Saturday, April 27, 2013

Charts 04-26: Two more weeks

Nope, sorry, but it looks like the bears will have to wait just a bit longer on this one -- two more weeks.  I know ... I know ... but this cycle will run its course and let us know when it is finished.

We just did not get the sort of sharp reaction expected from a final top of this magnitude.  We threatened to, briefly, but the sell-off was muted.  A big GDP miss would be the sort of thing to get things moving to the downside, and we got it, just without any follow-thru.

In 2007, we hit 1576 on the SPX and retreated 30 handles intraday.  That's the kind of signal we need to see here.

Elliotticians would then look for a terminal pattern up here, such as an ending-diagonal triangle.  Expect to see new lows in all of the leveraged bear ETFs.  It's a fair question whether UVXY (which I scalped this week) will even hold $5.

Short-term, I'm looking for weakness early next week as we retrace in (ii) of 5.

SPX 04-26
6M

7 comments:

Permabear Doomster said...

Well, that would be a frustrating scenario.

I'm tired of waiting, urghh.
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Clearly, if <1536, your scenario gets thrown out.

I'll ditch my outlook >1592, so the levels are pretty clear.
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Busy week ahead...good wishes!

Christian Gustafson said...

An alt to this could be that most of the last 5th is IN, and we top with a bump up to FOMC this week. Maybe they announce an end to QE?

This chart this morning is an attempt to find a terminal pattern up here. Plus, there's the New Moon thing.

Christian Gustafson said...

One more thing, re an ending diagonal that eats the next two weeks before the May New Moon. Depending on how you count the wave 1 up from 1343 -- was it 80 pts? 95 pts? 105 pts? -- it certainly took a lot longer to play out than the sharp run-up last week.

Two weeks of back n forth would give us a fifth wave comparable in time to the first.

stanley j g crouch said...

There is no bid in this market and there have been 4-5 mini-"flash crashes" and one real one in metals.

We have all the ingredients for a multi-year cyclical failure right here, replete with a failed new high, v-shaped and all.

What would 'surprise the largest number' is a MAJOR drop right here.

Could easily happen...i m H o...think of the media filling in the 97 pages of "reasons" after the fact..!!

treider_ said...

the new scenario was denied, now there are some daily tech oscillators showing positive cross

Christian Gustafson said...

Agreed, that new high today took out the E-D.

So take a look at the daily SPX from 11/16 through 12/12 -- wave 1 in the larger count. We have an initial strong thrust, followed by sideways consolidation and a gradual grind up. But the big gains were already in from the thrust.

We could be in a smaller version of that now. Glad I'm flat today, was thinking about some UVXY but am no longer. It will get a thousand nicks in a tape like early December.

Christian Gustafson said...

Today we put in a candle equivalent to November 29, 2012.

If the analogy holds, tomorrow should be a spinning-top doji. Wednesday? A rally and reversal.

That reversal would find a bottom on Friday, with a weak rally all next week.

I'll chart this up tonight.