Thursday, September 20, 2012

Charts 9-20: More downside

I think we have a couple more days of this, and that we are actually headed for the 1434-5 area.

Updated count on the current channel, showing the extended W3 and a proposed W5 to the top.

Better looking C-wave count
Then ... we get our turn, and we will watch it carefully to let it tell us where we are, and where we are headed.  Again, the goal is to complete the 3PDH formation by returning to SPX 1266 in time for the December FOMC.

In mid-December, short-interest should be high in anticipation of the fiscal cliff.  Congress and/or the Fed will announce Gramm-Rudman XVII or some other scheme, kicking the can for another 6 weeks and triggering a vicious short-covering rally.

That rally could retrace pretty deep, the .618 is just below SPX 1400.  From there we head straight to 1040, with a final spring 2013 bottom in the SPX 970-980 area (June 2013).

Summer rally ...

Fall 2013 wipeout crash.  SPX to 400.  We will short the tar out of this and then close all accounts, brokerage, bank, credit union, 401(k), punch-card burrito coupons from Taco del Mar, and go plant a 5-acre garden somewhere out on the WA coast.

If you do it, too, maybe we can be neighbors, form the core of the Great Northern Tribe.

This weekend, I'm heading out to the Olympics to hike the Skyline primitive trail, about 50 mi in 2 days.  The last time I hiked this was late-October 2010, in a serious fall storm.  I had a bit of a solo survival epic up there, a real close call.

Skyline Trail, October 24, 2010, nasty conditions


hettygreen said...

A thousand S&P points south a year from now? Ouch!

Just curious how you plan to short this. I figure anything using derivatives, having counter party risk or even the slightest hint of re-hypothecation will be toasted as much as any long position should such a cataclysm unfold.

Rajeev Shah said...

Given wave 2 was deeper, using the alternative approach, it seems the current wave 4 will be more flat.