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Friday, March 1, 2013

When Money Lords Fail

Yesterday's scenario stays:

If today the S&P gets above 1525.84, it will likely follow the Dow to a fresh high. I doubt this. I think, as in 2000 when the Dow, Nasdaq, and S&P hit their respective highs months apart, the same may be occurring now.

The pattern on the S&P suggests a possible continuation of its correction with another a-b-c to follow. This would mean an a-wave that targets below 1485 today or tomorrow. A b-wave bounce would be followed by a final decline in a c-wave targeting 1450-1470.

The Money Lords -- the insiders who get to see all the order flow and know almost everyone's position -- tried everything they could to break 1525.84 yesterday, including jamming the ES at 1:19pm ET. I saw it happen, but did not have Time & Sales running on the ES at the moment. Thankfully, Zero Hedge did:

At 13:19:58, in a brief 1 second interval, it appears someone (or thing) decided it was time to slam $138mm notional to work with no consequence for market impact or cost basis. 15,700 S&P 500 e-mini contracts surged through in that second, running all the stops above the highs of the day to test up to the highs from Monday (pre-election). Meanwhile, FX and Treasury markets are not at all enthused... but whatever it takes to get the Dow to all-time highs...

Well, they failed.

It is imperative in this game to identify who is trying to screw you and the methods they use to do it. Otherwise you are bait.

And never forget these same insiders would be absolutely nowhere without their information flow.

Futures are down hard overnight. Europe is down hard. Yesterday's scenario lives. The OEX puts are now paid for (doubtful about their prospects, but now risk free). The VIX calls closed higher. Today I'll manage these positions and add others.

I was concerned at yesterday's close that, as good as the sell off looked, it was only a three-wave affair. Today should put that concern to rest.

On the other hand, I will buy any failure to get below 1500.

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