Friday, January 9, 2015

Charts 01-09: Oh, I see now

I had a passel of 3 cent SPY calls that died horribly in the fire this morning, but their little meager lives will not have been in vain.  They were a spec play that we might keep going straight up the rest of the week, but also taught a valuable lesson.

The tell was in the triangle that marked the middle of the move up from 1992 SPX.  A triangle comes in a wave 4 or a B wave position on the charts -- in this case, a "B".  This was the warning that Thursday's impulse was a "C" and not a wave 3.  This larger pattern is an ending-diagonal 5th wave over the next week and a half, into the January New Moon and Bollinger Band glory.

Some very difficult decisions and days lay ahead for our European friends -- the land of our ancestors, our civilization, blood and soil, our home.  Our prayers our with them, that they will find the courage within to do what they must. 


I am looking to buy the dip early in Monday's session.

SPX 01-09 intraday

EDIT: adding longer-term chart with Bollingers, 200 DMA, and low into March FOMC.

SPX 01-09 1Y


Christian Gustafson said...

Please note the posting time on this one. I wanted to get this one in before Friday's close to make a point.

SPX was up at 2054 when I put this one up, has since rolled-over.

Good luck to all.

benjoyce said...

Hello folks, Just FYI, Dr. Mchugh thinks the top is in and most likely thurs. rally was wave 2, the low on tues was wave 1. The top was the Bradley turn date exactly on dec 26th and the top of the megaphone. This wave 3 goes down to the bottom of the megaphone at 1,750ish

Christian Gustafson said...

My subscription to McHugh expired in December and I have not re-upped.

Love to ask him, though, if he is comfortable with us not even flirting with the upper Bollinger on the daily SPX during this cycle. Not even close.

Added a longer-term chart showing the 3DPH characteristics and other fun.

Bicycle said...

I agree with Christian, we need to finish off the 5th in the rising wedge to kill the nested megaphones dead. And the upper bol should intersect both a 5th failure on the wedge as well as the 2014 megaphone.

Tech analysis has just been making far too much sense lately (especially since end of QE), after a long hiatus of confusion, for us not to go up and put in the 5th, touch the upper bollinger...

...and then blow all to hell, Alderaan-style...

Permabear Doomster said...

okay CG.

I'll merely note that on a break <sp'1900, that would have me on your side of the fence.

For now though... the broader upward trend remains intact.

benjoyce said...

Look at this..

Friday's action in the stock market was very bearish as investors rejected Fed Chief Evans' call-in market intervention executed at 10 PM Wednesday night where he put out on the newswires that the Fed may not raise interest rates until 2016. This caused the overnight S&P Futures to explode twenty points higher in about as many minutes which continued into a big gap open Thursday and another Fed induced short squeeze Thursday.

This verbal intervention was almost identical to the mid-October maneuver by Fed Chief Bullard. In both cases their tactical surprise dovish statements sent to the newswires during the thinly traded overnight futures completely reversed the global stock markets and marked the bottom to the very second it came across the newswires. Friday's give back of Thursday's short squeeze was a symbolic statement by investors that such an artificial rally is just not going to cut it anymore. If you were following the Wall Street Journal online Thursday evening in their market data center page, they showed that there was a huge outflow in the SPY money flow reading Thursday as investors sold big into the strength of Thursday's squeeze.

How about something with a little more meat on the bone guys?

Christian Gustafson said...

Whom are you asking, Ben?

I have a timeline, price targets, short- and mid-term scenarios, a proposed terminal pattern, conditions that need to be met for a significant (final?) top, and even a possible path for the early fallout.

All the free internet Elliott entertainment any (wounded) cautious perma-bear would ever want.

There's a New Moon in there as well for the astros, and probably some crackpot theory with the late-January Bradley turn once it comes within closer view.

We've got friends in the American middle-west, our man (chick? maybe) in London, idea men in the Northeast and the DC Beltway interpreting the larger scene, and many shelves full of good books on hand for when the grid goes dark.

Deflation Land is your gateway, the one link you need to get you through the 4th Turning, to what lies on the other side!

hehe, tried, couldn't keep a straight face churning this out

Phat Repat said...


One of the things I would like to see is the numbers at which your scenario would fail (e.g. stops). After which there would be an alt scenario. Perhaps it's already there and I just don't know how to read it? If I had any critique of EW, this opaqueness would be it. TIA.

Permabear Doomster said...

When the hell did I become a chick?

Could someone have told me this sooner?

Christian Gustafson said...

Until now there had always been an outside chance at that, Doomie, something we found exciting and even dangerous. You ought to have left the question open and unanswered.

Christian Gustafson said...

By the way, Dr. McHugh did publish his larger call for 2015, including a massive crash in mid-September, in the vicinity of one of his "phi mate" turn dates.

Certainly worth your consideration.

Phat Repat said...

Anyone feeling pinata'ish lately? :-)

Enough small talk; the numbers currently show downtrend, but not very strong.

Buy above 2053.11 Stop 2028.85 Target 2115.57 (cluster)

Sell below 2019.57 Stop 2043.80 Target 1936.85 (cluster)

Very interesting times now since so many clustered targets have not been hit, long and short. Perhaps foretelling of something ominous? Kinda like oil. ;-)

benjoyce said...


Your scenerio seems to be working. According to the chart be rally into the ECB meeting with Greek elections three days away and then "fall off a cliff". You probably don't want to comment on fundementals but the ECB/election-Greece, looks like a mess according to the chart.

Bicycle said...

Maybe a broad bull pennant forming to carry us up for our 5th.

Christian Gustafson said...

Out. Just exited an overnight position in SPY Jan 207 calls for a clean double-plus.

UVXY is holding up very well today, and the short-term tape is resembling a triangle. It could stall this week, and then we reach the upper Bollinger into the Bradley turn date @EOM January after all of the Greek, Euro, and FOMC news is out.

If we pound through the overhead resistance, I left some money on the table. My instinct is to very cautious always.

SPX top daily Bollinger coming in a bit at 2113 today.

benjoyce said...

I bought 2 calls and sold well on the way up. And I bought 2 puts and still have them on the way down.

BUT it was more luck than skill I think.

I did read that the market will tank ahead of the ECB on the 22nd to "force" the ECB to be a dove.

Maybe the market on ECB day rally's strongly only to sell off, like on the NFP?

Bicycle said...

With the move this morning it seems as though we are *just* now putting in 4 of 5 on the rising wedge, although with the lower bollinger curling up it seems a safe bet we'll head strongly northward to our 5th wave failure from here.

Christian Gustafson said...

Yes, Bicycle, that's the W4 triangle I mentioned yesterday, very clear on the SPX, too.

Now. Can we make our top around the New Moon (1/20)? ~2110 area SPX. Upper BB coming in to meet us around there.

My McHugh sub expired, but he sent an email alert out yesterday saying:

A fourth Hindenburg Omen observation for 2015 occurred on Tuesday, January 13th. We sit on an official Hindenburg Omen Tuesday, as we have more than one observation within a 30 day period, we have four from January 5th, 6th, 12th and 13th, 2015. This supports a possible stock plunge occurring sometime over the next four months. What is strange is that we also had several H.O. observations in the first half of December 2014. The close proximity of the January observations with the December observations is unusual. The December H.O. is valid through April 2nd, 2015. The January H.O. is valid through May 6th, 2015. That is three months of overlap from two independent official H.O.s. That tell s us the stock market remains in a precarious condition at this time and for the first third of 2015.

Christian Gustafson said...

Bicycle, if you click on my little world map -- a plug-in I found over at Permabear Doomster's -- you can drill down into regional and local traffic stats on my blog.

That's about as sophisticated as I care to make it. You will also notice that I don't crap the place up with ads and other nonsense.

It's not about traffic or making money. It's just my little corner on the web.

Added to my long SPY calls position this morning, playing entirely with profits from yesterday's pop (which I managed to exit before it got ugly).

Bicycle said...

Lights in the darkness going off all over the world...

Yes, a big bounce seems due. I can see another 50 Dow points lower or so today. There is also a lot of bearish social mood out on the twitter today. Would not surprise me to see us blast higher into the weekend.

Bicycle said...

Well that was fast.

We should bounce here for a 5th.

Bicycle said...

5 up in progress now?

Christian Gustafson said...

Yeah, Bicycle. I'll write about this tonight.

The "obvious" triangle morphed right in front of our eyes to a standard ABC wave 4.

I had the 1989 SPX level in the back of my mind as a line-in-the-sand for this decline. Why?

1989 was about the .382 retrace level for the complete push from 1820 to 2093 SPX. So call that big push "wave 3".

Note also that "wave 3" was in 3 waves. What we expect now as "wave 5" might be 3 waves as well.

We retraced .382 of that wave, suggesting that 4 is finally in.

Wave fours are evil! The triangle shape on the tape was just wave voodoo. May God help you if you shorted the hole on some notion that the triangle broke down and "failed" or some such.