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.

49 comments:

Christian Gustafson said...

I saw a particularly upsetting clip on the shock-video site theync.com a few weeks ago. It was of a wild Asian (it had long hair) bear killing and eating a villager.

The bear got on top of the poor doomed fellow and stayed there, like a wrestler, while biting his face. No feints, no tense stand-off, just predator-logic, swift and severe.

The other villagers stood around yelling and throwing stones. And taking cell-phone videos, of course. This did not dissuade the bear, who only changed his mode from "killing" to "eating".

I see black bears all the time, and I will take extra precautions after seeing this video. They can do this, probably even koalas if they are hungry enough.

I'm also still a little on edge after encountering a cougar in the woods near Ross Lake this fall. That was intense.

Lesson: don't let the bear bite your face.

Christian Gustafson said...

I'm seeing a lot of traffic from the Germany on my blog traffic this morning.

Willkommen meine Freunde ...

Christian Gustafson said...

One more quick plug for the Teutons on the blog today.

Got this on my wall at home. A daily reminder of how this all will end.

Phat Repat said...

Those sure are some perty notes; too bad it HAS to end that way.

Only question is will I be swift enough to remove my funds prior to that day?

Looking to the close here to see if we get close to your 2064 value. I am seeing 2103.32 as a target now (clustered). So, your value and breakdown or up, up, up...

Christian Gustafson said...

Somewhere between 2064 and 2080.

The system will not collapse on this swoon, Phat. This is only "A" down. The Fed will probably PANIC in June and inject liquidity, causing a mad bounce and insane short-squeeze, "B" up.

It's the "C" down that follows that move -- this fall? -- that you want to avoid entirely. Seeds, deeds, etc.

Phat Repat said...

I'm not getting that mad bounce thing from the chart you're currently showing. Is there another forthcoming?

Also, what would you see as a max move for this leg if it were to surpass your 2080 top? I have 2103.xx. Looks like that upper trend on your current chart which looks between 2150 and 2200.

Christian Gustafson said...

I'm just saying, if we shoot for 2100 SPX or beyond, from here we will need to drag that top Bollinger kicking-and-screaming with us.

The need for a final touch or pin through that BB is the reason I've been holding here, waiting patiently.

2093 SPX may have been the absolute top, if not the "technical" top.

Christian Gustafson said...

OK, here's my S-T market call.

The market is about to go into "annoying market mode", where it doesn't pull back sharply, or rally hard, it just dinks around gaining about 5 pts SPX for each of the next 6 days. The gains are in, and they will be held for now.

This will anger a lot of specs, and quiet things down, the VIX and vol ETFs, while we creep up north for a final top here.

2080 SPX is the ideal top for me.

Bryan Franco said...

Yes.

Phat Repat said...

Interesting take. Looking at the news stream for tomorrow, which I believe will disappoint, could give the pop you mentioned, but all at once, followed by the kiss good night. That would be my ideally selfish view. ;-)

Bicycle said...

Chicago is currently in the middle of the steepest falloff in condo pricing growth in the past 20 years.

frank said...

In my opinion there is nothing on the north american continent more under estimated than the black bear. The young ones that have not yet learned to fear humans are particularly dangerous.

I've never felt truly scared by cougars, although I did have one trail me years ago and that was an uneasy feeling. I could feel the bastard tracking me, but I could never spot it in the bush. Later, coming out the same trail, I could see it's tracks in the skiff of snow on the ground, see how it had followed me.

Christian Gustafson said...

Here is a channel and setup for a final top at 2080 SPX a week from today. This will count as a "failed" 5th wave, failing to establish a new high.

We can gap down overnight from this proposed high, as it will create an island top.

The gap will not be filled.

Bicycle said...

Right at the top of the trend on the flag, formerly the descending triangle, formerly the pennant. Whatever it is, something decisive will happen soon.

Phat Repat said...

That's nice guys. Would like to see one last high in the 2103.xx area and then boom. Capping at 2050 for now. Tick Tock.

Bicycle said...

Pretty clear break just now of the top trend on the DJIA. We're now on our way to the top BB, wonder how far it is going to drag it up. This may be it, peoples. The last wave up...

Bicycle said...

...aaaaand... helloooo ECB. Wow what a slamdown on the break.

Phat Repat said...

What!? For crying out loud, Gartman called it. Should have known. ;-)

So, impact to all markets or US as safe haven?

Bryan Franco said...

CG -Maybe your anticipated slow grind higher ended prematurely at 3:30 EST today? Was fully on-board, but now I am getting excited... again.

Permabear Doomster said...

re: 'Gartman called it.'
--

There are times when I do think of myself as the ultimate contrarian indicator.

Yet... compared to Gartman... I'm a trading god, lol.

The guy has seemingly been on 'washing machine' mode for a very long time.

He must be getting real dizzy by now.

ps.. hello CG.

pb said...

Why the excitement Bryan??

Bryan Franco said...

Because if the market is aborting stealth rally mode, then it will be more exciting. Bull markets are boring.

Bicycle said...

About 150 Dow points from the top BB this morning, not even a 1% move left to go.

Christian Gustafson said...

You think it might get exciting again soon?

Maybe you can parley a passel of index puts into your Dream Home!

Phat Repat said...

I dunno; the first time Gartman went bearish, before flipping to bullish, he mentioned the 3 peaks domed house pattern as well. Not saying his bullish position is correct, but to really throw off the guppies, they just might toss him a gimme.

I'm not playing that way, as I already have my orders in to cover, but this is some macabre theater being played out. ;-)

Bicycle said...

Yet again we have a hell of a stampede from Dow 17k to Dow 18k in a very short period of time. This feels much like the late December ramp when we put in the ATH. My question now is how high do we carry the upper BB before collapsing again.

Christian Gustafson said...

I've got the upper SPX BB at 2073 this morning, and angled up just a little. Still on board for 2080 SPX next week.

Phat Repat said...

Two sets covered with another two soon to follow. I'm not greedy...

Believe we could hit 2080 tomorrow with much gnashing of teeth to follow; but I've been wrong before. ;-)

If 2080 comes tomorrow, I will be buying and selling.

Christian Gustafson said...

Quick channel update. Mid-channel at resistance / 2080 SPX level one week from now.

FWIW, February 12 also is a turn date on the classic Bradley model.

Phat Repat said...

Oh right CG, forgot about that. Thanks.

Bicycle said...

Hm. Getting super interesting now. A newfound wedge may confirm the 5th failure on the original wedge.

Christian Gustafson said...

Carl Futia is also hunting "Three Peaks and a Domed House" quarry, but he has a very different take on it.

He also provides much more in the way of interesting discussion and sustained analysis than I would ever do on this shoddy blog.

Bicycle said...

That dude might be right, and my chart of the inflation-adjusted Dow shows his Dow target level (18800) as a potential top and massive resistance.

It is beyond bearish if we get up there. But that is my fear... this 5th wave is still super short in duration and it might be weird for it to terminate here. Instead we could just see successive minor waves pull the top BB all the way up until it intersects the top of the rising wedge again.

Then... catastrophe, beyond our wildest imaginations.

Bicycle said...

...and if you take the top green and bottom pink trendlines of that chart, it is a bearish rising broadening wedge, of which the current wave is only 3-up with 4 down to come next, sending us to an inflation-adjusted Dow 3k. 5-up would be a hyperinflationary event sending us above Dow 20k, probably to 30k.

T.Berry said...

"sending us above Dow 20k, probably to 30k"

now you're talking bicycle!

still haven't seen reasons to sell . now that oil bottomed we could rise for a while before next pullback. nice to see february arrive :). impressive s&p up 5%+ in 3 months since good ol qe ended.

have 4% cash for next pullback.

Phat Repat said...

All right, there's some downright crazy talk going on right now. The implications for SPX are sick if your DOW targets come to fruition. I believe I just became mildly aroused.

"shoddy blog"

Blasphemy...

T.Berry said...

phat--how about some nirp in the U.S. for some crazy talk ? may not be that crazy....

“Accommodative policy is appropriate, in my view, because the economy is operating well below its potential and inflation is undesirably low. If it were positive to take interest rates into negative territory I would be voting for that*” – San Francisco Federal Reserve Bank President Janet Louise Yellen – February 2010

Phat Repat said...

T.Berry
Yeah, that should be quite the event. Though technically we are in a NIRP environment; from a saver's perspective. ;-)

Christian Gustafson said...

Of course, T. Berry, Yellen made that comment 5 years ago, when the markets were at half the levels of today (1010 SPX low in May, 2010).

The Fed has now seen what QE can actually accomplish, which is why it has been withdrawn.

Tick tock.

Phat Repat said...

Still early but looking like we hit 2080'ish today. If so, I will likely cover the remainder of my position.

Read the piece by Futia (thanks) but calling for Dow 18.8k April/May sure seems at odds with what we are seeing and current projections. Which for me, if it were to come, indicates correction near term.

Tick Tock indeed.

Bicycle said...

top BB flattening out and starting to curl down on the DJIA

man your battlestations

Christian Gustafson said...

Phat --

So far today, the old blue channel here is being respected.

I drew a steeper gray one, that would represent a bolder move to new highs, but with the upper SPX BB at ~2075 today, that would push about 50 handles through it, which would be crazily overbought.

I like the new high above 2064 SPX today, invalidating a bunch of insipid E-W bear counts that hold that the six-day decline from the end of December was a "wave 1".

Bicycle said...

35 DJIA points from the top BB. We're going to find out--today.

Christian Gustafson said...

Well, we just popped out of that dark blue channel.

We now have an opportunity for new highs up around the 2120 area. We'll need to drag the upper SPX along with us for a while.

Closing above the upper Bollinger, followed by a close back inside, with related moves by VIX and the volatility ETFs, would be considered a decent sell signal (next week).

Impressive! Wish I had pulled the trigger on those SPY calls on Monday.

Phat Repat said...

Okay, uncertainty has me back to playing both sides of this; with sufficient room for error. Wild ride.

Christian Gustafson said...

With the break of the dark blue channel, now we have the potential to blow off all the way to 2120 SPX next week. There we would hit serious resistance from trendlines up from earlier highs.

What this does to the larger chart and especially the 3PDH model idea is drag everything out quite a bit more, returning us to the theory that we will see that rate hike at the JUNE FOMC with a crash-like drop into July.

Stretching the chart out improves its symmetry and allows for two important kissbacks where the bearish tape will retest the channels it exits as we head lower.

I'll work on this chart some more and post it tonight.

Time-wise, the April FOMC and nearby Bradley turn may mark a LOW. The market will rally back on a lack of a rate hike, then rollover in June.

Reverend Nihilism said...

Looks like the busy bodies at Twitter caught up with Nihilist Arby's. : (

benjoyce said...

ok bears, now what sell off in late afternoon, doji bearish candle. what now?

Phat Repat said...

Look forward to the new charts, though the drop may have altered that.

I still have a modest uptrend with a fall below 2042.58 (confirmed) would be a sit-up and take notice. A fall below 2029.96 would signal a trend change.

No action for me unless we cross 2110 or 1960 (cruise control).