Elliott wave count...

I'm always keeping my eye out for Elliott type wave relationships as often times they help mark shorter term turning points. There is always much debate about the correct primary wave count but sometimes wave segments seem to come in focus out of the blue and when I see them I latch on to them. In the chart below I highlight the battle that occurred up at the June highs, looking back on it that was one hell of a battle that was waged and I now believe it marked the ending of the bounce off the March lows. If this is in fact true then a wave count can be fitted which clearly defines wave 1 as labeled in the chart below. Wave 2 if labeled as a running flat shows very interesting wave price relationships between waves a, b and c, all of which ends with a brutal rally up to 929ish, characteristic of c waves is the steepness and the extreme levels reached on the RSI, (highest level since the March bounce began) Finally running flats tend to suggest that the next leg, (wave 3) should be massive and violent.

Another thing that might help exasperate the next leg down in stocks is if the crude oil market decides to head down into those low 50ies. The chart below argues that the turning point in crude might be close at hand...

I'm undecided for the moment....

I've covered everything except the GS puts which I may have to dump tomorrow with the way the intra day on-balance volume is looking on it. The S&P launched higher at such a steep rate out of what now appears to be a failed head and shoulders pattern that I suspect it will take several days to roll over if at all (perhaps something like the blue circled area on the chart) With out any clear signal via RSI I'm going to have to sit this thing out. If S&P does roll over then I will re-short on a penetration of the 884ish area (red circled area on the chart) other wise I believe there is a good chance we re-test the 950 area.

EXTREME TICKS

I see this as a last ditch effort to shake out some Bears via a retouch of the head and shoulders neck line from below. This also clusters nicely with the 50% fib from the top of that right shoulder while pulling the RSI up into over bought range.


I noticed that we've reloaded the $tick gun which should help us get a nice down side start to the day tomorrow..

crude weekly..

Interesting that the 50% fib level seems to be holding on a weekly basis. I'd like to see us penetrate that at some point to help the deflationist cause. Also if the top was in fact a distorted head and shoulders then the 1st target down has been hit.. I may hedge my SRS and EEV positions by going long DIG into the weekend...

SRS

Sometimes you can strip away all the technical indicators from a stock chart and just the plain and simple picture can give you a good feeling about near term price direction. SRS just has a nice look and feel to it for a long side trade.....

current channel

I see the outside chance that we could run up to the 895ish channel line though I'd prefer that the smaller channel contain this counter trend bounce....

The Deflation trade...

the chart below is an update chart which reveals the relationship between TLT and $comp.
With the green shoots now dead the long bonds can rally and send stocks lower...

My current situation..

call me scared but I reduced my risk which was spread out a little to wide off that bullish diverged RSI on the 10 min bars. That RSI signal offered extra lift into the close and it was time to take down the first leg of profits anyway. I'm out of my put option positions in /ES, OIH, HD and covered my short positions in GS also closed out of SRS, SMN, FAZ and DUG all of which had decent gains in them. I re-entered shorts in /ES as well as long again in SRS and a new position in EEV near the close. The idea was to narrow the focus of my Bearish outlook with just a few positions that I'd be able to manage a little better in the event of any surprise out of Alcoa etc. The further we slide down the more I'll concentrate my Bearish view via /ES on Globex which offers the ability to bail out any time of day or night and as we get into the heart of the earning seasons that offers slightly more peace of mind. I attached the summation index to highlight the near equal distance between down legs which at this point could stall the downward momentum, also RSI is very oversold though none of these things matter in situations where the tape may be about to snap and take us down sharply. So long story short, I am short in the hopes that we are at one of those points in time but some what flexible to bail if I'm wrong...

Looking for /ES 840ish on a closing basis...

I'm looking for 840ish minimum on a closing basis over the next 2 days and will be looking for reasons to cover shorts. Ideally we will see a few of those abrupt, deep and relentless moves down into a flat line type affair that allows time to relax and assess before rushing to cover but I will play it as I see it when we get there. Hoping to fatten up my puts a little on a nice $VIX spike before picking them.

/ES channel..

It looks like mini wants one more kiss goodbye at 900ish coming off a bullish RSI bounce.. looking to see the down channel hold...