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Public blog posts only as education and entertainment. private membership market updates reflect my view and analysis of the market. The information contained on this website and from any communication related to the author’s blog and charts is for information purposes only. The chart analysis and the market comments do not hold out as providing any financial, legal, investment, or other advice. In addition, no suggestion or advice is offered regarding the nature, profitability, suitability, sustainability of any particular trading practice or investment strategy. The materials on this website do not constitute offer or advice and you should not rely on the information here to make or refrain from making any decision or take or refrain from taking any action. It is up to the visitors to make their own decisions, or to consult with a registered professional financial advisor. And i absolutely discourage trading options.

Wednesday, November 17, 2010

two sides of the blade - something to think about. (overnight, i might already know the next catalysts already, see PS 2 below)

two nights ago Nov 15, i detected a potential code red, email special updated to all email list members about the potential, then next day Nov 16 yesterday, we got a big plunge with $spx down as much as 25 points. and i showed key members that market is testing the crash line many times. But it never realized to successfully solidly break the crash line. In the night of Nov 16, i sent another special email update to all email list members, saying "after further review and overall price & time consideration, code red likely canceled".
As i knew this developement, i anxiously took profits(those re-shorted around spx 1205 on Nov 15) and covered all my fully 3X leveraged $spx and $rut shorts during the pre-market session below spx 1180. Further more, i went long position of $spx seconds near today's bottom as posted real time "Nov 17 15:27. long at spx 1176.3 medium size".
i think the P2 Top already made, coming is just a bounce. But tonight there are many things make me re-think all the potentials with an open mind.

1). one of the chart - iso lines of major indexes humbles me. we had a broke out of major indexes MT iso lines in October. tonight i see the lows of Nov 16 back tested those broke out iso lines and coiled bounced up. the iso line is a MT bull/bear dividing line. and now we are running above.
2). i see so many indicators have a sign of bottoming.
3). my own developed "crash system". it's a two sides blade. if it break through the line. it most likely will crash and hurt the bulls. But the system also serve as the opposite purpose. If price bounce off the crash line and not coming back down, it almost ensure a strong rally ahead. we had tested the line for two days and failed to pass through. it almost ensure the other side of the blade to hurt the bears. this system has sucessfully tested all major crashes and major rallies for past years and decades. i am wondering if the coming rally just a large retracement bounce or more to it. if it's more, it's different from my view of P2 already topped. at this moment, i am not sure what kind of rally this would be, but i will do further study to try to find out. key members have top priority, email list members the next. application rules are near the top of the blog(blue highlighted), and it's open for applying.

Well, at least i am on the right side of position as i knew last night.
Following post i wrote exactly at the late Aug spx 1040 bottom, i think worth to re-read to understand the nature of the system.
<< i agree with people that "Crashes are never predicted".
BUT i have developed a crash system can pre-warn, and know what kind of setup condition and crash window it must meet for a crash to be realized. i have back tested this crash system against all major crashes, including 1929, 1987, y2k nasdaq, nikkei 1980, 2008, even 911. it can not know far beforehand, but these setup condition must meet for a crash to occur. for the flash crash, i didn't pay too much attention. but 2 hours before it occured, i suddenly "woke up" and saw the potential crash approaching, and notified friends.
i have done a statistic of all past crashes, a crash must occur around 10 (+-2) days after the secondary top window, after that it's no longer a valid setup. and they all must satisfy with the 6 technical setup (very strick) i developed. i can not know if it would crash or not, but a crash must meet these conditions. i can only watch its reaction to the crash line seup. it it pass beyoud and don't come back, a crash is imminent. in the past, it has longer reaction time to prepare. but now it only has around 2 hours to react. even if a crash doesn't occur, these setup condition can also be used as an extreme weakness warning system for the next 10 days or so.
AND, on a contrarian most important tradable point is if the market turn away from the crash line, it almost ensure strong rally coming for a while. recent examples are Jul 8 2009, Feb 5, 2010, Jul 1, 2010. they have all met the crash setup, but got rejected before the crash line.
And here since Aug 9 seconday top, it has met all the crash setup condition. but after it passes the crash window time, and the last crash line is too far below, it almost ensures a crash will not occur, and this setup is best served as an extreme weakness system (already passed away). And now it got rejected at the secondary crash line (spx 1040). Then this condition according to my experience, will turn into a strong rally. Here this crash setup has been reset, and have to wait for the coming strong rally petered out, and will take quite a while.
This crash / extreme weakness / reject rally system is developed by my own, i have very confidence on it, and it's back tested against most past major occurances.

Something to think about!

PS. 1). loukoum, thanks for the pragcap nikkei-spx qe chart. a key member already showed me during the day. i thought it looks alike. but now i checked Nikkei, found the QE comaprison chart from pragcap is mis-leading. first, nikkei already down nearly non-stop from 20800 in apr 2000 toward 11400 in mar 2001(QE), their QE only pulled it back to 14500 in may 2001. here QE2 in U.S. moved $spx into the new high of the entire rally since mar 2009 bottom. To just compare the local small period price performance is mis-leading. their structure & ew are totally different. sorry to say, wrong comparison chart from pragcap.

2). i probably already figured the next step overnite. a few critical stuffs is the inflection should make my mind, watch closely, also found a blueprint rhythming quite well. also some indicators to consider ah. priority as described as in 3) of main paragraph, of course my own benefit first. might announce anytime anywhere any form(i am very flexible) once those inflections clear themself. always plan a few steps ahead, at least know exit strategy before entering a position, an engagement. i like chess game, was once a champion in contest, always think many steps ahead. me? not a bull in heart.

3). 5 days ago, i posted 1119, there were some guesses there.
the answer is i found out at that time, 1119, Nov 19 is an important cycle turn day.

4). Nov 18 16:13 ET. i did not take profit on spx long position at the close.
A). since 11:00, it's a-b-c-d-e corrective, either 4th of B-wave.
B). Nasdaq tickq oversold, yes, oversold. but NY tick is overbot.
C). i have large advantage of profit cushion(long at 1176.3 spx yesterday's bottom), no need to worry that much.
D). blueprint target not reached yet.
E). had at least 10 key updates, charts sent to key members throghout the day. there are two rooms left for this years for new key members. if interested, need to earn it, anybody is welcome.
F). 1119 cycle is tomorrow.

5). (real time)Nov 19 12:55 ET: took profit and sold spx long at 1196.1 (bot at 1176.3 on 11/17). book profits at fibo resistance & ST overbot ticks(st trin v. oversold though). but i believe it still have unfinished business on the upside, not a new high, just retracement type per my blueprint. i confidently believe P2 is already completed per my ew counts(textbook traditional one). so far, my ew ST, MT counts correctly make me money recently on both sides trades. updated to active members. good tradings. GL

6). (real time) Nov 19 13:59 shorted $rut @723.4 medium
6). (real time) Add Nov 19 14:10 shorted $rut @724.6 fully shorted