Wednesday, March 13, 2013

Charts 03-13: A top looms

Our friend Pretzel has a very important bit of historical tape analysis here, a must-read.  In other words, we're near a top, but not the top.

With that in mind, and considering the chart I put up showing a deep correction and final higher high ahead, I also want to consider what a more shallow correction would look like -- to the current channel wall in the next week or two.

The problem with the earlier correction to SPX 1485 is that it did not go all the way to the wall of the base channel, leaving us open to the real possibility that it was a sharp (iv) of wave 3, with wave 4 still ahead of us!

SPX 03-13 -- the "shallow" correction count

The rally can then wrap up with one last touch on the central tine of this Andrews fork, in late April, or even as late as the FOMC on May 1.

SPX 03-13 5Y

This is pretty extended, but can probably go a bit further.

Ugh, I had to install Microsoft Silverlight in order to see the presentation Kyle Bass gave at Chicago recently.  This dead platform says so much about Microsoft -- here they were slavishly grinding out a Flash clone, while a real tech leader like Apple simply pronounces Flash DEAD and promptly puts a knife in it.  I can't wait for the disastrous future earnings where Ballmer exits in shame and the company is chopped into pieces.

Silverlight plug-in is now uninstalled.  I'll reinstall it if Kyle speaks again at the U of C, and then delete it again afterwards.

This weekend is my annual St. Patrick Day's walk to dinner at my mother-in-law's house in Everett.  I'll bring a camera and see if there are any fresh housing monstrosities between along the way.

4 comments:

stanley j g crouch said...

"Jaws of Death" top is happening in Wilshire right now. Maybe today as a matter of fact.

Why can't THIS be "THE" top..??

The one NOBODY expects is always the best kind.

Sandor said...

great overlay on zerohedge between current S&P and Dow '30-'42.

http://www.zerohedge.com/news/2013-03-14/1936-redux-its-really-never-different-time

This analog places the high in late 2013 a touch above 1600, followed by a 40% plunge to a downside target of 1075. Keep in mind that the last rocketblast levitation since November is almost perfectly correlated with JPY selling(overlay the USDJPY with the S&P). If the BOJ disappoints in any way in the coming months, this alone will force equities selling.

Alex Red said...

To Christian, is there a valid wave count if we put in the top right here and never come back here? Just wondering why you abandoned this idea.

Christian Gustafson said...

Alex - see the link to Pretzel's post on the DJIA's green streak here, and what how these have played out in the past. It suggests that there is some underlying strength here that can snap us back to a new high.

We're so close to touching the top of the Jaws of Death megaphone back to 2000, why wouldn't we hang up here just a bit longer now? The pullback would also bring the weekly SPX Bollinger in and possibly set up a buy signal on the VIX. That would be nice.

I still don't understand McHugh's target of SPX 1700+, at least not from the chart. The upper bound of the Jaws of Death has a very mild slope. SPX 1700 would blow so far through it so as to call the whole thing into question.