The Daily time frame shows a confluence of 2 swing projections and the 78.6% retracement level near the 92.0 area, and this has been established in recent posts as the target for the current intermediate term rally. We are now in a second swing that started at 0.88.

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Technically speaking, today’s recovery is a welcome development considering the extent of the USD/JPY’s decline over the past week or so. In fact, the USD/JPY almost tested 88 before jolting back up above 89. However, downward pressure does remain on the currency pair since the BoJ and DPJ are still…

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Technically speaking, the Aussie has multiple uptrend lines serving as technical cushions along with intraday, 3/2, and 3/1lows. As for the topside, the Aussie has multiple downtrend lines serving as technical barriers along with March highs and the highly psychological .90 level.

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The previous video post for the GBP/USD pointed out that the next target for the GBP/USD as it continues to decline aggressively is the 1.45 area. This week, the market has found support at the 1.4850 area, and a retracement to 38.2% materialized. The market fails twice to rally above…

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Technically speaking, the Cable has our 1st and 2nd tier uptrend lines serving as technical cushions along with intraday and 3/3 lows. Additionally, the psychological .150 level could work in the Cable’s favor shout it be retested. As for the topside, the Cable faces multiple downtrend lines. Our top tier…

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Makes a very nice 5 wave move down. It even shows alternation between waves ii (sideways) and wave iv (sharp). And wave iii has no internal awkward overlap and a nice down candle smack where it should in the middle that would form the “blue box” area.  There really is not other sensible way to label this move. Now lets see if it can tranlate to the cash index.

Slowly like a glacier, the underlying financial apparatus that allowed the markets to achieve astounding highs will be dismembered bit by bit. They are still in the talking stages but it is recognized that something must be done.
http://www.marketwatch.com/story/volcker-rule-targets-all-financial-institutions-2010-03-03

Eventually that something and everything they do will ensure deflation in the markets. It just makes common sense. You have a “wild west” going on right now with practically unregulated prop trading, CDS markets (bets) and massive dark pools, fraud, insider trading and agencies, the White House and a Congress enabling it all. So with all that, any change will be to the “less wild west” side of things.

The next Congress will not aid and abet so much that you can be assured.

No where at any time on earth has governments been able to engineer and control mass social mood.  They like to think they can but they cannot. That is the hubris that brings down powerful nations time and time and time again.

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[Update 10:10PM Although not a short-term timing tool, the "ALL IN " chart seems to reflect that, well, everyone is indeed going all in.  Parabolic in a way. Definitely a divergence in that new highs on this chart but the market is no where near its old highs. The momo machines will reach a limit.]

[Update 9:15PM: Black Monday discussion.

A bit old, but I laugh at  how the game of media stories is playing out over the Greece situation.  Why did Germany become the focus? Obviously because without Germany, the EURO would cease to exist. But Angela Merkel has already emphatically said several times that they will not bail out Greece.  First, there is no legal jurisdiction for it! (and she clearly stated such). Second, the German public would burn down some public buildings if they did pay for anything that you can be sure.

Germany has made some tough choices on its citizens over the last few years.  Additionally, the Germans have no particular love for the Greeks nor vice versa I think.

So amid all the posturing, Merkel is basically saying , We are not helping the Greeks, and if we wanted to, we have no legal means to do so (as opposed to our FED bending laws every which way they can) In the end, Germany can go back to the once-powerful Deutsche Mark. The citizens would likely support the move in full.

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7339784/Germany-refuses-to-be-bounced-into-Greek-rescue-deal-by-EU.html

So basically all the news stories and talk and "documents" being passed around is complete and utter nonsense and that comes pretty much from the Chancellor herself. Yet the media keeps spreading the lies and rumors and stories for who's benefit?  She also said in another story that Friday's meeting with Greece is not about any bailout talks.  I for one actually believe her.

http://www.marketwatch.com/story/merkel-warns-of-bank-scandal-on-greece-reports-2010-02-17

If you believe the market needs sparks to start a massive selloff, Monday would be a good day considering I think Friday's meeting will prove fruitless.  And yes we have been conditioned not to go short into the weekend. I will on this weekend.  And the IMF doesn't want to hand out to beggars, lord knows there are 30 waiting in line if that happens!  But our sorry-ass FED will find a way to do the funneling....

So yeah. Black Monday type stuff. I haven't used that word in well over a year.  This is the "Lehman" of the sovereign debt problem (although by money standards, its not that much debt compared to Illinois!). This is the "test". We did the Dubai thing, that was like Bear Stearns. But they will want to see what happens if Greece is not bailed out. And I don't think the market will react kindly.

[Update 6:51PM As far as the overall count on various indexes, its open to a lot of interpretation at the moment. And most chartists would have valid points no matter how you counted it.

Its probably appropriate that there exists a mixed bag of counts. After all, some sub indexes made new highs so it makes sense that the previous down move counts as an ABC "three".  But other indexes could perhaps not make new highs and the Industrials is a prime candidate.

Just about any count at this stage will have some spots that may not look "ideal". But thats probably a function of a market in transition back into a bear mode with non-confirming tops.

So whats the point? The point is not to get locked down on the nitty-gritty and take a "it cannot be that because of this" type attitude (I'm guilty) in counting because you going to get flaws no matter how you shoehorn it at this moment in time.  Its actually good that it has everyone going every which way.  If all the indexes make new highs than this is all a moot point.

I still like this count on the Industrials.  And I still have a problem calling this a Minor wave  2.  Even on the cycle high in 2007, the NASDAQ made a new high on the SPX and DJIA Minute [ii] wave not Minor 2.

So yes its not perfect by any means. In the end it doesn’t much matter at this stage as we are looking for 5 more small waves. The blue upper target box and 10500 seems like a worthy target. Then after that we see what happens.

The bullish percent indicator of stocks on the SP500 has now finally moved to an expected retrace spot if this is Minor 2 (or Minute). Yes it took some time in doing. Notice the RSI did not stop at the 50 mark as I suggested the other night and that it would keep going toward the green arrow.  We are about prime for a wave three down.

[Update 4:57PM: The daily chart of the SPX shows the "twos" are perhaps connecting.  I still say it could be Minute [ii] because I cannot see a proper Minute [ii] on this chart if we label it 2 instead. Of course if the SPX makes a new high, its a moot point. The previous twos in P1 stopped right about where there RSI is now.]

The move up today looked like a zigzag three but it can be fooling us. So it could be a b wave in an expanded flat of a wave (iv). The tight channel broke finally. Does this mean the up move is over? Could be but once again 1113 key support must be taken out to prove it.  So the wave pattern is set, and the moves should be easy to confirm because the market cannot go too low for a wave four and should hold key supports.  On the SPX, it should not lose 1113 support I would think if there is weakness early tomorrow.  We are looking for a volume down move to break those kinds of supports. 

Again, the move up today looks better as a zigzag three rather than an impulse.  So we’ll know soon enough if this up structure is completely over.

However yet another potential shooting star and this one is black (gap up that closes lower than the open) That is a potential indication of exhaustion and marking a near-term top.

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Levitating act overnight above support. Yet there was a new low overnight as compared to yesterday’s afternoon low.  Stochs and MACD are starting to reveal some tiredness. Volume candles are not all that bullish and just trying to maintain support.

Bears need good news like yet another Greek “austerity plan”. LOL. Is it any wonder the people of the world are in such a foul mood?  The pack of BS fed on a minute-to-minute basis by the worldwide media over the last many years is too much to bear anymore.

A revolution in communication is a 2 way street. Although the powers-to-be would like nothing better than to suppress those that disagree the genie is out of the bottle.  People are not dumb. 2 + 2 will still always equal 4, not 8.  Yet our governments and media pretend it can equal 8 and you’ll all be ok, “trust us”. And they keep promising more of what they do not have, nor have any right to.

Slowly, mass Ponzi scheme recognition is occurring and no serious attempts to rectify them. Instead they dare to make it bigger.   The bear market has a long way to go…

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[Update 9PM: Australia.Real Estate. Bubble? (like Canada) Anyone care to comment? I know we have some Aussie, Canadien readers.]

http://www.marketwatch.com/story/australian-real-estate-prices-continue-to-surge-2010-03-01
[Update 8:40PM: Really for the first time in BIDU's existence there is a big price performance divergence with Google.  I wandered in the desert while listening to some Doors and seen the snake.]

[Update 8:11PM: When things get a little questionable on the longer term, its best to switch views and concentrate on the squiggles sometimes.  To achieve a new market high for the Wilshire, the (v) is going to have to do a bit of an extension. However (iii) has already expanded at least 1.5 times (i), so for (v) to make a new market high above 11941 (Jan high), then (v) is going to have to extend yet another 1.5 times (i) which is asking for a lot and not typical. (unless we get a massive blowoff top)

So based on this squiggle count, I estimate the Wilshire will fail to make a new high. But the NASDAQ probably will if this count is correct. The DJIA will not and the SPX will not.

So that would be all the non-confirmations in a nutshell for P2.

However today ended above 1000 tick as Cobra pointed out and tomorrow could be much like today, flat or up by not huge. More to drive the bears crazy.  Wave i and ii of (v) of [v] type day unless this sucker proves ripe for a turn down.

The overall count for the markets is when this WILSHIRE 5000 finishes its count on this squiggle structure up, then the market up moves will be over. P3 can then commence in proper or wave 3 down for those indexes that do not reach highs. Just thinking out loud here folks…

[Update 6:45 PM: I have been singing a song at work that goes: "Bee-dooooo, bee-doo-bee-doo-bee-doo, Bee-doooo, bee-doo-bee-doo-bee-doo".  Keeps me sane that a Chinese internet company, operating under a thoroughly communist government that values heavy censorship, is selling for $525 a share.  INSANE! BOOYAH! how bout that?

Well, this sucker is so far corralled inside my magneto target box (that I hastily had to put together when the ED pattern was a bust) and is sporting a potential bearish engulfing candle.  But volume is light.  However did anyone notice that Google finally caught a bid? Is the day of wreck-on-ing finally arriving at BEE_DOO's doorstep?   Lets go to the squiggle counts below this chart:

The squiggle don't look too bad.The target range for that ascending triangle is $525 and some change.  So far, it counts well as a 5 wave move starting from the $406 spot.  Key support lies at $515, some support at $505 (likely just above $500) and then key pivot support at $495.

Using the base, acceleration and deceleration channeling method, the whole thing looks pretty decent.

[Update 5:10PM:  The VIX , and indeed this market is seemingly at a critical juncture. Although the rally is impressive from the 1044 low and much technical damage has been repaired in the process, the VIX is at long term support.  It almost seems as if the market cannot afford to "pause" in its mission to keep painting ever-upward tape.

The VIX is due a bounce. The total lack of fear back into the market is impressive.  To get the market to challenge the 1150 high, its likely going to have to wipe out 5 months of positive divergence on the VIX daily RSI and take out long term support once again. In other words, if there was to occur a final market "melt-up", we are getting close to that happening.  And the VIX is likely to have to have a melt-down to do it.

Indeed you have to be truly fearless to buy at this stage in my opinion. As SAB said in comments, the MM's aren't dumb.  They may be supporting the market but sooner or later they too need an out.

As I said the market has retraced P2 in sufficient time back in January. If there is a P3 still to come, then its on "borrowed" time so to speak and it seems to almost know that. The window for hiding the coming depression is growing smaller and smaller. QE by the FED is almost done.  Interest rates are creeping.  By summer 2010, we'll likely see signs of economic contraction or a big stall (I actually think thats happening now) again in the economy signalling a double dip.  Thats what they'll call it, but most Americans will silently suffer and know it to be a Depression.

Already this week they are goosing "expectations" for the coming bad employment numbers and blaming snow as if that kept companies from hiring! Total bulls___! And if they are not bad who is to believe the numbers anyway? Its all a lie. But you cannot hide a Depression forever. I think the market knows this. Social mood is not getting better and we are no where near riot stage.  So the bear market should have a LONG way to go.

So hence we are getting unclosed gaps because seemingly the market cannot handle closing them.

I don't like the Wilshire tracing above 78.6% Fib so I feel largely defeated here short term. The e-minis traced a large flat from premarket through the low today. So its doesn't yet look done to the upside. At least not at this moment.

So back to the VIX:  It has a potential reversal candle. But again needs the follow through.

The Russell 2000 achieved a new high today. Wilshire retraced from its Feb low above 78.6% which is generally a bad sign for bears.  However there are a few potential shooting star candles if we get any kind of selling.

The RUT makes a nice 5 waves up from B. I showed the squiggle count here http://4.bp.blogspot.com/_TwUS3GyHKsQ/S413OGp8J5I/AAAAAAAAELk/lZ1Nni7ZGWQ/s1600-h/rut1.png  Its possible/probable it has only topped at (iii) of [v].

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[Update 3:41PM: Possible RUT squiggle count for [v] of C.]

Holding upper support for now.  As a side note, I had been thinking about all the public attention to the EURO and how shorts have piled on and even hedge funds were “advertising” their positions in the Wall Street Journal which of course didn’t make sense. Not that the Euro hasn’t shown weakness.

But I think its just a convenient diversion.  It could be the real target of the hedge funds is the British Pound as everyone focuses on the Euro.

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The 88.76 target was met with 3 pips variance. The resistance at 89.50 is critical and while it holds there is probably a stronger risk that we’ll see 88.33 first. Watch for a bullish trade set up there as this should trigger a deeper pullback. Only an earlier break above…

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The Yen appreciated while the Pound depreciated sharply against most major currencies yesterday. The Yen recorded a low of 88.80 against Dollar (USD-JPY) and 119.64 against Euro (EUR-JPY). Though it has depreciated slightly since then today morning because of month end demand from importers, the technicals suggests that the Yen…

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The EURUSD attempted to push lower yesterday, bottomed at 1.3451 but closed higher at 1.3549. On h1 chart below we can see that price has slipped above the minor trendline resistance (yellow) indicating potential upside correction testing the upper line of the minor bullish channel. The main scenario should remain…

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Technically speaking, the Aussie has multiple uptrend lines serving as technical cushions along with intraday and 2/12 lows. Speaking of 2/12 lows, investors should eye our 3rd tier uptrend line since it runs through these levels. Hence, a failure of our 3rd tier uptrend line could yield a retest of…

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Euro 1.3560 Initial support at 1.3497 (Feb 23 low) followed by 1.3444 (Feb 19 low). Initial resistance is now located at 1.3692 (Feb 23 high) followed by 1.3788 (Feb 17 high)

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[Update 4:51 PM: The VIX daily had the lowest oversold reading on the daily since early 2003 on the Ultimate Oscillator indicator. Not sure what this means but thought it was interesting. Bounced up today. But its a setup to show positive divergence in this indicator]

The move from the low seems, in a way, to be behaving in a big 5 wave move-type structure.  Going back to the DJIA is always the best because it always seems to follow the trendlines the best and at critical moments has the best structures.

It seems the market really worked itself back up to get one more crack at a true breakout so I will respect the price action and give it a potential count.

The chart below is my favorite count for the moment in just about everything. And before you say to yourself “well that cannot be because of such and such”, well all I can say is that no matter how you count it, its not going to be perfect assuming that this is just a retrace wave [ii] or 2.  This also supports the notion that we are only in a Minute degree sized wave.

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[Update 8:17 PM: The SPX daily shows the 13/34 situation. A cross seems inevitable unless a hard move down occurs which is what the primary count is at the moment.  Even if it does cross it could turn out to be false. You can see 1113 resistance is the key.  Challenging this mark in A/H's on the futures and then a couple of times on the cash index.  Bears would hope any retrace higher holds under 1100-1104 and then it drops hard on a failure to take back support.

BPSPX, or S&P bullishness actually ticked higher by .02 rather than go down even though the market dropped some 1.2% on average. Thats good for the bears.  That indicates a good deal of people believe this is just a pause or a correction in the charge higher. They may be right. At least bearishness didn't increase.

And finally I think they are voting (or just holding a meeting) on SEC rules for shorting stocks tomorrow.  If there is one piece of news that I fear as a bear, it could be that because that directly affects "the game". But ya never know how the market reacts to such things.  If this is a wave [iii] or 3 down, then its going down.  

The market is always an opportunity.

[Update 7:52 PM: I know I am having no luck with the BIDU trade so far (I'm holding for a Google announcement - which might go against me - who knows), but I like HD's chart wedge pattern.  High volume could indicate an exhaustion if this is a wedge. At the very least, I think they fill their recent gap up. Disclosure I shorted HD today at $30.77 for a long term short trade. Stop is $32.38  based on 5 being shorter than 3 (wedge pattern) Price Target: $22.

Smaller CMF peaks helps confirm the wedge in my view. Short interest on HD of course has dropped to a low in quite a few years.  They squeezed it out.

I know it looks like a breakout and maybe it is, but the waves up are not forming an ascending triangle in my opinion. Rather its a wedge.

You could say HD could hit its blue box target. Remarkbale over 61% retrace since the Housing bubble high. But a constant squeeze will get you there. Of course reality is not that good.  Big resistance overhead.  I don't think it holds it.

[Update 5:57PM; According to EWI, the dollar daily sentiment readings are very high which means it could turn down soon. What I don't like as a bear is that equities have been following the inverse path of the dollar lately.   So add all that together, if the dollar turned down hard, and equities went up, that implies this is not a wave 3 down but a correction in the market and it will attempt new highs as the dollar gets crushed and the Euro gets squeezed higher.

Doesn't mean it will play that way of course with the inverse relationship. The markets and the dollar could both tank at the same time for all we know which is just as likely perhaps now that we have been "tempered" for a positive equity = down dollar relationship for a bit.  As a commenter showed last night, the 1987 crash saw both the dollar and equities plummet hard.

Anyways I try to make sense out of the dollar chart.  Lots of a-b-c's up which may be an ending diagonal triangle.  And since currencies can have extended 5th waves according to Prechter and Co., I drew this one up as one. Here is one potential count. Yes some things look retarded I admit but the currency charts usually do. After all this is a basket of currencies we are talking here!

[update: I actually think I have the degrees wrong and we are looking for the top of Minor 1 not intermediate (1). Sorry too lazy to change it]

And the all-hours hourly chart shows the final wedge potentially forming.  If this played out, then the retrace target area is about 78.  We’ll know in a few days if this is correct and how the market reacts.

There is a lot of action going on obviously. Currencies are swinging wildy and the e-minis all-hours has a double-top at 1112.75.  Both e-mini highs occurred in A/H’s which means the cash index hasn’t traded at this e-mini high yet.  The 1100 line is the battleground area. The e-minis sold off twice through this area in big down red hourly volume candles.  One was last Thursday on the rate hike news.  Today was on the consumer confidence and bank news.  So needless to say, 1100 is an important area in the e-minis.

Yet important support beneath the 1100 area was held firm today.  And you can see the reversal candle occurring as I type. Whether or not it holds I have doubts. Technically there is no positive divergence on this e-mini chart so there is no reason to believe that a near term correction or low has been set, at least using that method or clue.

The down volume bars favors the bears on the e-minis the cash index is not quite as bearish for today.  The SPX closed under the 50 RSI and the DJIA and NASDAQ and Wilshire did not.

The Wilshire index did impulse down in a very nice wave structure today.   But there are a lot of cross-currents going on as we’d expect.   Its a battle right now.

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