Sent: Thursday, September 22, 2011 9:20 AM
To: Premium Members
Subject: 09/22/11 Morning Notes

GM Everyone,

I am sorry, but if this doesn't send a message to the bulls, I am not sure what will. They have just finished watching "QE3 ghost chaser 5" and are finding out it has the same ending after each movie. 2 month of jockeying the markets higher on the belief that you can't fight the fed and Ben will not let this market go down, they have watched those gains disappear in less than 1 day.

It looks like IWM is going to be opening very close to the August lows..WOW!! I believe they may find some buyers there, BUT the TF (Russell 2000 futures) still has another 14 points lower before reaching the August lows. I have been saying for quite some time-who is leading who here, the futures or the cash markets.

It is quite ironic that when we made the lows in August, it was the futures that made the lows in overnight trading and the cash markets opened well above the those low levels on the futures. Today, we have a real good chance of seeing the cash markets making new lows as the futures hold the August lows. ES would have to get below 1075 to make new lows, which is almost 50 points lower. But yet the spx will be making new lows if we see it drop another 30 points. 

The ES looks like it is trying to hold the 1223 support. If that fails, then I am expecting a push down to the 1110 area. That should have the spx testing the 1120ish area. TF has already broken through those support levels and the next area of is the 623 level.

I think it is a little dangerous just jumping in short after this big of a move down in 1 day. I will be waiting for any rallies to look to short. 644-650 TF would be a nice spot. Stay away from the long side-the hunter has become the hunted. I am not ruling out a bounce at some point today that they try and carry the bounce into Friday, where it fails-and we see type of mini flash crash on Monday. Just thinking-don't trade this road map please. G-

Sent: Thursday, September 22, 2011 9:35 AM
To: Marketspath
Subject: Maybe bounce then test of the lows..

I am expecting a small bounce at the open and then a test or slight break of the lows. That is where I would expect the boyz to try and muster up a larger bounce, and that is the bounce we want to short. G-

Sent: Thursday, September 22, 2011 12:21 PM
To: Marketspath
Subject: Not sure if that was it?

 We got a bounce off the lows and the timing systems are not new short friendly at the moment. But I have a feeling any and all rally attempts will be used to get out of this market. The hunter has become the hunted-and that is not a good place to be long this market.

There is massive hedging going on with the institutions and if they want this market down, they are prepared for it. Again, a very dangerous place to be long this market. I would rather of seen a larger bounce to get more short and we MAY see it hit tomorrow, but I am not sure of that. Fear is much stronger than greed.

I am reluctant to jump in on the short side, even though I believe we are heading lower. The spx  is most likely heading to 1120, but the  Russell has already been to the area. That leaves the door open for spx weakness and iwm/Russell strength. What I mean by strength is..the spx may drop a quick 7 points and we may only see the Rut drop 1 or 2 points.

If you want to be aggressive, you can jump short here and place a stop at today's highs. Like I said, it is a little dangerous, but can also pay off nicely. But even if they bounce the iwm/rut, the August lows should be taken out soon. I am going to leave the trade entry up to you. This market is very weak. But I wouldn't get too aggressive down here on the short side.keep it small. G-

Sent: Thursday, September 22, 2011 2:00 PM
To: Marketspath
Subject: 15's timing system inverted

Hi Everyone,

If you took the short from the "not sure if that was it" e-mail, we have to be a little careful. I am not sure anyone will try and be a hero today and buy this market, but the 15 minute timing system is inverted and the 60 minute is showing some divergences.

 The daily is still in a solid sell and they most likely won't try and rally this market until it starts to turn higher or show a divergence. But with the only way that will happen is if we get some type of rally or bounce.

 With the 15 running inverted (it is on a buy as the markets are declining) and the 60 showing a big divergence, they may try to kick the bounce off in overnight trading. Another push to new lows will definitely show us 5 waves down and I would place a wave (1) there.

 It actually lines up with what the timing systems are showing, being once we complete this 5th wave of (1) down, we should see a sharp wave 2 rally. I am thinking we could see iwm run as high as 67 and maybe even stretch for the 68/69 levels.

 Now I am not saying to close all shorts and go long-I am just telling you what the warning signs that are being sent out from the timing systems. Do NOT be greedy down here on the short side. At the minimum, please place stops at your entry. After the wave 2 completes, we should have a wave 3 on deck, which should take the spx to the 1050-1020-980 area. G-

Sent: Thursday, September 22, 2011 3:28 PM
To: Marketspath
Subject: IWM next stop is most likely the 63 area

 Hi Everyone,

I continue to see the inverted 15 on the timing system, but odds of iwm heading to 63 by the close are fairly high. There is a chance we see some type of margin call at the open tomorrow, which would fit some type of short term bottom on the scheduled turn date. But we may also see that low come in overnight trading.

I think the short side is ok, as long as you are managing the trade with stops. I would be a little careful holding overnight with the full position and I think taking some off would be a better way to manage this position.

If we get the gap down margin call in the morning, I would be open minded to switching hats and going long at the next support pivot. For now, I think you can stay short with caution and take some off near the bell or near iwm 63ish. G-