Wednesday, October 9, 2013

Charts 10-09: Ending-diagonal scenario still alive

I can't be the only one wondering today, just who is going to take the darned Minutes, now that Janet Yellen will be the new Fed Chairman?  What will they do now?

The deeper sell-off this week, breaking through long-term support, means that if the ending-diagonal here is still in play, and we are headed to new highs, then we can no longer make it north of SPX 1750, at least on this count.  Any higher than that would require this to morph into a new count, because wave 3 cannot be the shortest wave in the series.

Rough wave 3 - wave 5 equivalence would put us up at 1748 on October 31.  My friend Pieter suggested today that something very, very important will happen during RTH that day, the sort of thing that would give us a vicious sell-off and a perfect topping candle.  Can you guess what that might be?

SPX 10-09 6M

I don't normally like or chart the DJIA, but since Permabear Doomster mentioned its touch of the 200DMA today, I thought I should mention it.  It looks like a broadening megaphone top, one of Dr. McHugh's Jaws of Death:

DJIA 10-09 6M

Of course, the pols will need to sort out their differences for us to make new highs, and I believe they will.  Don't let any of this bother you!  None of it matters, not even the ACA.  It is meaningless and irrelevant where we are going.  All of this vanishes in a puff of smoke when the $USD collapses.

The Yen may provide some additional support for the market in the meantime.  Notice the wedge breakdown and kissback.  It may be headed for new lows.

Yen futures hourly

Good luck to all, and may we have one more anemic, low-volume, completely self-conscious 5th wave up.

On the advice of a bookseller (I was scrounging for Richard Burton), I just finished reading Wilfred Thesiger's classic Arabian Sands, about his travels with the Bedouin tribesmen of the Arabian Peninsula and crossings of the Empty Quarter after World War 2.  This is as good as travel writing gets, an incredible collection of tales.  Burton's First Footsteps in East Africa is on-deck now.


sooner said...

All of this may be irrelevent in the end, but I believe the timing is relevant. Timing will help dictate preparations.

What does RTH refer to?

Pieter is High Rev isn't he?

Christian Gustafson said...

Pieter is not HighRev, whose work you can read here.

But Pieter is one of the half dozen or so thoughtful and interesting people left who still post on the ol' TickerForum.

Apart from this handful of people, all that remains are the sycophants and toadies who enjoy Karl's rants and his buffoonish cult of personality. Did you see that he has now invented Rearden Metal?

We still appreciate that Karl is still around for the laughs. But the man is a fool.

RTH means regular trading hours, which, for a news event, gives us a chance for a significant reversal candle, like May 22 or especially October 11, 2007.

One minute you have the market bumping along on low-volume melt-up, and five minutes later VIX has spiked 40% and the market is plummeting.

Now THAT's what we are interested in here to mark a transition back to the Bear. And October 31 affords this opportunity. So what could it be?

Bicycle said...

FOMC minutes on the 30th, and den...

Christian Gustafson said...

Excellent work, Bicycle!

The next release of the tentative outright Treasury operation schedule will be at 3 p.m. on October 31, 2013. At that time the Desk will publish information on transaction prices for securities included in the operations listed above.

Any decrease to the amount, and I bet we shed 30-40 SPX handles by close. We bounce that Friday, and then make a beeline for the 200DMA SPX.

Permabear Doomster said...

You're looking on track again.

What a surprise. URghhh

You must have a hotline to Boehner or something ;)

Christian Gustafson said...

I love you, Doomie!

Never leave me for another man!

Bryan Franco said...

Nice job CG. Any thoughts on my insane thought (hope) for a 5-f on your chart instead of new highs? You would probably (rightly so) wait for a sizeable impulse down to even begin that thought, no?

Permabear Doomster said...

Well, its 11.46pm EST, Thursday night.

Its cold, windy, heavy rains. Only another 7 months until the green shoots appear.

The 'jaws of death' is a great scenario. I suppose its possible, but the chances of Fed tapering are even less than September.

I realise of course, many don't consider the QE important, but...I still think its an issue to keep in mind, one that negate a lot of the sell side volume.

Anyway..the jaws of, it'd allow a new high...but not that much more...and then downside in mid/late November I guess.

There is a Puetz crash-window in mid-Nov. I don't normally mention such events, not least because it seems kooky, but still...if we're dow 15800/900..but then see some impulsive downside...I'll be real curious.

Frankly..I am cheering this market higher. The higher it goes, the safer it will be to short..right?