2/28/10 An appointment in Samarra?

In honor of the end of the month and because we are at such a crossroads in the market, I have put up some longer term charts. Long term count is 14 across the 151.16 line at about .40 per box multiplied by the number of boxes in a reversal (14x.4x3=16.8+or-) which gives a target of about 134. Which is where we have stopped. We have had shortening of the thrust going down and even rallied past a previous column of x's. The trend is neutral short term but our old counts are still possible.
On the short term chart you can see the small area of support that is developing.
Our glum British pound is continuing to stair step down. We have no action to hint at a bottom other than how far it has fallen without a rally.
The 3x chart only emphasizes the weakness. Look at the determined selling that began in November. No rally of 3 boxes recently.
The Bond has been in a trading range for almost 10 months. Whichever way it goes with volume it will go along way. On the bearish side is that we have stayed in the lower half of the trading range for the past two months, indicating there is still plenty of supply.
Yields have been in a trading range since last May as well and they have swung to a hinge at 46. I wish I knew. Someone who knows said every human being should be short Bonds.
This is another view of the same trading range. Notice the upthrust and hinge near the top.
The same trading range.
We have already described the distribution going back to September, the question is: is the area beginning about 1/27 re-accumulation for another rally. It could be.
The institutional index makes the same point as it is the index of the stocks most widely held by institutions. The conservative count of 8 across the 499.4 line has been accomplished. If we continue up here there are many valid bullish counts that would bring us to new highs.
The same is true of the SPX.

So where do we stand? The bonds give little support to either direction but hanging in the bottom half of the range would be bearish bonds and bullish stocks. The Euro which tends to trend with the stock market recently might be ready for a bounce in which case stocks would rally. And finally since much of the markets weekly gains have been between Friday noon and Monday noon if they are going up they should do it tonight. Are you waking up at 3:00am?

2/21/10 The usual culprits +

What we are doing is following a group of trades that we identified based on their point and figure charts quite a few months ago. The euro is on a small hinge with a count of 5 along the 136 line. While the major trend is still down with the widening zone of support along the 136 line a rally is possible.
I have added the chart of the s&p financial sector as we have now an enormous area of distribution. In the middle of its trading range there is not much to do but we have identified that it bears watching.
On the daily, we have made a lower low and are rallying weakly with decreased daily ranges and diminishing volume. The moment to pull the trigger may well be approaching.
The Pound looks quite glum and now is weaker than the Euro. It did get down to the counts discussed last week and has accomplished the 11 predicted most conservatively across the 166 line and the 3 across 157. We must now watch for further indications.
Bonds have held in the lower half of their 115-123 range, a sign of weakness according to Mr. Wyckoff and more than amply verified in my experience.
Yields have stayed stuck up against resistance. Again a sign they are going to rise.
The Treasury index is back at is 7 month support for the umpteenth time. Should it give way it will be like a dam bursting.
Finally our friend the SPY moved up from the hinge and is close to accomplishing its count of 5 across the 107 line. This too is having a small rally in a downward trend.

2/14/10 The hinge

The SPY ended the week on the hinge. It is at an apex and a move 2 boxes either way could constitute a breakout. The count of 10 across the 107.31 line gives a move down to 100 or so and the count of 3 on the 105.85 line has been accomplished. Should the market go up, we have a possible 8 on the 106.58. The count overall can be extended across the 110.23 line and possibly even further the October high which would make for a vicious bear market.

Personally given the history of possibly up to 4 months of distribution, I believe we are going to breakdown.(puns intended?)
The ambitious counts across the 1.6137 and the 165.66 line both came in within 1 box. At 155.76 we will again be on the hinge, but the count is only for another 1.5 cents or so over the short term. For some reason the long term chart did not copy over but it has not changed so the long term view on the pound has not altered.

On a fundamental note right now the market is obsessed with the "flaw" in the Euro, that individual governments cannot print money to pay their debts, which if the debt is denominated in there own currency is a stealth default but a temporary fix. Soon the flaw that will preoccupy the market is that Britain can and will print money to pay their debts.
We are looking for a return to the bottom of the chart. Not much buying interest evident yet.
How many hinges can you find on this chart? What is the count if we rally from here? This for a move down is also called a springboard.

2/11/10 brief

Today was the day of the big announcement, the market closed on its high of the day, and volume was the lowest of the year so far. For the Wyckoff trader the reflex explanation is lack of big buying interest, no demand. Needless to say it could also be lack of selling pressure. What argues against that is that if you look across the chart, the market never stayed around lows this long. Compared to the ease with which the market fell, with these struggling advances the direction of least resistance is down.
The SPX looks even more like a rally that is failing. These is very little lifting of supporting points over the past three days. Volume did not come into today's rally. This as we will see for the conservative approach is very important
We have already discussed how bearish this chart is with potentially large counts. The minimum rally objective of 3 boxes across the 1055 line giving 1075 or so has been met. The problem is the counts across 1062.1 which look bullish and call for a large move. Since they could also be continuation counts for further decline, we will wait for this small trading range to be exited with signs and wonders, volume.
I did not follow my own analysis and play this because I felt the bonds would move in the opposite direction of stocks. I was wrong and the Wyckoff analysis was correct.
Not much strength here.

2/9/10 Brief

See below
Daily SPX: After rallying about 50% of the last down move, the index on good volume closed approximately in the middle. It met supply where it should have and the rally rally might be a two day wonder.

The 5 minute SPY chart is notable for the 20 million share bar. This is called volume off the top and is very bearish. We will not discuss how the action for the 5 bars before the high volume bar is typical topping action, as we have discussed it many times before.
Apple Computer 1x3 chart showing a consolidation going back to October. Do your counts. Hint:213 line and multiply by 3. Also 196 line and multiply by 3.
196 on the 1x1 is the hinge. It is where prices come to an apex, found most easily on pnf charts and is a very low risk place to take a position. There are frequently sharp moves from hinges. They are psychologically ripe moments.
An example of distribution after a peak.

2/7/10 Follow up

This week I will follow up on last week with basically the same charts. While the euro can do whatever it will like, there is no sign of a bottom. The count remains the same with a target of about 124. I doubt it will get there in a straight line however.
Since the hinge at 162 the pound has fallen sharply and it close to its most conservative target of 155.
The vix also rose sharply as expected. A conservative target is 31 with 8 across the 23 line.
The Long Bond seems to be everyone's favorite short sale, with the never ending deficits and all that. In general notice that even with the sell off in stocks and the fight to the dollar this last week, the bonds did not move. To my mind, this not moving would be the same as a stock that did not participate in the sell off. It tells me that something is up. Here it is a sign of weakness or lack of buying interest. So we are going to watch closely for a change in trend. Until then our nearest upside target is 4 across the 118 giving 122.
This week I added the yield chart for the Long Bond. 8 across 47.25 gives 45.25 which has been accomplished for the most conservative count. The next is at 47 with 15 boxes giving 43.75 as a next possible target. We now have good support along the 45 line, so time will tell.
While the intermediate trend is down, there is the possibility of a counter trend rally. The most conservative count of 7 boxes across 1102 was accomplished at 1051 and we now have a count of 3 across 1058 calling for a possible rally to 1080. I am split on the possibility and will wait for the market to tip its hand a bit more.