Wednesday, January 30, 2013

Charts 01/30: Channel break

The decline today broke the channel wall on the c of 3 wave on the chart.  Ideally, we can cross the larger channel / expanding wedge over the next 7 days.  A zig-zag would be great here, and probably draw in enough early shorts to provide fuel for the last run to the top.

SPX 01-30

Tuesday, January 29, 2013

Charts 01-29

The McClellan barely moved today, suggesting that a big move is coming soon.

I've got enough subwaves here to call this complete, but we could replay the same familiar tape -- slight drop in the morning, and then the algos take it from there.

Looking for a deep pullback over the next 7 days, all the way to the lower trendline support.  A brief, shallow pullback or sideways move like August 2012 could mean a much higher final high, up near the 2000 and 2007 tops.

SPX 01-29

Sunday, January 27, 2013

And life goes on

... even as we contemplate the rapid collapse of a financial system running on debt-slave student loans, subprime auto loans, monetized California HELOCs, and worthless FHA paper, we are reminded that there is still beauty left in the natural world.

Saturday, January 26, 2013

The 16 percent solution

Looking for a top @ SPX 1528 into McHugh's March 1st phi mate turn date.

The 2007-2009 cycle was 1.16x the scalar magnitude of the 2000 crash.  I have extrapolated the 2007 tape by a factor of .156, for reasons explained in notes on the chart.

What we don't know is time, the pace of the collapse.  This will have our full attention in the coming months.

SPX Jaws of Death

Thursday, January 24, 2013

Charts 01-24

That was exciting today when we touched the orange line and pulled back, UVXY got all hot and bothered, but it didn't stick.  The 2007 top had a 30-handle reaction off 1576.  So we still have plenty of room left in the wave count and the monthly charts to put in a higher high at the end of February.  I think we have begun a wave 4 that will rachet down to 1451 the way we came up, in little fits and starts.

My old TickerForum friend Lunatic_Fringe always liked expanding ascending wedge shapes at major tops, so I'll propose one here.  This one could pop as high as 1528, where we really have the last trendline from these massive bearish wedges we have been building.

From a top at 1528, the .382 retrace to 666 is 1208, which may be a good first target for a wave 1 on the way down.  I'll poke around with the 1528 area to see if there are any fib extension levels from other waves that land near it.

[Actually, the 1.236 fib extension of the move from 1398 to 1502 (assuming it holds as a swing high) is 1526.5.]

SPX 01-24

And if it's over

Then this is how the 2007-2009 tape would fit a potential top here at ~1501.

Yes, the 3rd wave "waterfall" bounces right at SPX 666.

SPX 4Y with 2007-2009 tape projected

Just touched the top of the giant wedge

Is the monster bearish wedge just about complete?

Tuesday, January 22, 2013

Charts 01-22: Not over yet

Very neat that we hit Tom DeMark's call for a top at 1492 today, but I don't think it's over yet.  Looking for a pullback to mid-channel over the next couple of weeks.  It may start with a sharp drop on AAPL earnings, but then it will behave like a good wave 4 and dick around for a while and eat some time off the clock.

The problem with 1492 being the top here is that it doesn't touch a trendline in the larger wedge, and the monthly charts do not look ready to roll over.  It needs more time.  If this is a C wave, it needs a 4th and a 5th to complete it.

I know everyone is projecting the SPX going off into the stratosphere, but I'll take SPX 1510, right on the March 1st turn date. 

I think even the SuckerForum crowd has to hand it to Karl Denninger for his success lately with RIMM.  What a doomed, useless company, but he somehow managed to polish this stale turd into a fine agate.  We wish him well.

SPX 01-22 60D
SPX 4Y with the retrace count
SPX 10Y monthly with Bollingers

Monday, January 21, 2013

Thursday, January 17, 2013

Charts 01-17: Is tomorrow 10/11/2007?

On October 11, 2007, the markets opened up, gained 12 pts on the SPX, and declined 30.

We closed at 1480 today.  The weekly top Bollinger is 12 pts up at 1492.  This is also the edge of the channel formed with the 2002 and 2009 lows, and the 2007 high.

Will we drop to 1462 tomorrow?

Big SPX channel

Wednesday, January 16, 2013

Charts 01-16: Another week in the wedge

The wedge shape of an ending-diagonal is taking shape, and it looks like the 3rd wave of the move is in.

For wave 4, a pullback to the .382 at 1445 would work, especially if we can get the A and B waves tomorrow, with C on Friday.  C might be the large move that the small change in the McClellan yesterday would produce.

SPX 1445 would also give us the slight W1/W4 overlap we want to see on an ending-diagonal triangle pattern, indicating an underlying weakness in the overall move.

The upper Bollinger on the weekly SPX is 1483 -- we'll watch it carefully next week, as it is a good target for a topping candle here.

SPX 01-16
A drop into January opex, followed by a rally to new highs would also bring in the lower Bollinger for the VIX, setting up a VIX buy signal late next week where we can close a candle down in the 12s, outside the lower Bollinger.  That would be a useful indicator here, a nice-to-have.

VIX 1Y daily

Tuesday, January 15, 2013

Charts 01-15: Very close now

Like to see us pop up to 1476 in the morning before reversing and selling off.  The 1576 peak was a spike high reversal that immediately gave back 30 pts.  This also keeps us from having a pesky gap up here at the (presumed) top.

Also, the McClellan Oscillator was nearly unchanged for the day.  A big move is coming soon.

Is this the count?

Quick post over lunch, with the lovely Yahoo! chart graphics dropped into MS Paint.

Is this count correct?  Are we very very near the end of this mess?

Will wave (v) extend?

Current wave count has us in an expanding ascending wedge shape that is often seen at tops.

On this count, wave (iii) did not go to a length of 1.618 x wave (i), so we look for an "extended 5th wave" (or an extended (v)) here.

If wave (v) extends, and equals the total length of the move from the low at 1451, then it targets 1484.  This looks like a really good test of the principle today.

Monday, January 14, 2013

Charts 01-14: One more pop to a top?

Today's tape kept in line with the E-D count here.  The subwaves count in 3s, and wave 3 is longer than wave 1, so we could finish on a seemingly strong 5th wave move (+14 handles SPX) to a top.  Wave (i) was 13 pts, comparable to what I am expecting (ha!  guessing!) for tomorrow.

SPX 01-14
to the victors go the spoils!

Retail sales in the morning.  Hope we can all be like T.

Sunday, January 13, 2013

A few more charts re a top

Couple of things I noticed this weekend playing around with the long-term SPX chart.

The weekly top Bollinger on the SPX is right at 1484; touching that would support a case for a top (a local top), if not the full case for the top.

SPX weekly

The monthly chart does not agree; its top Bollinger is way up at 1512.

SPX Monthly 10Y
SPX Monthly all
Here's an interesting periodic cycle, based on the 2011 high and low, that hits a number of inflection points in the long-term chart, and is about due.

SPX cycle based on 2011 high and low

There is one more thing I noticed, looking at fibs, a very reliable pattern since the 2009 lows.  Every time the market puts in an important low, it then rallies to roughly a .618 retrace from that low, back to SPX 1576.

Retrace from 666 low
Retrace from 1010 low
Retrace from 1074 low
Retrace from 1158 low
Rally from 1266 low
Rally from 1343 low
This last rally, up from 1343, has its .618 retrace right at 1486.  So we are looking forward to reaching the 1484 area on Tuesday, if the market gods will have it.

If the fiscal-cliff dip to SPX 1398 is one of these "significant" lows, then the .618 retrace from that is 1508, which could end up being our final final top.  1484 could mark an intermediate top this week, with one last rally up to 1508.

The 2007-2009 "replay" scenario would have us put in a low at SPX 1397 on January 29, which happens to be an FOMC day (and a Bradley turn, FWIW).  In terms of news, we could see the discussion on the debt ceiling get more interesting starting this week, with the market dropping just as it did leading up to the fiscal cliff, back to the same area on the chart.

The next big low following that is (projected to be) SPX 1314 on March 1.  That date could mark the peak of worry for this phase of the debt issue and the working out of some kind of stupid last-minute political deal.  

We'll see what we get this week.  Always completely speculative, and waiting again for a (the?) top.


Friday, January 11, 2013

Charts 01-11: 1484 Tuesday top?

OK, so we didn't see a pullback to 1440, we're not seeing a blow-off top here, but what we have sure does look like an ending-diagonal winding up.

McHugh still expects a final high above 1500, possibly weeks away, Tom DeMark came out with 1492 this week, and I think we have a convergence of wedges and junk in the 1484 area by about Tuesday.  So I'll take 1484 for now.

Tuesday would allow the excitement from late today to play out, with one more sideways move and a final push to a mid-day high and reversal.  VIX in the 12s.  Weekly SPX Bollinger up there. Divergences on RSI for this peak compared to earlier ones.  All the signs are there.

I still think that a rough re-run of the 2007-2009 tape could be a decent sketch of the drop.  Look at the bullishness, the invulnerability that the Fed has placed on the market.  I've updated the spreadsheet with a 1484 top and plotted its price and time on the attached charts.  Having this as a reference will at least give us an idea if the 2013 cycle is proceeding faster or slower than it did then.

Europe may play the role of subprime mortgages on this cycle, with something breaking badly in late 2013.

Edit: here's a HK machine gun for sale, cheap ...

SPX 01-11

Thursday, January 10, 2013

Charts 01-10: Blow-off top, please

WFC reports before the open tomorrow.  Maybe they will announce that they have sold their entire California HELOC portfolio to the Fed at par, which will buoy the market with confidence for recovery and growth and the future.

So let's blow-off 28 handles tomorrow to reach 1500.  Monday can retrace a bit from there, giving us Tuesday for a final spike high to 1510 (and back down).

Tomorrow is a New Moon as well, suggesting that a top may be close, if you believe in that sort of thing.

The problem is, if we don't top soon, and we need to touch the top, per McHugh's Jaws of Death, then we're chasing an ascending trendline, and this could just go on and on.

So it sure would be nice to finish this up and bring on the bearish season.

Wednesday, January 9, 2013

Charts 01-09: Was that a triangle? uh oh ...

Did we complete a B-wave triangle today?

A gap up in the morning will be the tell.  Follow through into a final final top next Tuesday would be useful, too.

SPX 01-09
3 month daily

Tuesday, January 8, 2013

Charts 01-08: A little more drop

I'm of the opinion that if we're going to have a big bounce, we need to bounce off something.  The .382  retrace, the 10- and 13-day SMAs, and a pink line on the chart are all just below us.  So I'm looking for a drop to 1441 in 5-waves tomorrow to finish the retrace.  Then the market is free to go batshit crazy for a few more days and a final rally top.

Overnight /ES futures looked a little worrisome, but have bled off and will probably roll over in the morning once again.

With this sluggish tape, I'm pushing the spreadsheet model ahead one day, for a possible top as early as this Tuesday.  This actually lines one of the turns up with one of McHugh's phi mate turn dates, but I won't mention the specifics here until it has passed.

SPX 01-08

Charts 01-07

Let's see if we can't finish up our retrace today, with a spike low to the SPX 1442 area.

Consumer credit reports at 3:00 pm EDT; if it includes my gasoline receipts from driving to Tucson, then it will indicate that the economy is healthy and a strong recovery is in order.

Alcoa earnings AH -- 30 handle rally tomorrow?

Sunday, January 6, 2013

Charts 01-04

For Monday, I'm looking for a seemingly-sharp pullback back to support, which is then reversed with another manic rally.  SPX 1510 by Friday would be great.

That would make a nice top for the retracement rally since March 6, 2009.

I've been working on applying the 2007-2009 tape to the current outlook.  First, of course, we need a top, which I don't think we have just yet.  The chart above has us in a ABC zig-zag wave that could top into the long weekend this Friday.

What I count as an "A" wave from the 1576 top in 2007 ran 320 points.  If we can make it up to my projected top of SPX 1510, then another 320 pt drop from here nails the .382 retrace of the entire rally, right at 1190.  From there, it just gets better and better.

Anyway, I've shared out a Google spreadsheet with the 2007-2009 numbers, which I will adjust to the present once we get our top.

It's a workable model, or at the very least a baseline case for 2013.

Back from the Tucson

I took some time off over the Christmas holiday for a road trip from Seattle to Tucson, AZ, to visit my mother.  We decided to drive, which was much cheaper than flying and renting a car when we arrived. We also enjoyed the adventure of it all.

I didn't mention the trip here on my blog because it would only invite a home burglary from folks like my old friend Bezzle.  Never turn your back on a libertarian, or he'll be all over you with force and fraud, always looking to steal your Max Stirner:

We drove 3,660 miles round-trip, some serious Happy Motoring.  My wife and I drove in three shifts, with me taking the morning and evening legs each day.

On the way down, we skirted Siskiyou Summit in southern Oregon and took 101 through Redwood country down the California coast.  Gorgeous country, and it was fun driving over the Golden Gate bridge and through San Francisco before connecting back to I-5, the mother road, once again.

One night we had a herd of 11 javelinas eating leftover birdseed on my mom's patio.

The next day we visited the Pima Air and Space museum in Tucson.  The highlight -- in my opinion -- is the old B-52 that was customized to carry the X-15 space plane back when America still kicked ass in the 1960s.  Here's where the late Neil Armstrong used to hang out:

America, fuck yeah!
We then took the tour of the AMARC "boneyard", definitely worth doing.

Navy/Marines trainer, fun planes
B-1 bombers
A-10s scrapped for parts
B-52s, some with the wings cut off for SALT
No trip to Tucson is complete without loading up on tasty Poblano sauce.  I visited a couple Food City stores and, like a complete asshole, I just emptied the shelves of the green sauce:

We also visited a Tucson rock shop near the Desert Museum, where I found a most excellent trilobite, a 520-million y-o specimen from North Africa.  Here it is back in Seattle.

We made it back to Seattle in about 2 days, stopping to visit the splendid Rooster Cogburn Ostrich Ranch, between Tucson and Phoenix.  This is possibly the world's best petting zoo and the best entertainment $5 can buy.

Also, now that I have memorized the menu at Denny's, I can recommend the new "value" options to you.  Look for the $8 breakfast on the back that includes juice and coffee.  It will not let you down.  I am also happy to report that the bacon at Denny's is no longer the thickness of onionskin or prosciutto.  May God bless the return of real bacon!