The Major lines in the sand ($NDX)

My last post is just that "speculative", I am not saying the market is going to follow that pattern over the next several months.
(although would not be shocked if it did)




I do strongly believe that the $NDX (NOT the comp, rut, indu, tran, spx) is the clear market leader for many reasons. (2 links below w/ rationale as to why)


- the spx head and shoulders "failed" break down was also a simultaneous clear BUY signal for
the NDX
- the ndx was the ONLY index that made a higher low in March 09, compared to Nov 08
- the ndx is the only index ALREADY back at "pre-lehman" levels here

http://erikmarketview.blogspot.com/2009/09/closer-look-at-leader-ndx-and-why-last.html

http://erikmarketview.blogspot.com/2009/07/nasdaq-100-ndx-gets-no-respect.html

I am short the NDX (via QQQQ) here into major confluence of resistance, for a short term trade
(target of 1595):
(chart above, as it has the cleanest support/resistance lines compared to other indexes)

- IF the NDX can break 1668.57, the next resistance up is at 1790
- IF the NDX can break 1790, the next lines appears to be not till 1995
- IF the NDX can break 1995, it looks to be destined for 2055.82

And those are the key levels I am watching to see the duration, and magnitude of this rally. The NDX performance as the leading index has proved itself over and over again all the way since from the bottom.

Shall see, I have no CLUE where the market will be in 2,6,12 months. My gut says lower
The only thing I can do, is play the chart, by scalping at key levels, with pre-defined stops, for quick swing trades.

The bearish "speculative" head n shoulders play-out for 2009-10

...continuation from last post. Cleaner chart.

- Fall from here to 880-920est over Sept to early Oct establishing the neckline on right, as the volume returns to the market and the manipulation takes a vacation (1 of p3)

- bounce to 960est, kick-started first by the "positive gdp of the 3rd qtr, announced in late Oct" and then lastly maintained by the seasonal anemic Dec holiday volume, establishing the complete right shoulder (2 of p3)

- the crash......starting in Jan 2010, and the "hype of the 3rd qtr recovery is now past tense, as well as the holiday anemic volume, collapsing through the main right shoulder

(3 of P3)

Disclosure: QQQQ sept 39 puts @ 0.31

A closer look at the Leader ($NDX) and why the last head n shoulders went wrong.

My Thoughts on why the $NDX is the real leader (link)

http://erikmarketview.blogspot.com/2009/07/nasdaq-100-ndx-gets-no-respect.html

.........
Why did that Head n Shoulders fail back in June..????

Besides "too many people were looking at it".....

................

- The last head n shoulders failed, b/c it was ONLY the spx (well the INDU too)

However, not the NDX (which is the leader) (see large chart)

- The same reason the Nasdaq had given an EWT signal that P1 was over, and that P2 was

underway WELL before the spx had. (which dano called back well before the spx rule

violation)

................

Lesson Learned:

- When noticing a bullish signal, ensure the weakest of index's is also forming it as well

- When noticing a bearish signal, ensure the strongest of index's is also forming it as well

..............

On a side note, It's tempting to speculate here, that in addition to this possibly forming out a short term head and shoulders right now, we may also being forming a larger head and shoulders (with the failed spx mini that occurred in June...being the left shoulder, and right now being the head) That would also fit it the scenario of many EWT's who say P3 is underway. If this is wave 1 of p3, then wave 2 of P3 would be the formation of the right shoulder, with 3 of p3 being the break of the neck line running from June. (hmmmmmm)

...................

At any rate, I am short as of the close Friday, with target being the current neck-line: ie NDX 1595ish (one thing at a time)

...............

Disclosure: QQQQ Sept 39 puts @ .31

The head n shoulders part 2 marches on....

............

spare the love (hate) goldbugs, I don't wanna hear it. That's WHY i sold all my DZZ (and EEV) on Monday. (and w/ profits too....for the DZZ portion it was almost even enough to to fill up my gas tank once, after the commission fees). I feel bad for anyone who was short gold after Monday. When things don't feel "right" at all....how does the saying go? "when in doubt, stay out"

Well, It saved by butt this time, by abiding by it. No reason to "fall in love" with a trade if your sentiment decreases while the trade hovers at nuetral.

http://erikmarketview.blogspot.com/2009/08/twilight-zone-bear-etf-crack-down.html

That is exactly why I went in all cash.

Again, what i would "like" to see, is a pump job up on anemic volume tomorrow from some fabricated jobs numbers. That would be awesome. (if we got that, I would strongly think of buying some puts before the close, actually I know I would, on the market, not gold)

........
-BLK puts to be specific, is one that I am looking at very closely and if it moves up tomorrow AM, I will be buying puts on it for a short swing. (unlike the intact spy wedge from 666, blk juuuust broke from its own) . I think BLK is as overvalued as they get. However I also thought sbux was overvalued 25% ago, and I still do. So i could be dead wrong. (that's what i get for gaming earnings) But if we get a pumpty pump tommorow, blk puts are getting some of my attention.

Hopefully, after this holiday weekend ahead of us, the SEASONAL volume starts to increase as it typically does for September, thus making it more difficult to manipulate the markets, and the 20 min prior to close "pump jobs", wont be as effective. But again, that's just bearish speculation. The main point is that more volume makes it easier to identify trends, be it in either direction and LESS prone to drastic moves by 1-2 players.

VIX leads, Gold follows

Breakouts: Tue....Wed

SPX: Looks time for a retracement move back up here is due to correct some of the down move from this week

.

VIX: has still plenty of room to digest its breakout, yet still be

above the wedge line.

.

Gold: same story as the VIX, just 1 day behind it on the pattern, appears off to the races.

.

USD: Coinflip, lines in the sand are clear and identified as well as narrowing.

.

Disclosure: 100% cash