Tuesday, April 21, 2015

Charts 04-21: Revised ending-diagonal count

Updated count suggests 1820 SPX (by Memorial Day?) as an initial target instead of 1737 or other levels.  Extended, the trendline projects straight to 1266 SPX by July opex.

Notice how this presumed 5th wave up is centered precisely around the lower boundary of the wedge?  Rolling-over will lose this channel and keep going.


SPX 04-21

Saturday, April 18, 2015

Charts 04-17: No bearish break-out just yet

We're still in the wedge, in fact, we're still in a handy channel on the SPX:

SPX 04-17

Did you notice where the VIX peaked on Friday?  Volatilities are telling you the market's got at least another high left in it.  Watch the VIX next week!

VIX 04-17 6M

Larger picture, usual expectation of a market crash.  This one is framed with Bradley turns, and echoes all of the big turns on the way up.

SPX 04-17 4Y

... with a 50% Santa Claus rally that reaches the trendline between the 2000 and 2007 highs.  We just had Easter, and we in Deflation Land are already looking forward to Christmas.

SPX 04-17 all

Hang in there ... we still have not reached the upper daily Bollinger Band on the SPX.  So far this has worked great to keep us patient with all of this.

Friday, April 10, 2015

What a real crash would look like

It would be as shocking to us as 2008 was in comparison to 2001.

The market would simply go no-bid, again and again, with no one substantially short enough to stanch the bloodletting.

The only thing that would stop the destruction would be a panicked Fed announcing QE4, say, at the July meeting.

2138 SPX is the 1.618x fib extension upwards of the 2008 bear cycle.  2141 late next week would make a great end to all of this.

SPX worst possible intermediate-term tape

Monday, March 30, 2015

How high can we get this week? Triangle count proposed.

There's a Bradley turn coming up at the end of the week, into Passover, and the big question in the short-term is where we will be on the chart when we reach it.

New highs, with a solid slap of the daily and weekly SPX Bollingers?  That would be great.

But if we don't make it quite that high, if we clear 2100 this week but without new highs, then there's a triangle count that may work as well.  It would eat up some more time as the market loiters up here until the 4/27 turn date and the April FOMC, like so:

SPX daily with triangle count

The rationale would be that the market will continue to call the Fed's bluff until it is forced to hike short-term rates to earn back respect.  It would force Yellen's hand by pegging the SPX up near 2150, allowing her to claim victory over the dark forces of deflation and raise us 50 bips in April, and once again in June.

This sort of post really riles my pal Permabear Doomster, who needs to relax and understand what we're trying to do here.  We're war-gaming the end.  These are Soviets-in-the-Ruhr scenarios.  The existing tape gives us a set of targets both north and south, a road map of how we exit the 2009 reflation-rally channel and what may happen next.  You'll notice that I'm drawing the same lines again and again, all waiting for a signal from a plausible overbought top, and that's OK.

The market will tell us when she is ready to implode.  In the meantime, be patient or make hay if you can while the sun still shines.

Looks like the bears are going to get squeezed hard today.  Cool.