Friday, November 30, 2012

Charts 11-30 a.m.: Wave 2 almost in?

Bumping up against overhead resistance, here's a proposed count for the bounce.

Wave 2 with an EDT C wave
The alt is that They just gap us 10 or 15 or 60 points up and over resistance in the overnight /ES next week, fulfilling everyone's SPX 1500+ Jaws of Death etc models.

I'll post a study of the 2008 cycle over the weekend.  The initial retraces in the "A" wave off the top were deep -- exceeding .618, IIRC. 

By the way, I just noticed that in my larger chart, I have us bouncing up in a wave 4 back to 1260 into the end of 2012.  This would mean that both 2011 and 2012 would be nearly perfect dojis.

Tuesday, November 27, 2012

Charts 11-27: No changes

An exciting gap down in the morning would give us a nice island reversal with the gap up on Black Friday.

Exceedingly bearish!

Monday, November 19, 2012

Charts 11-19: Über-bearish case

We took so long to grind down in that selloff, that we were terribly oversold.  Are we now headed for crazy new highs, or ... are we in a wave 2?

I'll present the Über-bearish case.  If you can find anyone else posting charts on the internet who is this bearish, while making an actual technical case for it, please let me know.  No Yahoo! message board crash calls, please.

We regained the 200 DMA today, but we still have even more important resistance left overhead -- the rally trendline from 1074 through 1266.  The bulls have to retake this one, and soon.  The 50% retrace of the drop from 1464 to 1343 is 1403, which is where I have (i) of my W1 ending, on about November 28.  If you believe in lunar events marking chart turns, there is a full moon that night.

A failure at 1403 gives us 3 weeks of free-fall, to the low 1200s (1202? 1206?) before December opex. This drop would actually take us through the 2009 rally trendline up from 666.

The turn date at EOY would be the end of a 4th wave retrace that attempts to retake the critical rally trendline from SPX 666, giving us our 5th wave down into January.

Late January and all of February is retrace and a final attempt to retake the trendline from 666, this time failing at SPX 1300.  The market collapses to SPX 589 by the end of June (2013).

See the 3Y chart for the trendlines and how these waves would fit them.


Sunday, November 18, 2012

Books: Saving Max Weber

I ran into the classic problem faced by book hounds while out at Magus Books near the University of Washington last week -- what to do when you stumble across something you already have?

In this case, it was a rare edition of Max Weber's very famous, The Protestant Ethic and the Spirit of Capitalism, in what seemed to be very good condition, with the dust jacket, for only $10.

I already had this book, a 1948 2nd printing, a bit worn, with no jacket.  I found it in a bookstore on Clark Street in Chicago many years ago.

The new copy is the 3rd printing of this edition, from 1950, is tighter and far less worn than my older one is, so why would it be priced here for a mere pittance?

There must be something wrong, so I took a closer look.

Folks, this is why you beat your kids.  Beat them, beat them some more, then lock them in the cold garage for a few weeks.

Crayon marks and a torn endpage!  The humanity!

Well of course I picked it up.  $10 ... heck, I would pay that just for the dust jacket.  So far, I tried removing the crayon with an iron and absorptive paper, which did not work.

Here's how it looks on my shelf -- without the dust jacket, next to my 2nd printing and a 1st English edition of Troeltch's classic Social Teachings of the Christian Churches.  The 3rd printing of Protestant Ethic is on the right.  George Allen & Unwin was the great publisher of the Continental scholarship of its day.

Anyone have any suggestions for removing red crayon from 62-year old paper?

Saturday, November 17, 2012

Charts 11-16: Capitulation day?

I've got us in the midst of a wave 3 down that has not extended its wave 1 by the wanted 1.618x magnitude, for which the target was SPX 1334.  I'd like to see that Monday, with one last burst of consistent selling.  The McClellan has already put in a low, so if it can hold steady while SPX takes a dive, it will show a divergence that will help us mark an IT bottom here.

But any bounce from here should only target the 1361 area, before rolling over again into a 61 pt wave 5 that will take us to 1300 or so.  That would set up a 100pt rally into EOY.

Wednesday, November 14, 2012

Charts 11-14: Toasted channel

Well today set things straight on the progress of the wave 3 down.  We broke through the optimistic channel I had drawn, and now it fits much more nicely into an Andrews Fork drawn from the top.

1.618x the 61 pt wave 1 targets the 1334 area.  I could see that move on Monday, but only if they can hold things together Thursday and Friday with some retrace.

If the larger wave only bottoms in the 1300 area (and not down near 1260), it shortens much of the subsequent waves that would build upon it.   Some simple fib math then puts the trendline between the 2002 and 2009 lows back on the table as a possible target for the full fall 2013 wave 3 of C down.  SPX 565?

VIX still below 18 -- no real fear out there yet.  Super congrats to all FB longs!  You beat the "obvious" retail trade.

A rally into the EOY would likely be on delusional optimism that the Fed will figure out how to keep the plates spinning, plus short squeezes on the "obvious" fiscal cliff trade.

Tuesday, November 13, 2012

Charts 11-13: Slow-motion wave 3

Today looked like a and b of a wave 2 up, correcting the drop from 1433 to 1371.  Ideally, c of 2 will loiter and eat the rest of this opex week, leaving us at 1402, well within the confines of the channel.

That's 378K of SPY 140 puts going to Options Heaven!  poof!  Only to resume the decline next week ...

I think I have new (old) music to grind charts by -- Frank Sinatra's deep, dark "Only the Lonely".  Now there's an album that is coherent and complete, a real work of art.

short-term SPX

Charts 11-13: Channel and a Crash Call

Sorry about the dearth of posts, I've been enjoying watching the markets lately, and spending a lot of time with my kids.  My four year-old has made tremendous progress with her reading, so we are spending a lot of time together.  She has now discovered long vowels.

I had a good score on some old books from Grosset & Dunlap over the weekend, but I'll cover that another time.  Remember, I'm the guy in the pulp sci-fi novel Lucifer's Hammer who is feverishly squirreling away books as doom in the form of a comet strike on earth approaches.

I think we're in a nasty little channel, that will likely take us down to the 1270 area into the end of 2012.  If it does, then we can look ahead to early-mid February for the moment where its retrace will rollover into a market crash to the 2010 flash-crash levels.  The channel will also complete the Three Peaks and a Domed House count. 

In February, the 1370 area would be a 50 retrace of this decline, echo the 2011 high, and may even have the 200DMA in the vicinity.  Neat!

We blew a second Hindenburg Omen yesterday, and I'll guess that February 2013 is the first crash event that lies ahead.

If you haven't figured it out already, if wave 1 finishes in June, that gives us the summer to retrace that move, before things get really, really bad in the fall.

the channel
the (first) crash

Thursday, November 8, 2012

Three Peaks and a Domed House update

We closed under the 200.

Tomorrow is a huge test for the Three Peaks and a Domed House I have been tracking off and on.  

If we gap down and plummet tomorrow, heading as low as 1329, then the 3PDH is on and the end-of-year rally scenarios are toast.  Any rally into EOY would then be retrace.

Here's the count with 1464 as THE TOP, everything we have seen since, and how it would fit into a Three Peaks count that completes with the Full Moon at the end of the month.

SPX 1464 top count and W1 down
SPX - Three Peaks and a Domed House

Wednesday, November 7, 2012

Charts 11-7: Three options

I'm still amazed at the tremendous brass balls on the Obama folks for using such an historically-charged slogan as "Forward" for his campaign.  But that's all history, the Presidency is all his now to enjoy as we head into the Long Emergency.  A whole constellation of old GOP stars is now extinguished, bunch of has-been losers, an important step to the dismantling of our current institutions and what remains of their shaky legitimacy in the days ahead.  Both parties are doomed, as is the entire arena where they play.  Good riddance!

We threw a pin into the important lower trendline from 1074 through 1266 today.   Therefore, I think we completed a wave 4 and should rally.  McHugh thinks it could last into the end of the year; I'd like a sharper, shorter rally, jammed up hard into November opex.  This leg would compare to the original rally off 1266 to 1363, and end by reaching the trendline from the 2011 high at 1370.

That would still give us plenty of time, and a route through the various obstacles, almost to reach Goldman Sachs's napkin target of 1250 SPX by EOY.  I'd like to see us land on 1266, for horizontal support as well as a Really Important Trendline up from the 2009 lows.

Here are three options for the rest of the year on one chart ...

Tuesday, November 6, 2012

Chart 11-6: A 1464 top count

Our inability to descend enough in the last few days to touch the trendline I had in mind has me reconsidering the count, and wondering if we did indeed already put in our top at 1464.

The wave action this week would then be that of a wave 2.  1434 is the HWB of the initial drop from 1464 to 1403.  If this is correct, we rally a few more points, roll over again at 1434, and chop our way down to the 1300 area by the full moon at the end of November.  This also fits well with the Three Peaks and a Domed House count I was tracking earlier.

This would be the first leg of a larger drop to 1040 SPX, centered around debt ceiling worries and woes this Winter and into Spring of 2013.  After they paper over the intractable problems for a bit, we will rally through the summer and crash all to hell in the Fall.

Mitt Romney will be gleefully watching along with us, and, hopefully, buying index puts.

IMO Mitt never should have apologized for the 47% remark -- it's the first time a pol has spoken the truth since George W. Bush said, "this sucker's going down".  Oh well, too bad.

Anyway, here's the 1464 top count.  You could probably move the A and B around if you like, and get something else that works.

Monday, November 5, 2012

Chart 11-5: Two trendlines

I'm watching these two ascending trendlines.  The first represents the minimum decline needed for us to finish up the current retrace wave and label it as a "4", because we will then have an unbroken trendline between wave 2 and wave 4.  This trendline is right at 1400 at market close tomorrow.  What a cliffhanger if we close right on it!

The second trendline runs from 1074 up through 1266.  Past this, all we have for one of these supports is the line from 666 through 1074.  We'll test (and break) that one this Spring.

I think Goldman Sachs may have made a great call with their 1250 by year's end.  I like 1262.  But first I'd like to see a crazy round-trip to from 1400 to a top, straight back to 1400, with one last bounce before we roll over.

Sunday, November 4, 2012

Charts 11-2: Romney for teh POTUS

We're still waiting to put in a bottom on a wave 4 move here, before a final rally to new highs.  Tomorrow?  Tuesday?

Either candidate winning could be an excuse for a rally here -- either a continuation of Fed policies with an Obama win, or a business-friendly regime with Romney.

I used to have an apartment about 4 blocks from Obama's house.  I was at 53rd and Drexel; he lives at 51st and Greenwood, across the street from a Reform synagogue.

I've got more in common with Paul Ryan.  He grew up about 20 miles away from me (just over the border in Illinois), we both worked at McDonald's as teens, graduated high school the same year (I'm a year younger).  We both like our Beethoven and our Austrian economics, even dated black girls in college, the works.

I voted Romney/Ryan not because I expect any fixes or solutions to what ails us -- far from it!  I'm a kollapsnik and will continue to be, no matter who holds what office.  We're well past the event horizon on peak debt, and collapse is coming -- and it is deserved.  I simply think Romney would bring a better class of people into the office, compared to the thoroughly corrupts flacks like Eric Holder.  Joe Biden?  You have got to be kidding me.

Also, with Republicans in power, the Press will be immediately hostile to them and may keep them in check from any excessive power grabs on our civil liberties.  The first thing we will see, within weeks, are a torrent of pieces about the economy, the homeless, hunger in America, you know the drill.  But at least the Press won't fawn over the chief executive like it does today.  That's got to count for something.

I'm also curious to see what Ryan's professed Austrianism counts for if he makes it into office.  Austrian economics has a lite version for GOP types who oppose government intervention in the economy, but the real teachings are much more severe.  The entire existing financial sector goes poof in a heartbeat under a real regime of Austrian credit austerity; a lot of conservative pig-men financial types would not appreciate that in the least.

Still looking for our low -- 1396? -- followed by a sharp rally to a final new high.  There's a nice trendline over from the 1370 high that is right about at 1486 on November opex.  That would be a great place for the rally to call it a day.  Techs have topped and led the way down, and would bounce for a partial retrace on this final rally.  What would lead?  Financials?  Homebuilders?  Toll Brothers ... LOL ...