Tuesday, July 31, 2012

Charts 7-31: Three Peaks and a Domed House

Carl Futia has been tracking a count of George Lindsay's famous Three Peaks and a Domed House pattern.  3PDH is one of our favorite patterns, and we were delighted to see it form on the TLT ETF several years ago.

I see it in the SPX, too, but at a different scale of time than Carl does.  I know that the original pattern specifies a timeline, 7 months for certain segments to form, and so forth. If we can set that aside, I will make a case for 3PDH on the SPX on the chart since 1158.  You could count it from 1074 if you like, too, it doesn't make any difference in the final target, which would be a sharp return to point 10, or 1266 on my chart.

The big-picture proposed 3PDH count since 1158

Two tops possible for tomorrow, sane and vicious

The move up since point 10, and the Domed House

Overnight /ES futures just went green, so we will see if this can continue overnight and what sort of day we get tomorrow.  I think the 1398 top is more likely, but 1422 is possible if the market really likes the bone thrown to it by the Fed.  The problem with 1422 is that we would reverse off it right away, presumably on Thursday when the ECB flops.

Over the weekend, we were car-camping outside of Leavenworth, and my daughter found a rubber boa snake.  They are docile and can be handled.  This was the second one I have seen in the area, both at night (the first time I was coming out from a day hike of the Enchantments, because I'm too cheap to get an overnight permit).  It must be a sign.

Thursday, July 26, 2012

Charts 7-26, crackhead country

Well it's nice to see that we found those 15 handles today; those calls I scalped for a slim gain would have been 4-baggers.

We either get back inside the wedge here, or we fail.  No one is talking about the GDP number out tomorrow.  What happens if it comes in negative?  Or would that rally us?

If this is the channel, and we get a spark, we have the potential to do something truly historic tomorrow.    Super-unlikely, I know ... but ... Fridays have been very volatile lately.

I just want to post this chart so that we can say someone saw the possibility for tomorrow, OK?

Welcome to crackhead country

Wednesday, July 25, 2012

Charts 7/25

Was that it for a wave 2 today?  Not even a .382 retrace on this one, it just managed to cross the channel as I have adjusted it now.

In the morning, a 400+ number for claims and a bad Durables report would send us south in wave 3 style.  We could gap down hard at the opening, but we have a small amount of room on the chart for us to pop up a point or two, maybe a last ditch effort to hold us up here.  I really hope we get the latter, for a possible trade on some mayflies -- short-timer puts.

Trying to coin a term here, mayflies are opening a new options position with 3 or fewer days left until expiration.  This is in contrast to Lazarus options, which are calls or puts you bought originally with plenty of time on them, but you were wrong and held them too long underwater, and now, while expiry approaches, you pray for them to rise from the dead.  Only Jesus can save them.

I scalped some weekly 135 calls today, managed to dump them for a small profit while they were still green.  I wanted to have them more for the possibility that we could ramp another 15 handles higher, and I managed to ditch them before they became losers.  I don't want little spec plays like this to crash and burn and end up worthless and just embarrassing, which is so easy to do with mayflies.

Hope the channel is about there now.

Can we actually dive below 1280 this week?

The big nasty

Tuesday, July 24, 2012

Charts 7/24

Another tricky night here.  We had that rough AH session with the Apple earnings, but the overnight /ES is just not going anywhere.  If the Euro catches a bid overnight, maybe we can get a .6 retrace up to the pink trendline on my chart tomorrow.

It would close a gap and surprise many, for sure.  And it would be followed by a very nasty move south.

If we continue to selloff tomorrow, then the count puts us in a 3 of 3 scenario, getting down to the 1300 area by early Thursday.  It would look something like the steep, narrow channel I sketched last night.

By rallying tomorrow, we will actually make the next drop even more nasty.  One way or another we want to bottom in the 1260 area by next week's full moon and FOMC lemon party.

The deep wave 2 scenario

Charts 7/23

We're in one of those tough spots so common to wave-counting, where we really could go in one direction or the other.

I have great plans for this market in the fall, though, and in order to realize them, we need to start chopping away at the charts now.  So I definitely prefer steady selling through this week and again next week into the full moon and FOMC.

Ooh, one more thing, that I like about 1380.39 as a potential technical top for the entire rally since 2009, is that, of course, it is right at the .786 retrace of the entire 2008-2009 crash debacle.  So we've got that going for us ... which is nice.

Proposed wave 1 channel

Larger view of the drop

Monday, July 23, 2012

A little housekeeping

I earned the ban-hammer over at Karl Denninger's TickerForum board this morning.  I had posted my email address, to let my old friends there know how they could contact me in the future.  Karl had just updated his Terms and Conditions to prevent this sort of execrable thing -- not that I actually read them.   I feel honored that Karl updated his site Terms just for my little drama, though.  Gee, how about that.

I joined TickerForum the day it went live -- my "incept date" was the same as Karl's -- back in June of 2007 when we were hunting WaMu.  I managed to get a free new car for my troubles.  I did not post the typical fare-thee-well-and-fuck-you post many make on their way out, and I'm fine with that.

Karl is a strange fellow.  He still posts his Tickers with the constant refrain that we had better fix this mess now, or there will be hell to pay.  Does he still have the fax bomb program spraying each Ticker to each Member of Congress?  Does he imagine that they care at all about him and what he thinks?  That they will think of him wistfully and regret not having taken his sage words of advice back when they could have made a difference?

I don't think Karl has anything important left to say about the financial crisis and the future.  He carried the baton well several years ago, explaining to all who would hear about risk and leverage.  He informed many of us on these matters and the financial mechanics underneath, he was hugely and deservedly influential.  All he has left now is a great crescendo of I told you so as the entire financial world collapses at long last.

When he finally accepts in his heart that we are truly beyond repair, past the monetary event horizon, that NoThing was right all along with her advice to get "seeds and deeds" and guns and garden tools, he will simply disappear.  He's a smart and serious guy, and he knows deep down that his house is worthless in the long run except as a temporary bunker.  Once the manatees have all been eaten, and malaria is haunting Florida again, he cannot produce food from a cul-de sac modern house with no useful land.  He will go elsewhere, and fast.

All of you Gold "donors" will wake up one morning to a HTTP 404 on the site.  He won't owe you an explanation, remember, he's not obligated to you in any way.  The guy makes his own SCUBA rebreathers.  When he finally knows that we are done, he will simply buy a piece of useful land, with cash, and disappear.  All of the arrangements may be in place already.

I don't know if that will be in Florida, or somewhere else.  He hails from Michigan, which he knows well and is not a bad climate for general purpose gardening.  You could probably disappear pretty well there into a doomstead in one of the rural counties.  Plus, if he needs quality domestic help, he will already have a maid and a driver at his beck and call.

But Karl has nothing at all left to say to us.  We get it already.  The Fed bought MBS, they allowed financial fraud, the Rule of Law is done, we understand.  The system has bought itself some time, but is  of course doomed.  Failure is inevitable.

The best observer of the current state of things today is Steve Ludlum, "Steve from Virginia", who posts on his invaluable blog, "Economic Undertow".  Here's what Steve had to say over the weekend:
There is a far better chance of crop failures and starvation in countries that depend on external credit, imported fuel and F/X flows. Vulnerable Pakistan could see its population completely wiped out and India could lose half of its 1.4 billion in a matter of weeks or months, particularly if coupled with a diminished- or failed monsoon. There are simply no food stocks available to shift to needy areas in sufficient quantities … to feed billions. Fuel poverty would restrict the ability of nations to replenish food stocks or create new ones. We are near- or at a food/fuel limit.
Now this is something new.  Here is a man who understands the full gravity of the situation, the historical weight of what we are actually facing.  Steve's discussions about the forgotten relationship of energy to finance are groundbreaking and, I think, critical for understanding the nature of things, and where we are headed.

TickerForum and the Market-Ticker have served their purpose.  If Karl's work is useful to you, by all means, don't let me discourage you, just don't count on him sticking around for one minute longer than he feels is necessary.  Once he realizes the sheer folly of faxing op-eds to Congress and promoting Libertarian eagle scouts in local politics to fix things, I believe he will do an about face and check out rather abruptly.  And he knows better than to leave a forwarding address.

One more thing, Karl.  I didn't buy your book.


Charts 7/22

It looks like we have started our drop to 1257.  We'll need a couple more days of red markets to chop through support levels and confirm here.  I see us dropping until the FOMC meeting in early August, where there is also a full moon.

So is it the moon, or the meeting?

Short-term count

Series of steps to reach 1040

"C-down" 2012 crash cycle

Big-picture count

Sunday, July 22, 2012

Authors wanted!

Looks like I'm the latest refugee from Karl Denninger's Ticker Forum site, where I used to post daily charts of the SPX and Elliott Wave counts.

We had a pretty good vibe there, a solid group of thoughtful people trading in ideas.  And ... it's gone.

So I'm bringing my charts and counts home, and I'm inviting any of my old pals who are interested to let me know, and I will add you as a co-author to this blog.  Life for us will go on pretty much as it has, sharing charts, counts, and ideas, and riding this market to its final destination.

CJ?  Luna?  BritishSteel?  Pieter?  Any takers?