Monday, December 21, 2015

Charts 12-21

Updated counts.  Bullish and looking for new highs by the first week of the January.

Monthly SPX Bollinger Band is at 2150; the weekly is near 2145; the daily around 2120.  A lasting and significant high and turn would reach them all and then fall apart.

SPX 12-21
SPX 12-21 1Y

Thursday, December 10, 2015

Rate hikes will be market-bullish events

At the moment, the strength of the $USD correlates very strongly to equities.  When King Dollar is torpedoed like it was yesterday, stocks plummet.

So does this mean that a rate hike next week will be tremendously bullish for stocks?

The argument runs like so:
  1. Fed tightening will shoot the $USD through the roof
  2. Beaten-down currencies like the JPY will crumble again with respect to the Dollar
  3. The Yen carry trade and everyone riding on it will launch equities to new highs
When the market falls off its highs in January, the Fed can then rally equities by ... adding another 25 bps.

And so on, until the correlation shifts again between USDJPY and equities. 

SPX highs into EOY 2015

This of course begs the question -- is the Dollar actually on the brink of collapsing today, with the Fed now forced to defend it with a series of rate hikes?

The conventional wisdom of "one and done" or "no hikes at all, ever", may be completely wrong.

2016 may be about the Fed scrambling to regain control of the monster they have created, where the market bounces at each FOMC (against the overall decline) because they continue to tighten.  Between hikes the market sells off again with increased severity as the market comes to grips with what is happening.

The Fed hand may be forced.

The new game may be for each nation to export deflation to the rest of the world.

Tuesday, December 8, 2015

Let's set our sights a little lower

2138 SPX is mid-wedge this Friday with the New Moon, a new all-time-high, and the 1.618x extension of the 910 point crash in the 2007-2009 cycle.

After-hours /ES has broken free of the triangle; expect a gap and run tomorrow.

sleeping bums on the D-line bus early this morning

And an updated chart.

SPX daily 12-08

Friday, December 4, 2015

At long last, a blow-off top in equities?

Can we make it all the up to 2170 SPX by the New Moon next Friday, December 11?  Since 25 bps from the Fed is priced-in and all?

This would complete the rally off the August 2015 lows and touch the top of a megaphone shape drawn earlier this year.

Let's put a bow on this for the Christmas.

SPX 12-04


Friday, November 27, 2015

Season's Greetings from Deflation Land

From my family, and our friends the Assads, to yours, we wish you health and prosperity for the coming year.

wholesome and decent

blue eyes!  like mine

In an astounding twist of fate, Russia is now the guardian of the spark of Western Civilization, while the rest of the Old West rots from within.  The challenge to us all is to survive the collapse of the U.S. Empire in the days ahead.

Well, as long as the dollar still counts as the World Reserve Currency, we can still go shopping.


How long before these scenes are at Safeway and COSTCO?  Two years?  Three?

Austrians know how this story ends.  When the Dollar Era concludes, the mal-investments and unsustainable liabilities will be liquidated.

Do your best not to be one of them.



p.s. Can we get One More High?  Into FOMC?

Tuesday, November 17, 2015

This? Something else? Nothing at all?

We want to see patterns.

We want to believe there is order and causality and sense, matter in motion, not formless chaos.

Green channel?  Sure, why not.

SPX 2Y keying off 1737 area

Thursday, November 12, 2015

A wave count for those who refuse to believe the top is in

If you still think we can put in a higher high on SPX, then maybe a giant ending-diagonal count is for you.

SPX 11-12 ending-diagonal finale count

I tilt my head and squint my eyes, and the sharp October rally still looks like two five-wave impulse moves north, joined with a little correction -- i.e. an ABC move.  This would fit an ending-diagonal count that has been lurking since the August 24 mini-crash lows, which began with an initial bounce in 3 waves.

In this scenario, the October FOMC Minutes released next Wednesday are dovish and accommodating once again, sparking another short-squeeze off the .382 retrace at 2022 SPX.

The sharp 5th wave could then terminate either at the wedge boundary on Black Friday, or in the middle of the wedge on the December FOMC announcement itself.  AMZN P/E of 1000?

Or, of course, it never ever ends ...

Friday, November 6, 2015

Charts 11-06: Reader mailbag

Here in Deflation Land, we make it a point to take our half-dozen or so readers seriously.

Mackay, FSG 1974 reprint of the 1841 classic

So when very-bearish reader Scott asks:

I was asking how you formulated your rising "channel" as it seemed constructed to validate your price target rather than based on price history.

We owe him an explanation.

Here's our rising channel on SPX.  2135 is both a new high and a point at mid-channel on a very special day ahead of us.  It also corresponds to an earlier wave up in the cycle, from 1158 to 1422 on the SPX.

SPX 11-6

IMO, we have plenty of room to move sideways for a bit before putting in a final high, preferably at mid-channel and accompanied by lows in VIX and volatility ETFs like UVXY that visit their lower daily Bollinger Bands.

Those are nice to have, but the 11/18 release of the October FOMC Minutes is the next important event on the boards.  As much as we can speculate as to how the Fed will or will not act based on economic statistics, here they have a chance to tell us themselves.  And the Fed will hike.

What I am proposing, however, is that as much as the Fed thinks it has the Fall volatility season behind it, the quants and algos may prove them wrong, and we will get something much more serious -- more truly vicious -- than they or anyone but us deflationary doomer Austrian cranks ever imagined.

SPX 2Y

And we are Austrians.  We believe in reality and in the "long run" of the adults in the room.

Ludwig von Mises, ed. Greaves, 1978

And we are not afraid of the future, of revisiting the lower support of the old Jaws of Death.

SPX 10Y

Klemm, ed. George Allen & Unwin, 1959

For the thesis of the deflationist is that we get a deflationary debt crisis first, which shatters the remaining faith in the powers-that-be, in The System and in The Man, which is necessary before the final hyper-inflationary currency collapse.

SPX long-term

In that case, I recommend having a few good books on hand, and maybe some candles.

A Conrad Argosy, Doubleday, 1942

Have a good weekend!

Wednesday, November 4, 2015

We need to see 2135 SPX by Friday's NFP release

... and that will set a lot of matter into motion.

Dürer: The Four Horsemen of the Apocalypse

2135 SPX is a marginal new high and the top of the current channel.  News-wise, it would be a pop into the NFP numbers released before Friday market open, followed by a sharp sell-off.

SPX December

A decline into December FOMC allows the rate hike to be "priced in" and for a nice bounce back to resistance into the end of 2015 and Q4.

This sets up January 2016 to be a great crisis and disaster, as a head & shoulders off the 1737 neckline plays out.

SPX 2016

Friday, October 30, 2015

U.S. equity markets will crash in January

They'll crash in November-December, too, but should find the next support down at 1737 SPX.

It all keys off the FOMC Minutes released November 18th, and a promise to hike in December.  The market will front-run the move all the way to support from the 2009 lows trendline, forcing the Fed to kick the can again.  Once we are through the EOY bounce, the market will collapse.

When all the shorts are driven from the field (on marginal new highs), there will be no buyers left in this market.  Hedge funds and large financials blew that SKEW number out in the September-October cycle of this, so they are unlikely to hedge now until it is too late.

SPX rally into FOMC Minutes release 11/18
Long-term count


Wednesday, October 28, 2015

Janet Yellen: Just Do It

The equity market bounce has given you a free pass to hike, if only a little.

25 bps today will keep everyone on their toes.  Then you can stand pat in December and let them know you hear their concerns, etc. etc.

Friday, October 23, 2015

Central banks around the world

... are all pulling for this one now.  Anything to delay the inevitable.

The case now is that we are repeating 2011, with a low-volume continued rally into the Spring.

Finviz /ES weekly

Of course now we have the commodity implosion and attendant deflation at our doorstep.

Will it matter?

We kissed back the old rally channel this morning.

SPX

Will it matter?

Wednesday, October 21, 2015

S&P up against resistance

Shanghai Composite off 3.2% last night.  S&P 500 may get the memo soon.

NIRP announced at December FOMC?  They'll need a reason for it, of course.

SPX 10-21

Thursday, October 15, 2015

Can we make it to resistance @2046 into opex?

We are almost there.  It would leave us right at a critical juncture on the charts.

SPX 10-14

... and then Deutsche Bank blew up ...

Tuesday, October 13, 2015

All you can do is laugh

Take what you can from the markets while they last, exit the financial system when you have enough.

Disappear.

Don't look back.

Everyone out there who really gets the Austrian theme, knows what is coming, what reversion to reality will mean.

Disappear.

Don't look back.

Sunday, October 4, 2015

Power-thrifting by an actual Bohemian, in all his cheap glory

Even as a teacher will be proud of his students and their accomplishments, and their youthful enthusiasm, from time to time he must also show that he, too, is a well-established badass who still commands real fear from his charges.

I'm speaking of my good friend Bicycle, who is not only posting charts and used books he's gleaned from a dying civilization, but who has now made a most brazen foray into my own home turf, the Grosset and the Dunlap.  OMG!  What the bloody hell are you doing?!

Careful here, old friend, you need to tread lightly here, you are entering a world of pain.  Will the supply hold up?  We don't know.  We just don't know.

Like two old grizzlies, a show of potential force may be needed to keep actual fur from flying.

Thrifting in Seattle is serious business.  We have high-quality stores, excellent goods here, a general will to recycle and re-use old things, and there are many competitors among the customers.  I see books all the time that start out in the Value Village and wind up on the shelves of Magus Books over in the University District.  There are mooks who do this for a living, sifting out anything of marginal value and reselling it, while I am a simple end-user.  I buy to own.

Here's what I sifted from the world this weekend.

Pendleton board shirt, from Frederick & Nelson

Pendleton shirts are among the most sought-after items in the thrift stores.  They are beautiful and functional, perfect for the Pacific Northwest where I live.

This one has a store tag on it, from Frederick and Nelson, which closed in 1992.  The flagship Nordstrom full-line store is in their beautiful old building in downtown Seattle.  So this shirt, in flawless condition, has been sitting in some grandpa's closet, preserved from moths, sweat, regular use, the years of the grunge music and fashion, for over 23 years, so that I might pick it up for a mere $12.

I'll wear it to work this week.

I found this in the same Value Village (Lake City Way location):

Philip Woodhouse, Monte Cristo, Mountaineers, 1979 1st ed

I've been looking for a nice copy of this book on a Cascades ghost-town for a long time, seen it in shops for $30-$40.  Very happy to pick it up for $2.

And then I stumbled into this hoard at the Ballard Goodwill, for my kids.



You are entering a world of pain, Bicycle.  Do you understand the kind of sick animals that are out here?

A couple of local histories:



Ernest Renan,  a perennial favorite here in Deflation Land:



H. L. Mencken, because fuck you:

Knopf, 1990

Charles II, because someone's got to clean up the mess.

Hutton, Charles II, Oxford, 1989 

And last, a bit of cultural history that a lot of people do not know, that the horror of the 1960s actually began back in the 1950s as the dry-rot of the Beats and effete Northeast intellectuals.  I'm excited to read this one.

Fred Kaplan, 1959: The Year Everything Changed, Wiley, 2009

I hope that this is enough, that I have made my position clear for now.

Friday, October 2, 2015

Fed Minutes next Thursday?

Is Yellen finally going to hike rates now that everything is fine again?  There's a Bradley turn date next Friday (according to the Manfred Zimmel), if you believe in that stuff.

And where is our lower support in all this?  How much water does a waterfall fall?

SPX who knows

Monday, September 28, 2015

Markets on the edge of a cliff

... but here is a free dresser I found on the street here (8th Ave/80th St NW) in Seattle, stripped and restored for use by my daughter.



We must recognize what is real and valuable and lasting in our world and save it while we still can.

It could be an old unwanted dresser.  It could be some old analog books and the ideas they contain.

It could be your family, or your nation.

The 20th Century is coming to an end.  What will follow?  What will survive?

Thursday, September 24, 2015

How much of a bounce?

We have five waves down the /ES and SPX since the FOMC key reversal high.  The move has stayed relatively well-behaved in a tight channel.  A bounce is due, but how large of one?

SPX 09-24

Tuesday, September 22, 2015

Martin Shkreli is a Clinton campaign donor

The story on Daraprim was a ploy to get the emailgate scandal out of the headlines, so Hillary could shift the subject to health care and free stuff for everyone.

Fec.gov is your friend.  This is so obvious, child's-play.

HTHHAND

FEC query

Friday, September 18, 2015

Charts 09-18

Question for next week is whether we're done with the retrace or in a terminal diagonal that is almost but not quite complete.

SPX 09-18
SPX 09-18 1Y

Tuesday, September 15, 2015

Something like this, Bicycle

Bounces are back-tests of old rally channels, and the equity markets essentially front-run the December FOMC in a massive collapse.

SPX 09-15

Friday, September 11, 2015

Charts 09-11: A line we need to test

Going into a crucial week, there is an important line overhead we need to test:

SPX 09-11

I'll be out in the bush this weekend hiking 50 miles in the Olympic mountains.  I love this time of year when the tourists clear out and everyone else cuddles up with the television and NFL idiocy.  I'll be out looking for signs of the elk rut in the high country, hungry bears, loose cougars, and the rest, while you stew your brains in running-back statistics, wide-receiver match-ups, and injury reports.  À chacun son goût.

After next week, the next support could be as low as 1380 SPX by early October, no, really.  It depends where you begin to count the "wave failure" and technical top.

We could even test 666 this year -- and why not, if risk truly comes off?  How do you set "reasonable" limits to this after we have witnessed August 24?  But we'll worry about this in late November.

Tuesday, September 8, 2015

Charts 09-08: triangle watching

Waiting to see if this smaller triangle pattern has a final "e" wave down to support.

Either way, exiting triangles always involves a violent move.

SPX 09-08

Edit:  here's the plan going forward ...

SPX 3PDH finale