TIMINING UPDATE MARCH 19TH

Over the past two months we have looked at numerous potential turn points for this 3rd of 5 wave bull market rally. Wave 3s move in typical 1.618, 0.618, or 2.618 of measured low-high length of wave 1's.

I have not made an update since March 9th, the reason being we were not close to any top numbers either in time or price-thus I haven't had much to say. This last strong move, which I believe is a 5 of 5 of Wave 3, awaiting completion, has been led by Financials.

Financials have been very strong despite the fact the reality is some of these large banks will fail and only exist today due to free money, printed out of thin air, from the Central Banks. (The fundamental reasons never really matter, when trying to earn money in the stock market)

FAZ today formed a Hammer candle below the calculated Support<2>, combined with < 1 RSI<2> reading. History suggest that banks will begin to under perform the market going forward, until the overbought condition is corrected.

The question is-DOES THIS BRING A CLOSE TO WAVE 5 OF 3 AND USHER IN WAVE 4 CORRECTION?

This chart is of a long term topping pattern known as: 3 Peaks and Domed House. Some well respected technical traders are watching the markets in relation to this long term topping pattern.

The question is-WHERE ARE WE AT IN THE DOMED HOUSE?

Here is Doug Kass of SeaBreeze Partners take. He has us squarely at the top at point 23.

Based on my belief that we are in a 3 of 5, not a 5 of 5, I doubt we have reached the top of the Dome. In fact, based on the extreme upside we have seen in stocks like PriceLine and Apple, ala 1999, and that we are in an election year, we have to consider a top of the S&P well beyond 1500 as possible.

In the short run, we are looking for a completion of Wave 3. Here is a Kagi chart showing 3 successive 2% closes, outside the BBands,with not one single red sell signal in between.

Week to week fund flow data shows every month, money coming out of the stock market and has been for a long time. So, this extreme bull move is purely on Central Bank money printing.

The primary banks can not make money any other way, which is why every week Wall St calls for QE3.  Free money and an ever higher Russell 2000 is the only game they have left.

I have noted on the SPY a 180 day time cycle from the October 2011 low; first week of April. This can bring about the beginning of the 4th wave correction.

Summation index measure the health/breadth of this rally. I have the $SPX overlayed, with EW counts. I'm running an 8 period mva.

Summation index is calculated by advances minus decliners. Currently we see declining stocks are out numbering advancing stocks, even though the broad index continues to make new highs. Big RED FLAG is issued when we move below the 8 period ma, as we have now done.

Notice after the completion of 5th waves, the index makes new lows, filled with impulsive fear. Then notice the WAVE 1's of the new up cycles, filled with impulsive strong buying.

I drew this up for you, because this is how you make the most money; by catching these impulse moves. The biggest, easy profits are in these wave/impulse turns.

You can beat your head against the wall trying to catch the next $20 in Apple or the next $2 in Bank of America, as the stocks swing back and forth daily; or you can count the waves, adjusting, readjusting the counts and price targets, positioning yourself for the turns as they get near.

This is why we are accumulating TVIX down here. Because we believe we are in a 3rd wave, 5 of 5, about to move into 4th wave impulse down.

Too many novice traders get hung up on bottom price and exact timing. Let me clue you in: YOU WILL ALMOST NEVER BUY AT THE EXACT BOTTOM AND TIME.

$OEX50 breadth indicator measures % of stocks above 50 day. This just shows that the market is at the top of its capability to push a broader amount of stocks higher. This is not a valid time indicator.

Keep in mind, once markets top, they tend to go into long distributive patterns that generally can last 3-6 months. This indicator may suggest a Truncated 5 wave, SPY making lower high to complete the trend.

Here is the XIV which moves inverse of the $VIX. I like trading the Volatility index, especially now days because there are so many good ETF and ETN products to use.

XIV is one that we will pile into, once we see a completion of 4th wave, and the $NYSI retakes the 8 period moving average. (We will cross that bridge latter)

You can see the XIV has closed outside its upper BBands, same as the SPY, and is nearing calculated resistance. Again, this is a wait and see for now.

Despite price/time technical possible turn dates past, the market has sailed past them by gaping above these resistance areas via the pre-market futures ramps.

The question is-WILL THE FED USE THE SAME BAG OF PRE-MARKET FUTURES RAMP TRICKS THIS TIME, OR IS OIL TOO HIGH AND WAR WITH IRAN TOO CLOSE-THUS THEY NEEDS STOCKS TO MOVE LOWER?

Finally here is a chart of TVIX-which has performed very well verses its peers the last 4 trading days. I also like that as of today, the TVIX and $VIX are now 1 to 1 in price.

This chart technically doesn't tell us a darn thing. (Sorry, I know you were hoping to hear otherwise)

When TVIX gets a point and figure or Three Line buy signal, I will let you know. In fact, I am waiting on that to purchase more shares.

What I can say is, stocks will do 1-4 day counter trends within the existing primary trend (which is down); this expired today. If TVIX can push higher tomorrow, then we are getting somewhere and I will probably add to my stash.

Keep in mind, if you buy TVIX at $17, or $14, DOESN'T MATTER. Your accumulating for the 4th wave turn.

Now, I sold TVIX last time at $20, because it was clear, the market wasn't going to turn, thus locked in some profits. But, I have been buying it back on the new lows.

Being down a few points on TVIX is like Kentucky Basketball being down 10 points with 35 minutes left to play. (It ain't a big deal, don't fret about it)

Conclusion:

Once again, the markets are moving into a period of price/time ratio that could bring in a 5 of 5 of 3rd Wave top.

Until this top is in, and the 4th wave is in motion, my post have been a little less in frequency. If I'm not saying much, its because nothing has changed and we are not near any price/time targets.

I've said this before, will say again, don't be surprised at how far this market can go up, and by the same token, don't be surprised at how far we are going to go down. (I expect S&P to bottom around 400)

We live in times of extreme bubbles and extreme collapses, this time will be no different.

Tim Kathlina

TVIX INVERTED

Per CNBC TODAY:

For Market, There’s No Such Thing as Bad News Now

The way things are going these days, the New York Stock Exchange could be aflame and the only reaction from investors would be to buy stock in companies that make fire extinguishers. It’s not that there aren’t reasons to sell off — plenty of them in fact. It’s just that nobody seems to care.

Ask Sears (SHLD) shareholders; company lost 2 TRILLION in the 4th Quarter-stock up 20% today.

Back in the late 90's, oil was $8 a barrell. All stocks related to oil, drillers, exporters, gas producers, etc, were all trading below $15 or even $10 a share. Nobody wanted to pay this price for oil and oil related, dividend paying companies. Today-those stocks are over $200 a share, split a few times and have paid big dividends over the last 12 years.

Nope, instead, everyone wanted Qualcom at $800 a share, Micro Strategy at $3000 a share, Commerce One at $500 a share and many other names that, most of which, are no longer around.

Today, just like then, the pundits were all over TV telling everyone how CHEAP these companies shares were, companies with no customers and no earnings. Telling everyone that in no way did they want to own oil and gold and silver.

This Greek Tragedy will end the same as the rest-bubbles bursting, jobs lost, people shooting their coworkers. History repeats-this time is no different.

I inverted TVIX chart-common technique in technical anaylsis. Does it look like a bottom?

Here is the S&P inverted.  If you were looking for a PANIC LOW-would this be it??? Sure looks like one to me. 

Is this a top??

Tim Kathlina

AFTER THE BELL-TVIX TIMING UPDATE FEB 18TH

During the 1st hour of trading on Feb 16th, I posted on Twitter that I was exiting TVIX trade; citing DOJI at resistance and FED Speak. I then posted this chart on the blog.

The question now is, when to get back in?

This 1st chart is of TVIX daily-1year. The left and right side declines I have marked with the appropriate Elliott Wave counts.

The A-wave in June 2011 retraced the entire 5th wave. (Common A-Wave retraces are 1, .618, .5) This retrace helps confirm our EW count is correct.

Standard days of retrace typically are 9 to 13 days. Notice the A-wave was 13 days up, B-wave was 13 days down. (Again, confirming the count)

Moving forward to today, the A-wave retraced 50% of the 5th wave. (Confirming the EW count)

I do not know if B-wave will be an irregular move, making a marginal new low, or retrace the standard .382 or .50 of A.

Assuming a strong blow off top in the broader indexes next week; I am looking for a marginal new low in TVIX.



Next chart we zoom in on this A-wave action and note the 9 days up into volume resistance. (Standard pattern)

I am now looking for 9 days down to complete B-wave.

Next we look at cycle time using 1 year chart. Using our FIB number ratios, we note the highs and lows of this cycle are lining up perfectly to the corresponding FIB time frame. (We look for pattern changes at Fib Cycle Times)

I have counted from the FIB 13 week, each week up until now. We just completed FIB week 19. FIB week 21, where trend changes occur, is the week of FEB 27TH.

I expect TVIX to put in a cycle bottom the week of FEB 27TH, in other words, completion of B-wave. (Most likely the end of the week or 9 trading days)

This low could be a 1/8th extension of the 5TH wave bottom $14.26x1/8= $12.54

Conclusion:

Based on Fib Time analysis and EW counts; I expect TVIX is putting in a significant bottom in price and time.

I look for this bottom process to extend out to March 9th in a possible A-B-C-D pattern, with the B-wave being the absolute low price; the week ending FEB 27TH.

At this time, I feel like the major indexes are in a 3rd wave, not a 5th wave. If this assumption is true, then I believe TVIX will complete its next 5 waves up in 4.7 weeks, or sometime early April.

Tim Kathlina

AFTER THE BELL-S&P Update Jan 28th

From Yahoo Jan 27th:
Quest for the golden cross

By Rodrigo Campos

NEW YORK (Reuters) - January has turned out strong for equities with just two trading days to go. If you're afraid to miss the ride, there's still time to jump in. You just might want to wear a neck brace.

Bullish write ups like this are what tops are made of. The S&P is up 14% last 9 weeks. VectorVest universe of 8000 stocks now trades well north of 43xs P/E. (Very expensive)

On Dec 23rd SPY update, I reiterated my price targets set in early December by stating:

Conclusion: My forecast for 1290 to 1320, although many times in December looked improbable, remains. The forecast remains not because stocks should be going up, they should not be (Look at ORCL earnings miss, 1st in 10 years), the forecast remains because the technicals have not changed.

 

Lets look at where we are now

SPY weekly chart I have marked potential Elliott Wave counts. The 1st 5 waves up, followed by irregular a-b-c correction are easy.

 

The next 5 waves are yet to be determined, but this is the count I am going with for now, which has the SPY uptrend completion between the current close of Friday 133 and the 1st R1 area of 138.

The next two charts are to validate the above chart; indicating that the 5th wave is completed.

If we take on the weekly chart the bottom of Wave 1, to the top of Wave 3, its 31points. 5th waves tend to equal .61 of other waves. If we take the bottom of the 5 wave, add in 18 points we come to a price target of 133.

Lets take the daily chart to try and get a price target. The daily chart has an inverted head n shoulders pattern. Calculations for IHS patterns are head to neckline added to neckline. Using this formula, same price target of 133.

Next lets look at length of time. Counting from October low, we are coming into the 180 time frame from the low. The divisible numbers by 3 are strong point and time areas to look for tops and bottoms. So anytime between now and Feb 8th is a strong place for market turn.

Conclusion:

Current evidence of price and time, both on weekly and daily charts point to a 5th wave EW completion between Jan30th and Feb 8th.

Square of 9 calculations using Fridays closing price shows a GANN sell signal at SPY 129.39. A strong close below this price; coupled with increasing volume and within our 180 time frame; should seal the deal.

Until you see these numbers play out, taking down any high leveraged short ETFs other then ones tracing the $VIX is not advised. The reason we average into TVIX down here, AND ONLY TVIX, is because the $VIX tends to have defined lows, no matter how high the market goes.

Tim Kathlina



Before The Bell-TVIX 3 Pattern Set Up Jan 24th

From ZeroHedge Jan 24th:
S&P Warning Of Imminent Greek Default Again, But Promises All Shall Be Well, Dallara Speaks

You have heard history repeats? It's True.

Looking at TVIX, the power of the pattern suggest a historical repeat of 2011. Not only does the chart suggest that, but we can take 2011 headlines, such as the one above by ZeroHedge, and change to 2012; they all read the same.

Again we are trading TVIX because it offers the most, and quickest upside once a decline begins and it also provides a well defined low. Unlike ALL OTHER bear ETFs, that can go down and reverse split forever, the volatility index generally only goes so low.

TVIX exhibits what I believe are 3 repeating patterns, with Pattern 2 about to be embarked on soon. I expect the shares to jump up to $30, followed by headlines out of Europe that all the problems are solved, sending the shares sharply back below $20, which then sets up the final Pattern 3 scenario as we realize the sh_t is about to hit the fan.

This time, unlike last time however, I expect TVIX to go much higher. The reason being a full 5 wave up cycle will have been completed in the S&P by the time P3 begins, ushering in the start of P3 bear that will ultimately take the S&P to sub 600.

Conclusion: History is repeating as central planners believe doing the same thing, only more of it, will bring about a different result.

We added to TVIX position today, will probably scale that back at $30, then look to re-enter on the final pull back below $20, all in.

Tim Kathlina

After The Bell-Mid-Day Prepare for Increased Volatility Jan 18th

Let me share with you a truth about the markets-Low volatility preceds high volatility. When looking for points/profits-sometimes you have to start with facts that you know, then try to fill in the blanks.

What we know is the market has been struggling higher amidst low volatility and increasing bullish sentiment.

Looking at the XIV etf which moves opposite the VIX, we see a 5 day struggle to move higher. The %B indicator, an indicator I use to look for divergence from the BBands, is showing lower highs.

The VXX is the old formula. We see the same thing as the XIV, 5 days unable to move lower and a divergence in %B indicator.

TVIX same pattern, 5 day support with %B divergence.

Conclusion: As noted last week, I believe Semi earnings will kick off the start of volatility either by missing earnings or bringing about the final exuberant exhausting high because they blow away numbers. (The 1st scenario is more likely)

Either way, we are averaging into TVIX for the ride higher that's about to begin.

Tim Kathlina

AFTER THE BELL-OIL TO $120, SPY, EURO/DOLLAR UPDATE JAN 11TH

ZeroHedge Jan 11th-Iran Interest Rates Raised To 20% To Fight Hyperinflation; Iran Nuclear Scientist Killed In Street Bomb Explosion.

Americans will not support an invasion of Iran without provocation by Iran. History is well documented that governments in order to achieve an objective will create circumstances, under the radar, to pressure an identified enemy to make the first attack.

As FDR did enticing Japan to attack Pearl Harbor, George Bush urging Saddam to attack Kuwait, Obama is now boxing Iran in to entice them to attack US interest. Nothing helps re-election like war; foreign and domestic: Oklahoma City-Bill Clinton, 911-George Bush, Iran-Obama.

Looking at Light Crude, the daily chart seems to have an Inverted Head-n-Shoulders pattern. IF this pattern breaks the neckline upward, then the calculated upside is between $110-$120. If this breaks the neck line based on Iran/US military encounter, sky is the limit. Either way, as of today, it seems the path of least resistance for OIL is HIGHER.

December thru many fund managers under the bus because the decoupling of the Euro from the S&P. Prior to December, fund managers could count on the currency to move lock step with the US index. The majority of fund managers missed the 1290 S&P upside that we called for due to this decoupling.

Looking at the Euro, the chart looks to be in a bear wave 3 on the daily chart. I project the ending of this 3 wave between $123-125. Generally a 3-wave, an impulse wave, will extend 61% of wave one.

Wave one was 12 points top to bottom. 1.61%x12 is 19. Subtract 19 from wave 2-top of 142, gives us a price target between $123-125. At this price, we will buy the Euro.

Here the dollar/spx in December began running together. Again, this shows the appetite for all things US. Money will always go where its treated best.

Conclusion: Inverted H-n-S pattern in oil, plus Obama desperate to win re-election, almost ensures escalation of Iran conflict towards war, and higher oil prices. (Nothing is ever a sure thing)

For now, money is flowing into all things American, its the lesser of two evils. The question is as everyone seems to be all in USA, will the EURO bottom as we project, money move out of US stocks/US dollar; moving into EURO, GOLD, OIL, SILVER, etc? Or will a rising tide float all boats, and everything goes higher on extreme bullishness? This we do not have an answer to yet.

So, we will go long the EURO at the calculated bottom, wait for the response by US equities. Our next TVIX insurance purchase is coming within days.

Tim Kathlina

After The Bell-Before The Bell SPY Update Dec 23rd

On Dec 18th I identified the correct uptrend for the SPY using Pitchfork analysis. At the time, the market bears looked like they were going to give the bulls a knock out blow with no Santa Rally.

On Dec 13th I used price and time counting to project an upside target and date. At the time, again bearish news headlines ruled the day.

Today we are focused on a 1 month chart of SPY, to help support or deny my previous post. When forecasting, its important to check your list twice, use multiple time frames, multiple indicators and re-check often.

On this chart I included volume by price bars to the left side of the chart; we are concerned with the longest bar. Stock trading is about price discovery, where is the balance between buyers and sellers?

The longest bar is at the 124/125 level. In early December, this area of supply won the day moving the shares lower. Negative headlines, along with the 200 day moving average proved too firm of resistance for the bulls.

The question is: will supply overcome demand once again? Please do not under estimate the bulls ability to run the SPY up to my previous price targets, once able to move past an overhead supply area. What was resistance quickly becomes support when the area is broken to the upside.

OBV is trending higher. The strong move up starting Dec 14th.

The largest open interest for call contracts for January is 130, right around my price target - noted Dec 13th. Options expiration is too far out for this to be a factor; but stocks tend to gravitate towards option prices that make the contracts worthless.

Conclusion: My forecast for 1290 to 1320, although many times in December looked improbable, remains. The forecast remains not because stocks should be going up, they should not be (Look at ORCL earnings miss, 1st in 10 years), the forecast remains because the technicals have not changed.

Despite the rest of the worlds stock markets already in a bear, the USA extend and pretend continues on for just a little while longer.

This is not a recommendation to buy the SPY, just a forecast for a top. On the contrary, I would be running from bull positions as fast as possible. One bank failure and its all over.

I am averaging into TVIX.

Tim Kathlina

After The Bell-Time To Buy Insurance Against 2012 December 21st

I have noted prior my expectation for a impulsive major bear wave 3 down move to begin in January 2012.

It is my intention to begin accumulating insurance protection against the bear move in the form of ETF's that track 2xs or more the VIX-Volatility index. Based on the charts below, I feel the time to begin taking a position is now.

This first chart is the inverse VIX index, symbol XIV. This ETF moves higher as market participants become more and more complacent and comfortable with the world and stocks. I still find it hard to believe after the daily deluge of failed government attempts to put lipstick on the finance pig, stock investors are feeling giddy; according to XIV.

Putting that aside, closing outside the upper BBand, RSI2 over 99, is always a sell signal.

The next two charts are the opposite. The TVIX and VIXY move up as the investor fear level rises. With the world on the verge of collapse, one would think these stocks wouldn't be performing so poorly.

History is repeating: crash of 1929, crash of 1987, dot.com bust of 2000, housing bust 2007, Bear Stearns and Lehman collapse 2008. Today, same as all the other times, the Tulip Bulb Ponzi stock investors, are the last ones to figure things out.

Conclusion: If the market tops now or 5 months from now, the technical picture for buying insurance protection has never been better.

Time to average into these TVIX and VIXY plays every week or other week until the musical chairs, ponzi stock market catches up to reality.

Tim Kathlina