SP500 Wyckoff 2.0 Update

By: readtheticker | Thu, Aug 11, 2011
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So your stock portfolio looks a bit like Nick Nolte, and you are scratching your head, is this is a real crash or a sell off to first support. Our information tells us the picture is clear, get ready to go long.

What we have:

  1. We have seen distribution on the SP500 since the Japanese quake. The big boys have been selling to the less informed expecting a mark down in prices. So far they are winning large !
  2. The much loved 1x1 Gann Angle from March 2009 lows is broken. We are watching for a shift to the right for a restart of the trend.
  3. Prices have fallen (close basis) to the Gann percent of 12.5%. This is where support is found most times on the first leg move.
  4. RTT TrendStatus says this is just a normal sell off in a still positive trend. Waiting for price action to confirm the bulls are in charge. Sure but for how long.
  5. QE has ended twice and twice we get a (so far) a mini crash. This is near exactly what happen in Japan when Government juice starts and stops. So you can bet the big boys are making bank if they are following Japanese QE history.
  6. assive Support at 120


The News

1) I read that Germany cant support Italy, and that it says it cant save the day. If so we may get SP500 printing 1000 very soon.

2) The FED may jawbone the market up with QE3 talk.

3) Who knows, the egg heads will be doing all they can to prop up RISK ON assets.


Conclusion

We expect a bounce that may last for 2 months before the real fun starts. If not the only other choice is CRASH to 100 on the SPY or 1000 on the SP500. Watch out for real strength in the US dollar, this will give you clues how serious this all is. We are looking the bullish side for now. The egg heads will sugar this market up one last time.

UPDATE1: Another smash down to 114 on SPY or 1140 on the SP500. We are now at the 16% percent level, we are also at the level when Ben Bernanke made his speech at Jackson hole Oct 2010 which started QE2. Watch out for buying. We want to go long but only after every one else has started to buy. Gold stocks are holding up well, thats where to go fishing. Nobody should try and catch this falling knife.

UPDATE2: Every one can see the head and shoulders on the SPY, we all saw the distribution within the head and shoulders pattern and every one expected the market to fall once QE2 ended, and Mr Market made sure it happened. Now its truth or dare, the expected bounce from the current market plunge will determine the trend for the next few months. If the expected bounce is sold off hard then new lows below SPY 100 can be expected. Volume on the upswings and downswings must be watched with an eagle eye. Wyckoff would go short if the upswing from current lows (SPY 110) is poor. The fact the massive 1x1 Gann angle is broken should tell us to standard aside until the picture is clear as we have no reason to be blindly bullish any more. The HFT (high frequency traders) and computer traders make the swings massive, 50 points on the SP500 is nothing these days.

SP500 ETF - SPY 2011-8-07
Larger Image

UPDATE3: This is why we expect a bounce. a few short term cycles says that the current bottom is in, the bounce should run into Sept 2011 at the very least. Assuming the current market plunge is over !

SPY Chart
Larger Image

 


 

readtheticker

Author: readtheticker

readtheticker
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We are financial market enthusiasts using methods expressed by the Gann, Hurst and Wyckoff with a few of our own proprietary tools. Readtheticker.com provides online stock and index charts with commentary. We are not brokers, bankers, financial planners, hedge fund traders or investment advisors, we are private investors.

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