Wednesday, April 29, 2015

Charts 04-29: Count the wiggles

We had our long-awaited brush with the upper daily Bollinger on the SPX this week, but we did not see a similar oversold move on the VIX and the volatility ETFs that track it, which suggested that we are not yet finished on the upside.  Here's my point re UVXY:

UVXY 04-29 daily -- lower Bollinger under $9

We're still inside a very plausible channel for an ending-diagonal to end it all.  Some more wiggles, more overlap, it will probably make the most sense in retrospect.

This short-term guess would have us bottom again today right into the FOMC minutes, which would not raise short-term rates.  The Fed members may continue to warn of such hikes in the future, but they are unlikely to raise today on the heels of this morning's GDP report.

SPX 04-29

If you're looking for an flashpoint event, it might be the Eurogroup finance ministers' meeting in a couple of weeks, should they decide to stop paying off the Greeks.

It would be nice to have all of our ducks lined-up in a row: the DJIA, SPX, and RUT at new highs and up against a 2-SD daily Bollinger band, comparable lows in the volatility instruments, and a plausibly-complete wave count with a terminal pattern.  Then the markets can go into free-fall.

SPX 04-29 2Y

Reader Reverend Nihilism asked about the move in the 10Y Treasury.  No breakout just yet, we appear to be at a midpoint in the eternal channel of the 35-year bond bull.  Presumably, a scary sell-off in equities bids the 10Y yield under 1%.  If bonds sell off along with equities, however, than that would be even scarier. 


Tuesday, April 21, 2015

Charts 04-21: Revised ending-diagonal count

Updated count suggests 1820 SPX (by Memorial Day?) as an initial target instead of 1737 or other levels.  Extended, the trendline projects straight to 1266 SPX by July opex.

Notice how this presumed 5th wave up is centered precisely around the lower boundary of the wedge?  Rolling-over will lose this channel and keep going.


SPX 04-21

Saturday, April 18, 2015

Charts 04-17: No bearish break-out just yet

We're still in the wedge, in fact, we're still in a handy channel on the SPX:

SPX 04-17

Did you notice where the VIX peaked on Friday?  Volatilities are telling you the market's got at least another high left in it.  Watch the VIX next week!

VIX 04-17 6M

Larger picture, usual expectation of a market crash.  This one is framed with Bradley turns, and echoes all of the big turns on the way up.

SPX 04-17 4Y

... with a 50% Santa Claus rally that reaches the trendline between the 2000 and 2007 highs.  We just had Easter, and we in Deflation Land are already looking forward to Christmas.

SPX 04-17 all

Hang in there ... we still have not reached the upper daily Bollinger Band on the SPX.  So far this has worked great to keep us patient with all of this.

Friday, April 10, 2015

What a real crash would look like

It would be as shocking to us as 2008 was in comparison to 2001.

The market would simply go no-bid, again and again, with no one substantially short enough to stanch the bloodletting.

The only thing that would stop the destruction would be a panicked Fed announcing QE4, say, at the July meeting.

2138 SPX is the 1.618x fib extension upwards of the 2008 bear cycle.  2141 late next week would make a great end to all of this.

SPX worst possible intermediate-term tape