Saturday, October 18, 2014

Charts 10-17: Breakout ahead

But which way?

Friday's tape and close left us just about where I thought it would the other day.

You can see it even better in the trendlines on this chart.  What a meat-grinder.  One of them has to break.

SPX 10-17

I think new highs are possible if the bulls can spark a short-covering panic brushfire this week, starting with a taste of trading above 1900 SPX.

This isn't his call, but this week we tripped one of Dr. Bob McHugh's favorite tactical technical signals, the "VIX buy" signal.  This is where the VIX closes outside of its 2SD Bollinger Band, and then back inside, indicating a "buy" across all of the indices.

We shall see ... we shall see ...

Edit: chart for Permabear Doomster, our man in the London.

SPX 10Y

Actually, I think this last chart should give any short-term bear some serious pause.  Whoa!

4 comments:

Permabear Doomster said...

Hello CG.

I'm bemused that after a full three years of waiting.. now that we've fallen 199pts from 2019 to 1820, with VIX soaring from 11 to 31... the first thing that many are touting is 'ohh, here come new highs'.

The monthly charts on the broader market are only just breaking.

The same chatter happened with the Gold bugs in spring 2012 (not the initial break in spring 2011)... they called for a floor, at the VERY time the giant monthly cycles/trend had just broken.

..some two years later... they're still floor calling, and haven't learnt a damn thing about watching the bigger trends.
-

R2K broke July
Dow.. 2 weeks ago
sp', 1 week ago....

..yet here we are.. and many are touting 'new highs are coming'.

I ain't going long unless >sp'1970, and sure doesn't look likely.
-

Frankly, EVERYTHING I've experienced in market land across the last few years tells me this is the best shorting opportunity (after a bounce) that we've seen in years.

To see you.. and others seriously contemplate new highs... its just bizarre.
--

I realise you are trying to keep an open mind, but really, go stare at ANY of the monthly cycles for a few minutes, and then ask yourself, how the hell (barring immediate launch of QE4).. we're going to break new highs, before at least falling to the sp'1600s.

Regardless.. hope your weekend is good... next week...and more so.. November will be... dynamic.

Christian Gustafson said...

I know, I know Doomie.

Now check out the long-term chart I just posted.

Markus said...

Note the large open interest in VIX call options. I think the market is likely to move sideways or up until the options expire on Wednesday. Whatever can be done to lower volatility.

Christian Gustafson said...

Target on that inverted head & shoulders is 1976 SPX, a devastating, demoralizing swing.

Especially if we run up all the way to the upper edge ... and crash.