The developments of the last 2 trading days make me consider the whole rise from the post crash bottom to the last week's high as a W2 Kane ABCD:





Timewise it doesn't look good because it rarely happens in a zigzag that CD leg lasts 80 times longer that AB leg. But if it comes to proportions - it's almost perfect: AB and CD legs are nearly equal and whole ABCD retraces between .685 and .786 of the preceding leg down from the top.

Initially I thought that whole zigzag should finish at May 11th high. Now I see that high as a C point of a W4 correction in the CD leg:





The behaviour of the market in the next couple of days should help us jugde whether this interpretation is correct. This is rather important because in such case we should expect a drop to at least 1020 (1.272 external retracement of the ABCD) and probably much lower if W3 down has just started.

Originally posted by jarek

Look at what happened to gold today. Looks like yesterday's spike was nothing more than a shakeout of shorts

Myself, I could care less about trading gold (okay, I like the way gold trades, but my concern is more long term with it). I want them to crush it so I can buy a bunch at a lower price. I'd love to see that $875, or $600. If I bought a bunch at $875 and it went to $300, I'd be the happiest guy on the planet. That means the rest of my cash is doing great. If I buy at $875 and it goes to $10K, I'd actually have a lot less value to my assets overall. If I put 20% into gold and it skyrockets, the 20% retains its value and the 80% goes to zero, so I keep 20% of my net worth, approximately. If I buy gold and it gets cut in half, I keep my 80%, it may even 'appreciate' (currency is 'worth more' during deflation), and I lose say 1/2 of 20%, so I lose a little and I have some insurance. My best case is gold goes down, I buy a bunch, and gold gets crushed. Think about it.

They are buying like crazy in the aftermarket...

And the after hours low was also right where it should:

Lots of action today and it sits exactly in the same spot as 24 hours ago ...

re short covering rally in gld....it is a pattern you will see many times... for those who have an interest, go back to your short term charts in the jan to early feb decline... six times the computers hit the trade... each time the line sorted the fib, the computers covered and waited to get short again at the target, the medianline from the green probability set.

in the indexes

Very cool, roofer.

Although this is right at a key area, this thing could crash. Enough panic and a non-existent market depth of participation, and once again the HFT stand aside and there is no one left. But, they aren't unwinding carry right now, and that may be needed to trigger a 'flash crash'. Who knows, no one knows what it takes. Point it, I'm expecting a bounce in here, but am wary it may get killed. Staying short side bias until it really moves up. BTW, those puts priced at I think it was 1.09 are now 5.76...

Right around 1070 is my best bounce spot, and it's the big .886, too. We'll see. It's close enough now that I am getting ready, but like I said, it will have to prove it to me, and I'm ready to see this take out that 1056 low, as I've suspected all along it will do on its way to much lower lows.

Okay, I think that was as close as it may get. I got the trigger, hence 'proving' itself to me, but if it rolls, I'm ready. I wish 70 was hit more deeeply, but given the size of the decline, that's as close as I can estimate it. Maybe it bounces up and does a final push down to there. But I'm assuming 'that's it' for now.

I suspect a big run up in GLOBEX and a huge gap up over that line. We'll see. The weekends are getting longer and longer as the inevitable blowup gets closer.