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.


Bryan Franco said...

I believe it is a normal session today. Friday, there is a 1 pm close per NYSE.. http://www.nyx.com/holidays-and-hours/nyse

Bryan Franco said...

keep in mind, it is still possible for the top to be put in today. the study only looked at closing prices. so.. if there is room for one more closing high (that isn't an intraday high) after a 3% decline, i'd be curious what that might look like.

Bicycle said...

The default of Illinois pension obligations commences December 3:



Christian Gustafson said...

Hmm, you are correct. Somehow I had got it into my head that we closed at 1 PM today.

Hmm, let's see if the POMO schedule is interesting after all.

Illinois ... you put me in a happy state.

Christian Gustafson said...

Bryan, I think on my chart, say we top into December FOMC. It might work like this:

* today we get some taper, a trial balloon amount, $5 or $10B. The market sells off into next week, to 1746.

* that bottom holds, and we rally into FOMC, with the usual market expectations of more goodies.

* December FOMC arrives, reaffirms their policy stance, and we put in our final high with the intraday reversal and high-volume selloff.

Something like that. POMO schedule release in 25 mins, hope it's good.

Bryan Franco said...

CG - what I was wondering is if THE violent reversal happens today, is there a plausible chart that depicts today putting in THE TOP, while next FOMC gets the closing high? that would still conform to my 'rule'.

Christian Gustafson said...

$45B POMO for December. No shift yet.

Permabear Doomster said...

pomo pomo pomo pomo pomo.

next week looks nasty.


Christian Gustafson said...

Nasty how, PD? Up or down?

The technical top here may well have been Monday, with the spike low in VIX and the high on /ES.

Could count this as A down, sideways B, since then, with C due next week.

Is that what you're seeing?

Christian Gustafson said...

I dunno about you guys, but I'm not setting foot in a mall on Friday. The most work I may do is to shave off this beard I've grown this month -- it's starting to bug me now.

That, and I may be lifting a couple of pints of something hoppy from the PNW. That's hard work.

Permabear Doomster said...

The only thing worse than a $5bn QE-pomo day..is setting foot in ANY mall in the late Nov-early Jan period.

The horror!

*as for next week, I meant 'nasty' as in heavy QE...likely further gains.

Even a 1-2% retracement is seemingly unlikely until at least second week of December.

Anonymous said...

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That is Darwinian's (Ron Patterson) new blog since the demise of the Oil Drum. It's packed with data and facts - along with some of the best comments on Peak Oil.


Pass it on - and have a happy New Year!

Bicycle said...

Illinois legislature just passed the pension default bill.

That's about $160 Billion in retirement benefits that just went, "poof".

It includes things like, limiting the pensionable amount of salary to roughly the first $109k (like social security), it takes the COLA from a flat 3% a year and cuts it to half the PPI for the year (and also caps it at a max of 4%), raises the retirement age by about 5 years, and all sorts of other stuffs.

All on Illinois' 195th birthday!

Now we get to have a big constitutional legal battle over this one...

Bryan Franco said...

I just ran a fairly simple program based on an exhaustive search technique that looks at every possible price correlation window for an instrument versus itself. For the DOW, using a 26 week starting length, the single highest computed correlation was for the 77 weeks spanning 2/10/1928 to 7/26/1929. The correlation is 97.8%. It implies an 8.4% four week return, followed by a crash. I have every other possible combination as well, and most of the highly correlated timeframes imply fairly sobering returns on three month timeframe or greater.

Permabear Doomster said...

re: 'That's about $160 Billion in retirement benefits that just went, "poof".'

They were NEVER there in the first place.

The people voted for public officials to lie to them..for decades.

Now the charade is fracturing in a few places, and the 'reality' has to be addressed.

So..no..those billions of funds..never existed in the first place.

The same of course is true across much of the western world.

Christian Gustafson said...

Sorry to be AWOL -- I've been watching for a while here, and the basic idea here is unchanged, just stretched out a bit.

I think Mr. Market can make it up to SPX 1850 by year-end, but we have to drop down to 1746 first. There's a larger head & shoulders forming on the S&P that gets us there, if we can first make it up to 1802.

So, 1802, then 1746, then 1850. At 1746 SPX, I'll buy a passel of Q4 SPY calls.

The rest of the year will then be a replay of the tape of the 1st half of September. Record bonuses for our innovative financial sector masters.

The next Bradley turn marks the top. I'll post a bunch of charts and explain my thinking on this tonight. First, I need to see if I have enough beer in the fridge.

We need to raise taxes on the skinflint Millennials to pay their fair share for the pensions our good public-sector employees have earned. They are hero and deserve!

Bicycle -- I heard that the deal for the Illinois pensions was something of a poison pill, reconfirming the "contractual" status of pension debt. For God's sake, move to Washington, brother.