TIME & PRICE ANALYSIS
EVENING UPDATE FOR DEC. 4 - I have been thrown for a loop today. We moved out of our Dow futures trade this morning for a nice profit and reversed the position to short. With my gap/reversal system, odds were about 90% on the gap being filled within two hours. This is one of those 10% times that it did not. The advance decline line with this move up is not that strong, especially on the Nasdaq, which is the leader. There are some-short term cycles due to bottom Monday into Tuesday, m recommend is that we hold this position over into the first of the week and exit there. Whether or not the gap is filled we should still get a better price there. The projected low looks to be in the 1166 area on the futures which should be tested Monday. More on this in the weekend update.
AM UPDATE - Traders should have exited the Dow Jones contract with anywhere from a $600-$750 per contract profit from yesterday evening. Now I want you to SHORT the December s & P futures contract, with a buy to cover at 1154.50, or you can simply trail a stop behind on this trade. The projected low is 1141, so odds favor at least a run towards that number. Get out all of it you can. Check in before the close for another update. I expect a rally, then the rally to fade, with a flat close. DOWN on Monday, exhaustion move selling on Tuesday. We will look to re-enetr longs there.
MORNING UPDATE FOR DEC. 4
As expected, futures up this morning. We have about a 60 point profit on our Dow Jones futures contract,or $600 per contract. I want you to SELL this contract here on Globex if you can . Check back in at 9:00 AM this morning for another pre-opening update.
NIGHTLY UPDATE FOR DEC. 3, DEC. 4 TRADE DATE
Today went down with a thump and then a bang. Since the forecast high on the 24th, the Dow has fallen nearly 500 points. It really was just a matter of time before technicals caught up with this market. And it ain't over yet. I am now getting a price projection down to 8370, so odds favor we will make a drop to 8160 level before this decline is over with in January. The a strong rally that may or may not make new highs into Spring. Then devastation AGAIN into next summer. Those of you who are skeptics will just have to sit back and watch.
What we have seen is a classic double top formation, which, when it fails to penetrate the previous high AND POWER THROUGH after a long decline, the next stop should be a re-test of the lows. An intermediate degree wave four completed into October, we have now likely seen wave 5, and area in the process of an A-B-C decline as I speak. The B wave into Spring, as I said, may or may not make new highs. My GUESS is that it MIGHT, at least on the dow. But EVEN GREATER divergences will exist when that time comes, and what follows won't be pretty. Investors should just stand aside and await a re-test low next summer.
I have to tell you I got as about as close as I have ever come in calling for a top on the 23rd. Most of the other major indexes all hit highs in this time frame. The Nikkei has fallen apart since this forecast, but should be in for a decent bounce soon.
I am having trouble getting the CBOE numbers tonight so I won't be able to post the put/call $$ ratio for tomorrow, I can get the volume numbers but not the prices for the individual options, i will publish the figures in the morning.
MACD DAILY SLOPE - DOWN
WEEKLY MACD SLOPE - DOWN
OVERBOUGHT/OVERSOLD INDICATOR - .32(MILD/BULLISH)
TOMORROW'S PROJECTED RANGE FOR THE DEC. S & P FUTURES CONTRACT: HIGH - 1163 HIGH - 1141 LOW
The evening update today I advised buying a 1/2 position in DOW JONES futures. Futures traders looking for a long trade should be in that contract at 8875. We should, short-term, be ready for a rally attempt, possibly as early as tomorrow morning. I made this recommendation based upon the fact that we may not see a low until the 7th, where we will look to scale in another position. However, if we rally early in the morning we may look to sell this contract for a quick profit, and look to re-enter in the morning. The put/call volume a still suggests we may move on down to the next level, but there is short-term support right under the current level, so we should see at least a decent bounce in the morning tomorrow. I am going to post a special update BEFORE 8:30 AM, because of the report coming out, we may look to sell this position prior to that if we can see a nice profit. There may even be a good opportunity for a gap play. Check in the morning.
Good Luck, Good Trading,
EVENING UPDATE FOR DEC. 3
I am recommending that futures traders take a 1/2 position in the Dec. DOW JONES futures contract. Not the S & P's. We will move in another 1/2 position if we do in fact dip down into the 8th, where the next set of hourly lows should come. OEX traders who are well-financed should take a 1/2 position in a higher-dollar option to closely simulate futures trading. Under-financed OEX traders should wait until I give you the nod to jump in, most likely it will be on our second scale-in on our futures position if it occurs. UNLESS I GIVE YOU THE NOD, and unless you have the buying power for a $12-$15 option, then SIT OUT until I say so. Better safe than sorry.
MORNING UPPATE FOR DEC. 3
Dramatic turnaround from last night has taken place. What happens here is not perfectly clear. USUALLY, the low seen on GLOBEX is tested at some point during the day. The call buyers are in force, if anything this tells me whatever initial rally we get will likely fail. But we are getting closer to a short-term bottom if we haven't already put one in. The best LONG trade would come with a close near the lows for the day, my overbought/oversold indicator would signal a small buy trade if this would occur. Traders should wait for the signal to go long, which could occur anytime over the next day or two. If we continue higher without another move down then we will look to get short on the next rally up, which will be an even better opportunity. Check in 15-20 minutes before the close this evening, I may have an update for you if we get a strong close to the downside.
NIGHTLY UPDATE FOR DEC. 2, DEC. 3 TRADE DATE
Today's action was totally unexpected. The DOW broke through 9,000 support level and continued lower before reversing late in the day. Checking GLOBEX action tonight, it looks to me like my second scenerio is the one that is going to take place, a LOW on the 4th-7th. Put holders will feel really good in the morning, as will any futures traders on the short side. We are down nearly 13 points in GLOBEX trading, which should break us through today's intraday low on the dow. This is wave three action. Today was a B wave rally, C waves can be devastating. We may move on down to previous fourth wave support, my target of 1118 futures. THAT would be a good spot to possibly enter on the long side. I will cover the balance of my shorts in that area if hit over the next few days. The next conjunction of hourly cycle bottoms looks like they might occur on the 7th, stay tuned.
I told you last week that, at first, this decline would start out SLOWLY, gaining momentum as we went along. Also I warned of the technical divergences that were occuring. And it is finally showing up in the market, as I knew it soon would. The high forecast for Nov. 23 so far has been it, at least for the Dow Jones. Was anybody listening when I said "be aggressive on the short side"? Longs were HIGH-RISK after Nov. 23, and still are.
The GOOD NEWS for longs is that we are getting closer to a short-term low. If you are considering the long side, scale in SLOWLY, and use only a small portion of capital. Reserve your most $$$ for the short-side.
I will cover EVERYTHING at 1118-1120 futures, but only if it occurs by the 4th-7th. I may even consider one or two contracts on the long side. I would like to see us close near the lows of the day, with a -800 or higher closing TICK reading before being too excited about any longs. The scary thing is the put/call $$ ratio actually moved HIGHER tonight, along with increased call volume. Which means NO FEAR. The same thing we saw in mid-July. Also, again we had a day of 50 new lows, another dangerous sign.
The Nikkei has broken through an important support level tonight. Hope some of you took my advice and went short this index. PUT options begin with the symbol JPN, but too late for now. Wait for a rally first.
MACD DAILY SLOPE - DOWN
WEEKLY MACD SLOPE - FLAT
PUT/CALL $$ RATIO 1.61/1 IN FAVOR OF CALLS (NEUTRAL)
OVERBOUGHT/OVERSOLD INDICATOR - .61(MILD/BEARISH)
TOMORROW'S PROJECTED RANGE FOR THE DEC. S & P FUTURES CONTRACT: HIGH - 1170 HIGH - 1149 LOW
No new trades, we may be setting up for a small long trade over the next day or two. Check back in the morning, I would like to finish seeing tonight's GLOBEX trading first. Futures traders who took the gap trade this morning should have exited on gap fill with approx. a $1,500 per-contract profit. OPTIONS TRADERS be careful with these gap trades for now. They work best with options 8 days prior to expiration, why I have no clue, but back-testing has shown this.
Gold stocks took another dip today as we get closer to our cycle low date of Dec. 15 for gold. Continue holding ASA, we will be adding to this position. I want to see a confirmation through some indicators before adding to this position.
Thanks for checking in. Check back in the morning, I will post another update and some morning comments.
good Luck, Good Trading
NIGHTLY UPDATE FOR DEC. 1, DEC. 2 TRADE DATE
The market tested 9,000 today and turned on a dime. My morning recommendation called for this, so traders should have done some covering. I myself covered 1/2 my shorts at 1154.50 today, for a 15 point profit per contract. I will look to add to these in the morning on any continued rally, especially on any rally into the 4th, which I believe we may see the next high. I can FEEL the bullishness after the rally today. A dramatic reversal, but again on bad technicals. The DOW, SPX, and NASDAQ all moved higher, but the a/d line closed to the down side. The number of new lows numbered over 50 today at the close, another solid warning sign. My proprietary systems are all mixed tonight. I use a short-term directional model, a reversal model, a longer-term fundamental model, and my cyclic model. The short-term model turned to SELL today with the technicals being what they were. The reversal model turned to BUY today with the move above 1170 on the futures. The long-term model, which is designed to forecast price action for several months ahead, is mildly bullish, down from VERY bullish in early September. The cycle model says lower prices ahead.
I see two possible paths over the coming days. The first, which I favor, is a rally into the 4th-7th to re-test the highs. There are several shorter-term cyclic components that point to this. The 13 trading-day cycle likely made a bottom today and is projected bullish until Dec. 7. There is an 8 trading day cycle that bottomed last Thursday, it also is projected bullish into the 4th-7th. HOWEVER, there is also a 21 trading day cycle that is 17 days since its prior bottom, projected to bottom Dec. 4-7. The down pressure from the 21 day cycle should be balanced out by the shorter-term components. The intermediate-term components have turned down. The shorter the time frame, the more unreliable these cycles are. Also the harmonic clusters that formed the June 4-6th highs earlier this year should also form to produce a high on the 7th.The SECOND scenerio is we rally strong early tomorrow, completing a B wave rally from the lows today, followed by declining prices into the 7th. Tough call right now.
After reviewing over my charts and indicators last night for several hours, I have come to the conclusion that we are likely to test the 8160 dow area before this cycle low is in. And we are likely to re-test the October lows before all is said and done. Everything I have and see points to this. My fundamental model could turn negative anytime here. The same model turned bearish only a few days after the July highs, and turned VERY BULLISH in mid-September. The number of new lows is on the increase, a dangerous sign. My feeling is that any rally we get this time will contain within it even MORE bearish divergences. And they will INCREASE as the weeks go by. My feeling also is that the Dow has seen it's high, although I could not rule out a move to the 9600 dow area. A move to there with the same glaring divergences I am seeing now, and a crash-type decline could unfold.
MACD DAILY SLOPE - DOWN
WEEKLY MACD SLOPE - UP
PUT/CALL $$ RATIO 1.51/1 IN FAVOR OF CALLS (NEUTRAL)
OVERBOUGHT/OVERSOLD INDICATOR - .81(BEARISH)
TOMORROW'S PROJECTED RANGE FOR THE DEC. S & P FUTURES CONTRACT: HIGH - 1189 HIGH - 1162 LOW
TOMORROW'S PROJECTED RANGE FOR OEX - HIGH/589 - LOW/576
Todays projected high and low projected a wide range from low to high. The low was made first, as was expected. Tomorrow the pattern should see a HIGH made first. The projected HIGH is 1189. Day traders could look to sell into that area for a day trade. Use your technicals to confirm a high may be in. Position traders should use the area, as I will, to put back on some shorts. Any GAPS DOWN before the open should be bought, cover on gap fill. OEX traders I will be testing my gap/reversal system 8 trading days before expiration. So be on the lookout for this. SPY traders remain short. We will continue with this position over the coming weeks.
The BEST MOVE for those traders looking for some action may be just to stand aside for now. If we see another day down it should provide a good long entry. At today's close risk is too high. A rally into the 7th into overbought territory and will will again be aggressive on the short side. Thanks for checking in.
Good Luck, Good Trading,
MORNING UPDATE FOR DEC. 1
Nothing new to add, still looking for a low to be made either today or tomorrow. Traders should do at least some PARTIAL covering on a test of dow 9,000, which is where this first decline will likely end. I see a rally into the 7th which we will look to get short into.
NIGHTLY UPDATE FOR NOV. 30, DEC. 1 TRADE DATE
Two words tonight. HARMONIC CONVERGENCE. The same harmonics that were present on August 31-September 1 were in force again today. Most were caught off-guard today by this move, I have to admit at being a bit surprised myself, even though I knew we were due. I made the comments that this move down, once it began, would be SHARP and QUICK. Traders were advised to be aggressive on the short side, with today's action, you can see why. The area to focus on becomes the 8850-9000 area on the dow over the coming days. My figuring is we will see a low in that area, followed by another move up, which again should be followed by more selling. This will keep going into next year. The long-side is higher-risk right now, any trades that we take there will be kept small and quick. The Dec. 4-7 dates now become the focus of our attention. I had been focusing on the 30th as a possible low because of the clusters coming from lows that were present here. IF THAT IS THE CASE we may see a short-term low as soon as tomorrow, followed by a rally into the 4th-7th. Daily stochastics allow for another day or two of selling before moving into oversold territory, at which point it would be wise to close out shorts and re-enter on a rally. That is my best FEEL for what is going on here.
I want to let it be known here and now there is a very REAL possibility that we test the 8160 area, possibly the 7400 area before all is said and done. I know it seems far-fetched right now. But as I said before, the market will seem as though it will never stop going down before it is over with. But I don't SEE a low re-test until sometime next year, just by the fact that the market is INTERNALLY better shape than it was in last July. But, as I mentioned before, ANYTHING GOES HERE. We could be right back at 7400 by early January. The thing that makes this scenerio possible is the fact that I can see 5 waves up for the DOW, with the move down into October being wave four of a larger degree, the move from October to Nov. 23 as wave 5 completion. If this is the case, then an A-B-C decline to test the lows, or NEW LOWS are possible. What happens into January may be only wave A of this decline, as I am speculating it might be. What could follow would be a B wave rally into spring, then a devastating C wave decline into late summer. It is really to hard or too early to tell right now. I will get a better read at the close of trading on Friday. If we finish this week strongly lower, then I would have to give 8160 the benefit of the doubt, even 7400. If this week's close is only modestly lower, then we may stop at 8760, my initial target. We'll just have to wait and see.
Gold and gold stocks took a NICE beating today. As expected, the cycle low is due around December 15. We are 50% long ASA mining and we will look to add to that position in the coming weeks.
MACD DAILY SLOPE - DOWN
WEEKLY MACD SLOPE - DOWN
PUT/CALL $$ RATIO 1.83/1 IN FAVOR OF CALLS (MILD/BEARISH)
OVERBOUGHT/OVERSOLD INDICATOR - .20(SHORT TERM/BULLISH)
TOMORROW'S PROJECTED RANGE FOR THE DEC. S & P FUTURES CONTRACT: HIGH - 1171 HIGH - 1146 LOW
TOMORROW'S PROJECTED RANGE FOR OEX - HIGH/580 - LOW/570
Nothing new to add. Traders who have been aggressive were rewarded today, futures traders should now be at a profit. Look for a test of the dow 8850-9000 over the next two days to start doing some covering. Remember, the minimum price on the December futures contract I am looking for is the 1118 area, but that may not be seen until the next phase of this decline. So it is best to move out then re-position on a rally. OEX TRADERS should also look to the same area to sell put positions. SPY TRADERS continue to hold shorts.
The pattern for tomorrow should be an early morning sell-off, followed by a late-day rally. A quick move down to 9000 or below and out-of-the money put holder might look to exit positions there. We will put them back on on a move back up into Dec. 4-7 on a rally. The projected low for tomorrow is 1146. Not quite sure if we can get it down that low, but if so, look to start covering at least some shorts. Position traders who have the staying power might look to just hold out for 1118-1120 area, but be aware that you might have to sit through another rally before you get it, although we certainly COULD get down there over the next day or so.
Day traders should sell any gap-up opening tomorrow morning. In Globex trading we are looking to open lower, so odds are there won't be a trade there. Traders looking for a scalp buy trade should use their technicals on an hourly chart to confirm. Look for a divergence on MACD along with a lower low to be the first confirmation, along with a move into the projected low might be a good spot to enter longs for a day trade. The best spot for traders looking to ride the move back up may get their chance Wednesday morning. I need to see more selling into our target range first. More on this tomorrow. Any updates/changes/comments will be posted tomorrow at 9AM EST. Thanks for checking in.
Good Luck, Good Trading,
MORNING UPDATE FOR NOV. 30
Looks like the reversal may be at hand. Most of the world indexes have reversed in overnight trading, which should keep weighing on the markets over the next few weeks. Traders BE AGGRESSIVE in put buying and futures selling here.
Not a formal recommendation, but the futures are lloking to gap down to the 1189.00 area, near the projected low. Nimble traders might look to BUY this and look to get a couple of points out of it. Since there is so much risk on the upside, however, I myself will PASS on this trade. This gap may or may not get filled for a while. That's the risk. Nothing else to add. Traders are reminded to watch for the closing TRIN value over 1.20 I referred to in last night's commentary.
WEEKLY COMMENTARY FOR NOV. 30
First a few numbers to crunch. The NYSE specialists are accounting for over 50% of the short volume on the NYSE. The 10-day reading of TRIN is now at its most overbought level in over a year. The put to call $$ ratio shows the market in its most overbought condition in nearly two years. The transports are still a long way off from their highs earlier this year, as well as the value line index. The advance decline line topped out in April and, despite the rally we have seen, is nowhere near its high. THESE are CLEAR divergences and warning signs. If they were occuring anytime prior to Nov. 23 I would have said NO GO, this market is MOVING HIGHER. I said that all the way through October when most advisories were calling for a crash into October 28, something that never materialized. What I said then was we were to make a run to at least the 1125 are on the December futures contract, sometime before December 1. We got that and then some. IT IS TIME to be bearish now. My analysis over the weekend gives me an exact figure I can give you to look for before January 19 - DOW 8760. Even if the move to the upside is still not complete, we will likely see this area before the next 6 weeks are over. The market MUST open higher Monday morning and continue its ascent, any down move and a break of the weekly trendline on the dow has taken place. A key indicator I am watching is the TRIN level. Usually, after a long rally and a 10-day TRIN at this overbought level, when you see a CLOSING TRIN over 1.20 or higher, this is a very good signal that the correction has begun. Keep a close eye on this.
The NIKKEI is also due for a cyclical high in this timeframe. 15,200 was the cycle target for the upside that I projected in late September. Traders of the Nekkei futures might look for a place to start shorting. The down-cycle target for that index is 14,200-14,400 area , due sometime before January 19.
Looking at the charts, the most important trendline resistance is at the 1220 area on the December futures contract. Traders who don't currently have shorts should look to this area as a low risk entry point. Or simply await a break of the weekly downtrendline in the Dow industrials. What we are about to experience is a decline very similiar to the one seen In August of 1997. VIX has come down to a very low level, meaning put buyers, if they turn out to be correct, will see a sharp spike in premiums over the next few weeks, a fantastic opportunity here.
The rally from the 1118 level still looks to have another move up before completion, so I cannot rule out a move up early this week towards the 1200 area, although not required. I cannot absolutely rule out a run to 9600 dow, but I am reserving this area for a cycle high projection next Spring. But ANYTHING GOES here. My best recommendation is for traders to be on the short side, buy puts, short futures, short the Nikkei, on any rallies. Again, the minimum downside I expect is 1118 on the SPX. A VERY good liklihood we will see the gap at 1097 filled before all is said and done. Just as this market seems to not want to turn down here now, it will seem in January as though it will not want to turn up.
No change on my gold analysis. Traders/investors should be on the BUY side here, looking to add to positions on any decline into December 15. What follows should be a strong rally into next year. Aggressive traders should look into DROOY, traded at 3 1/32 at the close Friday. This stock DOUBLED between the last cyclic low in August and the high in early October, and I am expecting similiar action over the next few months.
MACD DAILY SLOPE - FLAT
WEEKLY MACD SLOPE - UP
PUT/CALL $$ RATIO 2.76/1 IN FAVOR OF CALLS (BEARISH)
OVERBOUGHT/OVERSOLD INDICATOR - .68(NEUTRAL)
TOMORROW'S PROJECTED RANGE FOR THE DEC. S & P FUTURES CONTRACT: HIGH - 1199 HIGH - 1190 LOW
TOMORROW'S PROJECTED RANGE FOR OEX - HIGH/592 - LOW/587
The Sentiment Index I constructed last week told us to look for a continued rise in the market. 8 traders, including myself, predicted lower prices. But the market had something else to say. The readings I am getting from traders tonight seem to be neutral to bullish. I would like to get a few more responses before I post this, any traders who wish to participate just e-mail me your prediction for the close of trading this Friday on either the OEX or SPX cash indexes. I would much appreciate.
Trading recommends remain the same. Maintain shorts here. I am personally short 4 S & P contracts at an average price of 1170, looking to add one more position at the 1204-1220 area on a run up to that level. Again, 1118 is the target. Put options are cheap right now, aggressive traders should be adding to positions on these as well. Stock traders continue holding shorts in SPY, and longs in ASA mining. Check in at 9 AM for any update that I might add then. Thanks for checking in.
Good Luck, Good Trading,