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S.P. market overview

12/15/09

 Closing Comments:

We closed at 1103.50 which means we maintain current bullish momentum

 Let’s talk about Top formations preceding trend reversals

 The minimum day TIME consumption is 10% of the previous trend

The maximum is 15%, more than 15% it’s clearly NOT a top formation.

 This upward trend is a tad over 9 months old,

Or to be exact is 197 days old

Therefore the minimum time requirement is 20 days

Today is the 21st day of the top formation

 

Let’s talk about cycles

Immediate term

12/13 day low to high cycle

Tomorrow is the 13th day which means it should be an immediate term high,

Which is generally followed by short lived pullback either 7 or 8 days depending on which cycle we hit. Generally the 12/13 day cycle, alternates. The last time was a 12 day, therefore this time should be a 13 day.

 Then we have the dangerous 23 day reversal (violent) cycle

Which often creates new born again energy, most often after the cycle is complete we then have a jump gap like we did on 7/15/09. Jump Gaps are what they sound like, they literally jump over the key resistance line. You get a lot these on the Gold, Beans and the Coffee…

Our last high on 12/4 at 1114.25 is exactly 23 days from the last significant low at 1021.00. General rule of thumb on this cycle is 2 or 3 days following the previous high or low we near but fail to make a new high or low. We did not do this.

This cycle is an irregular cycle, the last time we had this cycle was on the low at 865.25 on 7/8/09, after making a high at 957.50 on 6/5/09.

I don’t believe this is the cycle. Due to the fact we did not challenge the previous high within 2 or 3 days, and also so far there is no Jump Gap.

12/15/09

11:35EST

 ESH10:

 Today’s close:

Must close above 1103.25 to maintain a bullish momentum

A close above 1111.00 is immediately bullish and means the break-out has begun,

Put on your seat belts due to the expected turbulence.

Below 1084.75 /1085.00 the breakout is down

Below 1099.50 (above 1085.00) is neutral to bearish

 

Immediate term:

We have a key (NYSE:AV) Apex vector support line at 1103.50

And a key CTSL (C/T compression support line) at 1099.50

From 12:00EST until the close, we have an AV / CTSL trendline crossover at 1099.50

 

It appears we completed (geometrically) the top formation on Friday afternoon.

Once completing the top formation, where the market closes is of central importance, not how high or low intra day but the close, but the close determines the immediate direction from the top formation.

 

How we get out of the blocks is also of central importance.

It’s sort of like sex, no foreplay the sex doesn’t last long and often does not continue (one night stand) a spike out of the top formation generally means that it won’t last long, a pullback from a substantial breakout greatly decreases how high we reach. A slow back and forth break out of the top formation means it should continue up, and as such no significant pullback (head fake) means it should reach the maximum projected level

 

A break-out to the upside 1137.50 is the immediate price target

A break out to the downside 1067.75 is the immediate target:

 

Key note:

Failure to reach 1114.75 is immediately bearish and takes us down to 900.25 within 13 days of the failure point, and possible down to 873.25

 

10:51EST

 ESH10:

 

I like to spend time reading what the guru’s have to say and in addition the various traders talk forums;

It’s beyond belief what I’m reading and I haven’t seen this in a long time..

The BEAR Guru’s and traders are basing their positions from their emotions, and not the objective numbers..This is dangerous, meaning they’re vulnerable to lose money..

Often traders get in a hole and lose all sense of objectiveness…

We reached 767.00 on 10/2002 it took 31 months from the high (1574.25) to low at 767.00

The last move was from 1586.75 down to 665.75 in 18 months, the crash or rather mini crash occurred only from 1133.00 on 9/15/08 down to 739.00..It’s still so fresh meaning the time factor, you have to realistic and understand what crashes always heads back up to the crash point always.

 

I want to talk the E-Waves..

It’s nice and cute to see traders doing their wave counts on the 60 minute charts or daily charts, but it’s all wrong..Proper wave counts are done on the Yearly or Monthly charts for the proper wave. The purpose of the proper wave count is to determine TREND..nothing more..thats the value of the E-Waves..Now you can put it under the microscope (I don’t) on the weekly charts although it’s a mistake it will confuse..here’s the proper wave count

We just completed wave 3

A was at 767.00 on 10/2002

B was at 1586.75 on 10/2007

C was at 665.75 on 3/2009

 

When C is lower than A it always means we will have a failed 5th wave or even a failed 4th wave

 

Currently we are in 4 in A

General rule of thumb A always reaches the 50% level which is somewhere around 1121.00 to 1124.00

But on 3/2004 we developed the single most powerful C/T in terms of compression ever..It’s the second largest ever in terms of size.

it’s the Babe Ruth of the C/T patterns..

this pattern is profoundly important for right now..why? here’s the pattern and lets examine it.

The lower outer wall is at 1084.75

The upper outer wall is at 1163.75

The equalizer is at 1124.25

The difference figure is 79.00 (the ranger)

 

Now we go one step further, this is very very important

 

Last year we developed the most powerful C/T since 3/2004

This is the number two most powerful C/T in terms of compression ever.

But the number one C/T in terms of size.

The lower outer wall is at 1133.00

The upper outer wall is at 1291.25

The equalizer is at 1212.25

The difference figure is 158.00 (the ranger)

Exactly double the one above..

These patterns are relatives..

 Now we go to this pattern

 

RCT (from 1/15/09)

It’s an RCT not a C/T

Down Price Target: 652.25 (we reached 665.75)

Up Price Target: 1088.00

Up Extension: Up to 1219.75

As you can see we already reached the up price target and we are currently in the extension.

The above patterns ranger extension count is as such:

131.75 points

66.00 points

33.00 points

1088.00 + 131.75 = 1219.75

1088.00 + 66.00 + 33.00 = 1187.00

1088.00 + 66.00 = 1154.00 (50% extension)

1088.00 + 33.00 = 1121.00

 

see the similarity in the numbers…

 

why are we discussing this..because we are looking for a trend reversal and where it will occur..okay so what? Well we’re currently Wave 4 in A..when A is complete then we begin Wave B..Wave B must reach and probably trade BELOW  sub wave C of  3, which is at  665.75, why probably? Sub Wave C of 3 was 102.00 points lower than sub wave A…

 

On the yearly or monthly charts the E-Waves work quite well, because you’re immune to the after hours trading which destroys all proper wave counts. In order to have accurate e-wave counts volume must be constant, according to a five year study in Melbourne Australia which is the most comprehensive study and research  ever conducted regarding the E-Waves..It works if you have liquidity (a lot of volume) and constant volume meaning all the time.