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
4Y
10Y

4 comments:

Permabear Doomster said...

Great charts, I think many should keep them in mind in the weeks ahead.

I certainly will.

Christian Gustafson said...

Thanks, PD.

Like I said, it's a baseline, and we'll see quickly enough if it's at all useful.

Interesting to see that the "waterfall" phase lines up with November and rolls through EOM February, 2014.

So the year would end on market panic and massive carnage, still in progress!

Christian Gustafson said...

One more thought. Let's say we get the rough parallel to 2007-2009, that it holds up pretty darned well through 3 waves, taking us down to the low at the 2002-2009 trendline.

Well, this is a C wave, so we expect it to unfold in 5 waves, not 3. That would give us a 4th wave back up to the SPX 760 area (guessing .236 retrace), and a final move down into the 400s.

So it's late Fall, 2014, and the market is destroyed. What happens next?

We have a mid-term election. Scared senseless, the country picks the party that promises to make everyone whole again. Obama brings Paul Krugman into the Council of Econ Advisors.

And that is when the deflationary cycle ends and the hyperinflationary collapse begins.

stanley j g crouch said...

No volume accompanying 'blow-off' top yet.

I believe that is a necessary condition for a multi-decade top. Dr. McHugh does as well. "Jaws Of Death" makes a lot of sense. And, why Prechter and most EWers have gotten it wrong, since we have not had "THE" top yet and GSC Wave III is not yet complete.

Sucking 71 year-olds, Joe and Mabel Citizenry, in at the end is a MUST and has already begun to happen (4 year high in net inflows last week).

Additionally, a 'slight' re-allocation on the part of pensions and endowments, toasted by their under-performing 'alternatives' and having made the 'easy money' in bonds in 2012, would have a reinforcing effect as well.

If the Fed accomplished anything, it has been to prevent sellers rather than inducing buyers.

When the last vestiges of timidity are shed, we are at or near the FINAL top...!!