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Saturday, October 24, 2009

A Bearish Solution

Currently the "True-Value" of the SPX is less than the Price by $4.00. That's my term, and the algorithm is known only to me, but my prediction is that Buyers will continue to buy at slightly inflated prices for a short while on Monday, and aside from the morning lemming rush, Volume will be low (the stops still need to be filled as usual) . Topping at about 1082 /ES, Sellers will break down, and Prices will fall on gaining volume. Should the 1082 level be breached I would be cautious with short positions as there is little resistance until 1092 /ES.

You may have noticed I have moved away from the Elliot Wave. I'm still a believer, but sometimes it becomes impossible to know if the count is correct.

I've call upon other technical indicators. MarketSpy is something I have been developing for at least 2 months. It is giving me a better grasp of the market than EW right now, and so currently I'm more into calculations, algorithms and scientific method than the nature of human behavior.

EW will gain it's footing in time, but there is a transition going on and it's not easy to count the waves right now. Fibonacci ratios suggest that there is a chance of higher prices. But most of us are traders, and only care about the intermediate general trend as a backup.

So right now we are on the precipitate of the market making a decision. We know it will eventually be down, but short term is on the line between new highs or a sudden crash. MoneySpy has a weakening hold short on the M60, the Daily is very close to a sell. and a hold long on the weekly. I'll try to keep you updated as best I can, but I've got a real job to play at too.

Below is a succession of my MoneySpy charts.
M30 (which is close to crossing the buy/sell), the M60, and Daily charts

These charts indicate to me that it is possible for a rally to new highs, but I'd rather be a Bear than a Bull right now.

Currently on the M60 Ichimoku Chart the Tenkan=sen and Kijun-Sen are at par. Both are below the Kumo with Price below them. This is a Bearish Chart to be sure. But the trend line from 10/2 has caused the price to pause, and it will be a significant break if the market falls below it.

The Awsome Oscillator on the lower chart is basically the Elliott Wave Ocsillator on acid. The thing to notice is the divergence from the last high. (sorry I did not mark it, but I'm sure you will see it) This could be a warning that higher Prices are in the near future. This divergence was also found on my MoneySpy chart, and so I'm a very cautious Bear, but a Bear by all means!

Analysis presented on this Blog has only informational, and educational purpose, and does not represent a proposal for buying or selling currency contracts.


  1. Is this moneyspy an indicator that you created?

    Also I have been using the Awesome for about a month and I am really liking it.

  2. Hi, I found it useful to add a signal line to the Awesome Oscillator, as explained by Bill Williams in Trading Chaos.

    And I'd love to have a look at your MoneySpy thinkScript, in case you're willing to share it..

  3. Yes it's a project I've been working on for quite a while. I knew what the approach would be, but finding the question to ask was the hard part. Once I found the question it took a bit of common sense and a great deal of trial and error to find the answer. I'll be honest it's just a few lines of code. But getting to this point has been frustrating and so I don't feel like sharing the code just yet. It's really not all that mind blowing, but I think the results are.

    Thanks for telling me about the Signal Line. I used a 5 period WildersAverage(AO,5); and it looks really good. In fact it is in perfect sync with MarketSpy, Even on different periods!

    I had to go back and look at the Awesome code just to be sure it was not the same. It's got some minor similarities but a totally different concept with completely different IDdataholders.

    I'll post a chart so you can see the results. I really can't believe the way this both get the same results from different data and totally different math formulas.


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