Saturday, March 30, 2013

Charts 03-29: Jaws of Death ahead

Daneric has a good count of the short-term situation for this upcoming week, a little higher (1580?) before a reversal and sell-off.  He really ought to note, however, that there is a serious ALT scenario to the top he is charting, where we drop to the lower channel boundary and head back up to a final higher high.  Looking at the tops in 2000 and 2007, I think this is very likely.

I mentioned this earlier, that all of this drama and fuss could be us completing a wave 3, with a small wave 5 still left to go.  We're unlikely to top at 1580 -- if we have come all this way, we may as well complete the 13-year "Jaws of Death" megaphone pattern, north of SPX 1590.

The lower Bollinger on the VIX is coming in nicely.  Hopefully, when we get around to May, the floor will fall out again on the VIX -- perhaps after the May 1 FOMC -- giving us a daily candle on the VIX below the lower Bollinger ... setting us up for a serious buy signal on the volatilities.  UVXY to have a 5-handle by then?

Saw Werner Herzog's Stroszek tonight, another work of German genius.  My favorite is the wiry old guy running about spouting German at the Wisconsinites, referencing essays by Schopenhauer (a favorite in my house) and seeing the grand conspiracy all around him.  And the dancing chicken, of course.

SPX 03-29

We dance until the money runs out.

Sunday, March 24, 2013

Charts 03-24: "Triangle" breakout

/ES futures have broken what looked like a triangle in play.  

Looking for us to wrap up the larger wave 3 this week with an ending-diagonal shape, topping at the level of the 2007 highs.  Then a pullback before a final move up to complete the giant, 13-year megaphone. 

SPX 03-22

Friday, March 22, 2013

Charts 03-21

We're in an ambiguous spot, a triangle that could take us up or down.  If the latter, we would sell down to the SPX 1512 area next week, setting up some sort of resolution or quarantine for the Cyprus situation next weekend.  With the storm passed, we will be free to rally to hopefully final highs on the SPX -- completing the Jaws of Death megaphone pattern since 2000. 

If we head down, I'll be watching the McClellan for oversold signs.

I spent some more time charting what I understand to be McHugh's take on this, and will watch for signals that his scenario is actually playing out.  Remember, he's looking for a torrid rally to silly new highs late in the year.

SPX 03-21

Wednesday, March 20, 2013

Charts 03-20: 1576 on deck

It looks like the Cyprus mini-crisis is over for this week, and we can complete the larger wave 3 rally to a top projected out to SPX 1576.  This would be a double-top with the 2007 intraday high, but not the final top this year.

We are so close now that the Jaws of Death megaphone will likely complete on the S&P 500.  I took a close look over the weekend at McHugh's work calling for final highs above 1700 on the SPX, and can only conclude that his work is based specifically on the DJIA completing its own Jaws of Death by touching its megaphone top.  This would pull the SPX far above the top bound of its megaphone.  Pick your index; I'll go with the SnP, thank you.

I chatted with a couple of work friends yesterday, who remembered that I am known as something of a Doomer, a critic of the real-estate bubble, and general skeptic of the world today.  They were interested in my current outlook, which of course is unchanged.  So I need to write up a general restatement of the deflationist point of view, my take on it at any rate, the core narrative for the days ahead, and what I plan to do about it.

I'll work on that this week, while the market finishes up this rally.

Charts -- looking for an aggressive short entry -- Q1 SPY puts? -- if we can close up in the ether Friday.

SPX 03-20 a.m.

Sunday, March 17, 2013

Walk to Everett, 2013 edition

Every year on St. Patrick's Day, I walk from Seattle to my mother-in-law's house in Everett.  The distance is no worry, but the pavement is rougher on the soles of the feet than any trail.  Earlier posts from this walk are herehere, and here, and here, and also here.  Here's what I saw today.

A little moss on the roof?  Can you believe that only a few years ago idiot RE speculators were waiving inspections on their darling little $400K Seattle debt traps?  This one on 145th Street is a teardown.

Hideous monstrosity a few miles north in Shoreline.  American dream!

Here is a high-end house underway on Olympic View Drive in north Edmonds.  It has a view and is made of real wood plywood instead of chipboard.  Maybe they should leave the cedar shingles off to show off the plywood.

Or is this the house?

$300K buys this building in the dead space between Edmonds and Lynnwood.  Perhaps asset inflation can kindle animal spirits and provide some sort of George Gilder supply-side miracle on this one.  Onward recovery!

Of course, across the street is an empty, failed strip mall.  Someone built it several years ago, and it has yet to find a tenant.

Crossing WA 526 -- the Boeing Freeway -- on a pedestrian overpass.  I can almost smell the corned-beef.

Watching Aguirre, The Wrath of God tonight, easily one of my all-time favorite movies.  I still can't believe Herzog made this film.  I can't believe Herzog made this film without killing half the cast.

Saturday, March 16, 2013

Books: Finding Hayek in Portland

Last weekend or so, I stumbled across a beautiful copy of the 1944 Chicago edition of Hayek's The Road to Serfdom at Powell's bookstore in Portland, OR.  This brought up a classic problem for bookhounds, for as they say in Monty Python's Holy Grail, "We've already got one."

I found my copy, the seventh printing of the first edition, in Evanston, IL, twenty years ago.  The one I found recently in Portland, is the eighth printing, and in fine condition.

Price-wise, this copy was a ridiculous steal at $17.  Abebooks has similar copies for $250, and even a signed copy of the Routledge edition.

So I'm keeping it.  The newer edition has the most beautiful textured cover.  Here they are together for comparison, with the copy from Portland on top of my trusty old one.

Another look, with dust jackets, and a third book of Pelerin-style essays edited by Hayek.

I'm fresh out of vinyl jackets -- exhausted from Value Village raids -- ordered some tonight from Demco.  It doesn't take me long to burn through 100 of these sleeves.

My mother gave me some Hayek last Christmas.  This book lacks a dust-jacket, but it is very clean and tight for a fifty year-old book.

At Powell's, I also found a few more kids books from Grosset & Dunlap's Illustrated Junior Library, and a hardcover edition gathering together Fritz Leiber's Lankhmar books with Fafhrd and the Gray Mouser.  These are books my kids need to read!

Wednesday, March 13, 2013

Charts 03-13: A top looms

Our friend Pretzel has a very important bit of historical tape analysis here, a must-read.  In other words, we're near a top, but not the top.

With that in mind, and considering the chart I put up showing a deep correction and final higher high ahead, I also want to consider what a more shallow correction would look like -- to the current channel wall in the next week or two.

The problem with the earlier correction to SPX 1485 is that it did not go all the way to the wall of the base channel, leaving us open to the real possibility that it was a sharp (iv) of wave 3, with wave 4 still ahead of us!

SPX 03-13 -- the "shallow" correction count

The rally can then wrap up with one last touch on the central tine of this Andrews fork, in late April, or even as late as the FOMC on May 1.

SPX 03-13 5Y

This is pretty extended, but can probably go a bit further.

Ugh, I had to install Microsoft Silverlight in order to see the presentation Kyle Bass gave at Chicago recently.  This dead platform says so much about Microsoft -- here they were slavishly grinding out a Flash clone, while a real tech leader like Apple simply pronounces Flash DEAD and promptly puts a knife in it.  I can't wait for the disastrous future earnings where Ballmer exits in shame and the company is chopped into pieces.

Silverlight plug-in is now uninstalled.  I'll reinstall it if Kyle speaks again at the U of C, and then delete it again afterwards.

This weekend is my annual St. Patrick Day's walk to dinner at my mother-in-law's house in Everett.  I'll bring a camera and see if there are any fresh housing monstrosities between along the way.

Monday, March 11, 2013

Charts 03-11: Under duress ...

... forced to come up with a count that reaches new all-time highs and the top of the mega-megaphone (McHugh's "Jaws of Death") extending back to 2000.

We are at the edge of a large rising channel, looking for us to start heading down to an IT low into the May 1 FOMC.  Ben will bring his bag of goodies, should hold us into the first week of August.

New Moon tonight.  Did we top today?  /ES may tell us overnight; a gap down here is not a big deal, because we'll be back up here in a couple of months.  

SPX 03-11 5Y
Speculating that a move across the channel from here would be a nicely-balanced zig-zag, with the first leg running to support at 1448.  The zig-zag shape would fool bears into thinking the c leg is a wave 3 in progress.

SPX 03-11 2Y

Friday, March 8, 2013

Intraday 03-08: 1551 hit!

It looks like we have two competing channels here on this final (?) move up to a (the?) top.  I've drawn them on the chart in blue and pink lines, drawn from w0-w2 and w1-w3, respectively.

The move this morning hit 1551 and threw a pin up into an old orange trendline for the larger channel.  1532 is the .382 retrace of the 50-pt wave 3 move.  If we can make that, then a 19-pt wave 5 will take us back to 1551 for a potential double-top.  It also gives a ratio of 2.618 : 1 between W3 and the proposed final W5 move.

SPX 03-08

Taking my girls to this lecture at UW tonight, after a round of Friday pho.

Patience, patience ... the month of March is all about reversals.

Hey!  I'm not a McHugh salesman or anything, but he does have a pretty good deal on his newsletter, running for a few more days: 9 months for $99, about thirty-six cents a day. 

Wednesday, March 6, 2013

Charts 03-06: Weimar moniez

JoAnn fabric/craft stores recently had a good discount on custom framing, so I brought in a pile of Weimar currency for a project I have wanted to do for some time now.

Here's how it turned out.

German hyperinflation through 1923
You can see the full progression in the Papiermarks from 1DM through 500MM DM.  I never did get a 1B DM note, but that's OK.  IIRC, they weren't around for long before they revalued into the Rentenmark at 1B : 1 -- comparable to the FAZ reverse splits over the last few years.

Of course, hyperinflation in the America doesn't have to come from outright printing.  All we need is for the CBs of the world to reject the dollar and Treasuries as a store of value, and exit them for physical goods all at once.  The "printing" has already happened -- the dollars are out there, all around the world, from eighty years of credit expansion.

Today looked like A and B of a wave 4.  We would need a steep drop early tomorrow to reach the .382 retrace at the channel wall; maybe it will meander instead.  

Remain concerned about the technically-critical 1551 level just overhead.

SPX 03-06
Small change on the McClellan oscillator today.  Maybe we can get a few more of these to build pressure in the tanks, despite the recovery-in-progress.

Tuesday, March 5, 2013

Charts 03-05

This steep rally could be a throwover for the Big Bearish wedge ... but it needs to stay under 1552, or the whole darned thing may morph into something else.

Did anyone notice there is a New Moon on Monday?

SPX 03-05
SPX 03-05 3M

Monday, March 4, 2013

Chart 03-04: Last stand for the big bearish wedge

The Big Bearish Wedge is just overhead at 1526.  If we blow it out tomorrow, we could complete the inverse head & shoulders which is obvious on the charts now.  McHugh's Friday phi mate turn was either that spike low, or a possible sell-off starting tomorrow.

March opex is probably a high (1550) or a low (1425 gap fill).  We should know tomorrow which we will get.  Don't forget Services ISM 30 minutes into RTH; if the overnight /ES remains stagnant, this release tomorrow could decide where we go next.

If we rally above 1530, it could work as a "throwover" of the Big Bearish Wedge up until SPX 1551.  Beyond that point, the 3rd wave of the wedge, from 1266 to 1474, becomes the shortest leg, and that's a problem.  Daneric is labelling this scenario a "triple zig-zag", which may be true, but it lacks the useful downside target that the wedge provides: going back to the start at 1158.

SPX 03-04

Intraday 03-04: Back from Powell's

We took the girls by train to Portland over the weekend, visited the zoo, and had a good time in a fine city.  I bought about 10 books at Powell's, including a second copy -- I know, I know -- of the 1944 first edition of Hayek's Road to Serfdom.  I'll post some scandalous book pics tonight.

We're at McHugh's "major" phi mate turn +1 today, and here is a possible count for the failed 5th here.  The bear-bull battle is important, and will likely resolve on some sort of intraday rejection and reversal, so as not to leave any pesky gaps in the chart way way up here in the ether.

SPX 03-04 intraday