Here's the answer...

You can see from the graphs that the $RUT has a lot of room to run...so only the $SPX is somewhat trendline constrained, but it does have higher trendlines to go up to...so the rally is probably real, up to a point...

The top graph shows the trendline that has produced the bottoms in this index. Clearly the wedge that's forming is being driven by the internal math of these waves...it's not random....Now which trendline does it go up to? Probably the $SPX will hit it's higher trendlines at the same time...

By the way, here is the similar buy signal for the $RUT:

Here's that oddball signal, it's still there....

Although it got less pronounced late yesterday after a dramatic reversal that stopped me out, the signal is stronger today, although I think I'm not going to chase this one...I agree with Anonymous that there's too many wild cards out there right now...

With the intraday high currently 1086.16 here's the same chart at 2:30 central time:



You can see the funny 'hook' where the blue line and red line go vertical and overlap..that's what breakouts in their early stages often look like on this system. If I had had the guts to hang on yesterday, a small loss could have been a descent gain by today...but some of this stuff is experimental, theoretical, and I haven't field tested this exponential-log moving average system enough yet to know that it always works...

So the better part of valor...

P.S. The highest confidence breakouts are irrefutably confirmed when the blue and red lines go off the top of the chart....

P.P.S. If the market chooses not to breakout, if this is a bull trap of some kind, that is understandable too. This is the chart that suggests it will fail:


You can see where we are...right up at the old trendline...so it's make or break somewhere close to this price level...

'Flash Crash' Bollinger Band Statistics

Just for grins and maybe long term research, I have compiled how many Standard Deviations the 'Flash Crash' pushed down to on various indexes. The results are:

$SOX 4.5950
$RUT 5.0045
$NYSE 5.1346
$SPX 6.4519
$NDX 7.0448
$INDU 7.86945

Some pretty amazing numbers, and the resulting rally to the 5/13/10 top was influenced by these values...

Normally, of course, Bollinger Bands are computed at only a Standard Deviation of 2.0, which produces an envelope that contains most of the price action seen in markets...

Looking at the spreadsheet above, although I only have 6 examples, you can see the not unexpected tendency of the 'B' wave retracement to increase as the 'A' wave flash crash went deeper into the bands. Effects after the 'B' wave didn't really seem to be dependent on the Flash 'A' wave...

Keeping it simple....Green markers for Bull markets, red markers for Bear markets...

(Click to enlarge)

What I keep seeing...

Look at these odd wedges forming on these different indexes...I don't remember ever seeing such divergent patterns before across the different indexes....I'm not sure what to make of it....The bottom one, has of course, been 'transformed' a bit by my math programs, but it still looks basically the same as it's 'normal time' cousin, above it...

I went long this morning on leveraged $RUT ETF...

I'm having a good morning with this so far, expect a few days of upside before we hit the higher trendlines...

update:

It was an 'up' signal..I followed it up, it rolled over, I was stopped out for a small loss...

I've been whipsawed a bit the last couple of days...part of the game....

Overhead exponential trendline on the $SPX is at about 1100...

Now we'll see if it staggers up there and drops again...or goes through it for some reason...Today I got out with a small profit but it would have been bigger if I had pulled out about an hour sooner...I was really expecting the market to give me another 2% or so, oh well...Looking around I do see some divergences, but they weren't huge...except for some of the ones I check less often...like $NYMO....big positive divergence there..so we sit on the sidelines and wait...

Here are all of the trendlines relevant to the decline. The two thick orange trendlines represent both the trendline it's been following since the April top, and a higher one it could reach up to and follow (or bounce off of and come back down) if this market wanted to create a 'right shoulder' and decline from there...

Do we see an intermediate term bottom coming as we approach the weekly Bollinger Bands?

I think so...watch RSI on short time frames for fairly extreme readings as we get near the weekly BB's...Fibonacci considerations produce a possible bottom near the 1024 area...which is near the 1027.57 level of the weekly bands...

(click on the chart to enlarge it)

Update:

Fed engineered a bottom today at 1042.17, to create the illusion of a double bottom with 5/25/10. There seemed to me there was no technical reason for it, not yet oversold, not at Bollinger Bands...We'll see how well it sticks...

Market continues down....

The market's ($SPX) decline may pause briefly soon as the weekly Bollinger Bands are approached...but in general the decline seems strong at this point.

It's worth noting that the monthly Bollingers Bands are at about 740 and the quarterly Bollinger Bands are at 760...These levels should be watched as we approach them...a number of months into the future....

Of course, two things to remember about Bollinger Bands, (1) they move and (2) they usually are exceeded a bit before they work...

Today's chart:




Notice that the recent top of last Thursday (6/03/10) shows up on the chart as just a whisker past the .125 value on the X-axis (1/8 Node)....

The slow death of the regulatory state

http://blogs.reuters.com/great-debate/2010/06/04/the-slow-death-of-the-regulatory-state/

At last the mainstream media is mentioning the obvious...That regulation everywhere is failing...From toxic financial products to toxic industrial products to toxic food items and clothing....Nobody is clamping down on this stuff...

Excerpt:

"Regulatory capture –where regulators come to share the interests and viewpoint of the industry they are supposed to be overseeing, rather than acting in the broader “public interest” — is nothing new. President Dwight Eisenhower warned about the power of the military-industrial complex in 1961.

But the scale of the capture across so many agencies, reaching into the heart of the regulatory state, under governments of all colors, is unprecedented in modern times.

It represents the largest “privatisation” of government since the Old Corruption of the 18th century (where government offices and laws were seen as an opportunity for private profit rather than a matter of “res publica” or the public interest)."

Spoken plainly, 'regulatory capture' is usually related to bribes and corruption....

The panic low of 5/25/2010...

Just for grins (and for my notes) I checked the values for RSI and the Ultimate Oscillator on the 15 minute charts for the $SPX and $NDX on 5/25/2010. The values for RSI were 15.86 and 13.95 for the $SPX and $NDX, respectively. For the Ultimate Oscillator, the equivalent readings were 24.15 and 24.95....

If you go to the 5 minute charts, you get for RSI, 10.862 and 8.904, and for Ultimate Oscillator 14.336 and 17.574, again for $SPX and $NDX in each case...

These are what major lows look like...although in this Bear Market, it will turn out only to have been a pause....

What would Hyperinflation look like?

There are many people concerned about excessive money printing (myself included). I found this site that describes what happened in Germany to the ordinary people in the early 20's, 'on the ground', as they went through such a crisis.

The experiences in the U.S. may well be turn out to be different, but this is instructive nonetheless...

Here's the link:

http://www.nowandfutures.com/us_weimar.html


After reading this, I can understand better what happened later in Germany...

Boycott BP!

http://www.citizen.org/boycott-bp








Sign the Petition, and pass it on!

Forgive us....

http://www.howestreet.com/articles/index.php?article_id=13629

These pictures say so much....

$SPX charts...

Both trendline charts are tracking the highs very well, and I suspect over time, one of the two charts will prove slightly more accurate, and I'll drop the less useful one...Right now in terms of the the Correlation Coefficient (Linear Regression stuff, for those that are familiar with it) shows that the top picture's trendline has a correlation of .993403 with the highs of this index, and the bottom chart's trendline has a correlation of .993726. Virtually identical accuracy exists for both charts. Right now, visually, I like the bottom one slightly more. Remember, perfect correlation is 1.00000. We're real close to that, about 7/10th of a percent off.

In case I forgot to say it, I went short late in the day yesterday, with a small position. Once we go below the 'flash crash' lows, I'll get more aggressive...

A Plague Upon The World: The USA is a "Failed State"

http://www.globalresearch.ca/index.php?context=va&aid=19458

Dr. Paul Craig Roberts was a former high official with the Reagan administration, and a deep and thoughtful guy.

His point here, is that the Bush-Obama administrations have shredded the Constitution. We are loosing/or have lost, Habeus Corpus, and other things. Since we are ethnically diverse as a nation, the Constitution was the only 'glue' there was. We are not a traditional country bound together by 'folk' traditions. Once it's generally recognized/understood that we no longer have the rule of law, our diversity will lead to anarchy, if I understand him correctly....

Market declining as predicted....

One of the stranger and more tragic things I see is how people coming in to this site are interacting with the charts I place here. The last post was headed by a conventional chart, showing a conventional trendline. The last two charts show the special trendlines I have created, which worked well this morning even as the conventional trendlines failed.

Guess which charts get clicked on to expand them for better visibility. The ordinary one at the top of the post, which produce no real information. The novel new ones, which performed well, got no clicks...

Makes me wonder about the fecklessness of people...

It also shows the power of the familiar, even if it's wrong....

This morning's $SPX charts (so far)

Basically, these charts seem to be saying that we are now at another 'top'....This contradicts the daily MACD indicator and the put/call ratios, which looks so much like a warning of the beginning of a new up trend. The day is still young, but as of 10:50 CST, today's candlestick DOES look like a top,,,

The top chart shows a conventional trendline that will probably _not_ work...The bottom two charts show trendlines that _should_ work....

(Click on the individual charts to enlarge them)

Test of indicators coming...

If you look at daily charts, the MACD indicator looks to crossover in a positive fashion, it looks short term bullish. The next couple days will be critical in confirming the Bear. We have to see if MACD is warning us of some kind of pumping by the FED to overcome the Bear, or whether we are just seeing a small Bull trap forming, or whatever...Don't commit to too many positions either way until this resolves...

An introduction to Memristors

http://www.howestreet.com/articles/index.php?article_id=13590

Maybe able to model animal nervous systems....