Friday, March 6, 2015

June rate hike, please

Please, pretty please.  Janet, I'll send you a Starbucks gift card, good for a latte or baked goods, or -- what the heck -- why not both!  Treat yourself right.

SPX 1Y head & shoulders top 3PDH etc etc ceteris paribus ad infinitum

Wednesday, February 25, 2015

Triangles in commodities

Started watching this a while back.  The question is, when will this chart:

Lumber weekly

Look like this one:

Copper weekly

Or even (OMG) this one:

Crude oil weekly

Because everyone knows what lumber means.  And, yes, it tends to lag the others.

The problem is that the great suburban tract chipboard McMansion is the hard asset underlying the great American debt ponzi!  That and your future!  And both are worthless!

SPX likely finished up wave 3 up today from the 1980 low.  We've got at least two more weeks for 4 and 5, during which that top Bollinger will come back in (2142+ today).

No worries.  Go look for books at Value Village.

Tuesday, February 24, 2015

Waiting for the Bollinger

If our analysis hinges on the top Bollinger Band of the SPX, then we need to be patient -- it's way up at 2136 this morning.  Since this is a measure of extremes, of standard deviation of our moving averages, then we need to wait for it to calm down before we can reach it.

Of course, with all of this excitement and energy and animal spirits and relentless innovation in the markets, we are still building like mad here in the Seattle.  From my walk to work:

To the moon!

Here you can see the top Bollinger Band on the daily SPX, and how we flirted with it before finishing up the third wave in the series (red 3).  We never did penetrate it, however, so that 2093.55 high was always suspicious.

SPX 02-24

The next few weeks may be terribly dull, I'm sorry.

EDIT: no, well, actually, it could either be horribly dull, or we could see that herky-jerky ending-diagonal play out after all.  That would be both exciting and very trade-able.  Pray for that!

Sunday, February 22, 2015

Charts 02-22: Six more weeks of winter?

We're waiting for a top, a final high for the rally since the 2009 lows, and I think it's very likely to be this Spring.  But we know from experience that we need to approach this very carefully before committing to leveraged put options positions on the indexes to play.  The crash ahead is a momentous, possibly life-changing event, but it must be approached with great care and patient analysis.

We want to see:

1. Penetration of the upper daily Bollinger Band on the S&P 500.

2. Penetration of the lower Bollinger Bands and/or new all-time capitulation lows in volatility and bearish ETFs like UVXY, TVIX, SDS, TZA, FAZ, etc.  Bullish wedge patterns are helpful on these, too.

3. A larger "terminal" pattern like an ending-diagonal triangle.  Maybe even two of them, nested (yes, this).

4. Decreasing volume towards the top, as well as any other bearish divergences that rear their ugly head, like a lower high on the McClellan or NYSE A/D line.

5. An intraday-reversal candle on manic panic volume, if possible.

6. Other correspondences to past tops, flattening Bollingers, leveling moving-averages, etc.

7. Unusual astrological events make a nice touch and are always welcome.

8. *your favorite pet indicator here*

I stood by while many bears who should know better, claimed and charted that the dive from the 2093.55 SPX high in late December 2014, was "the" top and an impulsive wave 1 down.  It took some time for the waves to sort themselves out, but I was proven right, that we needed to reach that Bollinger Band, and that it was truly foolish to think that a six-day decline would be "corrected" by a full month of chart oscillation.

2093.55 SPX fell, and the bears looked like jerks again.  Well, yeah.

But the daily upper Bollinger on the SPX took off again this week, exploding up into the mid-2120s, suggesting that it, too, needs to settle down to allow us to reach it and setup the overbought conditions we need.

So ... in a nutshell, we probably need more time.

The good news is, the really good news, IMO, is that the tape since the 1980 SPX low looks like a plausible triplet, a possible ABC leg for wave 1 of an ending diagonal.  This is very encouraging for us true perma-bears, who have managed to survive all this time eating grass and winter-kill carrion, but surviving nonetheless.  We will make it to the waterfall season of the markets when the salmon are running in numbers once again.

Here's the proposed ending-diagonal, in daily candles:

SPX 02-22