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Thursday, August 4, 2011

$SPX - Extremely Bullish Cycles Approaching

Certainly it was a strong selloff in the market today, but it was not a crash.  Today, SPX fell 34 points below yesterday's low.  That is not a crash.  There is nothing in the cycles to suggest a crash approaching, and there will not be a crash for the stock market at this time. 

Quite the opposite actually, the cycles are extremely bullish after August 10th.  I have consistently said to expect selling pressure up until about August 10th due to the time cycles.  I have said that this is a massive bear trap, and that analysis stands.  Ideally, I wanted to bring out that analysis nearer to August 10th from a timing perspective, but I decided to show early what the headwind is facing precious metals going forward.  Additionally, I wanted to be clear why it is a mistake to be overly bearish SPX at this time. 

There may be some minimal downside from today's close, but a rally to near SPX 1267 is anticipated next.  Another severe drop is likely from the cycles during the Aug 9th to Aug 11th time period.  It may be a slightly higher or slightly lower low.

Notice the Financials (yellow) continuously outperforming SPX since July 20th.  They are strongly hinting at the coming power rally to NEW HIGHS.

There will be further much more detailed analysis coming this weekend.     

30min Chart

93 comments:

  1. 1267????

    What happened to 1300by tuesday?

    Where's my lobster?

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  2. Lol. Hey I think you were looking for 1240-50 so we may have to split lunch this time lol!!!

    Should be a wild week...

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  3. Nice work on your posts ! I am sceptical of the bull case though now,with so much resistance at 127 (Spy) Still lets see !

    http://1.bp.blogspot.com/-qVjeg6tTj2s/TjvD94-zTNI/AAAAAAAAGMs/F_v8AbJ4dwA/s1600/a1spy.gif

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  4. Hi SC it was crazy yesterday I must say, I agree that we will see a very sharp counter-trend rally to relieve the over sold conditions. I am currently long as well on SPX, do you see SPX only getting to the 1240-1250 area as you have written above or do you see it going maybe up to the 200 day MA which is around 1280? What is the lowest level you see on the SPX today if any?

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  5. Here is a comment from another blog SC.

    Have access to DJ-30 data back to the mid-1920′s. Looked at situations where the 200dma (simple) had been below the 50dma and price an extended period of time (say at least 8-9 months) before there was an initial close below it – similar to the scenario of the last few days. Look for instances where the DJ-30 closed 5% or more below the value of the 200dma on the day it was breached, and did it in short order – i.e. 1-3 trading days.

    The only two other instances that I found were 10/15/1987 and 10/21/1929. In neither case was the 200 dma regained shortly thereafter. Instead, severe declines were in store in short order.

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  6. http://astrofibo.blogspot.com/2011/08/sp500-time-ratio_05.html

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  7. SC, I have an important question. In July of 2008, the financials outperformed after underperforming for a long time. Stocks bounced a measly 100 points after more than a 300 point drop. What is the difference here.

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  8. Jobs data better than expected at 117,000, lets hope this helps give the SPX a kick.

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  9. My lobster is still in the pot because I think you will see 1240-50 max.

    Watch 1231 or 1258 and that is only if we don't make a lower low first.

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  10. SC...I agree with you old forecast for SPX. I belive it will go to 1305 (which is exactly 61.8% retracement of the high. But I disagree that it will rally afterwards. I believe once it rallies it will drop very hard.

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  11. Looks like we're going to have a nice gap up this morning. Hopefully it holds. Obama to speak at 8am pst on jobs.

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  12. I like a bounce next few days to 1267-75.

    Hook, let me take a look at that. Thanks. Generally, I haven't been putting much weight on stats. The rationale is that this is an unprecedented bubble, and so I don't see why it would follow the normal rules. Stats can be helpful, but not always.

    One difference with the financials then vs now is that the financials in 2008 had a long bull run into 2007, and now they are coming up off the bottom from the 2008 collapse.

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  13. SC...Do you still see Silver at $44 by Aug 10th?

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  14. Scratch earlier comments, looks like we're headed down again. Sold calls, added puts. Will get better entry on the longside.

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  15. Might have to lower my bounce targets.

    1267 ain't gonna happen my friend but I do think you make a low today.

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  16. Silver could see that last surge up. There may be a last rush into it as a perceived safe haven.

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  17. Hit the orange lines on the chart above.

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  18. Yesterday I said we needed one more hit today before bottoming. I was expected a mediocre to terrible job report.

    Turn out the job report is very good. But does not seem to matter.

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  19. SC, margin debt that traders carry is at ~300bil right now, at 08 level, 3 year high. any more panic - we could see major sell off unfolding very quickly.

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  20. Sold puts, I'm out. 100% cash. Just going to watch on the sidelines, but not holding anything through the weekend.

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  21. SC how are you seeing the action today, it doesn't look good at the moment, the SPX down to 1182.

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  22. The panic is already over.

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  23. Just latecomer sellers today who read yesterday's news.

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  24. Hi SC

    Aren’t sure what you mean by panic is over? Is there news you seeing somewhere? We are still in negative right now with SPX currently.

    Thanks!

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  25. I don't how much we would see today, but Monday/Tues look for big bounce.

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  26. excellent, see everybody next week

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  27. SC,

    More bad news out of Europe this morning. Rumor is it won't expand the EFSF (European Financial Stabilization Fund). That seems to hit the market.

    Need to point out EURUSD did not drop. One more positive is no seeing rush further into bonds.

    The later comers will hit more when the funds sell at close.

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  28. P. S. Europe had a small bounce at close.

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  29. Yes negative, but no panic today. The panic was yesterday. We will see some more panic next week though around Aug 10th.

    If anything the panic for the next few days will be the shorts getting squeezed.

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  30. SC, why 44 for silver? there is a fibo fan that silver could not break through at 42 .. targeting mid 30's seems to me if that doesnt hold - waterfall.

    http://img692.imageshack.us/img692/5172/streamingserver9187026.gif

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  31. 1180 taken out. I would say still some panic.

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  32. This has turned out to be my worst trade in years going long SPX last few days. I am more of a bear, so I should have stuck with gravity. I have a decision before the close. At least my PM shorts are ok today.

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  33. My friends, Don't be fooled. The panic is just getting started. Remember 2008 crash??? Same scenerio. Everything is setting up for a crash. Sure u'll get the odd bounce here and there, but the up trends have all if not most been broken and its setting up for a crash and its taking everyone with it. The BULL market is over, the BEAR is back. It could last years. The precious metals will be hit the most as was the case 3 years ago. Same scenerio is unfolding. Check the 3 year charts of DOW and S&P, they nearly have almost the same top formation as they had in 2007. Just check the charts and you'll see for yourself. Exact same set up on a smaller scale. This crash will take years and it will be worst then we have every experience. STAY away from Commodities (they will be hit hardest). Best way to play this is bear on almost everything. Hope you guys are well protected. Forget the safe heaven myth and stay away from GOLD and Silver, they are setting up for a crash (tops are allready in). Now the long awaited drop is on its way and its going to be a monster. Silver will be at the forefront of it and its going to at least half what it is now in probably couple months if even that. Your best to short that. Its going to be a bank machine i believe....OMG as i am typing this, i can already see silver dropping to 38. GLAD i shorted it today. GOOD LUCK EVERYONE

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  34. Damn, I sold to early lol. Total breakdown.

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  35. Silver and Gold may have a little downside first, but not much more and I do think Silver is likely to see a last push. For the future ideally $46. Waterfall from there.

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  36. What is going on it just won't let up

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  37. SC....Sorry but i couldn't disagree with you more. Silver's up trend is already broken my friend. It just dropped $5 in 2 days and still going. If thats not a trend reversal i don't know what is. And if you think Silver is pushing to $46 dollars before the crash then you must be on something and you'll be waiting for a longggg time....LOL....I would love to bet you on that one.

    FOLKS Silver is going to mid 20 before a decent bounce then it will continue to crash into the mid teens or lower.

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  38. Silver is already trending with the market. Market crashes so will it ...lol

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  39. I won't be short Silver until it is $45 on the future. If anything I would consider a long position here for a trade.

    People are convinced the mkt is crashing, and they will rush into it in the near term. Wait for them to rush in then short it.

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  40. Sold all puts. Will reshort on the bounce. SLV puts made a great return for holding since Wed!! 48 hrs - almost 2x return - hard to argue with!!

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  41. How wild are the swings in this market its just crazy. From 1218 to 1168 back up to 1290 it is all over the place.

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  42. Hope that was a bit of a bottom in SPX and not just a fake bounce. Sold half of my silver and gold shorts just in case. I will hang onto the other half, but will add if PMs go higher. If SPX goes above 1260, I will buy lunch for everybody. Crazy markets.

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  43. This will be a feast if SPX goes above 1260 for everyone lol, lot of buying lunches going on. :)

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  44. Get the bull horns on elevator going up!!!!

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  45. Man, this is too much stomach. LOL what a RIDE.

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  46. Daily inverse H&S pattern played out beautifully. Too wild for me to ride though. Sitting this one out.

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  47. yes SC lets go up so we can clean up :) Lets hope it can hold it's gains this time.

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  48. SC, the symmetry still working well, point 9 official confirmed at 36.60(it lasts minutes) waiting for point 10

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  49. Once the uptick really happens, we're going to see a huge short squeeze. The amount of puts vs. calls on SPY is like 8 : 1.

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  50. Action should slow now for today. Long and strong S&P until around Tues.

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  51. Hi SC

    do you still see $44 silver before August 10?


    Thanks!

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  52. TC, i thought we were done with point 12 on that symmetry chart! Why did you skip down turn on the 20th?

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  53. That is the plan, one final surge up for Silver. Then the Silver party is over.

    I'll update the Silver chart on the weekend.

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  54. Still think we fall well short of your target but lunch is yours if we get there.

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  55. Bluemoon:for me, on the chart point 12 seems lower than point 10 and the point9 we just have that until today, SC said in the symmetry point 9 not allowed to skip and target for the last push around 43-44(not yet reach),so i just think big picture and consider point 11, 12 are more details for the road from point 9 to point 10. Just my thinking

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  56. 1231 should stop it.

    If not then 1258 and I buy you lunch.

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  57. ok. let me check. Im looking at the TSI (4,7) for SLV and daily is going down, crossed 0. Weekly turned down. Set up looks like '08! If we get a spike it should be short lived.

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  58. Oh , Bluemoon,so you think that silver already done with point 12 and will be down from there, no more up for silver?

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  59. lol if only i had a crystal ball! SC made it look like 12 was reached but there would be a possibility of a move higher. I have no idea. I hear people saying top is already in place.

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  60. trapped longs are probably waiting for a bounce to get out!

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  61. If bulls can clear 1231 on Monday or so then can run it to 1258 but i think 1231 caps it. Too much vol and selling pressure.

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  62. 1267 SPX lines up best for me. In this crazy mkt it may just overshoot to 1274 top end.

    That would be under the 200 SMA, but close enough to lure in traders thinking it get's there.

    Probably the rumour mill will start to cook soon. QE3 etc...

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  63. closed half of my silver puts. lets see if we get a good bounce from here.

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  64. Low is in, but more selling before the close.

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  65. Im not entirely sure people will respond positively to an announcement of QE3. It almost seems that it would be an admission that QE1 and QE2 didnt work. We raised the debt ceiling and we all thought the market would act positively to that. It did not. My guess would be that the announcement of QE3 would take the market down initially but then rebound when POMO is actually in effect.

    Either way I think I am just going to wait for confirmation or non-confirmation of QE3 and see how the market reacts to it and ride the momentum. Ive got a feeling which ever way it goes it will go strong.

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  66. rumor that usa gets downgrade after closing bell today?

    http://www.n-tv.de/wirtschaft/Faellt-das-Top-Rating-der-USA-article3986746.html

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  67. Thanks for your information Bluemoon

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  68. Gold still up while silver still down even dollars down, maybe gold is save heaven not silver

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  69. 1inbluemoon - I'm seeing more and more stories that S&P may downgrade U.S. tonight or this weekend. If that's the case, I don't think Monday will be pretty.

    http://www.cnbc.com/id/44039103

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  70. Downgrade?...........that will tank it monday to 1145 at least.

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  71. really doubt this downgrade will happen, not other rating agency in US made any downgrade so far, in fact some even reassure the AAA rating after debt ceiling deal. Cant see how S&P will be the single individual in US doing it.

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  72. As well reading that article from Rowley:

    """"
    On July 14, S&P put the government on a credit watch with negative implications, meaning there was at least a one in two chance the U.S.’s long-term debt would be downgraded within 90 days.
    """
    There is some many more days before the 90 days end. Only 3 weeks pass so far from July 14...

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  73. Yes but says "within" 90 days.

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  74. SC, silver looks dead with the bearish engulfing candle. How can it make it back to 45? Is that a 78% retrace?

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  75. S&P just downgraded U.S. credit rating!

    http://news.yahoo.com/p-reconsidering-u-downgrade-cnbc-001207261.html

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  76. Yes, it's official. I have a chart coming that shows how this might play out next week. The dynamics are counterintuitive I believe. Things are not what they seem.

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  77. SC how do you think the markets will handle the downgrade news for the US?

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  78. I should have went with my gut and sold my SPX longs on the bounce a couple of hours before the close. I don't think the market has priced this in, maybe a little. I should have been paying a little more attention. I got a feeling the markets are going to soil themselves on Monday.....I hope I don't join them. It's possibly looking like my worst trade in years. We shall see, but looks like no lunches next week.

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  79. Downgrade.

    Last one out get the lights.

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  80. Thought the down grade never come, but finally it came today.

    Next week the time should still be tense..

    Between August 8 and 14 of 2011 transiting Mars in Cancer is square Uranus and opposition Pluto. This could produce some violent demonstrations and confrontations and possibly bombings or terrorist acts, probably false flag, in various parts of the world. There will be intensified danger of war. The populace will be in an angry mood. Revolution in various parts of the world could break out or escalate. It will be a dangerous unstable situation. Just prior to this in the first week of August 2011 transiting Mercury turns retrograde at the first degree of Virgo in opposition to Neptune at the first degree of Pisces just before retrograding back into Aquarius on August 6, 2011. Some form of mass deception and or mass confusion is likely. There will be a general collective unconscious psychic sense of foreboding. If it hasn’t happened already happened by then, this could precipitate the final collapse of the global world economic system. The summer of discontent of 2011 will make the summer of discontent of 2010, with massive riots and demonstrations in Greece, France, and other parts of Europe, as bad as it was, seem mild by comparison to the summer of 2011.

    http://timecycles-timer.blogspot.com/2011/08/5-aug-thoughts.html

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  81. SC & followers, I am thinking this may have already been factored into the market somewhat, that's why we saw the early gains erased and the market drop hard and then bounced back. Even with the better than expected jobs data it had little effect as rumors or inside knowledge of the downgrade were already circulating. I think we may get a spike down initially maybe but the market always is one step ahead.
    I think everyone knew that this was going to happen anyway that is why we have had a deeper correction than we expected even after the debt ceiling deal. Interesting to see what happens Monday.

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  82. SC, the technicals on silver look busted. I believe the only way it can push up to 45 is a coordinated money debasement announced Monday

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  83. Actually after reviewing old charts. I noticed GOLD & SILVER top last in comparison to DOW/S&P. GOLD & SILVER have not topped yet. As soon as there's a little pop on the DOW/S&P and a little pull back to same lows, GOLD and Silver should rally to new recent highs (looking at SILVER about 44, GOLD about 1780). Please look at the DOW and S&P from Oct 2007 to FEB 2008 you'll see something very interesting. We have the same top formation now as we did then, same shape on a smaller scale now. Then look at Feb 2008 for both DOW and S&P. GOLD and Silver did not rally to new hights until DOW/S&P bounce to upper trendline which is now at DOW at +/- 1200 and S&P 1230-1270 (resistance)and pulled back to same lows this week. SO, I appologize to SC, now after reviewing the charts I do agree that Silver and GOLD are safe heavens and people will be running to them soon for at least the time being. I disagree with SC on the timing of Silver's top, but I do see it topping within a month before it crashes. I also see a rally coming for DOW/S&P for the next weeks before another crash and when and if DOW/S&P break the old lows this year and crashes it will also take GOLD/Silver with it. I carefully examined the charts, and its been like that for PM's for the last decade so I expect the same behaviour this time around. I know S&P just downgraded US credit rating, so people will start of this week panicing before they come up with something to rally the market again(QE3 tuesday?) and scare all the weak hands. But when everyone is say 95% pessimissim about the market then thats your hint to start going the other way. Remember when they had the QE2 announcement, the dollar was at its lowest and was suppose to plumet more but instead it rallied when it was suppose to drop. Same senerio, but thats not to say it can't drop another day or two before another megga rally to the resistance line. Stay tune my friends, we'll see if i am right.

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  84. Surprise - I am expecting S&P up on Monday...

    I will be showing the chart soon with 2 S&P moves this week for nearly 200 points each. Yes, the S&P should move 400 points this week in total.

    The puzzle is finally complete. The key has always been Aug 10th.

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  85. LETS see the charts SC....LOL....i expect a rally as well in the S&P but not near the level your suggesting, not even close.....Just the upper resistance level standing at about 1270 in the S&P and about 12000 in the DOW. If you think S&P is going to 1600 by weeks end or Aug 10th, then i think your on crack...lol...Under the current situation I don't thik thats possible. But if it does happen then that would be the mother of all calls and I'll bow down to your mercy and never second guess you again...LOL


    Lets see how the market handles this, I expect a rally in the S&P to 1270 and a light rally with Silver. Then few days later, I expect S&P to drop again to near current lows while Silver sky rockets to new highs.

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  86. Germany just said it won't bailout EFSF (for Italy and Spain). Seems we are certain to test 1170 again. Selling may start Sunday night.

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  87. SC.............

    Love ya' man but you're nuts baby!

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  88. New lunch bet............400 points in a week? I buy everybody here lunch.

    Now back here on earth...............

    Down Monday, Flat Tuesday then rally some.

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  89. What SC is saying may sound crazy but it's actually my primary expectation as well. In Elliott Wave terms, I'm looking for a wave iv rally that may go into the 1260s or even up to the low 1270s, a wave v that either makes a modest new low or truncates above Friday's low, and then a wave 2 rally that may retrace up to 1260-1270 again or even higher. We have a lot of volatility coming - it sounds crazy, but look at it in the context of last week's volatility. I am skeptical we rally on to new highs, although it isn't impossible - we have burned off an awful lot of overbought condition and bullish sentiment in the last few weeks.

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  90. I have gone over every chart for every time frame I have for the SPX and I have to say I see nothing that would tell me a monster rally is at the doorstep. A modest one perhaps but that is all.

    I look forward to seeing the chart and the thinking.

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