As my time is very limited this evening, I am simply updating with three charts of the SP 500 Index in different time frames.
By far the most important chart is the weekly chart shown first, since it updates the bigger equity outlook picture.
By the way, this chart format is the exact same chart format last posted here on December 01, 2010, on the blog and also posted earlier in November. As you may recall, we used this format to discuss and forecast the Fibonacci event, which now in hindsight was a bullish market acceleration up after a truncated wave four correction. That event was on time as scheduled about December 01, 2010.
Notice on this weekly chart a NEW ELLIOTT WAVE COUNT.
To err on the side of safety, the weekly chart now depicts a more conservative and far more bearish count of now being in the fifth of the terminating fifth.
The alternate count (also still valid) is that we are currently in the third of the fifth (with the logic that the third wave has now extended - also called an EW extension).
Also, on this weekly chart, you will further note, that I have depicted the next scheduled Fibonacci event on the FIB Ladder.
This now suggests that by applying our current overall market logic as posted on our blog, a serious correction should commence in the last two weeks of January 2010, or very early February if just one week late. This allows for a margin of error, of just one week early or late.
The daily and one minute chart posted below are self-explanatory and have my usual mark-up comments.
QUESTION and ANSWER
On the last blog a comment was asked if this so-called manipulated rally could last until March. I thought the answer might be useful to all so I am responding here on the main blog.
My answer is naturally yes. Anything could happen. Moreover, I again say that my own forecast made months ago was for a final and important top within the first quarter of 2011.
Moreover, speaking of manipulation, after all I do not have a red phone connected to Mr. Bernanke or the Plunge Protection Team. Having stated that with a degree of sarcasm, that is not what I expect to happen. As I mentioned in the weekly chart upcoming Fib event, later in January (or even very early February) there are some important cycles for the current market to overcome.
Although I generally do not discuss cycle details here in the blog, these important near-term cycles include no less than three distinctive categories of cycle events such as Astro cycles, Fib cycles (see the weekly chart included here), and even Gann time cycles that in this case fall very close to each other in time later in January.
There are also two important points that some of you may have missed or have failed to learn.
This BLOG uses a SWING TRADING FORMAT versus a TREND FOLLOWING approach. This is one of the main reasons why this blog if far more valuable and useful to the readership. That should be self-evident, but if it is not obvious, then perhaps ask me to explain later as time permits.
Secondly, the first rule of money management is not to lose capital or expressed differently, to take on stupid or excessive risk. I repeat, that in my viewpoint, the current market risk to reward at present is extremely poor, and by my estimation is at least 4:1.
In summary, trade what you see on the charts and not what you think or hear. The charts posted today have many clues and insights.
ERROR CORRECTION - The 1 minute chart above should read.....driven by futures "BUY THE OPEN PROGRAM TRADING" ....The market remains expensive, heavily overbought, and likely being manipulated by large or deep pockets - THUS SELL OR USE TIGHT STOPS
James Kelly Sr.,
Editor in Chief, BBTL Blog
www.KRTT.com
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