Wednesday, June 6, 2018

S&P 500 going parabolic again?

It looks like the 5/29 Bradley turn marked an important local low.  It was on a Full Moon, which should have been clue that the turn would be a bottom.

Now it looks like the S&P 500 is going parabolic again.

Next week's FOMC happens to fall on a New Moon.  We're less than 4% away from making new all-time highs on the index -- we could easily make it there by mid-session next Wednesday.

An FOMC can give us a reversal without gaps.  The February decline left giant holes in the chart, as well as an excessive RSI.  This parabolic needs to make a marginal new high, fill the existing gaps, while putting in a lower, divergent RSI.

$IRX is only 10 bps from glory and another .25 hike, maybe the one to break the camel's back.

SPX daily 06-06

Tuesday, May 29, 2018

Bradley turn today

The last one was at the end of January.

The 340 pt dive in February was a warning -- this is how we decline now.


Bradley siderograph, 2018, Manfred Zimmel

Wednesday, April 4, 2018

The case for 3070 on the S&P 500

I think we are headed to 3070 on the S&P 500.  I think we are headed there this month.

Getting there will piss just about everybody off.

The bears will be squeezed, again and again as they reload their shorts.  Bulls and bubble types will watch this proceed as a true blow-off top, and miss the OTM index calls which return high multiples.

It will be a most hated end for the most hated rally (since the March 2009 lows).

Tonight the /ES broke out of the old bearish channel.  It looks done now.  The overall decline never became truly dangerous and impulsive, did it?  The 2553 W4 low was made right after the Full Moon this past weekend.

/ES breakout

So here's the case for 3070, a true blow-off move into the end of April.

1. It's a 1.618 fibonacci extension of the drop from 2872 to 2553

2. It is the target for a Big W pattern per Bulkowski.  The psychology of this is simple -- we grind our way back to 2872, squeeze anyone covering at the new high, and push unimaginably further north.

3. The blue dotted line, which is the overhead channel trendline on a LOG chart all the way back to the 2009 lows.  IMO we need to test and reject it one last time.

4. The January highs put in historic extremes on RSI for the SPX, indicative of the 3rd wave of the series.  IMO we just wrapped up W4, so now we get the 5th, with higher index values and lower RSI, the final divergence marking the final high.

I still have the pet theory that the next great window for the start of a real Bear market (via a 40% crash back to the 1810 level on the S&P) will be the first estimate of Q1 2018 GDP, due out at the end of the month.  A miss on this would torpedo any remaining illusions of growth and expansion and animal spirits still in play.  Any bounces will be sold mercilessly.


Sunday, March 25, 2018

It's not 1987 ... yet

We still have gas in the tank.  Quite fine with me.

It's going to take 2 things to kill this market dead:

1. Q1 earnings season badness.

2. The first estimate of  Q1 GDP due EOM April.  If this misses, markets crash and stay crashed, until the FOMC can regroup with a new QE in early November.  A weak GDP read upsets the entire recovery/growth/animal spirits narrative, and the Fed is not yet ready to do anything about it. 

But first we need to touch the dotted blue line one more time.  It has stopped every attempt in this eternal credit-expansion rally.  It's not all that far away, and we are setup well to visit it.

The slope of the recent declines since January point to ominous targets.  Let this run for a month, and we're back at the 1810 lows.  Let it run into the Fall, and we're at scary new market lows under March 2009.

The leverage is there, the crap debts are there, the big players (pension funds, 401ks, ETFs) are all ready to sell and keep selling, at this rate of decline, at the slope shown here.  

And crashes are three-wave ABC affairs. 

SPX touches the dotted blue line and dies