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Wednesday, February 10, 2010

Wednesday updates

After the close, A go nowhere type of day, that for me, is bearish because we did not have any follow through to yesterday's bullish move. After examining the bottom of every correction since the big one down at 666, we have never had a rally off a bottom that has stalled, they all have rocketed in the first few days, never leaving behind a red candle on the daily charts. And that signals too me there are just no dip buyers willing to pile on to drive prices higher. The micro counts are an absolute mess to try and count with any forward looking accuracy, so for now I will stick with the bigger picture, and the technicals.
This is my most bearish count, with the 2nd wave up finished at 1079.28, followed by another 1-2, one degree smaller. Now in order to label the 2nd wave top any higher the SPX would have to break above the upper channel line. Something that would cause me to rethink the whole wave count.
The Russell finally had its death cross today, with the 20 day MA crossing the 50 day.
The SPX did make a lower low today, without making a higher high, slightly bearish, with the trend neutral until we can break a more important high or low.
Breadth pretty much confirms today was a day of consolidation, ending the day at 1.0053:1, advancers, on low volume, this is something that has never happened after a bottom was just put in a couple of days ago, and why I am still bearish.
Breaking below 1044.50 would confirm the trend is down.
The Head and Shoulder pattern I posted on the chart below is still valid, and looking good. The neckline is about 1062, and a break below there should really get the ball rolling.
The indicators on the above chart are up against trendline resistance with room available to run to the downside now, also there is divergence on the indicators, that is as the SPX made its last high at 1079.28, the indicators could not make a higher high, a sign that momentum is waning for the bulls.

Click here for a live, updated chart!!!
9:50, I am seeing a pretty good Head and Shoulder pattern developing now. One encouraging thought for the bears, and after the close I will show some charts of it. After we bottomed at 1044.50 the price action has been much different then it was after every correction since the big bottom at 666, this time, is much more corrective compared to all the previous times where we would immediately spike-up in impulsive style waves that did not over lap, coupled with increasing buy volume and breadth.

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7:58, There is a big fight going on here, and if the bulls lose control of this last gray bullish fib fan, the next downside target will be around the 1010 level. Then when you match the count to that defeat, it would more then likely be a very sharp and sudden sell-off.
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Click here for a live, updated chart!!!
7:11, We have the start of an impulse wave down, but I would still like to see 1044.50 taken out to confirm the 2nd wave is over. Also a break below 1044.50 would make an a-b-c count down from 1150 less of a possibility.


  1. For the rally I see a sloppy 'A' followed by a clean three wave 'B' (which might be the first wave of a sideways triangle). Now rising in either wave 'b' of the triangle or wave 'i' of C.

    Preferred count is that the entire decline is a three.

  2. Lower low - check. Lower high - check. Lower close - check. All this on a day when watching the market competed unfavourably with paint drying.

  3. Hi Mike. You may be right about where you have your top for (ii), but I find the deep retrace of the first wave down of [iii] to be uncharacteristic of what should be an extended wave. I'm wondering if we might not be painting the final leg of a triple zz. I also would make the point that the descending trendline is a 0-2 trendline and NOT a 2-4 trendline yet. As such, it is not inviolate and it could be that Minute [iii] established a different channel than that which contained [i]. We will DEFINITELY find out tomorrow, I'm SURE.

  4. Columbia... Thought you may want to read this. I posted this today on another trading blog.

  5. Hey Mike, nice work, the reaction to the jobless numbers coming in a second will dictate. I believe the upside will continue until early next week and the gap at 109.80 on SPY will be filled before the big move down. We'll know soon enough!