Tuesday, November 26, 2013

Charts 11-26

Here is the revised chart, cleaned-up:

SPX 11-26

This would have us pull back just over the required 3% and top right into December FOMC, where we are greeted with a policy change of some sort, tapering of bond purchases, who knows.

If the top is later, like December 31 or next year, then it's higher.  We're chasing ascending trendlines, so the longer this goes on, the higher it goes.

Of course, there is a shortened session tomorrow and POMO schedule release at 3:00 P.M. eastern is actually after market close.  So, while it may surprise and be bearish, it can't give us that kick in the teeth reversal candle during trading hours.  FOMC on December 18th can still do this, putting a quick end to the holiday rally.

Both the lower daily Bollinger and the .382 retrace of this last leg are down at 1746, along with obvious chart support.  It's also where the previous minor wave 4 found support.

Hey, Bryan

My friend Randy and I were kicking around the idea of topping into the December 18 FOMC, presumably on a real policy shift announcement at the Fed.  So I took the current wedgy-thing we are forming and stretched it out for two more waves -- a 4th wave that retraces us a standard .382, and a 5th wave back up to the wedge trendline at ~1844 on 12/18.

Here's what I came up with (just a quick sketch over lunch at work):

SPX E-D into December FOMC

This looks pretty good as an ending-diagonal formation, but it also fulfills your requirement for a minimum-3% headfake pullback before putting in a final top.

I'll work some more on this tonight.

Monday, November 25, 2013

Charts 11-25

It's so funny to see the liquidity game turned back around at us.  Only now, instead of us creating credit and buying assets from the world with fresh credit-money dollars, now apparently it's the Chinese buying up Irvine and Brooklyn.  All of this, with money conjured up out of thin air.  We'll see if they can purchase the rest of the world's gold and oil along the way.

But Irvine is a national treasure, so this cannot possibly stand.  With that in mind we are looking forward to a strategic reply of real tapering in the schedule this Wednesday.  In any event, it certainly is a very good time for an inflection point on the chart, whether it's the "pullback" everyone expects, or something more sinister.  The wave count is mature and putting up bearish wedges.

The little squiggle I drew this morning did manage to catch the excitement late in the session today.  Yawn.

SPX 11-25

The larger perspective of a top kicked off by a possible taper in POMO purchases this Wednesday.  They aren't going to pull the plug all at once.  Of course not, that would crash the markets.  A taper, even a little one, would give us something better, a real market again.

SPX 11-25 60D

Charts 11-25 a.m.: Proposed terminal wedge, no. XXVII in a series ...

This wedge finishes up at 3:00 P.M. Wednesday, just as the December POMO schedule is announced by the Fed, with the Standard and Poor's 500 Index right about at 1818.50.

Should the POMO calendar show a real "taper" on the purchases, I would bet we will have one of the great final hours of trading in quite some time, losing 40 handles into the close.

VIX did bang out some room on its bullish channel this morning; it still looks headed for the 11s.

SPX 11-25 a.m.

Sunday, November 24, 2013

This week in thrift-store books

I continue to find quality books at Goodwill and Value Village, books overlooked and unwanted by the public.  My goal is to accumulate these treasures while they are still available.  Before TSHTF, I am stackin' ... books.

Here's what I found this week.

I had some time to kill while waiting to pick up my daughter from a birthday party in Ballard, so I dropped in the Goodwill at 65th and 8th NW.  Good thing I did, because I stumbled across someone's old collection of Grosset & Dunlap books, of which I am an avid collector.

G & D, "The Story of" series

These date to the late 1950s and early 1960s, and are in excellent condition, with dust-jackets.  I need to order some more vinyl jacket covers from Demco soon (I order batches of 100).  Sometimes bibliophiles call these jacket protectors "Brodarts," but I don't order from them because Demco has them whipped on prices.

more "The Story of" series 

These will look great with protective sleeves on the jackets.  I would have been pleased enough to find these, but also found six books in the "We Were There" series from Grosset & Dunlap.  These are historical accounts where the author weaves a story involving a couple of kids into an event, to help explain it to the reader.  An historical consultant keeps the narrative honest.

G & D "We Were There" series

I'm kinda curious to see how the author gets two kids out in Bataan, and whether they are bayonetted at some point by the vicious Japanese, their frail bodies dumped by the side of the road.

more "We Were There" series

Value Village had this from Rodale Press, could be useful.

Rodale Press, Growing & Using Healing Herbs

And so could this:

The Chronicles of Amber

Value Village had this book, the first of a series meant to accompany and update the Great Books of Western Civilization produced by Britannica and the University of Chicago, Mortimer Adler's grand project.  Once in a while I see a Great Books series or individual volumes at thrift stores, even though I don't have a set or much interest in owning one.  My library has plenty of classics and overlap with the set, and professor Allan Bloom used to make fun of the translations used for these books.

The Great Ideas Today, 1961

I bought this because it contains a length essay by an old friend of mine, the late professor Edward Shils of the Committee on Social Thought at Chicago.  In his essay, in the inaugural edition of this series, he summarizes the condition of the social sciences and the world in general in 1961.  As soon as I started reading it, I realized that this was an amazing time capsule, which deserves further study.  Shils's writing here is like a letter from another planet, and I'll give it a good read and post more about it up here.

Deflation Land trivia -- my comments on charts are always in green text, a secret nod to Shils.  Anyone who has been his student understands why.

Charts 11-22: Another POMO calendar approaches

Each month now, while the very idea of "tapering" is out there, we have a potential violent turn with the announcement of the next month's POMO schedule:

The next release of the tentative outright Treasury operation schedule will be at 3 p.m. on November 27, 2013. At that time the Desk will publish information on transaction prices for securities included in the operations listed above.

We continue to see regular TOMO -- temporary -- operations, where Treasuries are sold back into the market.  We had TOMOs all week -- why?  Who is starved now for quality collateral?  What's going on out there in the shadow banking system?

So all eyes are on Wednesday, while the indexes and VIX continue to form wedge shapes.

SPX 11-22
NDX 11-22
VIX 11-22

Wednesday, November 20, 2013

Charts 11-20

I'd like to see us back at SPX 1805 by early Friday ... for a violent reversal.

Good luck to all risklove speculators and fellow-travellers.

SPX 11-20



Sunday, November 17, 2013

When the market bores you to tears ...

... it's time to break out the set of Swift.  1856 Roscoe ed., bitchezzzzz ...

Ancients vs the moderns ... like Swift, I'll take the ancients any day.

Charts 11-15

Low-volume drift upwards continues; I'll be interested in a potential top by FOMC notes on Wednesday.  Whether it's the end of a fifth wave or just a third (with 4 and 5 to follow), we won't know for a while.

If Monday can gap us down a bit and sell-off, then we'll have the gap at 1798 to close later this week, possibly crossing the channel entirely up to 1710.

SPX 11-15

Saturday, November 9, 2013

Charts 11-08: Most bearish case possible from this crazy tape

My good friend Matt_Bear suggested that this manic Friday rally was a leg of a triangle.  So even though we have blown a perfectly good key reversal daily candle on the SPX, we still may be setting up for another exhaustion move.

Here's how the triangle here would work:

SPX 11-08 with 4th wave tri

An impulse follows the completion of a symmetrical triangle; I'll propose that it will target 1798, where we will rollover again:

SPX 11-08 6M

You could count these final waves as an ABC from 1560, or as an ending-diagonal that started at 1627, either way -- they both point to 1798.

Which sets up the larger catastrophe, the 2008 tape x about 1.35:

SPX 11-08 5Y

Which looks like this on the really long timeline:


So the first order of business is to finish the rest of this proposed triangle this week.

Thursday, November 7, 2013

Charts 11-07

So far so good, we got our key reversal today ... no gaps left up at the top.

There are plenty of scenarios out there still to take us higher; I poked around among some of the larger ending-diagonals up here lately.

I would prefer of course for the top to be in.  If so, then we can build a larger wave 1 down -- 1 of A down -- that wraps up next Wednesday.

SPX 11-07

Wednesday, November 6, 2013

Charts 11-07: Do we top tomorrow?

No, really, do we?

Daily top-calling is not about to become a feature of this blog, but I can't shake this pattern on the DJIA:

DJIA 11/06 megaphone

Here is the corresponding terminal move on the SPX, an ending-diagonal that terminates at 1778 tomorrow:

SPX 11-06

Some big longer-term bearish analysts, like Bob McHugh and Bob Janjuah, see us heading to a final higher high weeks or months from now.  But what if they are wrong?  What if the SPX, having touched the other side of the 2009 rally channel, is done now?

What if the self-awareness of the equity bubble by its participants, brings its end?

What if we print a hot number for GDP in the morning?

How the local count fits into the larger picture:

SPX 11-06 60D

SPX 11-06 6M

The DJIA chart has me wondering, and so does this chart from AlbertaRocks.  In 2000 this peak nailed the equities peak, but there was a lag in 2007.  

What to expect now?  A hard reversal off these levels tomorrow would be a good start.

Monday, November 4, 2013

Charts 11-04: Another ending-diagonal

The move off the 1775 high has not been impulsive to the downside, so it is likely yet-another-wave-4.

If it is part of an ending-diagonal, then it may have a ways left to go, as its channel may take us as low as about 1729 late this week.  This would of course give us the slight W1-W4 overlap we want to see on an ending-diagonal.  The ending-diagonal is important to us because it is a terminal pattern that brings in a change of trend, i.e. down.

From there, a strong push through November opex and into the following week.  McHugh has one of his own "phi mate" turn dates out that way.  IIRC, he nailed a few critical inflection points in the 2007-2008 tape with his proprietary turn dates.

Is this the ending-diagonal we are looking for?

SPX 11-04

Sunday, November 3, 2013

Charts 11-01: A bearish chart

I managed a dayhike on Saturday, headed right into a fall cold front here in western WA.

Here's what greeted me on my windshield when I returned to my car:

"Let yourself out"

Needless to say, it was a wet hike, a quick run up to the high country and back down to safety before winter sets in.  I put up 15 miles or so, in constant rain or snow.  I had planned to go another 7 mi farther, but conditions were pretty nasty up there, and my legs were cold, wet, and cramping up.  

Big Creek trail, North Fork Quinault district, ONP

I decided early on that I would set a strict turnaround point and time if I wasn't moving fast enough to come out during daylight.  The Olympic rainforest is a very scary place to hike in the dark, especially alone.  I've crawled out of the North Fork Quinault on several occasions in the dark, nervously scanning my surroundings with my headlamp.  Scanning for ... eyes, those big, reflective, hungry, 200# feline eyes.

The North Fork of the Quinault river is a spectacular drainage ditch, channeling huge amounts of water through its narrow canyons.  Once I returned to my car not only alone and in the dark, but from a trail that was under knee-to-waist-high water.  It was a pretty intense little hiking epic.

Here's the obstacle course that greets you when you approach the bridge over Big Creek.

Trail bridge, Big Creek trail, ONP

I made it to Three Lakes and the start of the Skyline Trail, one of my favorite trails in the park.  Gale-force winds and blowing icy snow greeted me up here, so I did not linger.  This junction is only at 3,300' elevation, so to push on to my original goal of the Elip Creek trail would have taken me even higher up into the storm.  Plus, I would have come out in the dark.

View west toward the old Tshletshy Creek trail

I locked the park road gate behind me and headed back to Seattle.

The pop to 1775 on the SPX fulfilled the main condition I had for a possible top in equities -- that we touch the upper side of the rally channel formed since the 2009 lows.  We have done this now, so the market can exhale now ... right?

I guess we will know soon enough.  Here's a very bearish count and possible channel for wave 1 of 1 of A down.

SPX 11-01

Currencies were jumpy earlier tonight, and I think the $USD could break out a lot higher from here.  Will post more charts once the market gives us an indication of what's in store.

Friday, November 1, 2013

Did we have a failed 5th wave?

With the SPX completing its rally at 1768.5 on Thursday?

Busy with Halloween last night; just wanted to get this idea out here.

Waiting for confirmation, several important levels to break down first.  There is also the possibility of a larger E-D here that takes us up to 1800.  But we touched the top wall of the 2009 rally channel on Wednesday, so I'm happy with this goose being cooked.

SPX failed 5th wave