S&P 500 - Feb 27, 2009

charts courtesy of stockcharts.com

Buyers, whoever they were, were overwhelmed by sellers all day long.

But there was no palpable panic or sense of urgency to get out, some were buying and some were selling, and selling pressure was heavier.

Maybe it’s different this time and the drop ends without a bang (aka capitulation).

Maybe the capitulation has already happened, and all we are left with is program trading among some super funds.

Many attempts were made during the day to prop the market. At some point, DOW ran from -150 or so to plus 10 against very poor breadth :-!!!!???

It of course was knocked back again by sellers. Do you honestly believe that it ran like that because suddenly there were all these genuine value seekers buying DOW components? Who knows? The curious thing is that it was all orderly.

Take a look at this 1-minute chart of DIA, which I use as a proxy for the DOW. Pay attention to the volume spikes: sporadic attempts by whoever to buy immediately followed by sellers response. There are quite a few black bars into the close, trying to perhaps get that psychologically important daily reversal, just to be dwarfed by red bars. While we are on the subject of reversals, how many so-called important reversals have we had since market rolled over?

Also notice how choppy today’s price action was, give me a chop like that, and my first thought will be to pick a spot to short for a trade.

Let’s move on

A question I keep asking when I practice Elliot Wave is: Do I have a complete set that can satisfy the minimum requirements of a wave?

Let’s look at this 15-minute chart of S&P futures

Forgetting about the orange alternate count for second, it appears that we either have enough to declare victory or are a spike away from having the minimum technical requirement.

Now, bringing the alternate count back into focus, one could argue that we are just warming up, the third wave is being extended, and the 5th wave is yet to come.

But since I have or am very close to have the minimum requirement in place, and the market is oversold, I’ll be on the lookout for a bounce, and signs of a reversal.

By now, you should know the drill: higher highs, higher lows, impulsive waves, good momentum and breadth, capturing and holding of pivots, momentous run-ups, shallow pullbacks, etc.

Referring to the 1st chart of this post, a chop-chop struggle is not the characteristic of a bullish move up.

Just to keep those of you who like multiple wave scenarios a bit busy, this is an alternate count that I personally like better because it looks nicer.

Regardless, one step at a time, price has to turn, momentum has to turn, higher highs, higher lows, impulsive structure, positive alignment of moving averages, etc, etc, leading to a positive technical profile.

The daily action was negative, Volume was heavy, and breadth was poor, it felt like a day of churning with a downward bias.

Nas100 has been outperforming the S&P since the lows of November 2008.

The animal spirit of the market – the risk takers – the lovers of high beta!

Seems like it’s peaking, the ratio may correct, but strong moves like this usually continue after correction. If we finally get a rally that is not the product of bubble vision hype and rumors of a man with a plan, techs may outrun the S&P. I say may, because there are so many oversold and badly depressed sectors and industries that may attract risk capital.

We just have to bottom first, and then see who is outperforming

I am thinking of maybe covering Nas100 more frequently, it’s just a matter of time required for regularly writing about it. I do not want to replace coverage of S&P with Nas100, as I think S&P is more important in the grander scheme of things. I’ll see what I can do. But regardless of what I may be able to do, I recommend that you keep an eye on the tech index.

I guess many, if not all of you, have, by now, heard that Bob Prechter of Elliot Wave International has advised his subscribers to cover their short positions. I hear it here and there that people say Prechter is bullish. Those who say that either do not know the man’s work and have not read his writing, or are bullish propaganda masters trying to exploit the situation. That was my polite way of saying that they are either ignorant brutes or outright crooks.

1st off, if one really needs to know what Bob Precther has said, one needs to either read his writing of February this year, or listen to him. He recently appeared on Bloomberg TV, Canadian BNN, and CNBC.

2ndly, Prechter’s market projections are longer term, mostly months, and years. He does not concern himself with the next daily low of later stages of a bear or bull. There are other analysts in his organization that cover the near term.

3rdly, he called for short positions well ahead of the peak, a bit too early for my liking, and never, to my knowledge, really called for a move to cash, his short call is sitting on a gain of 700-800 S&P points, why not go to cash, especially when everybody and their cousin seem to be ready to short the next rally? So many seem to want a piece of the action so late into the action.

4thly, he has not issued a buy recommendation, he just has said he thinks it is time to take the long term short bets off the table.

5thly, he has not said the bear is over, he thinks it will be measured in years.

6thly, he is a very unconventional thinker, try his writing, you may like him, or, at least, listen to his latest appearances.

Food for Thought: What if governments around the world started buying stocks or index futures? Would that bring a sustainable rally?

Enjoy the rest of your weekend

S&P 500 - Feb 26, 2009

charts courtesy of stockcharts.com

Another choppy session.

The day started bullishly and then turned sour and bears took control.

Volume was above average, and breadth was not good.

In fact, in the morning market was doing internally well, and then everything turned and internals deteriorated. There was quite attempt in the final market hour to push the index up, but sellers sold all advances. This is not inherent of bullish behavior

Market behaves in very peculiar mode these days. Price has a very hard time getting traction. Breadth is consistently bad, yet there is a lot of complacency as portrayed by CPC.

It is as if a big rally is expected.

VIX behaves like it has no interest in the affairs of the market at all – been there, done that is what volatility traders seem to say.

Somebody’s making a big mistake betting on the near future of this market. And I have no idea who that might be. Frankly, I think it can go either way, either collapse like a ton of bricks on complacent heads, or burn up through a lot of shorts like a shooting star.

So, I am back to trading till I can find a more certain foothold.

The potential Inverse Head & Shoulder I talked about yesterday failed to deliver

See how it went close to the neckline, teasing the impatient to jump the gun? Also notice that the small series of higher lows were handily broken today.

I am counting, at least for now, the peak of yesterday as minute wave A, and the current decline as minute wave B. It is possible that yesterday’s peak was minor 4, it’s just a bit too small for my liking, but it is possible.

This is a 5-minute look at today’s action

My bias is bearish, my charts are bearish, trends are down, but I am hesitant to take big positions home. I would be extremely careful with the market at this juncture. I would like to get an idea who the loser of the big bet might be. It should not take long for us to know the answer.

I think Nas100 is an index to watch closely as it may lead any attempted rally.

If the low of February 23 gives way, and cannot be recaptured, all hell may break loose.

So, instead of focusing too closely on intraday counts, let us keep the bigger picture in mind, and pay attention to our pivots and support/resistance areas.

And let us not forget that the rise from Feb 23 low looks and acts corrective.

Food for Thought: Bankers are getting some good deals. Will they finally loosen up? Will the fat cats finally say it’s over in coming days? Or are they still waiting for Mark-to-Market to become Mark-to-Fantasy?

KaChing - Feb 26, 2009

I used to have a virtual fund at marketocracy.com. I never liked it,. Their system is, IMO, poorly designed, oudated, not reflective of today's market realities, not suited for active managers, and a waste of time.

That was not a very humble opinion, was it?

One of our astute readers, Chrispycrunch, who also operates a blog I regularly read, asked me if I was on KaChing or not.

I looked them up, and finally decided to try it out.

there still are things missing, e.g. they do not have stop loss order (they say it is coming), and they do not have options, which are an important part of my market activities.

Other than that, it's a very nice environment, and not restrictive at all like marketocracy was.

I have a link to my portfolio on the right margin of this page. It's a hobby, and I may lose interest and stop playing it. But for now, I am trying to actively manage the 10 million they gave me - relax! it's only funny money :-)

AEM, Gold Stocks - Feb 26, 2009

I reduced the amount of short exposure I had for precious metal stocks. This has been a very good and pleasant drop and I was heavily short.

I put some hedges in place, and the rest will go on stops. I will try to do a detailed post some time soon.

S&P 500 - Feb 25, 2009 - Possible Inv H&S

charts courtesy of stockcharts.com

There is a potential Inv H&S setup on S&P 500. As we all know, potential does not imply guarantee.

If successful, it measures to the 800 area that we discussed in previous post.

S&P 500 - Feb 25, 2009

charts courtesy of stockcharts.com

Index chopped up and down and ended flat.

Let’s not get caught in the minutiae of 5-minute waves from the low of February 24. It can be labelled in many different ways. Most important thing is that it does not look like an impulse. As such, it is corrective. It can chop a trader into pieces. It is not impossible to trade a choppy correction, it’s just very hard because corrections can unfold in a multitude of wave patterns, and they may not provide a sustained directional move.

I was an observer for most of the day. Near the end, I did a quick short based on negative RSI divergence, added to shorts on MACD rollover and covered shortly after market close.

Also notice that we have been dealing with a series of higher highs so far, and the 757 area seems to have served as a battle ground of sorts.

Let’s zoom out.

Nice channel, eh?

We can clearly see the series of higher highs since Feb 24. Price has moved out of the channel. There is some momentum divergence in place. Again, it’s hard to trade these things, and one day’s scenario may be different from the other. Just pick your levels and observe them with discipline.

Let’s zoom out

As I have mentioned before, there is an open gap in the 800-820 area that coincides with the end of a wave 1 of sorts according to these counts. That is a target, index may not get there, and it may surpass it, in which case, I will have to re-evaluate the situation.

Let’s zoom out

Volume was above average. Breadth was poor. It was a day of churn.

I just want to make a note that this count is still technically viable. Not very probable at this time, but something to have in mind

Not much else to say.

Let’s fade out

Have a nice evening

S&P 500 - Feb 24, 2009

charts courtesy of stockcharts.com

Now, this is what I call a bounce.

A new week, a new promise for a new plan. Bulls can now shout on every bubble box they can find that we have just had a successful retest of the lows. Hey, who knows? Maybe this really was a successful retest and we are on the road to S&P 1000 and above.

Of course, there is an awful lot of technical damage to mend before that happens.

We started expecting a bounce on Friday, and we finally got it.

It was an absolutely beautiful trader.

Volume was good, breadth was good on most measures. There still were quite a few lows being made, and that on a day that market advanced from the get-go.

So, the market taught a lesson to late shorts. You see being late to any party may not be much fun. Bears have long-term, and mid-term trends on their side, but, if I am a bear with conviction, and end up getting caught for bad timing, I should not panic into a squeeze. Otherwise, I am a speculator with no conviction, with no timing skills, easily swayed by this talking head or that, this promise of a plan or that, and I pay for it.

Give me a balance sheet, an income statement, and I dissect them in minutes, and I tell you what the fair value is according to the numbers and based on my criteria. But crunching numbers works only if I can find numbers I can trust and a macro environment supportive of forward projections. In the absence of those, it is imperative that I learn basic chartings and exercise discipline.

Now that many shorts are squeezed, the question becomes: what next? Do we get a follow through, do we hold the lows and rally?

There is an open gap in 800-820 area. There is resistance in 800-810 area. And if any of the counts with a 3rd wave is good, we have a wave 1 in that area, and we know wave 4’s are not really supposed to overlap their preceding wave 1’s (exception being an ending diagonal). So, we have a daily oversold market that can go all the way to 800 or so without challenging our bearish outlook.

To the downside, as long as yesterday’s low holds, index has a chance.

Last, but not least, VIX is still range-bound

One thing I constantly tell myself is that I should stay open to change. Maybe this really was a successful retest. If so, market technicals will recover and we will act accordingly.

Until then, long-term trend is down, mid-term trend is down, and short-trend is down.

S&P 500 - Feb 23, 2009

charts courtesy of stockcharts.com

This has become a very kind and generous market. Overnight, some news release appear about another great plan to help out a great bank or two. Index gaps up, and peters out in no time – giving us all an opportunity to re-short early in the day.

When making money in the market becomes easy, I feel somewhat uneasy.

I expected a bounce for some kind of a small degree 4th wave. As it happened, Friday’s meager bounce was very likely the 4th wave. But we got another chance to re-enter and I've got no complaints

This was the 6th day of selling in row.

Volume was above average, but less than Friday. Breadth was poor.

Let’s look at the 60-minute count

For wave measurement, it does not matter where I place minor wave 2. That is because late January peak and early February peak are at the same level. A simple wave 3 = wave 1 measurement will give us the 740 are, which was hit today.

Wave measurements are theoretical, and should be used as guideline.

All we have to remember is that the trend is down, and price is right now in a very ugly down-sloping channel.

Nas100 has also joined the downtrend party.

Things are lining up for a good low that may launch a sustainable rally. We need high volume selling, and a good rinsing of the happy crowd. After we get that, I should be on the lookout for first signs of an uptrend: higher highs, higher lows. I think we are still some ways from that, but I can start planning.

Short-term breadth is very oversold, and I still think a bounce should happen any time, but market does not care what I think, and price is all that matters.

To the downside we have 734 and 717 as pivots, to the upside, 750 and 768. If bulls can do something to get a rally going, 800-810 look like a very formidable resistance.

Again: long term trend is down, mid-term trend is down, short-term trend is down.

APOL, ESI, DV - Feb 22, 2009

charts courtesy of stockcharts.com

In a post of February 7, I wrote about some educational stocks and the attention and inflow of money they had been enjoying. Let’s look at them and see what’s happened since then.

The first one of the three to peak and change its mid-term trend was APOL

So, the third gap on the way up is now filled. Stock is now in a mid-term downtrend. It is getting oversold, but not there yet. Sometimes, after a good run, a stock does not get fully oversold, as hopeful souls, who had regretted on missing the party, step in after the initial drop. I would keep an eye on Stochastics and the down sloping channel for further clues.

Notice the rally on expiration day in APOL. Probably short covering and a squeeze of late shorts. The mid-term trend is down, and until that changes, every rally, regardless of its intensity, is suspect

While APOL took its time to chop its way down a bit, ESI wasted no time to gap down on heavy volume.

Notice the similar pattern that I have noted on the chart. The first drop was great because it proved me right and gave me the opportunity of taking some profit. The second drop was just fantastic as it was followed by a similar pattern and gave the opportunity of taking a massive stance against the stock, the third drop was just like a dream.

Again, we have a sharp rise. We may get the same pattern, but I will be careful. By now, everybody and their cousin should know about the cracks in these stocks, and things may get volatile.

See how oversold it got on this 60-minute chart

Also notice all those black volume bars on Friday. I think some market makers had a lot of fun squeezing late shorts who thought they had a sure win after such an spectacular selloff.

I have not decided on my next move yet, I want to see how it behaves next week to decide if Friday rise is another setup or a genuine start to fresh buying.

Regardless, the mid-term trend is now down.

There is a lot of similarity between momentum make up of ESI daily and APOL daily. I am not going to read much into it now, just something to pay attention to as I observe price behaviour next week.

DV did not give anything spectacular. It just sold down to the bottom of its range.

DV is still in its mid-term uptrend. It has been the weakest of the three and still has kept on living an uptrend.

All three stocks are in their long-term uptrends. So this might be a correction and nothing more. Let's see how late shorts play it out next week and determine how broken ESI and APOL are, and if DV will follow suit and break or not.

S&P 500, Feb 21, 2009

charts courtesy of stockcharts.com

S&P capped the week with a 5th consecutive day of decline. Volume rose and breadth was poor. Before the turn in the afternoon, breadth was horrendous. Around 1:00 pm, index stabilized and attempted a rally. The rest of the action improved daily breadth measures a little.

Not looking good, eh?

Index is oversold on the daily frame, and may get a bounce any time. But, as I have said before, oversold in a bear can lead to more oversold. On the other hand, one never knows when market masters decide to announce something, or deploy the loose electronic billions that would start a short squeeze. That is the thing with market masters. They scare us a couple of times and we remember. They bank on our fears to deter us from getting too unruly.

If there is going to be a bounce, now is a really time, it will give the appearance of a successful retest.

The whole thing has been too clean, and methodical. Like a surgeon would cut an organ here and an organ there. Also, volatility traders have been very complacent through the selling so far. Where is the panic to put the bulls out of their misery? We had some flashes of accelerated selling Friday afternoon, the spike in volume was very welcome, but it takes more than that to flush the system free of misplaced hopes and unrealistic dreams.

I think I can relegate the alternate count of Primary A, Major A, Major B to the drawer of my desk for now and bring the other count we have been following into sharper focus. Just remember, that that alternate count is still a technical possibility.

This is how the preferred count looks like now.

We are either finished with one wave set of 5, or are one spike away. That is if the waves do not extend. So, watch the oscillators for momentum divergence, and watch the price and MAs for directional change. And, whatever your time frame of trade is, try to align your actions with the trend of one frame larger. I say this because, if this count is right, it implies that we are not range-bound anymore, and it will be very difficult to trade against a trend that gathers momentum.

Keep an eye on VIX. It’s been contracting in its range for 2.5 months. If it tops and rolls over, especially if it falls below the support shelf around 38, there will be a high probability for a rally to kick in, and some short squeeze fuel for some fireworks. If it spikes up, indexes may break below their widely watched November lows and it may get nasty in very short order.

Food for Thought: Things are a bit wacky around the world of banking and finance. The man with the plan, who proved to be just a nobody with no plan, had better come up with something over the weekend. This market is on very shaky ground and, by the methodical selling I saw this week, people seem to be checking out of this horror show.

There, I used methodical instead of orderly, my command of the language is expanding.

The intraday message I posted yesterday turned out to be very good at timing the end of the intraday drop of the index – spot on, actually. But that’s just that – a good daily timing. Whether we bounce a relief rally or not is anybody’s guess. I just did not feel like staying short after 5 days of selling and with icons of banking reduced to nothing but dead weights on tax payer’s shoulders.

But then, for a weekend hack of an announcement to arrest the damage, the characters in charge need credibility, and they have destroyed a lot of that. Market seems to be more and more unfazed by words uttered by this character in suit or the other – déjà vu – been there, done that, what else is new?

It is time for action that market likes, and, above all, market likes certainty – how about not monkeying around with stupid rumors and promises that cannot be delivered.

And if the best the officials can come up with is something like the man with the plan of a few days ago, may God help the bulls, and, by osmosis, the rest of us down the road, for nothing good shall come out of a market with a one-way ticket to the depths of hell.

We are at the mercy of a band of fools. All we can do is fool on, and be in sync – foolish harmony in a foolish world.

Have a nice weekend!

S&P 500 - Feb 20, 2009

I covered most of my short positions into that down spike. The rest will go on stop. I may be too soon and there may be another spike down, or more. I just wanted to start my weekend early.

S&P 500 - Feb 19, 2009

charts courtesy of stockcharts.com

More of the same: controlled selling off a tight tape.

Very, very orderly: man I love that line from some bubble head of the bubble vision. I remember it from the dot.com crash days of 2000. All these companies that were supposed to grow business 100% or so, year over year for so many years were imploding, and the bubble vision guy off the floor would utter some drivel like there is selling but it is very orderly.

OK, I'll try to not use it too, too often.

We expected a bounce, markets tried at the open and failed and kept bleeding slowly into the close.

In my books, until we see some signs of capitulation, this leg is not over, but some sort of relief rally should materialize soon. So, I will be very careful with my short positions. I revise my game plan at night, decide what I would do at different price levels or technical situations, and then let the market do its thing.

This is a 60-minute chart of the index. I am still keeping the alternate count. It has become very unlikely, but technically possible. I have also computed some levels for the alternate count. The main count needs more waves down, and should exceed November low, or at least match the November low.

Dow is already at November low

There are some positive divergence being built. We just need some bulls with their backbones still intact to give us a rally.

Regardless, I play the charts, and so far they have kept me on the right side of things more often. I just think I need to be cautious and devise my day plan with tighter stops.

Volume was above average again. Breadth was poor.

But, hey, many of bargains of yesterday are cheaper today. That should make some value-seeking bulls excited.

Yesterday I said:

Market is oversold, but in a downtrend in a bear, sometimes, if not often, a lot of damage is done while oversold drags on. Stochastics are dipping below 20. In the DOW, the Stochastics have already got to 10. Had this been a single stock, I would call for an accelerated selling and capitulation to new lows to end this down leg.

Guess what. Market did what market should. It carried out its course of action in an orderly manner

I also said:

DOW is so close to November low, and this is an expiration week. In this market, billions can all of a sudden be summoned to the future markets to buy DOW or S&P futures – there are many loose billions floating the electronic banking systems nowadays. I will not be surprised if an all-out attempt is made to drag the index up into the gap that it opened on November 17.

The billions were a no show today. And Dow is till virtually where it was, and there still is a chance for the bulls to get a bounce and claim a successful retest.

My friend Bill Zimmer of prudenttrader.com quoted Bernard Baruch in his post today:

“The purpose of the stock market is to make fools of as many men as possible!”

How true! I think we have so far done a reasonable job of navigating this market. We have done it by paying attention to trusted technical measurs, and tuning out talking heads of financial media, bull, or bear.

But, there never is a time to be complacent.

Long term trend is down. Mid-term trend is down. Short-term trend is down. Resistance is 790. Support 768, and 750. And some positive divergences are building up.

S&P 500 - Feb 19, 2009

S&P is at 782, DOW 7400+, so close to November low. Bulls need to do something other than the rosary beeds.

I will be out of office and may not do another intraday post. It should be an easy play from here.

ESI, APOL - Online College Stocks - Feb 19, 2009

I talked about some educational stocks in a post of February 6.

Those who bought educational stocks so far above long term MA, thinking that these are going up forever because people seek multiple online masters degree programs in recession, needed an education.

APOL has been giving them a steady education for some time. Today, ESI gave them a crash 1/2-hour course.

My best hits this year by far as I was patiently short.

I will try to do a full post either later today or for the weekend.

Congrats to those who were short.

S&P 500 - Feb 18, 2009

charts courtesy of stockcharts.com

On the surface market did not do much. It chopped up and down a tight range and closed flat.

Looking a bit deeper, volume was above average and breadth was poor.

There are serious signs of breadth deterioration here. Yet, index refused to go anywhere.

Market is oversold, but in a downtrend in a bear, sometimes, if not often, a lot of damage is done while oversold drags on. Stochastics are dipping below 20. In the DOW, the Stochastics have already got to 10. Had this been a single stock, I would call for an accelerated selling and capitulation to new lows to end this down leg. But this is not a single stock, this is the US Equity market.

DOW is so close to November low, and this is an expiration week. In this market, billions can all of a sudden be summoned to the future markets to buy DOW or S&P futures – there are many loose billions floating the electronic banking systems nowadays. I will not be surprised if an all-out attempt is made to drag the index up into the gap that it opened on November 17.

Bulls need something to hang their shredded coat and at least claim a successful retest, and say things like an ongoing basing period . On the other hand, an appearance of a successful retest may start a fire, and some fear in the shorters’ camp.

So, a bounce may happen any moment, and the quality of that bounce may tell us what to expect.

Since the DOW has been leading the diving party, let’s take a look at it

So close to a violation of the November low. I am looking for either an intermediate C to end major B of Primary B, or a minor 3 of intermediate 4 of Primary A.

Looking at the structure of the chart above, I see a mature wave structure hitting the lower boundary of the falling wedge/channel below 7600. Coupled with oversold readings on this frame, the expiration week coming to its close, and three consecutive down days that we’ve so far had, I think the situation is ripe to squeeze a bounce.

I will be very careful with my short-term trading short positions.

To illustrate how dire the technical situation is for the bulls, let’s take a look at a somewhat bigger picture

Below the 2002-2003 lows and the technical gates will open, all the way down to the heart of darkness. If a bull is going to kick and scream and put a fight for his life, he should do it now. They need a bounce - bubble vision needs to claim a successful retest.

Again, I will be very careful with my short-term trading short positions.

S&P 500 - Feb 17, 2009

charts courtesy of stockcharts.com

There was no bullishness in the price action today. Index gapped, and stayed gapped. It did not do much after the gap as the trading range was tight. The close came at the lowest point of the day
Volume came above average, and breadth was very poor.

There really isn’t much to say. This was not a pretty day for the market. After the initial gap, S&P stayed within a tight range. This is one of those situations where some talking head of some financial tube outlet would say: there was selling but it was orderly, whatever the hell that might mean. Maybe it means market did not limit down like it did in Russia. So all those with potfolios bleeding red should be glad that it was an orderly haemorrhage.

Look at the 5-minute chart above, around 3:30 pm there was an attempt to squeeze the shorts, the attempt lasted only 1.5 bars, 7 minutes or so, and it was quashed by emboldened sellers. Do you think it was genuine buying by value seekers based on sound, reliable earning forecasts, and a realistic expectation for improving fundamentals across the board?

The DOW is the leader of the diving party

A whisker away from the November low. If we get a bounce from here, bulls may say that the retest of the bottomong process was successful. Then they can start the rumor mill, or maybe the man finds a plan. I don't know why a true bull market needs off-hour rumors, or a man with a plan to go higher.

But two heavy distributions in a week or so may get a good bounce soon, and we'll see how the bounce, when it comes, plays out.

Nas100 sold off as well.

It is still in a mid-term uptrend, and I think it is very important to pay attention as see if it can hold off additional selling or not.

I am still operating the two counts I have been discussing here numerous times

With the preferred count counting the January peak as intermediate 4. Alternate count counts January peak as major A.

The alternate count of Primary A, Major A, and the yet-to-come major B is very much alive. Yes, today’s selling was hard, but C wave selling can be hard and we may be in intermediate C of major B.

I mention this so that we do not become complacent and join the giddy cheerleaders of new lows without having safety breaks in place. Joining any giddy crowd can have less than desirable consequences.

Back in January 14, I presented this sideways count as a way for the market to cream both bulls and bears

This is how it looks now

It has become less likely, especially since the DOW has been very weak, but it still is viable. This is a market charged with extreme emotions, and mired with interventions, a character change can come out of nowhere - like a manic depressive

Support comes at 789, and then the low of 2002 at 768, resistance is 800-820 area that has been defended by bulls these past few days, and then the 850 area which we know so well.

In closing, let’s take a look at equity put/call ratio

Rising but not at extremes yet. There is still complacency out there, or as the talking head of the bubble vision might say: it is all very orderly