nice chart

It doesn't take a genius to draw simple conclusions from this chart.

Be Prepared

THIS sort of omen is not to be ignored or taken lightly.
With the China market taking it on the chin last night and the U.S. Dollar (and U.S. Treasuries) possibly finding support, we should be more prepared than ever to respond to a blow-off top in the near future.
"Trends end in a climax."

corrective wave

An excellent post today over at AfraidtoTrade.com highlighting the Elliott Wave count on the recent move down in the S&P. Even if you're not keen on counting waves and fractals until you go cross-eyed (self-confession here) you can get clued in to the end of an impulse move by looking at a momentum indicator. For as we approach the end of the 5th wave (today's lows) you can start to see momentum dissipate and diverge from price direction.
So, as we started dipping lower this morning you could see momentum lacking the strength to take things too far. Take a look at the 15-min chart with the momentum indicator losing steam (it's even more evident with higher time frames of course, like the 30- & 60-min chart):
As much as I hate to admit it (hate to admit it out of my own inadequacy, not because I think E-W theory is bupkis), keeping track of possible Elliott wave counts can prepare you for a corrective move/wave ahead, and remind you to watch price and momentum for a turn up (in this case in an ABC correction).
A previous post from today included a snapshot of the SPY forming an inverse Head & Shoulders bottom this morning. This reversal was the beginning of our "A"-wave correction and ended around a confluence of our pivot point, 200-MA, AND upper keltner channel. So, not only did we have that confluence of resistance, we also had a "Slingshot" setup taking place on the 30-min chart (can also be seen on the 15-min chart). Notice, momentum registers a higher high while price puts in a lower swing high, leading to a slignshot in price, also giving us the "B" in our ABC corrective wave.Tomorrow should be a telling day in terms of where we go from here and if people start buying this dip, take profits in their positions, or start to short with an eye on 880 in the S&P.

Accumulation/Distribution

Reading an e-book found on this traders blog (a lot of good info to be found there). The ebook can be found here.
Here's an excerpt:
"The trick is to figure out whether this new "consolidation" period represents accumulation
or distribution, and the only way I know of to be sure is to watch the relationship between
price and volume. How does the stock react when a lot of stock is dumped onto the
market? Does it tank or does it decline only a trivial amount? Is there follow-through to
this action or are the following days business-as-usual? If it's a short, sharp decline with
no follow-through, you're probably looking at a "shakeout" (forcing weak hands to sell their
shares so the stronger hands can pick them up at a discount) or a spree of short-selling,
but the latter is unlikely since it usually takes place over time.
Another help is to draw a line parallel to the bottom of your price-and-volume graph so
that only the busiest days show above your line. Note what happens on the busier days.
Is the price up or down? What about the slower days? Again, price up or down? If the
price rises on heavier volume days (though not enough to break out of the base) and falls
on lighter volume days, the stock is most likely being accumulated. Or vice-versa if it's
being distributed. (emphasis added)
It is important to remember that for a transaction to take place, there must be a buyer and
a seller. Huge volume and an increase in price indicates a lot of buying, but it also
represents an equal amount of selling. Volume, in other words, reflects only the number of
shares traded. Whether the pressure is on the demand side or the supply side is reflected
in whatever happens to the price. Unless you put this activity in a context of markets,
market psychology, and demand and supply, you stand a good chance of misinterpreting
what's happening."

To Keep in Mind

Here's a post made yesterday by Dr. Brett that I wanted to save here to keep in mind for future decision making.

big broth..er...government

Over at Mish's

nice graphic

server down

Tradestation server went down (on my end anyway) 15-min. before the close. I bought into a small position in BNI earlier which I wanted to hold over the weekend so the server down issue wasn't much of a big deal. I like the way BNI has held up over the past few weeks of selling and I thought a reasonable primary upside target could be $90, while a safe stop-loss area can be around $75.50. I wanted to post some charts and such, but it looks like I'll have to do that later, when I can access TradeStation again.
We got a pretty shitty sell-off at the magic 3:00p.m. hour. With that said; I refer you here...

DT

Some things I learned from DinosaurTrader today:
Yesterday (Thursday) DT wrote;
"over the next couple of days, I'll be thinking hard about what I'm going to buy once I see that first BIG green VOLUME bar come into the e-minis on the upside. That's your tell... when you see that gigantic volume come in... don't trust any rally before you see that volume."
He was right on with this statement come Friday's session.
Today he wrote:
"I won't say it was a "rollercoaster ride," because that implies it was fun. It was sick, and it was historic. If you traded today, you can say that you traded the single most volatile day ever recorded in stock market history. The high on the VIX was 76.94."
I can tell you, when that S&P Emini green bar on big volume came down the pike and the vix dropped like a stone, I felt just as though I was coming down from that big drop on a roller coaster. I was down and in the red, but at least recouping some of the day's losses with conviction that I should let the trade run to the day's highs.
Simple, but never understated; Volume (Momentum) Precedes Price!

spend, spend, spend

I'm grateful to The Fly for bringing my attention to this guy on his site.

update

So, as the news goes, the limit on short selling includes only 799 financial companies. Here's the list.
I have to hand it to THE Fly once again. When news of the short sale rule was first being floated he reversed ship and (among other re-shuffling) bought a boatload of C ("more than 100,000"). If he took some off the table at the open he was looking at a 22% gain. Not sure what he did at the open, but it's food for thought on how not to behave in this sort of environment. A lot can be said for someone who can reverse their opinion on a market and follow suit with their money to back it up. One can't hold too sternly to a directional bias in these markets; and when news comes out you have to act in an unbiased manner to protect and grow your bottom line. Live and Learn.

On a side note. The easy money today was made shorting the vast gap at the open. Not that I made the easy money, but it's good to preserve these tidbits of information for future reference.

perfectly said

"If you're not RIGHT THERE, stuck in the exact mood of the market, then you're really not able to do your job correctly. You have to feel extreme fear and you have to experience extreme greed.
Why? Because if you don't experience and feel it, you won't know it when you see it. Today we saw extreme fear. The flipside of panic selling, is always panic buying."
-DT

THE fly

"With my money, I am shorting more GS. It’s going to book value ($99)."
GS currently at $102...down $30+.
Say what you will, he understands what's going on in these markets.

S&P50%

The S&P500 has retraced 50% from the 2002 lows. A big level of support. Is this the bounce inflection point? Or will support flip to resistance? Check out the analysis.

USSRA

This article comes compliments of THE Fly's site and his cutting edge awareness. I feel we are helpless to do anything about this, but it's fascinating nonetheless. We all know the next presidential administration is going to inherit a shitstorm, so I think I'll be enacting the Costanza-vote this November; voting for the opposite party that I might otherwise vote for.
From the recommended article:
"This biggest bailout and nationalization in human history comes from the most fanatically and ideologically zealot free-market laissez-faire administration in US history. These are the folks who for years spewed the rhetoric of free markets and cutting down government intervention in economic affairs. But they were so fanatically ideological about free markets that they did not realize that financial and other markets without proper rules, supervision and regulation are like a jungle where greed – untempered by fear of loss or of punishment – leads to credit bubbles and asset bubbles and manias and eventual bust and panics."

die already!

The NYSE Cumulative TICK spent most of the day in negative territory today. Stubbornly price was being bought at support levels most of the day. Eventually we got a sweeping move down, the DJIA barely closing yesterday's gap.
I defer the discovery of all meaning behind this week's price action in the markets to here,
or here.
Oh yeah, I sold my position in NWL for a slight gain. Hindsight would have seen me closing out at the top of the morning, but it didn't happen until mid-day.
I missed trades in QLD as my bids weren't hit on my entries. blah!

Bubbles

Thanks to Stewie for bringing it to everyone's attention, we have this video about Bubbles. Fascinating, and quite logical thinking. To think that we could have another 40% downside to go in the housing market is pretty crazy. Watch the video and learn danielson.

sweet

UglyChart goes iUgly...ok, NOW I have to get an iPhone.