Where are we going?

I hope you can see the two black trendlines I've drawn over this chart, showing a wedge I alluded to in the last post. There are two magenta trendlines at the end of the wedge. It seems reasonable we may end this rally near there... This, of course, is just an educated guess, don't take it as gospel....

(Click to enlarge)

More wildness...

I sold both short positions right after the open, the price targets on the $SPX were almost met,and as you can see, quite a bit of positive divergence on hourly. So a 'bird in the hand'...

So the market may have bottomed today and not on the 2nd or 3rd as I originally thought. With this much volatility, it's hard to know for sure, but when you're close to the profits you meant to make, grab them....

Note the conventional trendline below, the market really may have turned up today, and it looks like a wedge is maybe developing, the lines are not quite parallel:

Kinda wild day on the Street

$VIX went wildly down, then up, then down again, causing mirror reactions in the markets, it ended up starting another up trend, suggesting lower prices tomorrow at the open...



$SPX closed right on the green uptrending trendline generated from the March 2009 to April 2010 move.
There is a lot of resistance under here, and lower....


Here, on the $RUT, you can see the crossover of the magenta and ascending brown trendlines marked the low price of the day and started a rally that only seemed to finish near the end....


On balance there's a lot of resistance below us from different geometries across all of the indexes. If it wasn't for the very poor volume that powered this rally from the July 1st lows, I wouldn't be sure of what the trend really is....at least looking at intraday charts, anyhow.....

Very tentatively, we might in some tortuous fashion get down to the lower ascending trendline in both the $RUT and $SPX charts, before rallying again. Those lower trendlines on both charts were struck twice and held, so I assume they will hold again...So just as the decline from the April 26th high was not a simple affair, it's a reasonable guess that this uptrend we are in on a larger scale, is going to be populated by humps up and humps down...I'm assuming we are on a hump down, at the moment....

I may have more to say later...

Analysis: Wall Street mounts campaign backlash against Democrats - Reuters

http://www.reuters.com/article/idUSTRE66Q68G20100727

All the funnier, because the Democrats, barely did anything to 'em....

A contrary view...

From Hopper:

Maybe a possible small up coming shortly.

$RUT Trendlines as of Noon Central Time.

I just went a little short...

$VIX redux..

Still playing with the $VIX chart. It is possible to draw a 'completed' wedge:

And this has important implications, as you all well know....

Look at this next chart, something is deeply suspect about this rally, maybe it really is a turkey ready to roll over and die, despite the weekly indications implying more upside is possible....well, maybe not...

WikiLeaks: shaking the foundations of U.S. policy toward Pakistan - Reuters

http://blogs.reuters.com/afghanistan/2010/07/26/wikileaks-shaking-the-foundations-of-u-s-policy-towards-pakistan/

This is how it works, we aid Pakistan, they funnel aid back to the Taliban, they kill our soldiers, we give more aid to Pakistan, and on and on...

The Market Is a Hologram Masking Deflation - Max Keiser

http://www.huffingtonpost.com/max-keiser/the-market-is-a-hologram_b_660277.html

It is my thesis that the inflation, deflation debate is flawed because we no longer have reliable price signals. The overwhelming domination of program trading on various exchanges has fundamentally changed the way prices are created and represented in the economy. All 'efficient market' theories are dead. - Max Keiser

Maybe How Things Really Are...

Possible Top here...

I decided to exit, can always reenter...just enough negatives to make me think about safety...

Another Clue from the $VIX...

It looks to me, currently at least, that as long as $VIX continues to slide just under the dashed green trendline, the $SPX will continue up. This might be the litmus test to keep us on track...

Signs of strength, Signs of caution...

Signs of Strength:

Breadth indicators have risen modestly, on a weekly basis, not overbought on this time scale:

Put/Call Ratios not extreme (although $CPCE a little more problematic than the overall ratio):


$SPX breakout:

X-Trend indicator not yet at extremes:


Signs of Caution:

Short term:
$RUT at some high trendlines, trying to break through...


Slightly worrying sentiment appeared tonight:

Longer term:

Important question, when will this wedge in the $VIX resolve bullishly, and therefore bearishly for the market? This is not yet clear, but we have to watch it closely:

Nice up day today...

Put/call ratios favor more upside, no sign of extreme sentiment...

The Death of Paper Money -

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7909432/The-Death-of-Paper-Money.html

CNBC - 15 companies with zero debt.

http://www.cnbc.com/id/38331259?slide=1

Worth a look..

9 Electronics/Network/Media companies
2 Retail clothiers or furnishings
2 Biotech
1 Resale (EBAY)
1 Transportation and Logistics (EXPD)

Current channels, $SPX and $RUT

End of day, 07/23/2010.

When There Is No Rule of Law - Ron Paul

http://www.financialsense.com/contributors/ron-paul/when-there-is-no-rule-of-law

Dr. Paul agrees well with many others of conscience pointing to the reckless use of power and it's consequences.

As a side note, I went long early today and I am seeing gains. It's a small position, as another trendline hurdle and daily Bollinger Band resistance is overhead yet. But the trend is definitely up now....

An argument for Bullishness...the Weekly $NYSI chart

Stochastics has climbed above 20, which is a buy for that indicator

Breakout may be occurring now...

Some of the trading services I subscribe too have changed their stance to Bullish this afternoon. See also Hopper's updated chart a couple of posts back. He picked up a support trendline within his system this morning...

So it could be that the big trend change I have been talking about for few days is finally happening. We'll see..For now, I'm still out of the market until things are a little more solid...

Wild behavior.

I haven't been able to reenter the market for three days..too wild. Here's the usual chart with the daily closes added in heavy black:


Valid from 10:00 Central Time.

$SPX and $RUT charts for 7/21/2010

VIX Monthly

This chart shows the higher probability of the market going higher in the intermediate term as VIX, obviously looks poised to go lower based on these indicators. The question is 'When does that market rise start'? I had thought perhaps today might be the beginning of that, but it turned out not to be the case. Short term the markets trend is hard to read right now. Sentiment is neutral, P/C ratios are slightly bearish.

One service I subscribe to is Clickcharts, and here are two of their proprietary oscillators (the top two) and their verdict:



Short term, at least, Bearish.

Chart from Hopper - updated picture

Hi Mark,

A picture is worth a 1000 words. The support levels can be seen like ripples in still water. The levels are diverging.

It would seem that yesterday we hit some support.

U.S. stocks tally modest losses as Bernanke speaks - Marketwatch

Here what just happened:

http://www.marketwatch.com/story/us-stocks-tally-modest-losses-as-bernanke-speaks-2010-07-21

U.S. Navy Successfully Uses Laser to Shoot Down Drones - CBS

http://www.cbsnews.com/8301-501465_162-20011041-501465.html

Mike Booen of Raytheon gave USA Today the money quote for the day: "The targets came in over the ocean, and it was a good day for lasers, bad day for drones."

$SPX and other indexes attempt to breakout.

The markets have declined slightly from this, done 10 minutes after the open...

My suspicion is the Bollinger Bands (intraday - 15 minute) will narrow just under the magenta trendlines shown above, for the rest of today and into tomorrow, before it 'pops' and goes higher...

VIX topping here, markets bottoming...

Quite a bit of positive divergences can be found around and about also, in the indexes...

Here's the $SPX intraday, I didn't draw in the divergence lines, I think it's so clear here they're not needed:



And here's the $RUT, same story:

Roberts on Glass-Steagall, Free Trade and the Dangers of an Evolving 'Oligarchy of Private Interests'

from the Daily Bell:

Introduction: Paul Craig Roberts is an economist and a nationally syndicated columnist for Creators Syndicate. He served as an Assistant Secretary of the Treasury in the Reagan Administration earning fame as a co-founder of Reaganomics. He is a former editor and columnist for the Wall Street Journal, Business Week, and Scripps Howard News Service. Roberts has been a critic of both Democratic and Republican administrations. He has written or co-written eight books, contributed chapters to numerous books and has published many articles in journals of scholarship. He has testified before congressional committees on 30 occasions on issues of economic policy. His writings frequently appear on OpEdNews, Antiwar.com, VDARE.com. Lew Rockwell's web site, CounterPunch, and the American Free Press.

http://thedailybell.com/1220/Paul-Craig-Roberts-on-Glass-Steagall-Free-Trade-and-the-Dangers-of-an-Evolving-Oligarchy-of-Private-Interests.html

Excerpt:

Paul Craig Roberts: During most of my life government power, the power of government bureaucracies, was excessive. The Soviet government was the epitome of unaccountable government power. In the US, government power over business and individuals grew.

Daily Bell: Is that still the case?

Paul Craig Roberts: In recent years there has been a redistribution of power in the US from government to private. The US now resembles an oligarchy of private interests. The most powerful ones are Wall Street, AIPAC, the military/security complex, the oil industry, agri-business, insurance and pharmaceuticals. These private interests control economic and foreign policy, write the legislation that Congress passes and the President signs, and have achieved the monopolization of the US economy by large-scale commercial organizations. As far as I can tell, traditional conservatives scarcely exist in the US today. They have been eliminated by the neoconservatives, essentially militarists committed to US world hegemony.

Daily Bell: That doesn't sound like a very healthy evolution.

Paul Craig Roberts: There's another. The Republican Federalist Society has succeeded in enhancing the powers of the executive over the co-equal branches of government. Many federal judges and Department of Justice appointments are drawn from the membership of the Federalist Society, thus putting in place ideologues to advance executive power. Once executive power becomes dictatorial, we will have lifetime rulers and growing conflict between the executive and private oligarchic interests.

American elections are meaningless as the vast majority of those elected are dependent, or become dependent, on the campaign contributions from the private oligarchic interests. Today government bureaucracies (Child Protective Services and police, for example) have unaccountable power over private individuals, but the power of government over organized private interests has been beaten back. Today the private interests rule the state.

Now it makes sense, the rally continues...

Now I see that the decline of the last three days was the expected failure against the large scale trendlines, but that large scale pattern is itself, possibly failing. The rally out of the 7/6/10 low has regathered at the bottom trendline channel. I have projected today's close as both the high and low for tomorrow, but that is just to show how we have risen off of the bottom trendline, showing it's still alive...




I was also quite bothered by what a low node value the rally was failing at against the long range trendlines (near the .250 node for the $SPX and .125 Node for the $RUT). The $RUT value is really early. Now I see maybe it was meant to be rejuvenated and continued, which makes perfect sense...

Update 6:50 P.M.

It's possible I was hasty in withdrawing today, the put/call ratios still favor decline and sentiment is neutral. I see the futures are still real bearish. It's possible that though the market bounced off of my old trendlines, they may not hold... There's little other evidence either way. The pattern I saw in the $RVX does look complete, but if the pattern is not what I think it is, it doesn't matter...

We'll see what happens tomorrow...

Contradictory signals.

I'm seeing put/call ratio consistent with more decline, but a candlestick on the $RVX volatility index makes me think there isn't much decline to go, so I sold my shorts for a profit and will sit on the sidelines for a bit...

Market wedge as seen in Russell 2000 implied volatility...

The target for the end of the 'E' wave, I belatedly now realize, are almost where we are now!


Based on Fibonacci calculations, you get 40.701, which is right at the current Bollinger Bands!


So Monday I'll have my finger over the 'SELL' button!

Video Game CEO cheers Digital Tyranny and Technological Enslavement

http://america20xy.com/blog6/2010/07/17/video-game-ceo-cheers-digital-tyranny-and-technological-enslavement/


This is creepy and supports my dislike and aversion to computer games.

Of course, this man is a fool. The U.S. will collapse so badly, that video game technology will be the last thing anyone has time or effort to worry about...

For a while longer I'm still bearish, but..

Although the markets are following my exponential trendlines very well, it is doing so opportunistically, in order to form the bullish wedge I see forming on many indexes. Also volume is declining along this path also, and yet I see no one mentioning this. That indicates to me a high probability of an extension of the rally (out of the March 2009 lows) happening, precisely because no one else is seeing this or talking about this. Everyone is chattering about head and shoulder patterns...




There are potential .500 node turn dates in both early September and early October, consistent with traditional Autumn low points. This is where these wedges may finish their work...

Roads to Ruin: Towns Rip Up the Pavement - Wall Street Journal

Asphalt Is Replaced By Cheaper Gravel; 'Back to Stone Age'

http://online.wsj.com/article/SB10001424052748704913304575370950363737746.html?mod=WSJ_hp_editorsPicks_3

End of day charts, $SPX and $RUT.

Can't you see a bounce coming? From the lower chart?

Want to see a 12 year future projection of the $SPX?

I don't know if this is real or not, but it might be, and I can see reasons why this guy might be right....and it might be wrong, but look at this site:

http://www.24see.info/

If he's right, his technology is well beyond mine, and I think that would make it very cool. But time will tell.
Just click on all of the 'I agree" buttons....

Re: Who is the entire world in debt to anyway?

http://peakoil.com/forums/who-is-the-entire-world-in-debt-to-anyway-t59039-15.html#p1002933

Perfectly simple, really.

Helen is the proprietor of a pub in Liverpool . She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her pub. To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. She keeps track of the drinks consumed in a ledger (thereby granting the customers loans).

Word gets around about Helen's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Helen's pub. Soon she has the largest sales volume for any pub in Liverpool .

By providing her customers freedom from immediate payment demands, Helen gets no resistance when, at regular intervals, she substantially increases her prices for beer and lager, the most consumed beverages. Consequently, Helen's gross sales volume increases massively.

A young and dynamic bank manager at the local bank recognizes that these customer debts constitute valuable future assets, and increases Helen's borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.

At the bank's headquarters, expert traders transform these customer loans into ALKIBONDS and PUKEBONDS. These securities are then bundled and traded on the international security markets. Naive investors don't really understand that the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics.

Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.

One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Helen's pub. He so informs Helen.

Helen then demands payment from her alcoholic patrons, but, being unemployed alcoholics, they cannot pay back their drinking debts. Since Helen cannot fulfill her loan obligations, she is forced into bankruptcy. The pub closes and the eleven bar staff lose their jobs.

Overnight, ALKIBONDS and PUKEBONDS drop in price by 90%. The collapsed bond asset value destroys the banks liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

The suppliers of Helen's pub had granted her generous payment extensions and had invested their firms' pension funds in the various BOND securities. They find they are now faced with not only having to write off her bad debt, but also with losing over 90% of the presumed value of the bonds. Her beer supplier claims bankruptcy, closing the doors on a family business that had endured for three generations and her lager supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion pound, no-strings attached cash infusion from their cronies in Government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Helen's pub.

Understand now?

Financial Reform Bill was a Stunning Success - Mish Shedlock

http://globaleconomicanalysis.blogspot.com/2010/07/financial-reform-bill-was-stunning.html

Quite good, and to the point. Thank you Mish.

Divergence on the $VIX

Notice the blue indicator with the black divergence lines I've drawn compared to price. It's called 'ECO' and I have no idea what it is or how it's computed. Does anybody out there know anything about this indicator? It's from a free chart site, copied here, and called Trixycharts.

Whatever it is, it suggests $VIX has a ways to climb, and by implication, the $SPX has a ways down to fall....

Still some ambiguity here...

We seem to be traveling 'across' the channel now, there is a suggestion that the late bounce today was the backside of the channel. I have been seeing this effect, and it often creates double tops. Still, being short, I don't like it much... Also this channel has been really a dirty affair, not clean at all...
So be alert tomorow, take nothing for granted...

Update:
Here is an intraday chart courtesy of Barcharts that shows weakness at the end of the day.
The Chaiken Money flow was weak on the late day rally, and the Williams Pro Go indicator, like the fast RSI I used, indicates a top (it seems kind of upside down to me, but), not a bottom. But we'll see...

End of day charts for July 14, 2010

I am a bit puzzled at the $RUT, I expected it to hit it's upper trendlines earlier today, and it didn't. Everything else, looking around, seems like a decline is likely in the other indexes, so maybe the $RUT will fall here also....

An interesting parallel between this administration and the last...

http://www.washingtonpost.com/wp-dyn/content/article/2010/07/14/AR2010071406006_2.html?hpid=topnews

Excerpt(s):

House Democrats are far more upset that they have repeatedly voted to support Obama's agenda and then felt they were left to fend for themselves when the legislation was watered down in the Senate.

"My experience is, we always feel neglected. The experience the Republicans had with Bush -- they felt neglected. That's the nature of the relationship between the House and the White House," House Majority Leader Steny H. Hoyer (Md.) said before Wednesday night's White House huddle.

The article infers that Obama is just building a 'firewall' around the Senate Democrats, protecting them, but is ignoring the House Democrats. Very Elitist.

The Disappearing Intellectual in the Age of Economic Darwinism - by Global Research

http://www.marketoracle.co.uk/Article21071.html

The consequences of a culture where 'dumb is cool'.

VXN

O.K., I guess I'm on a Bollinger Bands kick the last couple of days, but here's another interesting one:
Really tight, with positive divergence....

Another case of BB narrowing near exponential trendlines.

Here, on 05/13/2010, the two exponential trendlines were at 1163.48 and 1153.77. The $SPX price action was already above them during the narrowing process, and it broke downward rather than upward.

Here was yesterday's action (07/13/2010) for comparison:


The action here, shows the somewhat greater complexity with three trendlines interacting instead of only two, as in the example at the top.

Berlin proposes virtually 'taking over' busted european countries.

http://www.zerohedge.com/article/berlin-pushing-european-bankruptcy-framework-provision-state-sovereignty-give

Shades of 1930's?

Sentiment approaching levels at tops.

Put - Call ratios near 'top' levels, right against their Bollinger Bands:

One more somewhat up day should do it...