Friday, May 22, 2015

Charts 05-22: the "Force Janet Yellen's Hand" scenario

Two hours to go before the Memorial Day weekend, and we are hanging in here stubbornly.

We've moved sideways through a couple of support trendlines that have now been slowly, gradually stressed and broken, but the market is not yet ready to head down.

The daily SPX upper Bollinger, the lower daily VIX Bollinger, are untouched and probably unlikely to be tagged into the close today.  So far, these technical indicators have served us well to know that we have not yet reached the end of this.

The two most likely events that can roach the market and bring the return of the bear would be a suprprise hard default and exit from the Eurozone of Greece, and a 50 bps or better rate hike at the mid-June FOMC meeting.  Assuming that the PTB can keep Greece on ice, then let's consider that the equity market hangs in here until the FOMC, all-but-forcing Janet Yellen to declare victory and discontinue ZIRP (for now).  ZIRP will certainly return, but under much more desperate and frightening circumstances.

Here's a proposed ending-diagonal scenario that completes into the June Fed meeting, at the 2145 level on the S&P 500.

ending-diagonal into June FOMC edition

EDIT: after looking at the DJIA for corresponding waves, I added a second count in red that would have us finish up an ending-diagonal after the first week of June, presumably on Greek troubles.

Thursday, May 21, 2015

Friday VIX collapse finale

The lower Bollinger Band on the daily VIX is 11.55.  A volume-less, dead Friday before a holiday weekend provides an excellent opportunity to put a cherry on top of this thing.

Upper daily SPX Bollinger is at about 2140.

Have a nice weekend.

Detroit ... before ....

Tuesday, May 19, 2015

Charts 05-19: When do the Greek deadbeats exit?

Just a quick short-term chart.  SPX is bumping up against its daily Bollinger Band again -- up at 2135 SPX this morning.

How bubbles end

SPX 05-19

Of course, 2138 SPX is the perfect 1.618 fibonacci  extension upwards of the 910-pt bear cycle from 2007 into 2009.  Maybe it is of sentimental value to the algos out there.

Here be monsters.

10Y Note Monthly

Tuesday, May 12, 2015

Charts 05-12: Range-bound through May?

We did not get a spike up to the upper daily Bollinger Band on the SPX on Monday, dropping us back in the old range.  It's starting to look like a smaller ending-diagonal 5th wave within the larger pattern since the October lows.  It could easily last to the end of the month and eat the theta of anyone betting hard on a seasonal May sell-off.

Here's a proposed count:

SPX 05-11

The first target of a break would be its point of origin, the 2040 area SPX.  The 200 DMA will be in this range into June FOMC, setting up a bounce back to test the wedge.  A failure turns our attention back to support at 1820 (for the next bounce).

If the Bollinger Band theory holds out -- that we need to reach it on the daily and possibly the weekly SPX band, like we did in the 2000 and 2007 (year) tops -- then we have a very useful signal and guard against shorting this too early, while it is still stuck in this dangerous chop.

And the larger meltdown into the fall, of course, as we roll-over the old supports are all lost (desperate, doomed rallies).