as of 3:33pm ET..the horizontal line marking the move has been surpassed. folks are believing it..SPY now at 148.66 with day high just above

hi guys,

Yeah, looks like a general market bottom here. Will add to longs on a pullback.

cheers,

john

mss,

Great chart. The lows above lows in the RSI are also quite compelling. Thanks for the post.

This does not look good for tomorrow. TWT, but consolidation is very likely and another 20 point day is not suggested..............unless it's down.



mss

mss,



I certainly don't think it is wise to chase longs here. The question is do you buy the pullback or watch and wait to see if another big leg down is coming? We should mark a little time here and consolidate/successfully retest the lows if another big leg down is to be avoided. And that is pretty much what I expect from here. We'll see.

I like those charts. How do you find the time? I've got young kids off on school break and I have very little time right now to follow the markets.

cheers,

john

A trip down on the ratio would be nice IF it did not go below the other lows. I think we see several days of chop as suggested before, but in a consolidation mode, rather than a declining channel.

How do I have time, too old for young kids, grandchildren live 2hr away, and my days are filled as I wont to fill them. Make pretty good change position trading, and when bored, will day trade some.

Consult to some accounts and a few board mettings, but mostly do as I damn please.

$SPX bottoms today. I added my last tranche of Oct. 149 calls.

If I'm wrong, we are in a heap of trouble.

cheers,

john

woops!!

The sad part, I did not really believe my own post. I was sure 1420ish would hold so I bought some stuff, back in cash, bought, back in cash.
Well after today 1355/60 is starting to look in play, and I'm paying attetion this time.

374
mss

hi mss,



Yeah, that is about where I am coming from. An abc move down to $SPX 1370 -1375 looks likely. Then what? I still think a hard bottom comes in here this week. Beyond that things don't look as clear.

cheers,

john

hi mss,



Well, I was one day too early on the SPX bottom, and when it comes to options, it can make a world of difference. I didn't even bother to look at the SPY calls I was holding on Thursday, nor did I have the cash or nerve to add to the position. I traded out of most of that position on Friday, and I am very glad to see that my options account is still intact. An 80 point $SPX rally (unreal) is a 43% retrace of the 185 point decline we've seen since the July high. I assume we will grind higher soon to the 50% retracement level.

I will hold a small position in this contract and will look to add on a retest of the lows. The bull case still has to be made with a successful retest at some point, so I will be looking forward to your update of those charts of yours. I hope the technicals improve soon, otherwise the bears are going to be all over this market in September.

Thanks for posting those charts.

cheers,

john

PS. I'm off golfing for the next 4 days. I hope you can keep things levitated.

Main chart at the top of this thread has had a couple TLs added.
mss

MSS,

Thanks for updating your chart. Still nothing to confirm a bottom just yet?

Thanks again.

BW

And today does not prove anything - suggests we test another low - lower or higher - TWT
mss

today marked the day "the LINE" was broken to the upside on a closing basis.

and I am now short a small SPY near 148.23 to 148.40 entered near the close and after

I must need my head examined....149.40 to 60 could be easily seen next week on intraday basis.

http://www.traders-talk.com/mb2/index.php?...;blogid=26&

hi hiker,

Given Friday's $SPX performance, I suspect the low is in. But I'd still still like to see confirmation on some kind of retest, so I am not really interested in the short plays, but looking and waiting to add longs again. I did add to some long term positions last week in US equity and Japanese equity funds, but the major trading position is in cash.

I have always preferred the wave count where the March correction was an "A" wave and the decline we just saw this summer was the "C" wave to finish it. Can we see new highs by October? Very possible IMO.



Here is some great EW analysis by Dsquare.

Dsquare

cheers,

john

hi mss,

You'd have thought we would have made more progress for building the bull case. Apparently more time is needed. I'm not that surprised. $SPX 1485 still looks like it is going to be major resistance in the coming week. The negative divergence seen in the $SPX:$VXO against Friday's high is not encouraging.



cheers,

john

There are a couple of things that bother me. I have spent years studying the VXO and one thing stands out, the actual number is useful ONLY in the short term and its relationship to price. On the other hand divergence and conformation with price sometimes is a very predictable tool. There are doubters so up front, nothing is perfect.
The actual VXO number is still very high relative to past history and price action. The chart below has %BB (yellow lines) and a 8 ema of the ratio of VXO inverted. ($one:$vxo = inverted, views better)
I have marked some CONFORMATION points of price relative to VXO. RED price decline period, GREEN price rise period. I have marked the crossing of the center line with significant movement as conformation of direction change. Note May-July '06 and compare with June-now, which has no conformation UP cross of price yet. A longer term chart is also displayed with more points marked.
History of the VXO has indicated that price and VXO move somewhat together direction wise and we do not have that at the present.
Not sure I explained it clear enough, so ask questions.
First chart will up date.



This is a longer term chart of the one above.



Questions welcomed.
mss

Here is another view indicating the same thing. VXO has not reached a "bullish" mode yet, based on price. We ccan and may have price bounces, but a complete bottom is not yet in IMO.



Comments welcome,
mss

Scott,

I've studied the VXO and now the VIX for some time too. I've found that they correlate pretty well, though if you want to go back historically, you have to stick with the VXO. There are a lot of ways to look at it short term. E.g. I run a MACD on a 30' to get early warning of trend changes. I used to have a trading model based upon the daily and a set of BB. It tore the cover off the ball for a while then quit.

I mostly use it now as a heads up indicator. My favorite permutation is the Relative VIX. This is a measure of the deviation of the VIX from it's 200-day SMA. Now, I can theorize as to why this indicator works as a bottom spotter, but the bottom line is, it's VERY good and has been for a long, long time.

How do I use it? When I see an "excessive" reading, I go on alert. I look for confirmation from sentiment measures. If I have them, then I have a "go" for a Buy as soon as I get price and/or breadth confirmation. During the positive part of the seasonal cycle, I'm quicker to buy, and during the negative part, I'm slower to buy. BUT, when you get the relative VIX up there, it's really just a matter of picking your spot to get long. It doesn't mean that we won't test or even go lower, but you're going to get a rally (as we have been).

Take a peek at the last chart (BTW, there was an error. The Relative VIX is lower than at the June 06 lows, though not by a lot).

Click to view attachment

It appears that my original forcast made on Aug 7, start of this thread, is holding up. We are still trending down
with lots of bounces, which may come to a screaming halt very soon and just be down.

The other forcast made stated that if the Green line was broken to the down side, we could/would be in a very dangerous position, price wise. Chart below.



All of my charts in this thread update except one. Stay tuned, time is running out for a IT "bullish" outcome.
Comments, rebuttles, suggestions, etc. are welcome.
mss

hi mss,

I bought SSO yesterday and some SPY Nov 148 calls. I suspect it will be a good entry, but we'll see.

Meanwhile I watch this chart of yours. It would not surprise me if this chart confirms a bottom next week.



cheers,

john

john, here is a slightly different way to look at the same VXO.
Until the GREEN dotted line is crossed to the upside, we are in a "bouncing-forming" bottom. Then it has to cross the RED HRZ. to really confirm the bottom is in. I know I am swimmig aganist the tide here, but It's my tide , time will tell.



I agree, we should know something within the next week or so.

Best to you,
mss

mss, thanks for the chart. Real hurdle is 1504 and stays up there with no plug pulled. Until then still Looking good swimming there in your tide.

Took profits on SSO and SPY calls. I'll look for reentry.

cheers,

john

hi mss,



Those words may prove prophetic.

The $VXO is gearing for a move. Which way though? A test of the 50 dma for the $VXO (on daily chart not shown) is coming but what then? Things seem to be heading for another pivot around FED day.



Let's say the $SPX can take 1520 next week. Then the $VXO will need to drop substantially from here to get these charts of yours into a bullish mode. Otherwise it could be a lot of sideways meander (or worse) until later in October.



cheers,

john

Why is the September volume thus far as low as the late August volume?
I would expect late August volume levels to be relatively low, but why are we seeing such low levels in the post-Labor Day environment?
It's unusual, to say the least.

So, whose stepping in here with positions in front of the FED tomorrow? I think I'll pass.



cheers,

john

We going to know soon.

hi mss,

I think we can safely assume the bottom is in based on yesterday's events. The 4.5 year low was in August as projected by airedale. Hard to beat his Hurst work. I guess I should have stuck with my Sept. 10th long entries but then FED days are just something I can do without.



The challenge now is how to get longer in the coming weeks. I may have to wait until late Oct. before getting too aggressive. Certainly that applies for precious metals as well as I cannot see a good entry point right now to add to a core position.

cheers,

john

Changed some of the charts above, you moght take a look.
So now we wait. Chart below has all the congestion points thru 9/14. Will change and add thru 9/21 if needed.



btw: The bottom may be in, but is not confirmed till VXO crosses above the RED line in VXO chart.
The fun is just starting.
mss