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Major Trend Change - Dow Turning Point

TheInflationist puts an order to open for a long position at 7480 $5/point; 7390 at $5/point; and 7320 at $10/point. Our indicators suggest a major trend change is due. The Dow has dropped by 1340 points from a high in 6 January 2009 - that is a fall of 14%. Prior to any trend change, markets usually capitulate or surge prior to the ensuing trough or peak (respectively) to follow. We feel that November lows could be breached - this will fit nicely with the chart and also with other indicators (refer below) but this will be followed by a strong multi-week rally. Of course, nothing is certain - our technical analysis is as good as any out there without the test of time. Our portfolio is currently up >30% in about 1.5 months - we attribute this to sheer luck until we are publishing this from our yacht or private jet (we will let you know when that time comes). Some of the indicators we use are unique to TheInflationist. We find currency and commodities useful in timing a trend change. The Euro/AUD is inversely related to the indices - ie it goes up when markets go down (and vice versa). Looking at the chart, it looks set to peak but most likely has one last push up. We are expecting at least 2. We will place an order to open at 2.01 (short Mini). This suggests that tonight or tomorrow night, markets will make a big move down. Please note that this may present as an intraday low - recovering most if not all by the close. It is more likely for the market to close at a level below 7550 for it to be registered on the daily charts. We feel this inflection point is due this week - we are pencilling in 17th to 19th February. This will be a multi-week rally of at least 10%. So, do not be penny wise pound foolish. If markets fall tonight, anchor a long if you do not have any positions. Make sure it is light enough for you to fire more longs if markets continue to go down (it is almost impossible for one to pick the turning point, so please anchor lightly). A very reliable indicator that you are not over-leveraging is what we call the ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“I want the market to go downÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ indicator. If you are cheering when your screen is flashing red, then you are fine. On the contrary, if you refuse to go to bed (for our Aussie traders) for fear of markets going lower, then you need to lighten up. It is better to feel that you will be making less than to lose it all.






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Thanks Kelt. Yep, most expecting a turn any tick of the clock. I wudda thought that 7444 would hold in order for counts to be accurate, but I suppose an intraday overshoot would still keep things inline. Expecting maybe a 1000 pt rally before the wheels come off. I guess there will be a lot of stop loss hunting and a bit of driving the price down in order to secure a good entry for the bigger guys.


I'm still very cautious here. Too many traders expecting the same thing at the same time. Makes me wonder if we could be in for a bit of a surprise.


Obama is signing the "urgent" stimulous bill today. You know, the one that was so urgent that they couldn't hold the vote for a few days in order to give COngress time to read the darn thing. Curious how after the vote was secure, Obama has delayed signing it for 4 days in order to plan the signing party. Alot of anger about this is out there. People know that they have been played. It makes me very cautious here. I want to see that Wall St. is not gonna send a message here before I jump in.

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Wal-Mart Earns $1.03 a Share in 4Q Vs. $0.99 Est., Revenue $108 Billion Vs. $109 Billion (Story Developing


hi Dan

a sami-bluff by the big boys on wall st--------if TG don't come up with the good plan and big chunk of $$$ we gonna crash the market, then crash whole financial system, we don't have pay for this year any way!!!



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Talk about pushing things to the very edge of the cliff. The DOW closed 1/10 of 1 point higher than the critical level McHugh mentions in his mid-day email:


Stocks are dropping sharply Tuesday, expressing strong disapproval of the inadequate stimulus plan just passed, concerns over the problems with Eastern European banks and the exposure to U.S. banks with those banks, and the latest massive fraud, the SEC alleging an $8.0 billion fraud with a Texas firm.



Technically, Tuesday is a fascinating day. The Dow Industrials appear intent on closing below their November 2008 closing low, confirming the Transportation average, which if that happens, will be a Dow Theory reconfirmation of the Primary Trend Bear Market Sell signal.



We are expecting a temporary low this week sometime, as we have a phi mate turn date ideally scheduled for tomorrow, Wednesday February 18th, 2009 which of course can occur +/- a few days of that date. We also are inside a Fibonacci Cluster turn window from last Friday, February 13th through next week's February 23rd, +/- a day or so. Clearly this coming turn will be a bottom. It should lead to a multi-week rally, but perhaps from lower levels than we see now. This next rally could be the last chance to raise cash before a coming cataclysmic plunge, Supercycle degree wave (C ) down, which could get started as soon as this spring.



Intraday Tuesday, as of 12:45 pm EST, we see the Industrial's and S&P 500's weekly Full Stochastics remain on a sell signal but not quite at extreme oversold levels, allowing for more decline short-term. The Daily Full Stochastics are also on sells, approaching bottoms, but not quite there yet, allowing for a bit more decline short-term. The 30 minute Full Stochastics have reached extreme oversold levels, so a very short-term bottom is approaching (may not quite be there yet) for day traders. Same with the 15 minute Full Stochastics.



From a short-term Elliott Wave perspective, this latest decline that started from Friday, February 13th's 839 level in the S&P 500 is in process of completing five waves down. It looks to us as if waves one and two are done, today's plunge as of mid-day Thursday is most of wave three down, needing a bit more downside to finish, to be followed by a small rise for wave four, and then one more decline to lower lows for wave five. This is a very short-term Elliott Wave count which I will chart for you tonight.



As of 1:00 pm EST, the Industrials are down 268.97 points, or 3.4 percent to 7,581.44 . The level we are watching is November 20th's 7,552.59, closing low for the move from October 2007. A close below that level gets us a reconfirmation of the Dow Theory Prinary Sell signal, which would add growing evidence to our belief that a cataclysmic wave (C ) down move is coming later this year, one that could last several years and nail this Bear Market's economic coffin shut. As of 1:00 pm EST, the S&P 500 is down 32.32, or 3.91 percent, to 794.57. The NASDAQ Composite is down 56.62, or 3.69 percent, to 1,477.74. The NDX is down 47.04, or 3.80 percent, to 1,189.83. The RUT is down 16.50, or 3.68 percent, to 431.87.



The HUI is up 15.25 points, or 4.90 percent, to 326.41. Gold and Silver are up big, as are Bonds as we see a flight to quality and fear of a hyperinflationary depression.



We'll have more for you tonight.


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Hi Dan always read this discussion with huge interest...


Just wondering when McHugh talks about a cataclysmic plunge, does he refer to the gold and silver price (and stocks) to follow along with this plunge, or are they an entity of their own....



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