Thursday, February 14, 2013

Chart 02-14: It's V-day in Europe

I don't expect the current pullback to breach 1500 by much, if at all.

At this point, I'm reduced to updating my chart of the 2007-2009 cycle, expanded by a factor of .146, overlaid on to the current tape, while waiting for a short entry into the McHugh phi mate turn coming up March 1st.

SPX 1525 would be the ideal place in my work for the top and turn, a final touch of the big wedge.  100 SPX handles down would close the gap at 1425 and give us our first bounce, a sharp one, if 2007 is our guide.

With this timing, the May 1 FOMC will see us rollover into a frightening wave 3.  Before any of this gets underway, I urge you to go back and review the tape from 2007-2009, and understand just how vicious and nasty the retraces were in this thing.  Look at 3/17/2008 to 3/24/2008, stuff like that.  We're going to see moves like this again.

SPX 02-14 2007-2009  expanded cycle overlay

3 comments:

Permabear Doomster said...

Thata all very nice..and I've done analogy like that myself..in the distant past.

My simple question...

How is the market going to fall (significantly) whilst the Fed reserve is giving the primary dealers 45bn a month, of which 'some' is going to buy equities?
--

I refer you to the POMO cycle of Aug'2010> May 2011.

pimaCanyon said...

Why do you expect today's market to behave like it did in 2007 - 2008? We had a major credit meltdown in 2008. We would need something of a similar dire nature to cause a market crash like that, would we not? What are you seeing that would cause it to be 2008 all over again?

Christian Gustafson said...

Gentlemen --

I'll take up your questions tonight, I'll see if I can sort out some first principles of my bearishness, and why I think the deflationary scenario will play out.

POMO through 2013 could actually be a GOOD thing for the bears.