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Dr. Stocks-PHD Twenty year Wall Street veteran. Hollywoods direct line to Wall Street. Specialize in market timing and predictive modeling. Follow my updates via twitter/tkathlinastocks and at my blog
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    On May 1st I posted this SPY chart and indicated that we were in Wave 4, and that conditions have been met to complete the wave. The chart had FIB upside targets for Wave 5.

    Finally, after what seems a life time, we can now count a solid 5 wave completion of the bull run. Typically bull runs last 2-3 years, bear runs last 1.5 years.

    All the talk now is when is the bounce, where is the tradable bottom? The answer is: nobody knows for sure.

    What I want to focus on is a different question: where is WAVE 1 likely to complete? Lets not look at tradable sub-wave bottoms within WAVE 1.

    The point is, if we bounce anytime soon-should we cover our short or add to that short; sell short the bounce? We have to keep the concept in context. It's not important at what price the SPY bounces; IF THE BOUNCE IS A SUB WAVE, WITH FURTHER DOWNSIDE TO GO TO COMPLETE THE MAIN WAVE 1.

    To look at this properly, the next chart is a Kagi 2% chart of the last bear market year, the 2008 Presidential election year.

    Lets use apples to apples comparison years; 2008 bear-2012 bear, for a road map of dates and/or probable weeks of tops and bottoms of the MAIN WAVES, in order to maximize our profits.

    In 2008, Wave 1 down started in May, and completed in July around option expire week. This is based on 2% moves in the index that trigger the black buy Kagi or the red sell Kagi. All the noise/sub waves in between are removed from the chart.

    Our strategy-is to pile on to shorts, with every bounce in the market, all the way into July. In July, we apply a % trail stop that moves with the stock, raising our stop price as the short moves further into profit, until we finally get stopped out.

    Just follow the blueprint from here; begin shorting option expire week of August, all the way into the Presidential election; cover for Santa Rally, short Jan 2013 for the final 5th wave.

    Could a coordinated FED action put a wrench in this plan; sure. But we can deal with that if and when it happens. I believe the FED will not embark on QE3-4 months prior to a Presidential election; just as they took no action in 2008.

    Tim Kathlina

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: SPY
    May 19 10:38 AM | Link | Comment!

    Here is a chart of the XIV, which is the inverse of the VIX.

    Stock markets take the long way around to a final destination, always. We can see in the XIV chart, despite countless Europe interventions, Fed speak, and trillions of dollars spent-XIV has managed to simply make a lower high, confirming the overall larger picture, which is a confirmed bear downtrend.

    I have marked the change of direction DOJI candle, confirmed by the long reversal candle the following week.

    Continue to build positions in VIX trading products such as TVIX; take advantage of what will be a long slow bleed of Americans 401k retirements, and the ensuing panic that is sure to set in.

    Tim Kathlina

    Disclosure: I am long TVIX.

    May 18 8:08 AM | Link | Comment!

    On March 22nd I posted this chart indicating that April 1st or 180 days from a significant previous low could begin the 4th wave pullback that we have been looking for.

    On April 1st, finally a target date held, and we did indeed get the 4th wave pull back.

    The next chart is a current SPY with calculated topping pivot prices over layed. The Roman numbers count the 5-sub waves that complete the 3rd wave marked 3V.

    To confirm the 4th wave, we look for two things:

    1. The index to pull back in an equal or similar number amount to previous pull backs in this sub wave and/or

    2. The pull back to overlap the sub 4 wave pull back, either equal to, within the range of, or exceeding.

    Both conditions have been achieved; a match in total points, noted with a circled B, 7 points, and the pullback was large enough to overlap the sub IV pull back within 3rd wave.

    This now puts us squarely in a 5th and final wave to completion before the markets begin to price in the real world.

    5th and final waves tend to be 30-45 days in length. You can make your date calculations based on the low dates of the 4th wave, which showed a double bottom; begin to make shorting plans.

    We will use the current calculated FIB pivots for top targets. Those are subject to change depending on how bullish this 5th wave gets. (Remember, per Wall St, stocks never go down and are never expensive)

    I'm looking for buy indication on the Three Line charts of multiple bear ETF's as the ultimate trend has changed signal.

    Tim Kathlina

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: SPY
    May 01 11:06 AM | Link | Comment!
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