Sunday, February 7, 2016

Two head-and-shoulders patterns in play

One points down, one points way up (starting with a full retrace of January).  The tape obviously sits closer to the bearish one.

Each is plausible.  We're at one of those inflection points again.  Choose wisely.

SPX 02-07

By the way, if we were actually to thrust north and make new highs, the reaction off that move would be extremely severe and include a May crash that would make the old May 6 "flash crash" look like Canasta night down in Green Valley, AZ.

Friday, January 29, 2016

Charts 01-29: Breakout on death of the Yen

Glad to see the BOJ getting on board now.

Well, it's about time!  More, please.  Thank you, gentlemen.

Package for David Stockman
SPX 01-29

Thursday, January 21, 2016

A long-term count for that elusive One More High ...

In a nutshell, we stayed within wave 4 territory on this last scary plunge, correcting the W3 that ran from 1266 SPX all the way to 2134 SPX last May!

If we have one more 5th wave left to go, it will confound the bears and take us all the way to about May 10, at SPX 2185, touching the top edge of a megaphone.

Weekly candles with RSI make the case here:

SPX weekly candles

Big-picture, I don't think China has any choice here but to attempt to defend the Yuan, at least until they deplete their foreign currency reserves to the point where it is hopeless and they buckle down.

All supports down to 1820 and even 1814 SPX are now blown, so I would argue that the target of the first true impulse down off new highs will target the 1740 area, with a tepid bounce.

By the way, there are plenty of Elliotticians out there who would suggest that the original bounce from the 2009 lows was wave 1, meaning that we have an enormous wave 5 ahead, reaching 2500+ on the S&P.  Thanks to RSI and fibs, I would argue that the epic rally counts ABC instead of 12345.

Friday, January 8, 2016

The case for 2182 SPX

I know you guys think I am nuts or in stark denial, but VIX and the volatility ETFs simply were not confirming that there was any real fear in the tape this week.

Both the VIX and volatility ETFs like UVXY rose to highs this week almost identical to those reached in mid-December, yet the damage on the indices was far, far worse.  I think this is a serious divergence worth noting.

Much of the December rise was hedging going into the FOMC meeting as well.  But there was real damage done this week, but as drips, not impulsive breakdowns.

If this decline fails, then let's look at what happened the last time one of these failed -- we rallied to the 1.618 fib extension of the drop.  A similar reversal from here would target an astounding 2182 SPX, right at resistance from a trendline from the highs in mid-2015 (the year).

The weekly and daily Bollinger Bands should head upwards as well, like they did on the reversal off the 1871 low, only this time we are close enough actually to reach them.

And get our true top, with bad breadth and Hindenburg Omens and stupid blow-off moves on specific tickers.  It's going to be just grand.

SPX case for 2182 top

Yeah, I know it seems crazy after a week like this.  We'll know soon enough.

GLTA, have a good weekend.