Thursday, December 11, 2014

Good shot at a 4% sell-off tomorrow

Beware

Volatility spiked today after we rejected off the underside of the old megaphone going back to early July.  Tomorrow could see a 20+ handle gap down and flush.  The vols really were the tell today.

I do hope this is truly, finally, at long last the return of the Bear, because these moves would line up well with a real crash off the January FOMC.


SPX 12-11

32 comments:

Phat Repat said...

Okay, nicely down, attempt at gap fill but not full candle body on 5 minute chart. OpEx next week gives me pause for 1950.96 target; but the Stock Deity appears pi$$ed. ;-)

Stop comes in at 2049.39

Christian Gustafson said...

The gap fill was important, yes!

Now, will the floor drop out?

/CL 58-handle OMG

Bryan Franco said...

Need biotechs to go red and fall out of bed. Otherwise, this decline is very suspect. Also need small caps to get much much weaker. They are outperforming today. Hands tied until the close, unfortunately (or fortunately).

Bicycle said...

So the only question in my mind is do we bounce at the mid-Sept highs (basically here) or do we coast down to the 200 before a bounce....

Bryan Franco said...

Looking ominous for next week. For those of you that like candlestick charts, there are bearish engulfing patterns on IWM and MDY. From a market psychology perspective, this very bearish candle suggests that a lot of folks got "trapped" this week, and mostly on the long side.

Bryan Franco said...

bearish engulfing patterns on weekly IWM and MDY candles.

Bicycle said...

Dow landed right at September highs.

Industrial production on Monday, and FOMC Tu-Wed...

Christian Gustafson said...

Yah, my chart last night was way too aggressive. But the wave 3 count is still valid.

And there are no gaps overhead!

Gap down Monday, which will be filled in an EOY rally.

Bryan Franco said...

So we know that years ending in 5 never go down. 13 out of 13 times for the S&P. Not only that, but they massively outperform the other digits (25% + CAGR verus 8% for the others). Why not have a 70% crash between now and year end?

Bicycle said...

I really think we are getting too bearish after this week...

We could have an emergency OPEC action over the weekend, plus Fed horseplay early next week.

Bicycle said...

Infact the declining broadening wedge targets a new high right back at the top of the megaphone. Come on, have a taste of my bullish weak sauce...

Permabear Doomster said...

CG
re: Yah, my chart last night was way too aggressive.
--

Always overly aggressive in terms of downside targets.

Certainly, the Friday close of 2002 was interesting... but its just a move of 1.6%

Hell, I'm still open to 1980 or even 1950...but it won't make any difference by year end.

Have we already forgotten about the BoJ buying EVERY single day?
--

Once Yellen is out of the way...up up up.

Phat Repat said...

PBD

Heck, I care to the tune of 86 points should my target be met. And at $50/point that's some nice holiday cheer.

And I hope it does reverse to all-time highs either by end of year or early next; makes no diff to me. Up/down, money to be made.

Potential for significant gap down on Monday followed by recovery into OpEx. My view for the moment. ;-)

Bicycle said...

"Hyperinflation of 2018-2020"

Phat Repat said...

Bicycle
Sounds way too optimistic to me. But a few more years to prepare is more than welcome. ;-)

Permabear Doomster said...

re: inflation

If you assume there will be a commodity inflation... where starting next year..or after...

Equities are not going down until AFTER a commodity ramp of some degree.

Equities straight up for another 5 years?
-

Fun thought huh.

Phat Repat said...

And of course, target hit on TLT. Hmmm... Additional targets are non-clustered and looking kinda stretched at this point; IMHO.

Looking like UNG on a buy. But that has been quite squirrely. ;-)

Christian Gustafson said...

Yen yen yen yen yen yen yen yen yen yen. Reversed and is rallying hard post Abe election.

There is a gap down at 1904 SPX. Maybe we can close it this week?

john said...

My totally laymans view is ala the Eddie Murphy Kung fu grip theory, http://youtu.be/uI4fVgVVpiw
Everybody is nervous that this may be the last good Christmas for a while and it's time to sell off, U.S. markets down and NIkkei up.

Bicycle said...

...and there is our bounce off the old September highs. Now the question is, can we hold that and skate back up to new highs, back up to the top of our deranged, ugly megaphone...

Kinda seems like we will run it back up through the new year now.

But when earnings season hits...

...let's just say I haven't seen this amount of retail inventory sitting around at the holidays since xmas '08... '08 was worse... but this ain't good...

We are gonna see some of the hobbling retailers close it up after this quarter. Bring out your Howard Davidowitz...

Phat Repat said...

Once we close the gap at 2005, we will have a better feel for the direction.

I'm still thinking down given the action in the Nikkei and the DAX; but the market obviously rules. ;-)

Christian Gustafson said...

Never get out of the boat. Absolutely goddamn right. Unless you were goin' all the way.

Bicycle said...

Well I guess that answers that! Onward ho to the 200! Sub 17k again, exciting!

Christian Gustafson said...

All pops are being sold.

Worst-case scenario for today would be a panic breakdown to the lower edge of the downward channel, about 1919 SPX at close.

ZH warning of low liquidity.

Phat Repat said...

I will stick with my first target of 1950.96 and go from there. Just rolled down to extend my play. Given this is OpEx, a whole buncha folks must be stranded longs. Ouch. ;-)

Christian Gustafson said...

The 1982 low was a perfect 1.618 extension of what we called "wave 1" from 2079 to 2034.

The .236 retrace would tag 1999 late today.

5th waves down are powered by margin calls.

1999 - (2079 - 2034) gets us to 1954.

The larger pattern, repeated, takes us down to 1737 SPX.

saahilcap said...

UVXY not confirming this decline?

Phat Repat said...

Looking at the trend line on the 5 minute chart, I could see test at about 2005/6 and go from there.

Phat Repat said...

In fact, Tony C had indicated the potential of a run to mid/high 2030's, followed by drop. Anything to keep you off balance. ;-)

Phat Repat said...

Another reason I believe we bounce is that too many people are now talking about 1950's being their target. I believe we will get there, but a bounce first to burn those thinking this is easy bidnez. ;-)

Christian Gustafson said...

Is there a standard time when margin calls go out?

It's about time for some forced selling.

Permabear Doomster said...

re:Unless you were goin' all the way.
--

Bernanke, Yellen, and Abe got off the boat.