S&P 500 approaching previously stated levels

Two levels I mentioned in a previous post: the 1261 - 1265 range and 1296 to 1300 range.

These are the next significant levels, so watch for selling in the new year.  Remember no way the markets can disappoint Santa, higher the market goes up more people shop, translating into a "recovery".  That is the plan of action.  So I do expect that drifting higher for a bit longer, but  January / early February could be an interesting time.

I think the January options expiration (Jan 22) week will be an interesting one.  It will be interesting to see how the holiday numbers come out this year, I have a feeling that they are decent but honestly hope they are not very good as that means people have finally realized that they need to retrain their spending to pay off their debt.

Strange thing is the continued divergence with Gold / silver and the markets.  As the markets drift higher, gold and silver have flat lined.  I have a feeling they will converge quickly, either gold / silver jumped 2-3% or S&P 500 falls 2-3% or a mixture of gold/silver up and S&P 500 down.

As you can see since December 9th, silver has not gone anywhere.  Last 3 days have been exceptionally quite.

Not sure which direction but this beast might come alive soon.

SLV 3pm December 20th

A couple of POMOs happened today with 10+ billion in bonds being purchased.  As you can see they affected the silver chart dramatically.

Can you guess where they happened?

Important to note the volume around 2 pm.  In my opinion, that volume spike has placed a decent resistant point 28.65 on SLV.  In the morning. made a trade 7.03 to 7.16. And I am going to get a position by the end of the day.

Cyan = entry
Purple = exit
Start = 11am ish

This time period coincided with the POMO


Thought this was a very interesting chart.

From: ZeroHedge.com

S&P 500 Review - December 19th, 2010

Markets have continued to rally.  The Slow Stoch is embedded meaning strong trend.  The MACD histogram is starting to decline however the MACD line is well above the 0 level.

It is still my belief we are in a 5 wave, and therefore a corrective phase is approaching.  From the recent highs the corrective phase most likely will take the S&P500 to 1167 (38.2% retracement), 1140 (50% retracement and 200 day MA) or 1120 (61.8% retracement).

 30 min chart - Slow Stoch is overbought, expectation of small pull back Monday or Tuesday.


I have some put options on a 2x bear etf for the S&P500 for a January expiration.  In the mean time, I have been able to successfully play SBB and EDR on the TSX.  These metal mining companies have been hit hard last week as gold and silver tumbled.  However, looking at the current gold / silver price action it appears that they may have a good week.


Current gold price from Kitco
Current silver price from Kitco

HFT attack on efficient markets

My second article for a school paper on economics and market mechanisms. 
Will post an update on the markets tomorrow.

Website link:
http://www.insidermediagroup.com/features/hft-attack-on-efficient-markets

PDF version:
http://www.insidermediagroup.com/features/hft-attack-on-efficient-markets.pdf

Elliott Wave S&P 500

My attempt at a count of the S&P 500.
Interesting thing about Elliott wave is it is Fractal

Below is the Mandelbrot set, the most famous Fractal pattern.

I plan on studying Fractal math just to get a better understanding on the dynamics of a pattern.

From this website

These are my targets and the first one is around 1260.71

4 hour Chart

Hourly Chart

I think the 1300 mark makes the most sense at this point, as it is in the area of a Fib and it is psychological.  Also wave 1 = wave 5 equity is around 1292.70 which again is close to the 1300 mark.  W1 = W5 for time is about February 28th, 2011.

If this count is correct, the implication is that the 5 wave impulse from the lows in July will end.  This will lead to a correction.  At a minimum (38.2% retracement) the S&P 500 should fall to 1192.50 level, and the 61.8% retracement will be 1123 level.

I will keep updating this count as an experiment with Elliot wave.  Would like to learn more about it and judge how effective it can be.

S&P Elliot Wave analysis - Irregular Correction & EUR/USD divergence

I will start off with mentioning some videos that have provided an interesting count.



Target guidelines from the following was used:
http://www.esignalcentral.com/university/get/getManual/eSignal_Manual_ch9.pdf

Starting with a longer term chart

So Above is the daily chart.  It is a bit hectic, however, I didn't want to erase everything when zooming out.
Man thing to note is where we are in the wave count at this scale.   August 2010  terminated Wave 1.  I did some research on Andrew's Pitchfork  Video of action / reaction lines Here

Based on pitchfork time projection, mixed with Fib levels and elliot wave, a short term projected target of 1145 - 1155.  The big red dot.

Wave yellow B touched the 61.8% retractment of the breakdown of the markets in 2008.  This point a short term top, in my opinion until it is taken out. 

Once Wave 4 completes, wave 5 should go to modest new highs before terminating, leading the way for a strong down move in the indexes.

Closer look at the price target on a hourly chart.

On the shorter term count, the cyan count seems to have terminated, making the high 1235.

With a clear impulse wave down off the 1235 mark, the correction can be seen showing a bearish divergence.

So to sum it up, we might be about to continue a 4 wave down on longer term chart.  Which means news highs are expected, by next February.  Price target of 1255-1260 on the wave 5 up.
On the shorter term, it appears our irregular correction has just put in a B wave.  This means we have entered into a C wave down that should take out the A Wave at 1175.  With the target of 1145-1155 this price target is also 1.62 x Wave A which satisfies the fib targets of a Wave C.

From the PDF above on Elliot wave here is a picture of a irregular flat.

See more here

Just a EUR/USD update.  Bearish Divergence based on the purple lines.
Expect to see the Euro fall against the greenback.  Price should breach 1.26 if the divergence is to play out.

S&P 500 - December 7th, 2010

Weekly chart of the S&P 500: Interactive Charts powered by freestockcharts.com

Hello 61.8% retracement.  Today candle stick pattern was a Shooting Star

Lets attempt to overlay some Elliot wave

A bearish candle, off a 61.8% retractment is interesting.  Tomorrow look for confirmation.

On the monthly, it is always nice to see where we are currently over the longer term.