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S.P. 500: Blindfolded and walking the thin narrow plank

12/28/09
8:15EST

 

ESH10:

 

My last update (from 12/24) was this:

Since 3/09 this C/T has repeated itself on every short term top or bottom.

The patterns size (23.25 points) are exactly the same and appeared on every top or bottom; and we reversed in accordance to this pattern. I didn’t go back further than 3/09. Except for the last one (above pattern) all the previous 11 patterns reversed immediate direction of the market. You can’t argue with 100%.

The above pattern was CLEARLY intended for us to correct down, not head up; but manipulation (overnight sessions) has tampered with this pattern’s direction.

This is the same reason why the 23 day reversal cycle failed.

Do we reach the up price target?

We should not, but the markets are being tampered with, it’s impossible to know.

 

In addition the up price target falls right in place with my red alert levels.

The main reason for this recent tampering was due to Banks returning the TARP funds, they raised the capital (to pay back TARP) through stock offerings. The TARP funds have been returned to the Treasury Department (Large Banks).

Which in my eyes turns on a BRIGHT red light alert for a potential correction and possibility a trend reversal.

 

Conclusion: Long positions pay a high risk premium. This is a very dangerous market (long side)

 

After further reviewing all relative data to the above statement, I have this to say.

The market is blindfolded and walking up a thin narrow plank, of which one of two things will occur.

1)      We bounce off the plank (up) one more time (like a diving board) and then fall.

2)      The plank breaks without the bounce.

 

This fall will be steep and fast. It should be the second largest decline in a short period of time since 2005. The first and largest decline in a short period of time was from 1291.25 down to 837.00 in 16 trading days, which occurred or began on 9/19/2008. The C/T which created this mini crash; its lower wall is at 1136.25. This potentially sharp decline should reach 1000.00 to 1010.00 before the life preserve jackets are thrown into the water. The key level on this potentially sharp correction will be 952.00.

 

Immediate term: now

We have a small C/T

Pointing Up

Equalizer: 1115.75

Up Price Target: 1128.75

Down Price: 1102.25

 

Therefore we should reach 1128.75 in fact I’m expecting it reach 1136.25 to 1138.75 (the red alert beginning price levels)

 

We have several key rollovers on various C/Ts

Between those levels (1136.25 to 1138.75) Therefore these are the first potential failure levels, although 1124.50 is a key price level (1/4) on our Master RCT from 10/10/08.

 

Master RCT

From 10/10 – 10/14/2008

Equalizer: 952.00

Up Price Target: 1297.00 (½ = 1153.25) ( ¼ = 1124.50)

Down Price Target: 607.00