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The stock market got slammed on Friday after a worse than expected jobs report, weak China PMI report, and continued fears out of Europe.  I am back to the drawing board this weekend trying to figure out the levels to watch next week and where I think a potential short term bottom is for the stock market in 2012.

First look at the $USHL - The USHL is a great tool to use because it tracks new highs and new lows.  $USHL updates each day after the close.  As you can see from the chart, we've seen a huge rebound over the last 2 years when $USHL dropped below -300.  When the $USHL drops below -500, there is usually a crash followed by a massive rebound.  The $USHL closed at -277 on Friday.  To me, this indicates that we are nearing a short term bottom and a bounce can happen at any time.  If we don't get the bounce we may be setting up for a short term crash.

S&P 500 Support Levels - The S&P 500 is nearing a thick are of support between 1267 -1278.  These two price levels were tops in November and December 2011.  They should now act as support on the downside, or, a level where buyers will likely step in.  If the S&P 500 closes below 1267 next week, watch 1240-1250 but we will have to dig even deeper into the numbers.

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The $USHL ended up topping out at closed at +17 today so we are right in the middle of the recent range.

Hmm. We bottom again probably, at what, -175? We should get some bounce and confusion before the second leg down though, which should provide us with a higher low than 1267. What did GS say? 1285? (If we don't, and continue down immediately -- unlikely -- then the bulls will roar back up.)  So... probably dead cat bounce / chop till with drop for the second leg, and then shop as we pop again... before ugh we drop again. This is totally one big consolidation pattern for the summer at half the breadth of last year's, until we ultimately make a lower low in autumn before we Christmas shop.

I wonder where the monthly jobs numbers will find us? They can strong-arm this entire charade. Probably right at support or resistance. The robots have this down to a science. The only saving grace is that we programmed them. The fact that they are taking out jobs in more ways than one... is just one more irony.

97F. Fun summer on the East Side.

Right. So, the black line is now resistance, and the thin blue line is now support, or ostensibly/potentially our next bottom for the second leg down, whenever that happens. We are oversold right here though and might chop first, as we have some good support in between. Let's see what next week will bring.

(chart: EW trends and Charts)

do you see the month of july as a negative s&p growth

Based on what? Seasonality? Back testing? News prior to it occurring? A guess at the timeframes of moves? Tea leaves?

Do some research and ask a specific question and maybe we can answer it. But keep in mind that whether the S&P is up or down won't help you profit. It is about you managing your own trades. Depending on people's trading timeframes (day, swing, long), they might find it more or less profitable to trade bear or bull markets, and volatility or lack thereof.

Hmm Interesting... I had a feeling today would be panic day. I think we might visit that 1260ish range next week. How are you playing these days RHEE? Do you use ETFs, futures, options, or something else?

I generally play an occasional bio or high beta that is trending bottom left to top right for two or three days, bouncing off of support, and completely immune to the market -- ones whose behaviour I know. I also wait for the $USHL extremes and get into an ETF for a day trade, generally in pre-market or after break of resistance and/or a high/low $TICK, hedging in. I sometimes play clear gap fills off pivots and dead cat bounces. And when the market is choppy and uncertain, I am sidelines, as easier days ensue and I leave my gambling for my poker games deep in Brooklyn.

In the short term, the EURUSD is now in a small wave 4 correction of today's wave 3 (they are in lock step). So there should be a short-term bounce for this wave 4, typically 38.2% of wave 3, and then wave 5 down will come, typically the net distance travelled from the beginning of wave 1 to the end of wave 3 X .382 or .618. Or wave 1 will equal wave 5. These are common relationships. After the 5 waves are completed, there will be a retracement of the entire 5 waves down, typically 61.8% of the entire move down, which will be about where wave 4 was. Then there will be another 5 waves down, and that's how price advances.

Bored yet? ;)

Here's another look at support, from my favourite guy, Uempel. Same numbers and timeframes keep coming up no matter how we dice it.

All the lines super confusing for my stupid brain, but anyways I agree with you. I think the non farm pay roll will get us there. What do you think Rhee?

That's a good thing, Rhee.

rhee you think itll go down to 1280 sometime in july ?

how have u done at predicting future lines in the past, are you usually close ?


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