Thursday, May 30, 2013

Charts 05-30: The Triangle

Personal income and Chicago PMI in the morning -- these should disappoint and give us our (e) wave on the triangle, down to support roughly around 1643.  Then the miracle churn of perpetual POMO will kick in, closing us green, maybe even back up to the triangle boundary (so we can gap over it Monday).

Not expecting a final 5th now and candidate top until the 2nd week of June, probably a couple of days after the 10:1 reverse split in UVXY!

I need to find some time to read Dmitri Orlov's new book, so I can post a review here.

SPX 05-30

Wednesday, May 29, 2013

Charts 05-29

The tape has been suggesting a triangle, and it happened to close right on the .382 of the wave 3 that topped at 1687.

We'll know in the morning if this was a triangle, and if it is complete.  The tell will be that we explode out of it.  How high by Friday?  1710 would be an extreme -- all the way to the channel top.

Edit: Hey, did anyone notice just how oversold the MCO is lately?

SPX 05-29

Tuesday, May 28, 2013

Trails: Hannegan Pass in May

The trail to Hannegan Pass, about 10mi south of the Canada border in the North Cascades, was my first introduction to this range and is still one of my favorite places to visit, in all seasons.

Ruth Creek

This year I decided to see if I could get up to the Pass and bivy near the summit of 7100' Ruth Mountain.  This is a very doable trip in the summer, but much more difficult and dangerous in the off-season.  The view from the summit of Ruth -- looking at the East face of Mt. Shuksan and across the Nooksack Cirque -- is one of the finest in the North Cascades.

When I called to check on conditions, the NPS rangers told me I would probably be the first party back there this year, and asked if I would please note the trail and road conditions, reporting back to their office in the town of Glacier.

First, I shoveled out a section of FS road 32 on my way in.

Brute force solution
When I rounded the next bend, however, I saw that it was fruitless.  The road is blocked about .5 mi from the trailhead.

Some nut tried to drive over this
The signs at the trailhead were crushed to bits by a fallen tree.

At the end of May, this valley is only starting to melt out.  These photos look really dark ... but ... it really looks like this!

Mt. Sefrit
By July, these slopes will be covered in jungle-like brush, false hellebore, flowers, stinging nettles, salmonberry, and slide alder.

At this time of year, the hike up the valley crosses a series of steep, exposed snowfields.  You need an ice axe and great care to cross them safely, or risk sliding several hundred feet to the valley floor.

As the snowfields melt-out, they rot out from underneath and become even more dangerous.  I have fallen through them before, into a roaring, hidden creek below, and it is no fun.  But not on this trip.

My first good glimpse of Ruth Mountain.  Her glacier is a shimmering cloak of immaculate whiteness.

Ruth Mountain
First animal sign, looks like a bobcat track.

Bobcat print in the snow
In the shade of the trees, the snow can be hard-packed and very slippery, time to slip into something more comfortable, like these crampons.  Crampons and an ice axe extend a hiker's range considerably.

Accept no substitutes

I followed the route pretty well and only got into trouble once on a dicey snowfield, which was dangerously melted out from underneath.  When I got to the meadow below the Pass, I knew I was all alone up here.

Or was I?

Was another party just here?  These tracks look fresh.

Oh shit.

It's a big kitty!  Looks like I'm not alone after all.  He just came over the Pass, and is probably watching me right now.

I don't think I can make the summit of Ruth today, but I still need to sleep back here, and now I don't want to be anywhere near the Pass.  But the snow conditions above me are very dangerous, heavy loose snow slides everywhere, so I need to be careful where I go.  I ascend the steep slope immediately south of the Pass, to camp in the snow around 5800'.

Home for the night -- my bivy sack in a hole I dug.  I made dinner and relaxed with a flask of single-malt scotch, looking out at Bear Mountain and over toward Whatcom Pass.

Here's a look back down the valley I came up today.  These are the North Cascades in May.

Ruth Creek Valley
When I returned home, I checked Fred Beckey's classic Cascade Alpine Guide for this region and found a specific warning about slide conditions in this valley in the spring.  I was pleased to know that I recognized these same conditions and did not put myself at risk trying to push it up to Ruth.  The crux of the approach has a large cornice that can be dangerous even in the summertime.  

Certainly, there would be no one around to help me out if I got into any trouble, well, except for that hungry cougar.  An excellent trip!

Charts 05-28: SPX 1710 Friday?

The deep 4th wave held at 1635, and now it looks like we are finishing up.  A 5-wave move to a Friday top would be ideal for all involved.

SPX 05-28

From a 1710 top, the first leg down would be a swift drop to SPX 1601 by June 13, followed by a rally into June opex ... and ... a nasty surprise!

Thursday, May 23, 2013

Bryan's scenario

Reader Bryan Franco has been posting in the comments that the historical tape for major tops like these usually shows a nasty headfake before a final top.  He estimates that a 3% correction is needed before a final high that convinces him it will stick for a while.

Well ... we got that 3% just this morning. 

I can marry it to the 1705 high from last night, but the 5th wave leg to get there no longer relates to the 56pt wave 1 that began April 18th.  It's just a target up in the ether.  Figure that any touch of that TL next week (if we get up there) is a potential reversal.

The 1705 high comes out of a simple channel projection of the wave 2-4 trendline and yesterday's high:

Bryan's song?

Bryan -- really interested in your comments here, how badly I distorted your ideas for my own agenda, etc etc.

UVXY is so muted this morning, it really makes the overnight dive very suspect. 

Wednesday, May 22, 2013

Charts 05-22: the case for 1705

We finally crossed the channel, even pierced the other side before closing at its bottom.  This is a bit of a warning, because the dip buyers were tardy on this drop.  On my count, this was a sharp wave 4, giving us 1705 as a target if wave (v) is similar to the 56.61 pt wave (i).

May 30, five sessions from now and in the vicinity of the GDP number and other data, would be lovely.

SPX 05-22

Tuesday, May 21, 2013

Charts 05-21: one more time

Tomorrow has all kinds of news and fun, giving us a decent chance at a catalyst for this pullback.  The problem is, the channel we are in is so steep, that we don't even think of the 1640s anymore -- we'll be lucky to tag 1654 mid-day before we are off to the races again -- FOMC notes, etc.

Wave (i) from April 18 was about 5 days.  If we drop and bounce off the channel tomorrow, 5 trading days sets us up for a mid-day reversal on May 30th.  Since this is a blow-off move, maybe we can be spared the agony of a series of drawn out 5th wave extensions and diagonals, some sick eternal subdividing fractal top.  Those drive me nuts.

Mencken, bitchez!
SPX 05-21

I'm really enjoying the short-squeeze in Herbalife and think it is symbolic of our whole sham of a waste-based economy and dead-end society.  I sincerely hope that HLF rockets to $300 and that everyone involved, all of the players, end up horrifyingly melted and sucked back into the Ark like the desert Nazis at the end of Raiders.

Maybe HLF can join the S&P 500 ...

Monday, May 20, 2013

Charts 05-20: 1672 hit

On Thursday I mentioned that the 1.618 extension for the presumed "wave 3" we have been in since 1581 or so, that this would take us up to 1672.  We made that today.  We'll see tomorrow if we can pull back now, or if it was just another speed bump.

The shape of the move up, including the strange op-ex surge, sure looks like a thin ending-diagonal to me.  If it was, then it should fail and retrace to its starting point, SPX 1648.  We have chart support on the lower bound of the channel at 1648 at about noon Eastern time tomorrow.

U.S. news is light, so I'd expect some bit of international bad news to hit overnight, something really stinky.  If we make it to support and it holds, then tomorrow would be a big V bounce.  If we even manage to close green, market bulls will be euphoric.  This will power us to the top.

SPX 05-20
The lower Bollinger band on the daily VIX chart has come in considerably in the last few weeks.  I'd like to see this set up for a final plummet on the VIX next week where it closes down in the 11s, under the bottom band.  That would set us up for a possible strong BUY signal on volatility.  

VIX 05-20
Maybe they can even squeeze in one more reverse-split of UVXY before we roll over.

I've got a precious hall-pass for a solo overnight this weekend.  If conditions allow, I'm heading out and up into the shit in the North Cascades, near the U.S.-Canada border.  It should make for some fine photos.

Friday, May 17, 2013

Charts 05-17: op-ex fun

The move up from 1343 has been an uncannily-clean and consistent channel.  Of all of the tape since March 6, 2009, the last six months have been the most impulsive and actually ... well-behaved.

In the current W5 blow-off channel we are in, I think we still need to cross the current channel, to put in a minor 4 and set the stage for the last leg up.  For all of its excitement today ... the shape of things looked corrective, especially with the (b-wave) triangle pattern that ate up the bulk of the session.

Tuesdays have been green for so long because Monday has been good for a surprise and a red daily candle now and then.  So BTFD kicks in the very next day.  I'd like to see something similar happen next week, starting with a stern drop on Monday to SPX 1646.  This would be the last bear trap in this cycle, before we top and the bear traps are actually short-covering rallies off fresh spike lows.

SPX 05-17

Thursday, May 16, 2013

Charts 05-16

The current W3 subwave we are in reaches 1.618x W1 at SPX 1672.

SPX 05-16

Wednesday, May 15, 2013

Charts 05-15: Channel improvement

The pop today actually fixed the channel I had going.  It's nearly perfect now.  Looking for a touch of the lower trendline for a long entry -- most likely May 31 SPY calls.

Did you see Daneric's post tonight?  He's got the basic chart I posted last night, with a lot more discussion and details.  Neat.

SPX 05-15

This would have us topping into the close May 28 or 29.  May 30 has the next GDP number release.  I can imagine that could cause a stir.  Negative print?

Tuesday, May 14, 2013

Charts 05-14: Can we do 1703?

Hehe, I was busy all day at work, and just noticed some comments posted today.  I had a couple of short positions, for a couple of reasons, but I pulled them both once we broke above 1641 and held it.  A passel of SPY puts got dinged, but the UVXY held and was taken out with a protective stop.

Besides the larger channel here, I shorted because Monday, 5/13, was a McHugh phi mate turn.  This may be the 2nd dud of these this year, which is too bad.  He had an amazing track record with the phi mates in 2012, mostly nailing the spike lows.

At this point, I don't see any reason why we don't pause for a couple of days before blowing off all the way to SPX 1703 by the end of May.  This would be an "extended" 5th wave, due to the fact that the W3 (if 1651 holds for now) did not extend the W1 from April 18 by 1.618x or more.

A move like this would probably complete McHugh's "Jaws of Death" to his satisfaction, although we'll see what he says if/when we get there.

May 30th would be the ideal place for 1703 for me, because it would line up my tape with most of the FOMC meetings for the rest of 2013.  Those may be our real "turn dates" going forward.

The sight of a permabear like me looking for stoopid new highs probably means you can short with confidence now ... sigh.  But it's what I'm getting from this last channel and a strict wave count.

SPX 05-14

See how SPX 1703 touches the far wall of a much larger channel, for the whole of the rally itself?


Saturday, May 11, 2013

Charts 05-10: New Moon

First, a look ahead to 2015, with a pack of Deflation Land readers taking delicious long pig on the hoof with the atl-atl.  The marbling on this one is extraordinary.

following the seasonal herds
Tonight is the New Moon, which can mark important tops such as in 2007.  The tape these last couple of days looks a lot like a diamond-top formation -- again, it's either consolidation or a top.

We got the Hilsendrath news after-hours, with a POMO-free Monday ahead.  I'd like to see us close the gap down at 1600, with a healthy bounce Tuesday that rolls over intraday on Wednesday.

Enjoy the weekend.  If it doesn't rain Sunday, we'll be out at Interbay playing a round of mini-putt.

Wednesday, May 8, 2013

Charts 05-08: Alone

I stumbled across some old pictures I had not seen in a long time, and I am very glad I did not lose them.  In 1997, I came out from Chicago to visit Washington state, to solo-hike the Bailey Traverse in Olympic National Park and finish it with a traverse up and over heavily-glaciated Mt. Olympus.

Here I am at the snout of the Humes Glacier, miles from any trail or people, taking the photo with a timer.  This place is remote.

Humes Glacier terminus

Here's where I slept that night, out on the Hoh Glacier.  At one point I had to climb down into a yawning bergschrund, with a crampon wrapped on my hand, to maneuver myself to get onto the main flow of ice.  I was inside the glacier.  All night this midwesterner could hear the ice creaking and groaning -- moving -- all around.

Hoh Glacier camp

This was probably the single most pure, intensely existential experience of my life, raw adventure in real-time, alone, with tricky life-threatening problems to solve.  I returned to Chicago raving like a lunatic, and set about moving to this place.  Everything else flows from that.  Each time I take my girls to Olympic, I remind them that they would not exist without this most marvelous, perfect place.

In chart-land, we can see the overhead line is about at 1636 late Friday.  I'd like to see it come to a halt there, then sell-off hard beginning this POMO-free Monday.  The "expanded 2008 tape" idea/model would put us at 1602 Monday for our first bounce.

SPX 05-08

That would set us up for an initial low near the Bradley turn in late June, with a very violent August, and a final move down to SPX 1266 in late-September/October immediately after the German elections.  The results of that give us a sharp 5th-wave down, which bottoms on some nugget of hopium about making-do with or without the Germans.


Once we get that out of our system, we are setup for a waterfall collapse in Spring of 2014.


We then touch the lower wall of the Jaws of Death megaphone in October, 2014, with a currency crisis initiating soon after.  Equities will go up ... not that anyone will care ...


I'll be watching the tape very carefully to see how it proceeds, whether slower, faster, or roughly equivalent to the 2007-2009 cycle.  The expanded model (+16%) yields some really interesting price targets, but we have to verify that they are not only reached, but also when we expect them.

Monday, May 6, 2013

Chart-o-rama: 05-06

For Steve Ludlum, a classic:

Of course, Steve is featured in the KunstlerCast this week, well worth a listen.  I'll play it again on my iPod for my walk in to work tomorrow morning.

Jim Kunstler is the John the Baptist of us Latter-Day Doomers, and we will always be grateful for explaining to us just precisely why the suburbs suck.  He then stuck around to connect the story of suburban waste to peak oil and the exhaustion of our civilization.

IMO, the most important phrase I hear from Jim, and the reason why I know he is fundamentally an ally and a real mensch, is that society and our way of life can and should be an "emergent" phenomenon.  Despite an occasional whiff of sentimental Boomer-ism from Jim, I know that he is fundamentally against the dirigiste approaches that have made such a hash of our living arrangement and our debased modern social relations.  Besides, Jim is a big fan of Mencken, so he'll always get points with me for that.  Who knows, given enough time, Kunstler could become positively Burkean.


Markets looked great today, eating some time off the clock, and giving us new all-time lows in UVXY.  One good 15% day on that hand-grenade will put her right at $5.  Then, she will make headlines.

SPX 05-06

The upper Bollinger on the weekly SPX is right at 1636, so makes a great target for a touch at the end of the week.  There's also an interesting periodic cycle here, in sync with the 2007 high and the 2009 lows.  It comes due next week, after the New Moon and annular eclipse (!!) on Friday.

SPX 10Y Weekly

And a ^VIX daily chart.  11.69 target EOW.

VIX 05-06 daily

Be patient this week, enjoy watching the volatility ETFs bleed just a little more.  My sympathies if you are trapped in one.