SPY Weekly- Doji did not confirm for bears

Last week we were seeing some uncertainty with a weekly doji, and were looking to see whether it would confirm with a weekly down bar. It did not.

They don't ring a bell at the top, folks...

...we need confirmation next week.

SPY short: Worth the trade? UPDATE below

For intellectual pursuit, let's look at the Elliot Wave and Wolfe Wave hybrid set-up for an intraday short on SPY. We had a nice upward motive followed by the a-e "corrective" phase on Elliot wave. Bulls would say this is a bull flag, but this does show a moment of indecision in the trading, it could go either way.

If someone wanted to enter short, the down sloping white lines would be the targets, based on Wolfe Waves. But is this tradable? Odds are that this will end in misery for shorts, but heck, maybe the 37th time is the charm.

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UPDATE 4-15 at 3:53 pm

Here's the result. Yes, shorts scalped a bit, but was it worth the trade? What's the target?

SPY is a puzzle (or a mystery)

Which indicates it may not be trade-able here. Last week, we correctly indicated a Wave 3 and now is into a flattish Wave 4. This could churn going into Wave 5. The other scenario is Trader Vic 2b if it breaks below 115 with volume. The danger is that shorts could get trapped below 115, so be careful.

Sectors may be more prudent here than attempting to trade broad indices.

UUP: Completing Wave 5

Last week, I noted that UUP was completing Wave 4 and ready to make an upward move. Now we may be getting ready for an Elliot Wave a-b-c corrective, but overall this is a strong basing pattern on an intermediate time frame.

US dollar-- UUP-- ready for upswing

Using Elliot waves, the UUP is completing Wave 4. The US remains the "leper with the most fingers" as far as international currencies. Anyone who believes that the Eurozone can dissociate itself from Greece is dreaming. Of course, we have California to worry about.

Elliot Ending Wave 3; Vic2 B test of top

Interesting charts. This market is is showing several signs that a significant pullback is imminent... which, of course, means that it won't happen. In the last post I showed bearish Wolfe Waves in two time frames. Today, we had a successful Trader Vic 2B test of top with a bearish hammer, if it confirms with a down bar Friday.

Also, we are nearing the end of Wave 3 upward motive. Apparently the Elliot Oscillator can be used to differentiate between Wave 3 and Wave 5-- always a problem for me. It will reach its extreme at the end of Wave 3 and Wave 5 is less extreme on the oscillator.

Finally, the market is extremely overbought here and due for a pullback (although never a guarantee.)

SPX Elliot wave targets

Eric wanted me to explain my crazy thought process on Elliot waves.

There were two potential Elliot Wave scenarios until recently; now the only valid one is the white lines and numbers below. I'll keep the green lines and numbers in only for argument sake and I'll explain why this isn't operable anymore after the chart.

The white lines show Wave 1 from Jan high to Jan 29 low of 1071.59 (that was a key level to remember, hence the red line.) We swung up for Wave 2 and then rolled over into Wave 3.

Wave 4 could be no higher than the 1071.59 level from Jan 29 or that would have violated the Elliot Wave mechanics. I know this sounds weird, but it works nearly every time: Wave 4 cannot swing higher than the lowest point of Wave 1. This is why I was stalking this level so closely today looking for a short entry... and it happened at around noon when it began to roll over.





For a while I was thinking that the green numbers were operable, but this was violated on Feb 2 when Wave 4 creeped above the low of Wave 1, so that told me that Wave 1 extended down to were (3) is and we were actually still in Wave 2.

The Wave 5 target for the white Elliot waves is between 1011 and 1030. Wave 3 cannot be the shortest wave, so Wave 5 cannot go below 1011; a more likely target is 68% of Wave 3, which would put us at 1030... game theory.

Even if this were an ABC (green lines), the most conservative target is a test of the low at 1045... game theory was a target of 1050 for today. We didn't make it, but I had to close out my day trade (TWM long) since I'm away from the computer tomorrow. I set my target for the day on TWM at 27.95 with an entry at 27.42. The 27.95 corresponded to the 2-d vwap on IWM, whcih Brian Shannon had tweeted this afternoon. I thought this would be a good exit since buyers might come in on the 2-d vwap.

I'm still net short with swing positions is RSX (short), FXP (long), TAO (short) among others. Small long positions in XLV, XBI, SYK are my hedges.

ES_F: Trader Vic or A-B-C ??

Update on the developing pattern. 1127.75 is key level for bounce or breakdown.

Trader Vic 2B vs. A-B-C ??

Either way, we should pull back to the trend line. A break below the horizontal would be bearish. A break above the recent swing high is bullish.

SPY: Falling through support

Let's look at the longer view on the weekly. Last week was a big red pepperoni and this looks like a subtle warning ala Mamis. Strength in the US dollar was required for such a move lower in the stock market, so we continue to watch the DXY to stay above $76.00 and preferably $76.30.

The chart is necessarily busy and shows Elliot wave 5 resolving the motive with last week's high. Also, both Fibonacci price retracements and time extensions are depicted. Eighteen weeks passed from the March low to the July low. The July low resolved upward after the fake out a-b-c reversal. November 13 will be exactly 18 weeks from the July lows, so following the Fib time extension, this should be a significant date.

In July, the pullback was less than 38% and this pullback should be in that neighborhood if we follow Fibonacci rules. That would give us a target of about $95 on November 13th, which sounds like an aggressive pullback. We'll see.

The dotted red trend line is from the March lows as is the solid red trend line.

SPY Purple Crayon Elliot waves

I rummaged through by desk drawer and found the biggest purple crayon I could find to do some Elliot waves. Using Fibonacci time extensions I found that September 18th would be the 38.2% extension from the October 07 high to the March 09 low. this could be a proper time for a near-term top in the market. This corresponds roughly with the 8 week pivot highs we have been getting as well.





Not much to hang your hat on, but it does tell us that the run-up from March is not excessively long or large from a percentage standpoint in the grand scheme of things.

Intraday Elliot waves on SPY

Does Gold follow Elliot Wave mechanics?

GLD. I honestly have no idea about this Elliot wave stuff... I'll defer to Eric.

Teresa Lo has been pointing out that various technicians have been talking about the "inverse" or "reverse" head and shoulders pattern that would signal a breakout to the upside. The problem, as she points out, is that there is no such animal as an "inverse" or "reverse" h/s.

So, my question is whether Elliot wave theory can be applied to the usually enigmatic gold complex? The argument is that Elliot wave theory is predicated on a functioning cerebral cortex, with sentiment based on gaussian distributions, etc... and most gold bugs are operating at the midbrain level.

Disclosure: I recently sold a mutual fund of gold miners (FSAGX) that I have had for years. I still own GLD, but I am looking to reduce my stake.