Hot Potato

The intraday grind of Sept 22, 2009 demonstrates indecision in the market. Many are saying the market is due for a correction. This is all talk, until the tape confirms it. The bears have been ineffective (even for mean reversion strategies) and this feels like a surging bull market with blinders on, given almost every 1/2 percent drop finds equity buyers.

So, the game of hot potato continues, as the hottest asset class this year (equities) have recovered significantly (> 50%) from March 2009's low.

Telling Fibs

Rounded ESZ9 Fibs for today: 1073.50 1069.25 1067.00 1064.75 1062.75 1059.75 1056.00 1052.50

Rounded ESU9 (expires today) Fibs for today: 1074.50 1071.50 1069.50 1067.75 1066.00 1064.00 1061.00 1052.50

Fibs have been interesting intraday pivot points of support/resistance for the past few weeks.

VZ Ready and Set for a Drop to $28

Mid term bearish descending triangle. Started in August 09 around $32.50. Support shown at $32.00. Drop estimate: -$2.50 to 27.50. More likely it will find support at $28.25. Completion timeframe: Oct 2009.

Longer term bullish ascending triangle. Run 1, Mar-Apr 09. Run 2, Jul-Aug 09. Ascending resistance at $32.25 or so. Completion timeframe: Nov 2009.

Any calendar spread recommendations?

Three Day Forecast Results

In a wonderfully twisted way, my Saturday three day projection fulfilled in the ES futures prior to the market open on Monday. The ES dropped to 1032 and lingered prior to the Monday open. The SPX opened at 1035, and promptly launched to 1045. Another great example of the market fulfilling chart patterns in unexpected ways.

A 1 hour chart potential drop to SPX 1032 did not occur, but neither did my guess for a smaller 1 hour H&S. There are a handful of 5 minute chart examples showing that H&S patterns are fulfilling. This could be the start of a larger H&S fractal on everyone's mind. Many bears are feeling hurt from the last failed H&S (8/17/2009). These are baby bear steps shown on the tape.

Elliott says to me, the SPX daily has a little more room to start a wave 4 consolidation or wave 5 up again. Either way, the OPEX week bump and grind should continue.

SPX Three Day Prediction

Given the current scenario, SPX 1032 and 1035 are likely fib. S/R levels. A move up to revisit 1045 or consolidation down to 1039 could form a bearish 1 hour chart head & shoulders pattern to fulfill SPX 1032.

Full Moon.. Markets on the Prowl

Any moon traders out there? The past few days, the night-time moon has been quite bright. People make irrational decisions and become bolder in their convictions. Some of that effect can be seen in the recent plummet of the market.

The hourly SPX could be an Elliott wave 4 (consolitation), because the past three days sure look like an impulse wave 3 (due to the higher relative volume) or less likely, exhaustion wave 5 . On a multi-year daily chart, SPX could still be in an Elliott wave A (down), where 10/07 was the end of exhaustion wave 5 up. 3/09 could be the end of this larger wave A down, but given the timeframe, and failure to break the downtrend from the market peek to date, wave A down will likely continue on the weekly timeframe. This does not rule out a bull exhaustion to the 1030's, followed by a more significant correction.