Thursday, October 16, 2014

Charts 10/16: All-time highs are still possible

First we have to get back to the revised channel edge at SPX 1895 into opex tomorrow.  Very possible.

There we face a hard choice --

1. We can either crash again next week to support at 1740 SPX

2. We can gap out of the pink channel and make it up to 2050 SPX into October FOMC

The leg from 1970 to 1820 was precisely 1.618x the 93pt leg down off the September highs.  But do we count this series as 1-2-3 or A-B-C?

BTW, if the lower leg wins out, that pink lower trendline takes us all the way back to the 1040 SPX area by January opex FOMC.  It would mean that pulling QE simply returns us back to where we started.

Short-term S&P 500 doodles

7 comments:

Phat Repat said...

Well it appears the worm is turning, at least by the numbers...

Buy above 1890.95 with Stop 1868.61 T1 1933.18

Sell below 1860.07 with Stop 1882.37 but no T1 due to inconsistent values (likely indicating a turn; caveat emptor).

Christian Gustafson said...

The blow-off top option this morning comes from a smattering of ideas:

* 2050 as some sort of magnetic top target, identified by a lot of TA types for a long time

* the location of 2050 on that top trendline right during October FOMC week

* the fakeout low that preceded the final 2007 cycle high

* Bryan's model for "one more high"

* internal proportions on the decline, C (if not "3") at a perfect 1.618x A (not "1")

* possible megaphone top still on the board

* "everyone" knowing this thing is done

* perennial bear abuse

* a possible set-up for a VIX index "buy" signal, once it closes back inside its top Bollinger

I'm watching this last one particularly closely. Since it's been one of McHugh's key technical signals the last few years, I'll be interested to see what he thinks about it if the VIX drops enough to trigger it.

To me, it was at least worth a small hedge, which are cheap today.

T.Berry said...
This comment has been removed by the author.
Depriv said...

Wow, we are almost on the same track.

I too expect to see some more decline: it's 1740 or a bit lower for me.

But I think you are underestimating this actual pullback. Your chart suggests that so far it's only the 'a' of this decline is done, with a a 3-3-5 structure.
- 3-3-5 'likes' more than 50% retraces, which would be around 1920 or higher
- if you start counting backward from 1740 and expect an a=c then you are on the area of 1930s
- if you take this actual retrace of 'a' of a dZZ, then....

Depriv said...

It's almost the same as it was in 2007-2008 before the fall. A whole upward impulse was taken back before the last violent upward thrust.

Ponzi Unit said...

I like that target of 1740. A slow moving indicator Asimov designed for me on the monthly chart resides there.

Christian Gustafson said...

Oh definitely 1740, Ponzi.

Question is when -- this week, or several weeks from now (after launching to a perilous new high).