Tuesday, October 22, 2013

Charts 10-22: Two ending diagonals

First, I want to thank the Tylers and the regular readers for the fun last week where we got picked up by ZeroHedge and had a good time with it.  To cap it off, Jim Kunstler even brushed on the subject in his regular weekly missive.  Hey, how about that!  What a kick.

The chart is slowly making some sense again, and I've revised my target here for SPX 1768 next Thursday, October 31, by 3:00 PM EDT.  The rest of this week should be some pullback, either mild to the 1740 area, or a little more, enough to overlap the earlier high at 1729.  Either way, next week sees continued dollar weakness and happy rally into the FOMC.

I still suspect that after October FOMC we get a nasty surprise with the November POMO schedule, i.e. less than $85B planned.  This may send us 40 handles straight down in the final hour Thursday, a reversal that begins the great Bear Market of 2013-2015.

So we've got two ending diagonals.  We've got the near-term one we are in now:

SPX 10-22 6M

And we've got this monster one we've been in since SPX 1266.  We will revisit the SPX 1266 area next August.

SPX 10-22 2Y

Long-term bottom target is SPX 568 on March 30, 2015.  And you know what happens then ...


Bryan Franco said...

Hi CG -

Yes, and by my work, once again the sequence of declines leading up to this last new high actually needs another new high before the big drop. But here is the thing, the mini-decline that needs to happen by my work has to be in excess of 3%. That still leaves room to not take out the October 9th low. Then we get the new high, and then hopefully the big drop.

Permabear Doomster said...

...and what happens if we are in the mid 1800s by late November?

What then?

We are almost 200 handles above the old 1576 high of 2007. The monthly, weekly, and daily trends are ALL trending up, and the QE continues at $85bn.

Sorry, but this just reads as crazy talk, no different than when many were looking for a peak in the upper 1500s earlier this year.

I'll be delighted if we see a Halloween reversal, but how can you expect QE to be reduced? The Fed don't want to EVER reduce QE...which is of course centrally kicking the market higher.


I see a lot of theory, but none of those calling for much lower levels, ever answer 'why'.

Anyway, lets see where we are Nov'1st at 4pm.