Short the ESM8 or S&P500 ETF

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Tuesday March 25th

The corrective wave b we anticipated earlier ended up becoming what appears to be Corrective Wave 2. As a result there should be a dramatic decline down to several possible levels. Enter short position right now or wait for confirmation break of 1330. We should test 1330 within the next 2 days. A break through this level would confirm the corrective activity.


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Update Saturday March 29th

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Update-April 6 2008

First round of cover stops taken out. The S&P correction is unfolding in a 5-3-5 pattern. Due to the structure of "A" we can expect a decline down to around 1320. The rally following this decline could be the final leg up for the correciton.

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Update April 23rd

SPX Declined to 1320 as projected, this being the result of a triangle. Corrective rally currently at 1379 S&P500. There could be one more decline down to 1365. Then an additional rally of 40 points. This upcoming rally is suspected to be the end of this correction (trend being down).

RIMM W3 of W5 Complete

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RIMM has reached short term peak. A correction is highly probable. Take some profit on the trade and buy additional shares at a lower price. Allow yourself to have an averaged lower price than $103. This will avoid the potential of getting stopped out to soon. If you purchased the stock when the recommendation came out your position should be between $93 & $97.


Buy 1000 @ $94 March 10th

Sell 500@ $105 March 13th
Buy 500 @ 97 ------AVG=95.50 March 17th

Sell 500@ 114 March 25th
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THIS WEEK
Buy500@ 106 or (LOWER) = AVG = 100.75 March 26th- 31st
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Sell 1000 @ 121= Trade Finished

SPX INDU COMPX Wave "B" or "5"

Decline is wave "B"of w4. This will allow for an additional rally up to 1305-1317. This remains my opinion even though this "B" wave fits ratio characteristics of a 5th wave. Due to the scientific nature of this research, even this seemingly subjective flaw can be explained through TIME.
Wave A's time consumes 1-2 days, Wave B's time consumes 3-4 days (exact minutes will be provided when my data provider quites blocking this information). If this first rally was the end of the correction then we would expect all upward market action to be retraced in less time than it takes to form. Since wave b's time exceeds that of "A" then we can conclude that wave b is also corrective in nature, and as such it should be almost completely retraced in 50% of the time that it took to form. This scenario would result in a positive impacting Fed decision occurring March 17th with a rally extending to 1305 , 1317, or 1325. WAVE 1-2 is Flat-sideways therefore the ABC of W4 abiding by the rule of alternation would be volatile.

RIMM Update

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Sell target on RIMM moved down from 115 to 113. This target is lowered because the initial 115 target was calculated on prices bottoming around 95.00. Two days following the buy rating, prices bottomed at 93.37. Were up about 11.00% in just 3 days so I hope that you all took some profits in the last 30 minutes of trading today (Mar13th). The last 2 hrs of trading showed extreme signs of weakness in the futures market. There was insider selling and a block sale on YHOO went through for over 2 million shares. The S&P500 *Resistance points noted in earlier postings were "temporarily" violated intra-day Mar12th, bringing a sigh of relief for the bulls. Unfortunately, prices were unable to close above our resistance target and as result we are still projecting a decline in the S&P down to a minimum of 1,244. On a relative performance basis, RIMM has positively diverged from the weakness seen in the broader market. This divergence means that any subsequent declines in the futures should be viewed as corrective behavior for RIMM. The S&P is allowed to make new lows but RIMM is not. Any decline in RIMM below 93.37 from this point on should not be taken lightly. The initial reason we recommended buying RIMM was because a major support level was calculated at $93.79 - $93.84. The daily closing price violated these levels by 0.20 -0.25 cents.

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Update Wed July 2. RIMM went much higher than I originally anticipated. The concept that upward corrective action for the S&P500 would result in upward impulsive moves for RIMM remained true. My original projection for this leg of the S&P 500 decline was 1,244. The actual number was 1,256.

$SPX Update

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Fed decision creates a highly suspect rally. Further investigation shows possibility of A-B-C correction with wave "C" becoming a "Triple Zig-Zag". Peak of zig-zag closes almost directly on our hypothesized "Wave 1". Calculation of 100% x length based on *closing prices*. A gap open higher than 1323 would compromise the projected drop to 1,244 OR 1,216.

Looking at a possible *bankruptcy* for an NYSE listed company.

In the above picture I included an alternate count of the SPX to show what buyers could expect if my downward projection is proved to be false.

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OUTCOME

UPDATE MARCH 25TH.

Rally was infact a correction. We predicted a bankruptcy would take place for the Wave 5 characteristics. For more details GOOGLE= Bear Stearns JP Morgan Bailout.

Speculative first support level = 1244

Actual support level= 1256.98

FDG Trade Setup

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Declining wave iii & v of 5 for SPX could create corrective waves A,B,C,=(4) for FDG. As such, "corrective" Wave (2) for SPX would create "impulsive" wave (5) for FDG.
Above information will be updated when/if scenario changes.

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OUTCOME

Update March 25th

Corrective W2 of the SPX has not created impulsive W5 for FDG. This means that W5 profit is still intact. The next few days wait for sell stops on FDG to get taken out when price falls below $47.00. This should allow you to pick up the stock at a more acceptable price. It would be ideal to buy the stock at or below $41.

CTCM Trade Setup

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March 10 2008
Possible trade setup long OR for the short term momentum player, look for a violation of support and take out the sell stops. Still Keeping an eye on the $DJUSME.
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Update Tues May 20th 2008
Buy limit orders filled on CTCM. Next round of shorts have coverstops above $29.00.

Railroads Over AAPLES?

The following article is written with the understanding that Benchmark Index movements can have different "Trend" implications for equities in separate industries. Before any significant direction can be accurately forcasted for equities, it helps to understand past performance of all equities within their exclusive sector.

The weekly charts can provide a better example of the longer term implications of this correction for the Railroad Industry.

1. (CSX) L= $40.40 H= $53.29 +$12.89
2. (CP) L= $55.37 H= $76.18 +$20.81
3. (FDG) L= $31.21 H= $55.80 + $24.59
4. (NSC) L= $41.36 H= $56.45 +$15.09
5. (CNI) L= $41.89 H= $55.25 +$13.36
6. (BNI) L= $74.20 H= $91.30 +$17.10

This data provides information which can prove "Downward Trending" movements in the broader index provides "Downward Corrective" activity for Railroad Equities. An additional downward movement in the SPX (Wave 5) could create sequences = corrective (W2) OR (W4) for specific equities

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Understanding the difference between Corrective & Trending behaviour will allow you to use a "Risk to Reward Ratio" that is suitable for each trade. Depending on the degree of the wave you wish to trade, each trade is allowed to have "Slippage". This slippage ratio will increase with each degree of higher wave. It is possible to calculate acceptable slippage (from this point on referred to as Price Divergence or PD). Being able to calculate acceptable PD provides an opportunity to limit risk and immediately exit position when initial trade criteria becomes compromised. On the upside, entering positions when the PD occurs allows you to immediately have profit on the trade. If done correctly, price should never return back to your original entry price until the instrument full-fills its profitable pattern implications.

What was a correction supposed to look like?

This was our predicted "end of correction" scenario if prices could maintain at these levels.

From this example you can see "Wave C" was expected to unfold in a 5,3,5 pattern with "C" = 161.8% X "A"

The good news is that buy orders were not placed on equities or futures when price approached these levels. As you can see, we expected one more minor rally before the decline. There was reason to believe these support levels would not hold, and as such, it became our purpose to short the rally and break the support. Of course the "minor rally" never occurred so we missed out on short profit but atleast we weren't long. The reason not to buy was determined primarily through inter-market analyses of U.S Sub-sectors. Through pattern development in the U.S sub-sectors, it could be determined that many industries had more to fall, and as such would drag the SPX&INDU down with it. World and Regional indexes provided red flags as well.

$20 Rally In RIMM

SELL STOPS ON RIMM SHOULD BE BELOW 94.00

Any significant break below this level could negate rally.

Should be good for a higher high if support does not get taken out. If prices fail to hold at these levels, Rimm could drop as much as $10.00 So don't hesitate to bail if closing prices begin to fall into unacceptable territory.

Possible Mergers & Acquisitions

The spx.x could push for a new low this week. If the DJUSME does not make a new low with the spx.x and INDU then this bullish divergence will serve as the confirmation to enter long position.

The Divergence Trade

SPX Resistance is 1408

S&P 500 Last 1,293 YTD -11.92%

Possible Trade Setups

****Every course of action discussed or recommended on this website is not suitable for all investors. The reader is advised to consider contrary opinions from that of the author. The author does not act as a portfolio manager, securities/commodities advisor, attorney, underwriter, solicitor or broker. At no time does the author recommend the readers acquisition of specific financial products.****

Trade Setups for the Week of Monday March 10th,

The Counter-Trend Trade

1) Possible short position in Oil and Gas stocks or Energy Index Futures. Reasons are as follows- A declining market has pushed retail investors into transferring funds into "whats working". This sudden surge of capital has forced a big-time well known trader (and smaller traders) to cover their short positions. This short covering fools people into thinking there is additional support at these higher levels and as a result attracts "weak longs".
These people who "buy high, and sell higher" OFTEN use tight sell stops to limit risk and as a result, the instrument they obtain a position in becomes vulnerable to a sharp and drastic decline. If these sell stops push prices below specific levels then "Automated Basket Trading Sell Programs" can turn on, and spread the decline to all stocks within the specific sector. It is recommended that this type of trade be executed during a downward momentum phase of the instrument preferably after prices close below the speculative "sell" zone. Remember, we are looking for a specific level to be broken on a specific index. If this level acts as support then avoid loss and cover position.

The Day Trade & Swing Trade

2) Possibility of HUGE Short covering rally in MEDIA STOCKS. .. Again, buyers can only push this one so far, we need shorts to cover. There is currently additional risk associated with long positions for day & swing traders because the trend is arguably down. *Remember you should not consider buying stock in companies who's price is declining unless the decline in value is a correction.

Can the S&P 500 Fall to 1215?

The low of 1270 was put in place January 23rd. It was obvious that MSNBC was waiting for "true capitulation". Seeing oversees markets sell-off during the MLK holiday gave analysts and traders time to prepare buy orders for the next morning because "a sell-off to this extent must be capitulation". Buyers in this region enjoyed up to 33% (and higher) returns within approx one month. Within 2 days of 1388 being in place these same returns diminished to 9%, and those who failed to sell would most likely be holding a loss by now. The first warning sign for daytraders and swing traders to sell occurred Wed Feb 27th when a "fifth wave failure" (or double top) occurred. Longer term investors *should have got their sell signal Friday Feb 29th when the S&P gapped lower and opened below 1360.

The rally from the low of 1270 lasted for 26 trading sessions and is currently almost completely retraced within 7 trading sessions. Since the rally was retraced in 27% of the time it took to form, this positive market action better fits the description of a "correction" while the trend remains down.7/26= 26.92%

Look for the words "V Bottom" to be mentioned on MSNBC next.
This "V" bottom should occur *IF* the spx.x finds support in the 1206-1214 region. This rally could take us all the way up to perhaps 1500 or lower. Would this rally be a correction? If so, then expect a decline of 570 - 920 points.