Wednesday, February 12, 2014

Charts 02-12: End of February

The only problem with the '29 fractal scenario is that we overshot its upper target by about 15 points on the SPX yesterday.

So it looks again that Bryan's counsel is correct, that we had one sharp drop left before a top was possible in the chart.  I like the SPX 1886 area by the end of February and a New Moon going into March.  My friend Jeff noticed that there is very little news pending for the next couple of weeks, which leaves the market vulnerable to volumeless drift up.  So let it.

If this is a 5th of a 5th, then it corresponds to the wave 1 we began back in June of 2013.  Look at how that wave just ambled up or sideways, with no deep corrections.  With any bears stunned and bleeding at this point, the rest of February could look like this.  Feb 28 / March 3 then becomes our next "candidate top".  We will watch for upper Bollinger-band touches on the daily and weekly SPX, and some sort of extreme on the McClellan oscillator.


Spring of 2014 gets much more exciting with the next few FOMC meetings, too.  The April 30th one is especially important, because of the GDP print out earlier in that day, and the -- spooky now -- New Moon the previous night.

We have to take what we get from this market, but prudent bears absolutely do not NOT want a 1929-style waterfall, at least not yet.  It needs to happen like in 2008 after an A-B decline and retrace, which sets up the true waterfall.  Bears most of all must hope for a technically-sensible and tradable market, just one that goes in our direction.

Probably another move down on the Yen as well, before it goes into a deep retrace and upsets the carry trade.  Die Yen, die.



Lynx said...

Just a friendly reminder that the 1929 scenario to be made on the Dow and not Sp because it's a huge difference! It was 23 days down and five days as a countermovement and 50% of the decline 1929.The similarities are striking, but hope not people see them right now.

Christian Gustafson said...

Correct -- I overlaid mine with the S&P 500, because I don't care much for the DJIA, and because it's not like the DJIA 1929 is anything like that of today.

But -- very interesting to note that the Dow has only retraced about .61 from its lows -- much less than the S&P's deep retrace.

So yes it's still very possible, wild stuff here.

Permabear Doomster said...

*I did remember, and posted two charts..which also suggest 1886..or 'somewhere in the 1880/1920 zone by late March/early April.

Taper'3 gets QE down to $55bn a month, and that is kinda the level I think the sell side starts to overwhelm the market.

Christian Gustafson said...

There's a full moon tomorrow that may provide a bottom for this pullback.

Or the '29 scenario plays out and busts everyone's charts. Even McHugh, with his armload of indicators, is still on the fence as to the meaning of the sharp bounce since the lows this month. Signals can get confused at important points on the chart.

I repeat that bears should not want a crash; we want a market that trades on decent technicals, just bearish ones.

I need to get back to London for a visit. The last time I was there I had a glimpse of the entrance to the British Museum, but no time to go inside.

I expect a full tour from you, with Churchillian knowledge of Your People and their adventures.

Anonymous said...

You removed my favorite link..

Any particular reason?

Christian Gustafson said...

The iii Patriot folks? I replaced it with the McVerry Report. I just didn't want the list to get too long.

I'll add it back tonight.

Can you believe that the 1929 scenario is still viable here, because the DJIA has not retaken its 50?