Wow, was that some kind of week last week. The things going on, they were just amazing. There is just so much I see, in all honesty, it's way, way, way less than 1% that I can show or discuss in here. Part of that is that this is such a limited venue, a forum. As an old IT guy I used to know would say to me when we'd try to do something complex via e-mail or phone: 'We're constrained by the media with which we are working..." And, mostly, I've just advanced the craft, the methodology, to such levels that even I can't grasp the magnitude of what I have found. I feel like I'm in this rapidly advancing state, and I had another little mini revelation (maybe it would be better termed an epiphany?) on Thursday night into Friday. It's just amazing what I've learned in this journey.

Anyway, let's move on to my working topic. I feel this market has greatly increased the odds the top is now in, the 'bull' is done, and we will see some serious downside. I mentioned the key levels in last week's topic. I would like to see sub-1000, and there are some lower 900's areas that look great. Somewhere in there. There are some monster bounce spots on the way down. I'll be looking to use the legs down for downside bias, and the bounces for the upside bias for short-term trades, as well as using the entire legs for potential call and put plays for longer holds. Same plan as always.

I doubt they will let this go in here without much infighting and battle. Then, at some point, if the scenario unfolds, like in 2008, they just let it go, 'W3' happens, and it drops intensely. One needs to be ready for that, or it can drop so hard and fast there will be no way in. So, as I showed this past few weeks, the basis of my approach is to 'probe' every possible rollover spot that hits an area and reacts. I live for big bounces to set this up.

Now, let me note, one characteristic of bounces in bear markets is that pundits always (always) call each and every one on the way down the end of the 'correction' and then as the drop gets big enough they admit it's a bear and call each one the end of the bear. They are wrong every time, but they'll keep doing it until the end. Then when the magazine cover shows a big grizzly and the pundits say things have changed, it will never be the same, it's all over now, at nearly that exact point the bear is over. Watch for it.

I plan to look to lean on every bounce, to even wish for them. Play the countertrend bounces, as they are usually insanely strong and impulsive (my favorite types of moves), and the trend moves down, which are also generally very strong and impulsive. This is my favorite time to trade, my favorite style. Lots of volatility, lots of movement, and strong, impulsive trends that go far. My own personal nirvana.

So, hopefully this will finally play out. If so, it should be really, really fun. I can't wait to see all the 'experts', pundits, and guys like Carl Futia call the bottom over and over and over. I've been waiting almost four years. I think it may now be 'my time'. Long live Tim Knight!

Okay, so I posted after I said I wouldn't. With this action, how can I not? It bounced right off my first level, down to an unposted minor level, bounced off that, and is now at my next posted level. Will this all act as a 3D and create another bounce? Or is it going to go straight to the last level and get into that higher timeframe rhythm? I'm hoping for the latter.

I can't keep my eyes open any more, so this is it. This is acting like it wants to go up 20+ points off this low. There are very short-term layers from this 70.50 up to the .447 at 73.18. I'm too tired (and it doesn't matter anyway) to post the sub-levels. If it isn't turned down in this area I think it will have a good shot at that 20+. 77-79 area will also be a challenge, I think. Otherwise, see you as it challenges that 88 high... Let's hope it's just a 3D euphoria, and it will fade as soon as they realize the situation. But when I hear things like the European market is down five straight days as a Bloomberg headliner, I'm ready for a 20+ point bounce.

Let me post the very short-term overhead levels real quick, then I'll do the 'real post'.

84.00-.50

85.75-86.25

88.00-.50

91.00-.75

Note the 1.460 is at 89.82.

Originally posted by jimkane

I can't keep my eyes open any more, so this is it. This is acting like it wants to go up 20+ points off this low. There are very short-term layers from this 70.50 up to the .447 at 73.18. I'm too tired (and it doesn't matter anyway) to post the sub-levels. If it isn't turned down in this area I think it will have a good shot at that 20+. 77-79 area will also be a challenge, I think. Otherwise, see you as it challenges that 88 high... Let's hope it's just a 3D euphoria, and it will fade as soon as they realize the situation. But when I hear things like the European market is down five straight days as a Bloomberg headliner, I'm ready for a 20+ point bounce.

I need to apologize. After I posted that and went to sleep, the market went down and did its usual 2-tick game 'retest' of the low there (not that that should stop anyone out using proper stops with this methodology). And I was thinking around the high of 88, but also 20+ points. The HOD (so far) is 86.25. The low there was 65.75. So, up 20.50 points. But, alas, the low was 66.25 at the time I posted that, so the HOD, which drew the checkback, was 20.00 points off the low. Hmmmmm, must be a coinky-dink. Note, though, it's not clear this potential little 'bearish 'W2'' here will turn this down, so we may see that 88 and stop game shortly.

Let me also repost something I wrote last night.

"I was going to post a few levels, but honestly, I'm just not in the mood to do much posting. Anyway, since this is dropping I'll post them before it's after the fact.

69.25-.75

64.50-66.25 (Edit note: I came back and changed this from 65.50 to 66.25 'after-the-fact' because that was the area, and I posted it incorrectly, just to be straight up with this change. If you know my Fib work this will be obvious.)

59ish

These are approximations, do your own work. Maybe all they wanted was the stops and this 71.25 will be it. Maybe later I'll post some higher timeframe levels, in case this really gets selling."

Notice how I posted an edit note when I saw I had not posted the level correctly. Since it did the bounce off 66.25 I thought I'd make sure I explained why I changed it, to not give the impression of changing a level after I saw it bounce there. Not that it matters, given my levels are areas, not exact points, but I want to keep it straight up in here, so I put in the edit note.

Now, how funny, when it did the bounce off that 66.25, then rolled down for a retest to that 65.75 that was a tick from what I had originally posted! Too funny. It's all about areas, not exact spots, and my levels are meant to be 'center of area' levels anyway.

So, on to the apology. I'm sorry it did a 2-tick retest to hit the area more fully after I thought it was launching into that 20+ point move (I say 20+ when I see this coming because sometimes they like to go a tad over 20 when they do this particular pre-programmed dealio). And I did mention testing the area around 88, but that was basically to give everyone the spot to do the workup for. It wasn't meant to be the exact level.

Nonetheless, I was a point and change from the top, even though I was saying that about twenty points away and with no additional data to refine it. And noting that it may not be done and 88 may be seen and toyed with after all. Regardless, I apologize for being so 'off'. There's no excuse for my demonstrated lack of skills on this read and layout, not even being so tired. I'll try to tighten it up and do better in the future.

Now, watch the ABCD here, and the .447 and .486 level (why the .486 in this specific case?). The .685 ABCD level is already drawing a reaction. We shall see. This is going to give a big clue, this ABCD area, as to what it may be planning from here.

The 'best' spot is around 76.25 (the 1.000 is at 75.50), but will we see it roll down for a last push? Is this ABCD even going to play out? Could the downtrend have already resumed?

This 80.25-.75 is a really critical very short-term 'backtest' area, a nice spot for this to roll down a bit. If it smokes it to the upside with ease, that's a clue.

And it 'sees' that 80.75 on the tick chart.

Yes, it surely does 'see' that 80.75, now doesn't it. Right back to the low for the move.

Here's my surprised look:

And here's my usual look:

The question is, what does it do at the 75.50-76.50 area?

This is cool. A small ABCD created a bounce, which morphed into a bigger ABCD, which created a bounce, which morphed into a bigger ABCD, which is producing a strong bounce now. Where to from here? Another morph? A new high? Chop? I think the new high would be most likely. DELL just disappointed, and zero reaction so far from the ES, so we'll see. I think the ES, if it gets going, wants that mid-70's area. If.