what happens...

Falcon

 

[joelatti]

Well Falcon we closed just above 1103.....I guess we have to look a bit closer at that 1120
number

 

[DeathEatsaCracker]

Preposterous.

 

[The Thinker]

actually Joe your wrong.. only the cash SP closed above 1103

my numbers refer to the futures market... i trade the ESH09, the march emini sp 500..

yesterdays high was 1101.50
todays high (so far) is 1100.25

these are almost perfect numbers... refer to my post... i said i fully expect 1103 and actually we should have traded to 1107....

our first attempt at these numbers failed at 1101... if we cant go any higher, this would be a sign of even more weakness...


i want to go on record, i am NOT calling for the march lows to be taken out, not even close... i am calling for a trade down to 904 on the SP futures and then i forecast a turn back to the upside..

i really think it may take until June to hit the 904... at this point the dow should be in the 8300 range...

so far its working right on track... Joe you know i never listen to any news, its all in the charts....

Falcon

 

[kuwlness]

Indices dont fill gaps, that's for individual stocks, and not all those gaps get filled either. If you're looking for a correction of 20% to fill a gap based on nothing other than Gap Theory, then I'm sorry to say you're likely not going to see S&P 904 any time soon.



Fundamental Reasoning for Current S&P Levels:

With the S&P set to come in with EPS in the neighborhood of $80.00 for 2009, its historical P/E of 15 would put the index at 1,200 (currently 1103) and with the economy finally improving, this market's going higher.

 

[The Thinker]

kuwlness, i strongly disagree and ive traded for several years now... all by technicals..

there is a Gap at 904 on the SP futures market, it will be filled at some point... period...

i am not trading based solely on this theroy...

i am trading off a (1-2-3 TOP)
i am trading off a 61% Fib number
i am trading off a Gap at 904

if we move higher, i will exit short positions and move back to neutral or bullish... i do not marry a trade or a direction... i am a short term trader (not a day trader).... my trades last from a couple of hours to a couple of weeks...

Falcon

 

[joelatti]

I def know you don't care about news...I see this market teetering towards the downside also...I have moved back into cash after a ncie run-up...Still holding some core positions in PM's etc