Friday, November 24, 2006

Terminals are tricky

Terminals are tricky, which is why even when most e-wavers detect them, they fail to trade them. The problem with terminals is that they don't unfold in a text book fashion. Either they end in a throwover, giving the illusion of breakout and scaring the heck out of the short sellers or they truncate, keeping folks waiting for that another not-to-come leg up. In this case, it looks like a classic case of truncation to me. Wave b unfolded as a irregular flat and wave d as a triangle (alternation) and then there's waning momentum from wave a to wave c to wave e. We failed sharply after wave e. Then we went and backkissed the broken wedge and failed sharply again today morning.

Both my terminals calls i.e ending diagonal pattern calls in 2004 and 2005 were right on the money. One can go back and search my posts on I have reasonable confidence that this one is a terminal too. If so, we should see a fast selloff to SPX cash 1360, virtually giving no opportunity for anyone to position short.

This is a unique point in the price structure where the pattern, price-action and the momentum are all converging to a sell !

Short from ES 1407.

Enjoy your holidays !

Tuesday, November 21, 2006


In my last post i said, my hourly went to neutral and closed all my shorts and went flat. In hindsight, it was a good decision. Now we have a better price to short and all my ST indicators are lined up.

My best guess at this point is a rally in the morning to around SPX cash 1412-1416 area and then a strong selloff. If we do get the rally, i will be shorting the strength. Instead if we breakdown below the channel shown on the 120-min chart, i will start shorting the bounces. Either way, a ST top is forming right here. If i have to describe the 120-min chart in one word - GROSS !

I do not have enough indications to call it a IT top yet. But the ST selloff could blossom into a IT selloff. Stay tuned....

Bottomline -> ST - bearish, IT - bullish, LT - bullish