Wednesday, February 25, 2015

Triangles in commodities

Started watching this a while back.  The question is, when will this chart:

Lumber weekly

Look like this one:

Copper weekly

Or even (OMG) this one:

Crude oil weekly

Because everyone knows what lumber means.  And, yes, it tends to lag the others.

The problem is that the great suburban tract chipboard McMansion is the hard asset underlying the great American debt ponzi!  That and your future!  And both are worthless!

SPX likely finished up wave 3 up today from the 1980 low.  We've got at least two more weeks for 4 and 5, during which that top Bollinger will come back in (2142+ today).

No worries.  Go look for books at Value Village.

Tuesday, February 24, 2015

Waiting for the Bollinger

If our analysis hinges on the top Bollinger Band of the SPX, then we need to be patient -- it's way up at 2136 this morning.  Since this is a measure of extremes, of standard deviation of our moving averages, then we need to wait for it to calm down before we can reach it.

Of course, with all of this excitement and energy and animal spirits and relentless innovation in the markets, we are still building like mad here in the Seattle.  From my walk to work:

To the moon!

Here you can see the top Bollinger Band on the daily SPX, and how we flirted with it before finishing up the third wave in the series (red 3).  We never did penetrate it, however, so that 2093.55 high was always suspicious.

SPX 02-24

The next few weeks may be terribly dull, I'm sorry.

EDIT: no, well, actually, it could either be horribly dull, or we could see that herky-jerky ending-diagonal play out after all.  That would be both exciting and very trade-able.  Pray for that!

Sunday, February 22, 2015

Charts 02-22: Six more weeks of winter?

We're waiting for a top, a final high for the rally since the 2009 lows, and I think it's very likely to be this Spring.  But we know from experience that we need to approach this very carefully before committing to leveraged put options positions on the indexes to play.  The crash ahead is a momentous, possibly life-changing event, but it must be approached with great care and patient analysis.

We want to see:

1. Penetration of the upper daily Bollinger Band on the S&P 500.

2. Penetration of the lower Bollinger Bands and/or new all-time capitulation lows in volatility and bearish ETFs like UVXY, TVIX, SDS, TZA, FAZ, etc.  Bullish wedge patterns are helpful on these, too.

3. A larger "terminal" pattern like an ending-diagonal triangle.  Maybe even two of them, nested (yes, this).

4. Decreasing volume towards the top, as well as any other bearish divergences that rear their ugly head, like a lower high on the McClellan or NYSE A/D line.

5. An intraday-reversal candle on manic panic volume, if possible.

6. Other correspondences to past tops, flattening Bollingers, leveling moving-averages, etc.

7. Unusual astrological events make a nice touch and are always welcome.

8. *your favorite pet indicator here*

I stood by while many bears who should know better, claimed and charted that the dive from the 2093.55 SPX high in late December 2014, was "the" top and an impulsive wave 1 down.  It took some time for the waves to sort themselves out, but I was proven right, that we needed to reach that Bollinger Band, and that it was truly foolish to think that a six-day decline would be "corrected" by a full month of chart oscillation.

2093.55 SPX fell, and the bears looked like jerks again.  Well, yeah.

But the daily upper Bollinger on the SPX took off again this week, exploding up into the mid-2120s, suggesting that it, too, needs to settle down to allow us to reach it and setup the overbought conditions we need.

So ... in a nutshell, we probably need more time.

The good news is, the really good news, IMO, is that the tape since the 1980 SPX low looks like a plausible triplet, a possible ABC leg for wave 1 of an ending diagonal.  This is very encouraging for us true perma-bears, who have managed to survive all this time eating grass and winter-kill carrion, but surviving nonetheless.  We will make it to the waterfall season of the markets when the salmon are running in numbers once again.

Here's the proposed ending-diagonal, in daily candles:

SPX 02-22

There is no snow in the Olympic Mountains

This is insane.  From the NPS webcam at Hurricane Ridge, elevation 5,242':

Hurricane Ridge, ONP

There is a bit of snow at Stevens Pass in the Cascades, but not very much.

Wednesday, February 18, 2015

Charts 02-18: Get dressed for the big dance

The waves are lining up for a top in the mid-2120s next week just before the final Greek double-secret probation deadline arrives.  With a plausibly-complete wave count and the upper Bollinger Band on the daily SPX within reach, it may be time to get our war face on like old von Mackensen here.

Anton Ludwig August von Mackensen

The short-term SPX count seems clear enough.  Waves 1 and 3 each took 4-5 days.

SPX 02-18

This gives us a sharp drop back to support at 1972 SPX, followed by a kissback rejection of the old 2-4 trendline and a harder fall to 1820.  

SPX 02-18 6M

Today's notes suggest that the Fed will NOT raise rates at the April meeting, bouncing us back up toward SPX 2000.  We must keep a very close watch on the yield of the 13-week Treasury bill during this period for clues that the Fed will raise at the June meeting.  There's another channel kissback/rejection opportunity around 1985 SPX.

That would drop us to the next level of support around 1530 SPX.  A crash in September would finish the 3PDH retrace back below 1100 SPX.

SPX 02-18 10Y

VIX is setting up well for a low against its lower Bollinger Band and a support trendline that has been running for a while.

VIX 02-18

Thursday, February 12, 2015

Watch the upper Bollinger on the S&P 500

I've been watching it for weeks, and now we are in hot pursuit of the top Bollinger Band on the daily S&P 500.  It's up at 2089 today, rising at 5-6 points/day.

Let's catch it next week, and hit that pink top trendline.  Maybe that will be our point #23 on the 3PDH supermodel, at long last.

SPX ending-diagonal count

Wednesday, February 11, 2015

Gold to $600?

Sure, why not.  Simple count, not an impulsive structure.  ABC's so far on this one.

/GC weekly

 A few minor tunings and adjustments to the 3PDH that rules my world, too.


Monday, February 9, 2015

Charts 02-09: Stretching things out

I don't feel any sense of urgency at this juncture, certainly not to put on any shorts just yet.  Wednesday has a Bradley turn date on the classic model that may time well with a bottom; I'll consider taking a small long with February calls on it.  A little dash of Euro-hope and some fresh USD-JPY carnage can still power us to new highs.

SPX 02-09 60D

I still think that any Elliott count considering 2093 as the final high and the start of a "wave 1" impulse down is foolish and defective.  The awful blogger Daneric continues to push this count, because his analysis is lazy and sloppy and ultimately deceptive and fatal to his readers.  He may actually be some sort of market shill selling puts to the permabears, I dunno.  How are those SPY 195 puts working out for you guys, huh?  Wave 3 down any day now ...

Stretching the larger 3PDH model out a bit across 2015, with a final low at our point #10 target at 1074 SPX in November, which works on so many levels.  The specific turns in this chart are mostly Bradley turn dates based on the classic model.  The largest leg, the crash leg back to 1074 SPX, lands squarely in the Fall crash season. 

SPX 02-09 3PDH model

This entire move back to 1074 SPX counts as "A", with a big bounce "B" into early 2016 and a final destructive "C" to wrap it all up.  We have established important levels of support at 1972, 1820, and 1560 SPX.  This model has us reaching each level and bouncing just enough to kissback the previous channel or support trendline.  Once we get a final high with that Bollinger Band touch and all of the other good stuff, I plan to trade this model both short and long.

Looking for a final high around February opex.  Gotta eat the last of the puts and run the VIX down a bit more.

One more thing.  Speculating about when the Fed will start hiking rates (June FOMC?), has us inevitably looking at the 13-week T-bill for any clues.  The Fed follows the market, right?

If we look at a very long-term Yahoo! chart of ^IRX, we see that it has been flatlined throughout the whole ZIRP experiment, but that RSI has been very slowly building over time.  So what will happen if the RSI for ^IRX breaks out over .5?  Will this see a breakout spike in short-term rates, and a commensurate move by our Fed masters?  I think so.

13-week Treasury Bill

Tuesday, February 3, 2015

The question is what happens after SPX 1560

You see, a bounce at that support level sets us up for a particularly nasty head-and-shoulders, one for all-time, a true classic, epic fail.

SPX 02-02

The upper Bollinger Band on the SPX has come in about 50 handles(!) over the past couple of weeks, which for me is the one last requirement I had before expecting any kind of significant top out of this.

Our next visit to the 2064 SPX level will be met with particularly fierce resistance.

Checking the candles, we could even gap down over night off this level.  It would form an "island top" pattern with a similar gap UP we experienced back in November.