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


Christian Gustafson said...

This sort of tape would be so insane and violent that even most bears would sit and watch it in mute terror, missing the whole thing.

T.Berry said...

can't imagine anything happening like that cg! just cant. what happen in 09 was once in a lifetime event. for it to happen again so quickly would be crazy. i just wish had more cash if it did because that would be once again lifetime opportunity to buy stocks.

still see no reason to sell stocks if you have 5+ yr time horizon. if we do lose 20% , not going to panic because the stock market always comes back.

Bryan Franco said...

I believe we are near the 200% fib time extension connecting the '00 and '07 peaks and projecting out.

Phat Repat said...

I don't know CG; what's your take on the VIX? Though I have a buy on the system, I'm hesitant to take it due to such (extreme?) complacency.

If we lose 20%!? No way I can deal with those kinds of losses. What % gain does it take to recover from that loss? Hmmm...

T.Berry said...

phat, i'm in for the long haul of at least 12+ years (not a trader but should have listen to neighbor 2 months ago when he said short vxx, called it a sucker stock). we lose 20% from here i buy more as cash becomes available. at historic 8.5% return in 12 years S&P is over 4,100. not bad where else can you get that kind of return?

wow, what a day, if nas can pick up 5 more we could see a close dow 18000+, s&p 2100+ and nas 5000+. slim chance but next week itshould happen given earnings have been pretty good so far

Phat Repat said...

You've been more right than wrong though we can disagree on the cost-averaging approach. I'm too risk averse in that situation. ;-)

And with that said, I've opted to be conservative and take a 3% return with action required above 2130/below 1982. Good weekend all.

Christian Gustafson said...

Vol ETFs are being drawn down like the waterline before a tsunami. Will UVXY taste the 10s today?

Truly brutal treatment for anyone trapped in these pigs.

Daily SPX upper BB has turned up and is at 2112, rising. This is a good thing.

T.Berry said...

phat, i invest with long term horizon and buy pullbacks try not to panic and you come out ahead every thing i've learned over the years is the stock market always comes back. stick to basics 101 investing.
call me old school : )

Bicycle said...

MZM Money Stock, Percent Change from Year Ago, Bullish Descending Triangle.

Permabear Doomster said...

The market would simply go no-bid

How about all those companies buying their own stock back?

What about GE today?

Which part of that announcement didn't you understand today?

GE... along with many stocks, have a persistent bid under them EVERY single day.

Just getting 15/20% 'brief washout' this year is an almost impossible outcome.

We're headed far... far higher across the next few years.

.... and it remains laughable that higher rates... even 25bps are seen as 'end of the world'.

Tell that to Bank of America later this year.

T.Berry said...

RE: wow, what a day, if nas can pick up 5 more we could see a close dow 18000+, s&p 2100+ and nas 5000+. slim chance but next week itshould happen given earnings have been pretty good so far

nas well now that didn't take long for 5k+ this week. how long before ath's on nas? weeks or months?

Bicycle said...

Why hello there, deflation... State Street PriceStats Inflation Series for the United States, Bear Ascending Triangle followed by Bear Megaphone

Anonymous said...

Would an inverted yield curve be required for this scenario?

Bicycle said...

BofA Merrill Lynch US Corporate BBB Effective Yield, Percent Change from Year Ago, Bull Ascending Triangle followed by Bull Pennant.

Bicycle said...

Happy tax day

T.Berry said...

hey phat, hope you catching some of the rally. amazing run. don't feel it's over as earnings just started. been pretty good too.

Bicycle said...

Crude oil on the move, making it back up to high 60's would be a kiss back to old trend and set us up for deflationary crash.

Phat Repat said...


No, not missing it with the position I have but yielding a 'mere' 3% through 15May2015. No action for me unless above 2130 or below 1982. Technically a 'win' either way.

On the long side, the system shows a stop of 2091.51 with a T1 of 2174.97. Not bad if it gets there. And very good for you since you're obviously long, still. :-)

Oil is an interesting beast. Lately, the thought that 'fossil' fuels are the result of an abiotic process is gaining prominence, again. If that's true, then hmmmm... Energy scarcity? ;-)

T.Berry said...

nothing wrong with "mere 3%" for a few weeks work phat :)
still long here but with longer time horizon than most here (12+ yrs at least) and still stockpiling cash for the next dip. this secular bull doesn't show any signs of slowing down. not going to chase but will remain patient for next dip.

Bicycle said...

Business Leaders Survey, Current Business Climate; Percent Reporting Worse than Normal, Bullish Falling Wedge.

Christian Gustafson said...

Still no upper Bollinger touch on the S&P.

Boring tape ... will be interested in the 4/27 Bradley turn, see if it means anything for us.

Christian Gustafson said...

Oh, and our sardine population has collapsed here on the West Coast of the America.

Christian Gustafson said...

Today, we bounced off the lower bound of a channel from the lows of late March. If it holds into the close (probably), I'll post it tonight.

I was going to put it up this morning, but I was scratching my head re whether we were still in an even larger triangle going back to late February.

If we do head back up next week, it would be helpful to have two or three Hindenburg Omens to remind us of just how thin and fragile these markets really are.