Friday, October 10, 2014

How the market can reach 1233 SPX by the end of January

The bear trendline for this drop is already in place.  Surely it is the end of days!


I don't know if we'll put in a new low under 1925 SPX this morning, but I'd like to see us close the week at 1948.  This will clear the table of the 195 SPY puts I should have held on to ... grrr ... oh well, plenty of good trades ahead.

A lower trendline from the waves already in place takes us to 1233 SPX by the end of January.  The Fed will accomodate, you better betcha, and we will bounce 300 handles back up (.382 retrace) into the Spring.

But first for the crash call.  Big picture with the bear trendline and surprise support from a triangle from 2011.


SPX 10-09 4Y

It starts this fall with a series of breathtaking drops to key support levels: 1814, 1737, 1560.  The crash leg in January kicks off right after Christmas on the 12/26 Bradley turn, as everyone tries to secure year-end profits.  This quickly gets out of hand!  ONOZ OMG ...

Bounces are typically .382 of a previous larger leg, and they also correspond to corrections we experienced on the way up this thing.  Yes, these are all 3PDH numbers as well, you know the drill.

SPX 10-09 6M


Short-term -- I'd like to see that close at SPX 1948 today.  We can make it as high as 1962 into Monday if there is a B-wave triangle playing out here.

The question re the drop from 2019 to 1926, whether it counts as a 5-wave impulse or not, is moot.  Call it "A" and be done with it.

SPX 10-09


First important support is at 1814 SPX just after October opex.

24 comments:

Phat Repat said...

Sure anything's possible. Guess it depends on which 'team' they want this coming November.

But for now, numbers are as follows:

Buy above 1960.62 with Stop 1937.55

Sell below 1928.7 with Stop 1951.73 and T1 1894.47 and T2 1886.83

Bicycle said...

The door is still completely open to new ATH on the Dow here in short order.

Phat Repat said...

Interesting observation there Bicycle; kinda like, "when you least expect it, expect it." All things in time... ;-)

Bicycle said...

On the Dow, we never breached the bottom of the rising wedge forming since the beginning of 2014.

We are also still well within the bounds of the broadening descending wedge forming on the Dow since mid-September.

The broadening descending wedge targets roughly 17400, if it resolves. That would also land the Dow straight on the upper trendline of the rising wedge forming since Jan 2014, giving us a completed 5th up.

That would also be a final kissback to the completed rising wedge forming since 2009.

It is actually quite expected that we should have one more new ATH on the Dow, and that's what has me worried, actually. It makes too much sense.

Christian Gustafson said...

Jeff Lacker speaks in 13 mins. Let's see if he has a beer bong or does a keg stand for the market.

Bicycle said...

Well, now we got a big problem on the Dow. Monday is a crash?

Bicycle said...

Hey's let's steal ZH's Dow chart and annotate it with what may happen...

The descending broadening wedge will now no longer give us a new ATH, sadly, but it's still a valid pattern. What it may do is cause a kiss back to the underside of that big rising bearish wedge, which is now resolving.

Terrible days ahead.

Christian Gustafson said...

Wow, we actually found the 200DMA. VIX over 21, the works.

Bond market closed on Monday might allow this thing to bounce.

.5 - .618 retrace is 1938-1945 SPX. 1987 tape had one more kissback before rolling over.

Christian Gustafson said...

If we don't crash to 1850 in the morning, then the key may be in that VIX spike at the close on Friday.

That spike either marks the end of the first leg down, to support at the 200 DMA, or the point of recognition for a mini-crash. VIX closed above its upper Bollinger ... which can setup an index buy signal after it closes back inside.

I don't see any good bounce bets off this, either, with the VIX so high. We could spend the next two weeks retracing .382 to about the 1948 level, before crashing again, for real this time. That kind of tape will be extremely difficult to trade profitably.

One or the other ... and the Bear is still young.

Bryan Franco said...

I had to get short Friday at the close. As mentioned, only playing this to low 1700s. But look at TROW and AXP weekly. Look like death.

Phat Repat said...

Good stuff so far. The T1 for the short has been hit and I have taken it off the table (though the system still indicates short based on current numbers):

Sell Below 1911.78 with Stop 1934.66

Buy Above 1943.47 with Stop 1920.56

OpEx this week makes for goofy times. ;-)

Bicycle said...

1,000 Dow points off the highs in less than a month... 17,000 never again???

Christian Gustafson said...

Well, if my model and count are right here, we are finished with the 2000s SPX.

And also with the 1900s. At least until the $USD gives up the ghost and hyperinflates.

Oh boy!

/cue Bryan's higher-high right ... about ... now ...

Bicycle said...

Yah we do have the possibility of a wild bounce from these levels tomorrow per my latest chart of Dow... but new ATH... seems off the table for now

Phat Repat said...

Wow, well, as the saying goes, "you can't go broke taking a profit." But still. ;-)

Phat Repat said...

Interesting numbers this morn (though will change some as fresh data comes in):

Buy above 1921.96 with Stop 1899.34 and T1 1978.30

Sell below 1890.66 with Stop 1913.25

Thought I saw someone mention 1968 a while back. Hmmm...

Christian Gustafson said...

That about it for now? VIX will set up an index buy signal once it closes back inside its Bollinger.

.382 retrace would be SPX 1930-1935, end of next week. Looks like we landed on the support region in the smaller 3PDH here.

Long plays with SPY calls ... meh ... reward not work the risk, IMO.

Bicycle said...

As we can see our bullish descending broadening wedge is still valid on the Dow...

I think the bears are getting a little ahead of the market here. I feel the likely scenario is that we will drift sideways for a while to reach the upper bound of that descending broadening wedge again, then dump into Dow 15k's on a last wave of that wedge. This will trap the bears and we'll have some unholy ramp from this wedge to kiss back the underside of the old rising wedge that formed since late 2013. Only then can we dump to oblivion.

That's the scenario I like the best, because it suggests we'll have one more bull stampede towards Dow 17k before it all falls apart.

However, if this descending wedge resolves early, it is suggestive of us climbing back into that old rising wedge for not-quite-new-ATH's.

Bicycle said...

zomg WTI

Bicycle said...

Pretty much just bounced off the bottom of the descending wedge again right there...

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

put 60% of cash to work today. expecting mkt to begin earnings rally soon.

Phat Repat said...

Pre-market numbers show the following:

Buy above 1911.95 with Stop 1889.40

Sell below 1880.76 with Stop 1903.28

Numbers are beginning to converge so expecting a significant move. Move appears geared to upside but morning numbers will tell more.

And yeah, unbelievable action in WTIC, almost surreal in fact.

T.Berry said...

welcome the -12 futures. if there at open will use remaining 40% cash. got feel of a 100+ dow day