Monday, May 18, 2009

Tues/Wed should be key for a reversal

Sorry for not putting up a post for Friday. I took off a little early to do some camping with my sons, so I decided to just pick it up today. Well, Friday had some volatility in the morning, but the rest of the day was spent to the downside. I guess there were more calls that needed to expire worthless than puts ;-). Buyers came in strong in the 876 zone, which was my initial downside target for the completion of this first wave a. Although today's numbers look great on paper, the reality is that not much happened outside of the first hour and the last 15 minutes. It was definitely not the impulsive moves the bulls are used to pulling. We ended the day right at the 61.8% retracment level. Watch the hourly sma for the first sign that our wave c has kicked in. Target for wave c is the 790-810 zone. It should be our first real impulsive move to the downside since the low was put in at the beginning of March. My plan for tomorrow includes adding to my QID position, buying FAZ, selling June QID puts, buying july aapl 110, gs 115, xlf 12, iwm 46, and spy 86 puts. I'll be buying half my position in the first hour tomorrow and the 2nd half on a reversal signal or near the end of the day.


  1. Hey Rich, thanks for your analysis. You're going against the tide with this reading, but I'm not saying you are wrong. I will watch the 60 min SMA.

    943 has intersecting lines of a Jan high and a backtest of the trendline. Do you think it might that high first?

  2. We should be heading higher in Wave 5 of C.. Those puts are gonna burn ya again!

  3. Katy - 943 absolutely could be tested (as I mentioned that a backtest of the line and the 200 daily MA was a possibility), so I'm leaving that option on the table. However, it is important to note that we just had a significant number of technicals have rolled over and we're moving into strong resistance. There is no guarantee that we'll get there (we never did in May 2001), so that is why I'm going w/ a half position now and another either late Tues or Wed depending on where we are with that target.

    Jean - certainly a possibility. I'm not sure how you count an impulsive move out of what has been going on. If this is a wave 4, then it sure 'looks' out of proportion to any wave 2 that it would be paring up with. The market should let us know what it is going to do this week though.

  4. Thanks Rich,
    This is no fun. You and Tony, my two favorite guys disagree.

    The Ichimoku looks bullish, and the US Dollar looks like it's loosing to the Euro. I know you are a better trader than I, but you might want to see what the dollar does overnight against the Euro before jumping in with a heavy short. These markets are holding hands like sweethearts. It can give you a heads up before the market opens.

  5. This comment has been removed by the author.

  6. Hi Rich,

    great analysis as always

    I humbly think we can count a wave iv without violating any rules or proportions

    I also think a more bullsih count can also be counted

    I am not predicting it, just examining posiblities and probabilities

    best regards,


  7. Bob, glad to know I'm one of your favorites ;-). Tony has never been a detailed market timer, which is why his smallest chart is a 60 min chart. It won't be the first time we had different counts, and I'm sure it won't be the last.

    Piazzi, certainly a possibility, and some others are in agreement with you. I, however, still don't like the chart, but like I said, I'm not putting spx 943 out of the picture.

  8. Rich,

    I don't like the chart either, and am counting this as a B Wave up, but the possibility, and the background environment has made me less adventurous on the short side