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GoodVibe4Ever (< 20)

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GoodVibe Call – The anatomy of the bottom (Leg Two)

Recs

39

March 13, 2009 – Comments (13)

                 ..............................           Notice          ..................................

Please don't add any comments or questions in this post. If you like to do so, please click here. Thanks! the charts will be posted very soon in the comment section. I'll do nothing today. I don't expect much and I'll wake up late. I'll just chill out, watch, and have some fun with you guys. So relax and let us enjoy a day off. We desrve it! We fought the good fight, celebrated and now is time to prepare our next move. Let me start first with the talk to refresh your memory and inform new readers of where we are coming from.  

                                                .............................

On February 27 when I started to call for an incoming bottom, I raised factual hope in the Caps’ community as well as stirred mockery, satire, revolt, and personal attack or at best sympathy from some people towards my analysis. I used to have this reaction with my calls because I always take the opposite side of the popular trade. I sell hope and buy despair. I sell the tops where the bulls loathe me and buy the bottoms where the bears attack me.

When I found that some people genuinely didn’t understand my call, I decided to follow up on March 3rd with another post where I outlined "The anatomy of the bottom", where I tried to drive three points home and I will repeat them here so there will be not even a single shred of confusion or illusion.

In the anatomy of the bottom:

1. I outlined that the bottom is a process rather than a point on the chart of which once reached we start going up in a straight line. Only naivety will believe such thing is possible to call. Two things are basics in Technical analysis; first, Nothing goes up or down in a straight line and second, a real bottom that is solid and dependable must occur through a process of consolidation that takes period of time to call an “XYZ number” as the tip of the bottom.

2. I emphasized my call for this bottom as “THE” bottom because it might be THE bottom until proven otherwise. I trade the charts and never trade "believes". I trade "what is" rather than "what I wish, think, or believe". I don’t care if it’s bullish or bearish call. If it makes me money, I am all for it. When I see a potential bottom, I’ll call it as it is even knowing -as it’s the case with all bottoms- that in the near future as well as by the end of this year, we have to come back to test these levels again. It’s a long process not one or couple days or weeks. From here to there, I wouldn't set on the sidelines watching this potential rally run away without me in it. Sorry Perma bears, I was one of you before but if you think that we’re done rallying today, you haven’t seen anything yet.

3. I said that the stock market may get THE bottom while the economy will not. Two different things. I gave the 1932 bottom as evidence of that. We will have a recession; depressions, collapse or whatever you want to call it but that doesn’t mean that the stock market can’t bottom during this as it happened during the great depression. Again, I am not saying it will. I am just open to that, trading that, and making money out of that. Time will come when I will take the top of that rally down to retest again and I am sure know who will fight me when I call the top. You bet, the bulls!

Now, after I made my points very clear, let’s see where we came from to know where we are going next. I identified wave (2) top out of (5) @ S&P 875.01 (click for chart) on February 9 where I shorted the market and projected maximum downside of 655-635 by March 13-20 (i.e. total 28% decline) (Click for chart).

Along the way down in wave (3) on Feb. 17, I called for the first leg down of this bottom to have maximum downside of S&P 683 (22% decline) (click for chart). On March 3, Mr. market reached 692.3 (Click for chart) and we rallied for two days. I was a gradual buyer since S&P 717 where I nibbled and raised my bets on 695 as I communicated ahead of these levels. Mr. Market exceeded my maximum downside with only 2% @ 666.79 (click for chart) on Friday March 6 of total 24% from the top’s call @ 875.01, which I also bought and communicated live here in our community.

A lot of people predicted including here in Caps and on my own blog that Monday March 9 will be the 1987 crash again but to their surprises, the market started to rally instead as I predicted and we got our bulldozers shoving and kicking some hardcore bears. That rally took us so far to as much as 752.63 from low 666.79 (13% rally in only 96 hours) where we booked our gains and left some long inventories far deep in the money. (Click for chart)

How long do you think it takes in normal life to see S&P have such return? This is why I was keen to join the party early on. This is not a victory lap I take in front of those who took the other side of the trade against me. No! This is not my style for I know how it feels to be on the wrong side of the trade. This is a reminder to those who bark without bite. Some people didn't only miss it but also went and encouraged others to shorted it. What a disservice from those who called for such a move. If you followed them, at best you're sitting on the side, which is not bad, or at worst you're now sitting on the sidewalk in a cardboard box if you shorted the market. I am bringing this up now to you not only to call my work to your attention but also to warn you from those who offer emotionally driven opinions. Never follow the herd. Chart your own way and away from fear.

If you think that the above history is not only my way to chart our way to future analysis by first looking back to where we came from but also serve as a bragging opportunity, I won’t hold you from that thought. :) There's always time for everything. But it’s really important to know the big picture before you go into the details.

Before I go for the charts, I don’t want you to confuse my call for buy and hold with Warren Buffett’s buy and hold style. I am a swing/position trader who is now leaning towards the bulls’ side aggressively while hedging his positions in every possible way to take profits with every swing that goes to the bears’ side while we're heading north at the final destination (Please, not anywhere near the all time high. Just north from here). I am proud to call myself a bull convert until the charts tell me to call it off.

Now, for those who read the title of my blogs and assign their assumption to my thinking or actions (especially those Perma-bears, bear raiders, and others who got infected with their mentality), I have good news for you that I said it before but you were not able or not willing to listen. Are you ready?

There is a chance that the market is going down from the projected top of wave (4) to finish wave (5) and we can go down big time, though this one is not granted as wave (3). Wave (5) can truncate before completion (mean we will not test 666 again). This is why I picked the bottom of wave (3) on March 3 – 6 to build positions, make profits, and just in case wave (5) doesn’t go all the way down, I’ll be a happy camper with my long inventories.

I repeat - don’t count on wave (5) coming to full length, or even coming at all. Wave fives are the most unpredictable ones and we never know it’s done until it’s done. There’s number of possibilities that it can truncate making 666.79 the tip of the bottom. That said, we must function as if wave 5 is a high possibility. That means you stay defensive from going all bulls or getting lazy going all bears. Hedge and move fast. Again, this is why picking wave (4) was a must do. To let your gains hedge your positions. Don’t rush in to either side. Wait for your edges and make sure to know your timeframe, risk tolerance, and know what you're doing. The next couple days will be full of surprises and you can learn a lot by just watching. We made a killing and we should be nimble of picking where we can allocate those hard earned coins of ours. Let them fight it now and then we go and side with the winner.

I hope this find you as much you would like to find yourselves and maybe a little bit more.

What am I doing now? 

Please, forgive my GoodVibe today.

Just teasing couple bears in the only way they can relate to.

Didn't I tell you;

"The gods have their own funny ways of setting up the scene to make sure that those who don't humble themselves get humbled by the truth."

How about this chart (click here)?

And can you tell me why?

Am I having fun on your expense or what?

GoodVibe
Mr. Lucky

13 Comments – Post Your Own

#1) On March 13, 2009 at 9:40 AM, Tutom (< 20) wrote:

Good morning GoodVibe! Correct me if I'm wrong, please. So, we are currently in wave (4) or (5) depending on how far the next downward wave goes. When you say (5) may not appear, do you mean that the current wave (4) (as we have been calling it) is really wave (5)? 

Yours sitting on cash and waiting,

 Tom 

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#2) On March 13, 2009 at 9:47 AM, Tutom (< 20) wrote:

BTW, Investor's Business Daily confirmed that the market is in rally in today's edition.  --tom

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#3) On March 13, 2009 at 10:10 AM, Tutom (< 20) wrote:

Sorry, I meant "current wave (4) is really wave (1).

And, there are still very few companies with good fundamentals that are setting up in attractive base formations. We really do need another downward move. 

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#4) On March 13, 2009 at 11:18 AM, GoodVibe4Ever (< 20) wrote:

     ..............................           Notice          ..................................

Please don't add any comments or questions in this post. If you like to do so, please click here. And please don't respond here.

GoodVibe

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#5) On March 13, 2009 at 4:39 PM, RodneyFarva (< 20) wrote:

Why do you not allow people to post comments or questions here?

And then you make them follow a link to do so?

 

I don't get it?!?

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#6) On March 13, 2009 at 4:52 PM, GoodVibe4Ever (< 20) wrote:

     ..............................           Notice          ..................................

Please don't add any comments or questions in this post. If you like to do so, please click here. And please don't respond here.

Beside it's free world and I can do whatever I like :), there is a logic behing this request - Once the charts post get comments such as yours, people will flood it with more comments and it will be heavy to download. So we keep the charts in an easy to download post so people can have easy access to it, then if they like the updates, chats, etc., they can put up with the heavy post full of comments.

                 AND please don't respond here. Click here.

GoodVibe

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#7) On March 17, 2009 at 3:07 AM, GoodVibe4Ever (< 20) wrote:

For March 16 updates, click here. For March 17 updates, read here.

The large picture:

When the Bulls cross the fat red line, and hold for a while, the big lady will start singing and the bottom is in. Until then it's all blues. The point of crossing will be followed in a daily basis based on the price action and I will chart our way through it.

    INDU 03.16.09    Big SP 03.16.09

               Enlarge DOW Live Chart                   Enlarge S&P Live Chart

More below to come shortly...

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#8) On March 17, 2009 at 3:19 AM, GoodVibe4Ever (< 20) wrote:

The small Picture:

Please read the chart carefully and notice the numbers.

  Large SP 03.16.09   Small SP 03.16.09

        Enlarge Live link (for Russ)                      Enlarge Live link (for Russ)

More below to come shortly...

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#9) On March 17, 2009 at 3:27 AM, GoodVibe4Ever (< 20) wrote:

Two tells and one extra that the market is going down, big and will not stop until they stop going down:

GS and GOOG

GS 03.06.09        GOOG 03.16.09

            Enlarge GS                                                  Enlarge GOOG

The Extra is AMZN

AMZN 03.16.09

                               Enlarge AMZN

More below to come shortly...

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#10) On March 17, 2009 at 3:35 AM, GoodVibe4Ever (< 20) wrote:

When do we know that the market bottomed?

Keep these two live charts on your radar beside the still ones. 

The VIX:

VIX 03.16.09

                          Enlarge            Live Chart

The CBOE Options total put/call ratio: We should get in the zone even for a day.

 CPC 03.17.09

                          Enlarge             Live Chart

More below to come shortly...

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#11) On March 17, 2009 at 3:48 AM, GoodVibe4Ever (< 20) wrote:

Today's Extra:

Oil 03.16.09

                    Enlarge Oil             Live Chart  here here here

And a brand new chart, which I couldn't resist:

NFLX 03.16.09

                                   Enlage NFLX

I hope these charts will add some value to your thinking and if anything is not clear in them, please drop me a question, and I'll get back to you as soon as possible. If I didn't answer your question, please ask again.

Now to bed. I'll see you all tomorrow. Be happy!

GoodVibe
Mr. Lucky

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#12) On March 17, 2009 at 5:21 PM, GoodVibe4Ever (< 20) wrote:

Today's update:

Large SP 03.17.09

Enlarge

Read here for more - Comment # 249 and below

GoodVibe

 

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#13) On March 17, 2009 at 5:25 PM, GoodVibe4Ever (< 20) wrote:

Wrong Enlarge link above. Just getting used to this open in new window thing. :) Here is the correct one.

Enlarge

GoodVibe

 

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