Monthly Archives: March 2009

BUY SPX 680 LEVEL

We need to buy 680 with BOTH hands on the way back down this week. 

We should see 688 very quickly and then 680 and then we reassess the “crash” call but I think it’s out the window as I look at how damn bullish the intraday model’s look. 

It’s also possible that what I see as a crash window will take them back down to that INDU 6426 Fibonacci target but that’s close enough for us to start looking at that strategy of buying weakness at 680 and below as opposed to being overly cautious about a crash STARTING at 680. 

I think we do a straight-line down to 680 then basically MELT-UP to 757 and possibly EVEN that 842 magnet into the end of March/first week of April.

Full report coming soon

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SRS and DUG POSITIONS

We’re going to try to trade around the remaining SRS and DUG positions.

Go ahead and take profits on both the SRS and the DUG at the mkt. here (this takes us to a 0% exposure in those names because we took 1/2 our profits in them last week.

Full report coming soon

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Finally! SPX 680.

We’re also at INDU 6565 (another major magnet) and we’re approaching that Fib number I’ve been tracking since last summer at 6426.

Full report coming soon

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STOCK TRACKING MODEL PERFECTLY

I see scattered zones of weakness between now and the close today (including one over the next 30 mins.) but what really stands out is the persistent looking zones of weakness AFTER the close today as the futures continue to trade into the afternoon, evening, and night hours.  This has the distinct look of an after the bell negative surprise and it’s going to be interesting to see what transpires.

Stocks were tracking the model perfectly again today as the open faded from a plus 120 to a plus 30 tape but then they mysteriously turned higher, inverted and levitated all day.  No change in my work, we didn’t see 680 as expected today but should see it tomorrow as the crash window opens about 10:00-11:00am PST. 

Full report coming soon

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POSSIBLE CRASH INTO MARCH 5TH

The market topped at the open today as expected and then declined to lower lows on the year as expected but they’re wobbling around what the talking heads are calling “important support at the SPX 700 level” as opposed to accelerating down toward the BAM 680 magnet.  I don’t think this will last much longer but it’s fairly unimportant as we should see that 680 magnet soon enough.

The more important subject we need to focus on is when/if the SPX 680 magnet will break, creating a crash leg in stocks.

I know this is the most unlikely call yet (a crash after the market has already declined over 50% without a large counter-trend bounce) but the BAM model follows minute-by-minute data and the message is clear.  We need to prepare for a crash starting as early as 3-5.

3-5, not 3-4 as I had mistakenly said earlier, is the session that shows both a breakout in the volatility indexes (showing elevated emotion) as well as a breakout in the important TRIN model (showing elevated selling pressure) and IF the market tracks those two important models AND begins to expand volume in the indexes, we have a crash on our hands.

Adding to this bearish backdrop is the HUGE air-pocket that formed in the Nasdaq–as bottom-fishers moved that index in a sideway range since that November low–as well as the SPX “BAM speedline” which is colliding with the BAM 527 magnet this week and next.

My best guess (as I drill-down to the 1 minute intraday model) is for a move to 680 followed by a very short-lived, sharp bounce, followed by a crash beginning on 3-5 and accelerating toward SPX 527 into March 9,10. 

This is like watching a horror movie but instead of watching the knucklehead open the closest door (that the monster’s hiding behind) I’m watching these bottom-fishers buy this “magical” SPX 700 level and by doing so they’re creating additional sell signals.

Every time they bottom-fish, they generate NEW bearish data and sell signal set-ups (that they have to deal with hours or days later) in my model.

I know the number of down days seems unlikely (and I agree) but based on the model, they just keep digging the hole deeper and deeper.

I really can’t imagine a scenario where they escape from this without crashing on March 5 and 6 but we’ll see.

No change.  Hang on tight to those ultra-bear positions and shorts. 

Tomorrow shows sell signals overhead and the only window of strength I see is into 9-10:00am PST, so after they pass through that bounce window (no matter what level they’re at) the bottom should drop-out.

Full report coming soon

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BEAR ZONE AHEAD

No clue what’s holding them up but the tape action is creating additional BEAR zones ahead.

Look for any and all rally attempts to fail today (only creating additional downside velocity as they roll-over) as they attack that SPX 680 magnet before any shot at a decent bounce.)

The volatility model warned us last week that they will go verticle today through Thursday of this week so look for a bit of panic to creep into the tape today as they attack 680.

Full report coming soon

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