Friday, May 3, 2013

Intraday 05-03: or a violent spike top E-D

Jesus ... I sure hope people weren't trying to short the initial pop to 1616, there is no reason for it to fail just yet.

I watched UVXY for a while this morning, and it was holding up.  It should wither all this next week as capitulation sets in.  The lower Bollinger on the daily ^VIX is down around 11.  We will look for a collapse in ^VIX by late next week that sets us up for a "buy" signal in volatility.

So this is how it's going to end?  Think we can make 1641 by the end of next week?  Now that we have gapped over 1600, I don't see why not.  Let's see if it makes a nice E-D shape.

The problem is that we are stretching the rubber band too far north here, increasing the damage (and sweet opportunity) of the coming crash.  If we can make 1641 (and I sincerely hope we do now), then a move to cross the great Jaws of Death megaphone, to reach the bottom of the megaphone, on the timeline of the 2008 cycle, means that the 2013-2014 would be roughly 16% greater in magnitude than 2007-2009.

As I scribbled back in January, 2007-2009 was 16% larger than the 2000-2002 cycle.

With this blow-off top in-progress, we are setting up to do it again.  Or worse, who knows. 

I'm an optimist in even thinking that the megaphone bottom holds down at SPX 580.

SPX 05-03 a.m.


3 comments:

Christian Gustafson said...

This just in, it appears that our man in London, Permabear Doomster, has capitulated

http://permabeardoomster.blogspot.com/2013/05/10am-update-waving-white-flag.html

We bears are like the grizzlies in the North Cascades. If there are any of us left at all, we're isolated and inbreeding.

Permabear Doomster said...

Who can afford to breed these days? Urghh
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I'm sure not happy to have bailed today, but hell, the 1597/1600 was a clear breakout level, and we sure closed strong.

No point holding short positions >1600.

As ever, will keep open mind.
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The question I would ask, why 1640s? Why would it necessarily stop there?

Christian Gustafson said...

Excellent question, Doomie.

I'll review the long-term charts tonight, to see if they are of any use. Up until now, the top of the epic megaphone was our guide. Maybe we overlooked an important detail.

Go have a pint.