Saturday, August 30, 2014

SPX 2034 as a candidate top

There is a post and some discussion over at Daneric's about 2034 SPX as a possible target for this awful thing.  Everyone has got ideas and charts and technical voodoo on the market, which is the whole point of blogging it all and keeping the conversation going.

What makes the 2034 SPX level interesting for me is that it nails the top of a long-term and very important trendline -- right on FOMC day, September 17th.  This fits with a crackpot theory of mine, that the market will not believe the tightening rhetoric at all from the Fed, until it is forced to do so by having cold water splashed in its face.  Only then will it react -- hard.

Going forward, FOMCs may be increasingly bearish inflection points.  We could see an actual rate hike as early as the January 28th meeting.

We have some time to kill before September FOMC, so I'm proposing an ending-diagonal triangle for the final waves up to the top.  A terminal pattern is badly needed here.

SPX 8-29 30D

From September FOMC, we would return to the SPX 1904 level again for another bounce off the 200 DMA and a final kissback / rejection of the old rally channel (a pink line on my chart).

Here's the move down from 9/17 FOMC to a big turn window around the October Full Moon.

SPX 08-29 60D

I've rehabilitated the nested-double-Three Peaks and a Domed House patterns here as well.  It's good to have them both back on the charts.  Remember, FOMCs going forward are market panic-attacks.

SPX 08-29 1Y 3PDH

This builds up to the January 28 FOMC, where a (surprise?) minor rate hike signals an end to the freebies and crashes the market back to 1074 SPX into May.

SPX 08-29 4Y

And the crash into May ... is only "A" down.  Good times.  Until we get an actual top, I like the shape and timing of this highly speculative model.

4 comments:

Permabear Doomster said...

Hmm...

Well, 2030 might be it..I'd prefer 2040/50...but yes..Sept'17 or so..would make for a good cycle top.
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I'd agree on low 1900s as key target when the next cycle completes.

If we get stuck 1960 or so...then I'll revert to 2130/50 target.

The 'safe' short side money will be made after the bounce from 1920/00. Until then... its tricky.

re: interest rates.

I still think the market will rise on higher rates...its a good thing..not least for capital formation.

Market should be able to sustain 150/200bps higher across 18-24mths.
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Christian Gustafson said...

Comment I posted over at ZeroHedge re-stating the case for deflation.

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Yellen and Bernanke did not debase the USD.

The inflation in the system has accumulated over the last 100 years. Your parents and grandparents helped fuel it, by demanding new currency to be called into existence via the magic mechanism of loans. Thus they enjoyed Spring, Summer, and Fall of the cycle.

The problem is that Winter is coming. Or, more accurately, since the 2008 crisis, Winter is here.

The extraordinary and unprecedented efforts in monetary policy signal that we are now playing in soccer "stoppage time". QE and ZIRP could be extended as long as faith in the system could maintain it, and as long as the resource providers would continue to accept USD EUR etc for their real goods.

The inflation is already baked-in. It already happened. The money has been printed. The system could no longer generate organic credit and debt, which is why the Fed stepped in to take a whack at it and fill the void.

The hyperinflation we will experience in the future is not from episodes of continued printing, it comes from a lack of faith in the mechanisms and superstructures holding the system together.

Deflation is the key to undermining and collapsing that faith, the key to the next great crisis, the wrecking-ball of the great pyramids of debt.

After deflation, then fiat-dollar rejection, Treasury collapse, and the next great crisis of our civilization.



Edit: Anyone else see $500 gold as a target out of the B-wave continuation triangle on the weekly? Oh, that's right, you disagree because we are "printing".

Deflation cometh, ladies ...

Bryan Franco said...

I agree with gold. Separately, our last sequence of 3-5 and 5% plus corrections is one of those that requires another 3% plus correction that does not exceed 20% followed by a new closing high. Can we draw such a scenario?

Christian Gustafson said...

How about this, Bryan?

We're running a true full-service blog here.

cg