Sunday, December 7, 2014

Season's Greetings and Bollinger update

Christmas in Deflation Land

It's the holiday season here in the PNW (and probably where you are, too), but the jury is still out whether we have a new bear market on deck.  We got our "one more higher high" per Bryan's model of serial highs going into historical tops, and now we are sitting up at the top of a parabolic move with no significant corrections.  Commodities and shit speculative credit ("high-yield") are in decline, and it's high time for the indexes to take a dive.

Let's take a quick review of where we are with respect to the Bollinger Bands on the various indexes.  At the moment, the S&P 500 is our lone holdout -- its upper BB was at 2084 SPX on Friday.  A few comments on the charts.


Blog regular and upright Illinois citizen Bicycle has been engaging heavily in fantasy bearishness lately, drawing trendlines to zero and other such nonsense.  OK, I'll play. 

Here's my take on the chart to OMG zero which includes my interpretation of Martin Armstrong's 2015.75 date for style points as well as shits & giggles.  Also, it's got fibs!  Eat that, Bicycle.

SPX chart to ZERO (hint: your brokerage is broke)


Bicycle said...

I LOL'd when I got to C down target at 5.00

All in long at 5.00!!!11! I'll be cash in hand on the floor of the CME! I wonder if they'll let me walk some cows and pigs in through the front door.

Christian Gustafson said...

Yeah. I can get you to 5; after that, you're on your own.

Permabear Doomster said...

My gods, Armstrong mentioned on this site (sorry, maybe you've highlighted him before, I can't remember).

A collapse of some kind is of course coming, but probably from much higher levels.

Even if you just roughly consider the previous ECM cycle, the market maxed out six months after.

That'd give us spring 2016.

Anyway, its a long... and tough year. Many bloggers/sites have left us... I do sincerely hope you ain't going anyway... even if we first hit Dow 25, 30, or 40k
back on Monday.

Christian Gustafson said...

We bears all understand the insane state of things with respect to fundamentals, and that some sort of collapse is ahead. It could start next year or next week, that's the rub.

My outlook is that there is one good bearish cycle left in this that is still tradable before the banks start shutting down and accounts are frozen. After all, we made it down to 666 and the lights are still on.

But it's also quite possible that we just keep running up in a parabolic move to some crazy, unimaginable top, and what results from it is not tradable at all -- it's just all over.

Permabear Doomster said...

re: not tradeable at all?

Urghhh.. that is not a good scenario.

re: banks.. I ain't worried about those. It'll be bail ins.... with fed help... if necessary.

Equity bulls have little to be worried about until Q4 of next year, if not spring/summer 2016.

Bryan Franco said...

Not bearish enough! All in at 5 is sill all-lost at 0

Sarah Bell said...


I don't understand what you mean by target at 5.00


Christian Gustafson said...

Oh, Sarah, I was just joining with Bicycle in charting us all the way down to dust. The bottom of the huge Jaws of Death megaphone is actually in the mid-500s SPX in this timeframe, would make a more logical target.

The larger concern ahead is that trading accounts will have the same status as savings accounts in a bank -- essentially a liability to you, good luck getting at it. So if things fall apart, and you manage to make money along the way, there will be a point where it will make sense to cash out the chips and walk away from the table entirely.

This morning -- 5 wave impulse off the top, looks complete. Now we need a wave (ii) back up that rejects off the pink line that had been support. That will send us to the 1980 SPX area in a hurry.

Permabear Doomster has his eye on the December FOMC. That timeline works well for my first low, a bounce off the 200DMA, roughly SPX 1951.

Christian Gustafson said...

Just throwing out an idea here, but the most evil short-term count for the bears here would be that the SPX is putting in one. last. megaphone. top. Here, now, as in we still have the "E" leg up left to go.

It would allow us to inch back up to a final high and touch the SPX upper Bollinger, into either the Abe election or FOMC next week.

It would also piss a lot of people off.

Bryan Franco said...

R2k unch. What a joke.

Christian Gustafson said...

Exactly, Bryan. And look @ the NDX, too. Is that a 5-wave impulse?

We're at a very dangerous time to pile on shorts.

PayDay said...

If savings and brokerage accts are frozen/rehypothecated during a SHTF scenario, can anyone speculate what happens to mortgage/credit card debt?

Is it frozen? Eliminated/wiped in a deflationary bear crash?

Pay off your debt with a few silver coins? What?

Bicycle said...

Good eye Christian. I see it on the Dow now. Hell yes. May mean that turn date is a bottom into the E-up.

Bryan Franco said...

Mini megaphone within larger megaphone would make Mandelbrot happy.

Christian Gustafson said...

No, Bryan.

Triple megaphone!

That's the title of tonight's post, probably late -- I promised to read with my girls first.

I am well-supplied with beer in the fridge, which will help.

I'll also take up PayDay's question and concerns. Welcome!

Bryan Franco said...

My daughter will be one in January. I wish I could freeze every version of her. She loves the lift-the-flap type books. Things like "Where is Spot", and "Peekaboo Kisses". She also loves "Mother Goose".

Bicycle said...

Bryan prepare your shelves with classics like "The Little Engine that Could" and "Mike Mulligan and his Steam Shovel", and many others.

Books you loved as a kid, and when you read them to your children as an adult the pain and hope of those who lived the Great Depression leaps out of the page. We'll get more legitimately good children's books like this, and soon.

Your daughter will also love having the Laura Ingalls Wilder books read to her in about 3 years. Prepare your shelves.

Then there's dangerous commies like Leo Leonni. "I'll be the eye" (of that red school of fish) in Swimmy. You'll need to have a book club discussion with the kid after that one, and remind them that swimming with the group carries its own dangers...

Bicycle said...

Dow Jones Industrial Average, Inflation Adjusted.

How about a key top at 18500 and a bottom at Dow 3k?

Phat Repat said...

Nice little action here in SPX. Interesting observation yesterday; someone purchased calls with a strike of 2100 at 1.05. That's odd given expiration is 9 days away. Questionable print? Hmmm...

Nothing for me to do right now as we coast into OpEx; at least not yet. ;-)

Christian Gustafson said...

Price is right on those SPX index calls, which are trading 1.05/1.25 this morning. Always a larger spread on these compared to SPY options.

I don't think they will go ITM, but I bet they can be dumped later this week for a profit, which is all that matters.

Pretzel has a pretty good take on the SPX chart today.

Phat Repat said...

Well, anything is possible, though trading at 0.01/0.29 right now so that's gotta hurt. ;-)

Christian Gustafson said...


What's trading .01 / .29?

I've got the December '14 210 SPY call trading at .15/.17, and the SPX 2100 call at 1.1/1.6.

See what I mean by the spread on these SPX options? Those are European-style, too.

Phat Repat said...

Ah, I meant Dec 19, 2014 SPX 210 calls at 0.01/0.27. Quote I'm seeing right now. Doubtful those will go ITM by next Friday. And yes, European style only for me. ;-)

Phat Repat said...

CG, I see where I might have confused the situation. XSP (mini SPX index). My bad.

Phat Repat said...

Okay, now we're talking. Assuming everything stays the way it is, I have the following numbers showing:

Sell/Stop 2043.04/2067.48 T1 1950.96 (cluster)

Buy 2076.89 (nuff said) ;-)

Bicycle said...

I ain't touching this. What a mess. We have WTI down at the target everyone and their mother had going and we are at prime spot for the Fed to spike it back up to 80 to salvage the shale industry. All they have to do is slip in some language about delaying rate increases.

It will be "funny" if it just keeps diving tho. Does not seem like Venezuela troubles are enough to break OPEC.

Something is afoot. Nailing Venezuela is another way of smacking Putin in the face. Saudis are on some kind of US financed jihad mission here.

Gotta wonder if we are gonna push the Vlad too far and he lashes out after being cornered. Black Swan right there, another chapter in the US dumb ass blowback book.

Phat Repat said...
This comment has been removed by the author.
Phat Repat said...

Never mind; losing my mind. ;-)

T.Berry said...

put remaining cash to work. no sense attempting to catch bottom. long term money and sites on 2300+ snp next year.

Bryan Franco said...

Going short on close today. Have to use mutual funds per new compliance policy at my firm.

Christian Gustafson said...

RSI divergence with each lower low in the series?

TSE said...

The Crash?

Sure any day now.

Except the Shop can't crank out enough of these Transfer Cases.

Trail Worthy Fab.

Approximately 80 of these hand crafted (Racine, WI.) Transfer Cases currently exist in the World.

The Markets will run up to at least 2016 - THEN - it will go dark.

Christian Gustafson said...

TSE --

I don't know what those shiny things of yours do, but they look really cool. Thanks for actually making something here in the America. We'll see you reflected in the Durables number.

This morning -- a bear count should have had us gapping down in a larger wave 3, right?

But we're back inside the Bollingers again and have another shot at the top one on the SPX.

Abe election this weekend, Fed next week. Incredibly, I could see us as high as 2096 SPX going into the FOMC. That's where I've got long-term chart resistance here (yeah, some trendline I drew).


Christian Gustafson said...

Ful-disclosure, I considered shorting on Monday due to UVXY's banging its Bollinger, but I couldn't pull the trigger. Why not?

1. SPX never reached its upper BB

2. No intraday reversal candle

3. Various indexes not in sync

4. Ho-hum appearance for an impulsive wave "count"

It looks like yesterday's Bradley turn was a bottom. I wish I had picked up a small spec long after-hours there, but I missed the entry, and won't chase. I'm more than happy to wait some more for the setup I'm looking for again.

Phat Repat said...

Wish I had seen your post first. But, the system said otherwise and I did pull the trigger (sell futures) and am looking at 2088 as a stop-loss.

Gap up in this case not seen as a positive, but, I won't fight the tape and will stop out at confirmation. One ugly sell by my system, but of course can be negated. ;-)

Bicycle said...

Welcome, TSE. I took apart the NP231 on my old Jeep once to install an Advance Adapters HD SYE kit. That was a fun project.

Christian, we're going to need this fellow. He's building parts for the insane vehicles that can carry us to the Thunderdome and recover the remaining oil supplies....

Christian Gustafson said...

See, it sucks, because if we had gapped down 20 handles this morning on /CL concerns, everyone + mom would have seen this as the central wave of a 3 down.

The lower Bollingers would have been pushed lower, etc. And I'd be kicking myself for waiting for the SPX upper BB and totally missing the top.

10/16 and 12/10 are Bradley turns that HIT. Next one is 12/26, right after Christmas.

The upper trendline I mentioned earlier (back to 2011 tape) would have us at 2100 into Christmas, if Santa sticks around. Oh my.

Christian Gustafson said...


Just wow.

So ... are we going to roach to the mid-1900s SPX tomorrow?

Phat Repat said...

Okay then, looks like I can maintain my position for another day. Still have a gap to fill lower and then we'll see.

The earlier target at 1950.96 is in play; for the moment. ;-)

Christian Gustafson said...

Yes, Phat. Yes, it is.

T.Berry said...

oh the cromnibus drama...ssdd yawn, if it doesn't pass we may have to wait till '15 for 2100. a pass and we could hit within days

Phat Repat said...

Sure looking that way. Or we are starting the sell the news cycle? It's early, but futures aren't supportive,but it's early. ;-)

Bicycle said...

The Steve from Virginia is calling for oil targets of $10, $8, $5, and $0 in his comments