1190 SPX is the lower price of the support range.  The market closed a full 26 points above this price today.  If 1190 is lost, prices can run a long way lower.

Max pain thesis:  So long AAPL closes above max pain on OE Friday, AAPL is in a multi-month rally. It usually closes near highest OI (calls) when in multi-month rally and near highest OI (puts) when in multi-month decline.

Max pain (Jan 12) is lower than Highest OI(Jan 12 puts).

11/18/11 Max pain = $390, closed below at $374.94.
10/21/11 Max pain = $390, closed above at $392.87.
09/16/11 Max pain = $385, closed above at $400.50.
08/19/11 Max pain = $365, closed below at $356.03.
07/15/11 Max pain = $345, closed above at $364.92.

OI of possible bullish vertical call spread (Jul $480/$500) is now over 22,000.

Edit:  Added max pain for Jul to Nov.

Unique - 18 November 2011 07:48 PM

For me, 1190 is pretty much guaranteed for next week through my noob assessment.

I like your chart, but I don’t follow EW. It over complicates things.

1190 will trigger 1150. I hope Apple finds a strong support at 200 MA (362). If not, who knows? What is your take of Apple when the market takes a dive to 1090?

Possible dead cat bounce to close gap down before continuing downwards.

What the chart is saying is S&P is in bearish impulse, should sell on strength or short something as suggested by Eric and unique.  S&P would eventually test 666.79.  The decline won’t be as sharp as 2008 but would keep grinding down, taking down many stale bulls.  Long and holding LEAPS calls to expiry could be fatal.

Almost time for a technical rebounce to 1220 before crashing towards 1074.

Mace, thank you for sharing your perspective.

Mace, thank you for sharing and all the help you have given me.  Have a great Thanksgiving!

Mace - 23 November 2011 03:27 AM

What the chart is saying is S&P is in bearish impulse, should sell on strength or short something as suggested by Eric and unique.  S&P would eventually test 666.79.  The decline won’t be as sharp as 2008 but would keep grinding down, taking down many stale bulls.  Long and holding LEAPS calls to expiry could be fatal.

S&P would eventually test 666.79 - This thought scares me. Good analysis Mace.

Mace - 18 November 2011 07:43 PM

Max pain thesis:  So long AAPL closes above max pain on OE Friday, AAPL is in a multi-month rally. It usually closes near highest OI (calls) when in multi-month rally and near highest OI (puts) when in multi-month decline.

Month   Max pain   Highest OI(calls)    Highest OI(puts)
Dec 11    $390          $420                 $390
Jan 12    $345          $400                 $350
Feb 12    $380          $500                 $350
Apr 12    $375          $410                 $250
Jul 12    $370          $480                 $350
Jan 13    $330          $400                 $250 

Max pain (Jan 12) is lower than Highest OI(Jan 12 puts).

11/18/11 Max pain = $390, closed below at $374.94.
10/21/11 Max pain = $390, closed above at $392.87.
09/16/11 Max pain = $385, closed above at $400.50.
08/19/11 Max pain = $365, closed below at $356.03.
07/15/11 Max pain = $345, closed above at $364.92.

OI of possible bullish vertical call spread (Jul $480/$500) is now over 22,000.

Edit:  Added max pain for Jul to Nov.

EW is not the solution towards predicting the future. The fact that we closed above max pain 3 out of 5 times only tells you the market is fickle.  We dropped 15% back in July of 2010.  There was higher chance of dropping to 666 on the S&P back then or even in Oct compared to now.

Too much talk of gloom around here.

Thanks for the chart Mace.

I am also watching VIX, it hasn’t spiked much in the past 6 days. If bottom was near we would see a spike in VIX. Thereby indicating that we are not near a bottom…perhaps slow grind down

Cut n paste from another thread.

Breaking below $354.24/200-day SMA/52-week EMA means in multi-month downtrend, likely bottom would then be $235 (hard to believe, I know).  Just hope and pray that $354.24 holds.

There are three waves from $426.70 to $363.32, hope and pray that is a zigzag, abc, and not 123 sequence of a bearish impulse.  The latter means liquidate all long AAPL trades and goes aggressive shorts.

There should be a rebounce next week,
- If not higher than $380 and then breaks below $363, is a bearish impulse.  Should liquidate any remaining long AAPL trades during the counter-trend after completion of wave five of the bearish impulse if not nimble enough to liquidate during wave four. 
- If rebounces above $380 and subsequent retracement not lower than $363, can cautiously hope for AAPL to fill gap down since $426.70.

Note: Above are just thinking aloud not trading advice.  Not responsible for any extreme emotional swings .

Unique - 27 November 2011 11:34 PM

BTW, how much is your stockcharts sub?

Not mine, just too lazy to post Daneric’s EW link.

Cut n paste from Daneric’s EW website.  Next few days would be exciting, let’s hope that S&P can rally above 1219.  Plan to buy tons of throwaway hedges when S&P is near 1219.  Corresponding to 1219, is $390 for AAPL (answered alice question before she asked )