Sunday, June 7, 2015

Charts 06-07: This projects out nicely to the June FOMC

The tape since the 2044-ish low is drawing an ending-diagonal, with its recent chop making the case that the top is not yet in, and that we are not yet impulsing lower.


Looking at the slope of a few of the legs of this mess, one more leg of similar slope would land us back at the top of the wedge, up in the SPX daily Bollinger Band land at last, right into the June FOMC meeting.

SPX 06-07

Janet will raise.  She already told you this.  Several times already.

So now we wait and see.


61 comments:

Permabear Doomster said...

...getting closer.

If you consider the USD, that offers downside into early July... hence I'm still open to 2160/80 zone.

I don't expect higher rates at the June FOMC, a lot of recent econ-data was weak but Sept. YES.

Ironically, market will probably be close/flooring around Sept/Oct.

Have a good week CG

Bicycle said...

What June does to the Dow monthlies, will tell us a lot about where we are...

Reverend Nihilism said...

LOL!

http://www.bloomberg.com/news/articles/2015-06-08/billionaire-cartier-owner-sees-wealth-gap-fueling-social-unrest



Christian Gustafson said...

Look, if you gents really want to have your feathers ruffled, go visit Ben Jones's invaluable Housing Bubble Blog.

The stories are all there, of REALTORs pumping local real-estate, aided by HUD programs to get new homeowners in at insane leverage, more and more media fuel to pump the bubble.

We're doing it all over again, utter madness.

Reverend Nihilism said...

It's interesting just how isolated some of these housing bubbles are. My wife and owned two homes previously, both three bedroom two bath. The last one was in a fairly desirable neighborhood in St. Louis, the other was in a less desirable, but still good area. The first house is now worth LESS than we paid in 2003! The other is just barely hanging in there. This was before all of the Ferguson riots etc, so I'm sure they are now even worse. A great deal a real estate across the country is not doing too hot, but areas with strong Tech industry are in major bubble territory, as are the Tech companies themselves.

Bicycle said...

CO-Denver home price index

Bicycle said...

Fort Collins

Bicycle said...

top BB is still way up there at 18410 and rising on the DJIA

Christian Gustafson said...

If today's tape is finishing up (b) of 5, then it's a .618 retrace of the choppiness from 2045 SPX to the high at 2134.

A == C suggests 2168 as a target, which would touch the top of the big big ending-diagonal next week on FOMC. We'll need "good" news out of Greece, a last-minute deal to smooth things over and kick the can again.

SPX 2168 ... How can Janet Yellen NOT bump rates?

Bicycle said...

DJIA may have topped on an inflation-adjusted basis

T.Berry said...

<<>>
here's hoping she does as it should cause pullback and i have some cash to put to work. i can't see fed raises more than .25 over next 18 months. no need to

Reverend Nihilism said...

Looks like a blowoff top setup to me.

Reverend Nihilism said...

UVXY pounded lower, getting interesting.

Christian Gustafson said...

Yah, UVXY total implosion -- $35 ahead for it? That's a split-adjusted $7

pb said...

No way in hell that the fat white hair albino will raise interest rates Chris. If she does
this economy will nose dive. It is presently on fumes.

Christian Gustafson said...

If the ^TNX is threatening 3% and beyond, don't you think throwing equities into the shredder would bring it back?

At least for a little while.

Janet's got all the headline data she needs to declare victory for now and hike short-term rates. I'll take 50 bps, gentlemen.

T.Berry said...

pb, no reason to raise. low rates aren't hurting the recovery. at best may be token .25 raise between now and january '17 but that's about it. this secular bull has a ways to go. if you are in the market for long term really no reason to sell and try to time a pullback.

Bicycle said...

If we look back to the rate increases after the dotcom crash, they raised 400 bps over the course of 3 years, with the first 100 bps coming in the first 6 months of that.

However, they were raising right out of the bottom of that cycle.

They've been procrastinating--for years--and they know it.

We could get a 100 bps move right out of the gate.

Volker gave us a 100 bps in 1979.. over a WEEKEND.

T.Berry said...

why should they raise bicycle? what harm are low rates causing the recovery? we're fortunate to be experiencing the greatest economic recovery in history. i believe bernanke did get it right this time. at first i didnt but after almost 7 years its pretty clear he did.

Bicycle said...

extended low rates cause dollar hoarding

no return on savings, equities bonds real estate maxed out, no yield growth, therefore you must save more

i.e deflation

extended low rates cause deflation

Christian Gustafson said...

Hindenburg Omen today?

First sign of these since last fall. It's about time.

One more signal gives us the crash window.

Reverend Nihilism said...

Looks like that 2045 might be ahead of schedule.

Bicycle said...

One... more... ramp. please

T.Berry said...

here comes ramp,


wouldn't bet it's the last either : )

Christian Gustafson said...

Oh we definitely have another high left in all of this, no question

SPX upper Bollinger up at 2135 today. I'm patiently waiting for us to tap it.

Bicycle said...

Really wish today had given us better information. We did not even tap the top of that little descending broadening wedge yet.

We can still go as low as DJIA 17500 from here and hold a pattern that sets us up to tag the upper BB...

Christian Gustafson said...

Next window for me to be interested in a market short is EOM June, if we make it up to the Bollingers.

The weekly and daily SPX Bollinger Bands are 1 pt apart, in the 2135 area. 2138 SPX is also the old 1.618x fib extension of the 910pt 2007-2009 crash.

Around 2140 you have overhead resistance from another possible bearish wedge shape.

Content to wait for that.

Christian Gustafson said...

Check out the monthly SPX Bollinger, too.

From the 2007 high, it was one of the first supports.

It's set to reach the 1820 level very soon. That's our target for the first leg down off a top.

IMO this one is very important.

Bryan Franco said...

Short much higher or a little lower. But definitely not right here. CG - do you have a 'no new high' alternate? For fun?

T.Berry said...

sorry to those expecting june hike. surely sept right? surely? still no reason to . zirp working rather well.... and until becomes problem won't see any hikes. zero need to.

Reverend Nihilism said...

3 month Treasury @ zero.

Christian Gustafson said...

^IRX is still floored, but not quite zero.

At least its lower Bollinger is positive once again! LOL

I'm concerned that Bryan's "hi-lo" historical model may have been violated recently by all of this chop chop chop.

Bicycle said...

Monday is a crash

Longest day of the year this weekend

Greece defaults

Monday is a crash

Bryan Franco said...

No. CG it hasn't. Amazingly, since the last trigger, we haven't even fallen 3% on a closing basis. So we are stilled allowed to fall 20% + outright, or make a new high and fall 20% +

Bicycle said...

Monday's a crash. 200 DJIA points away from the collapse

Christian Gustafson said...

OMG Bicycle, what have you done?

If you're wrong on this call, your credibility will be called into question. LOL

Bollinger Bands will set you free ...

Bicycle said...

BBs coming in pretty fast on the DJIA

one more day of this it can easily meet us back at the underside of the rising wedge

we have the hindys, this weekend greece and the starstuff, terrible fundamentals, terrible social mood, chart looks exactly like '87
meanwhile ever bear knows its coming but we're waiting for the perfect setup, too afraid to make crash calls any more, burned by a 6 year epic rampathon.

since I have no credibility... I have none to lose...

monday is a crash... right before 2Q end... will hose everyone.

Christian Gustafson said...

McHugh reported a 3rd Hindenburg Omen day in his update last night.

Christian Gustafson said...

Q1 final GDP is reported next week, 6/24, as well. Red?

Bicycle said...

Nasdaq new ATH

Come on get on the crash train

Reverend Nihilism said...

Yet another low for UVXY.

Christian Gustafson said...

Ja, UVXY pre-split $7 handle

Sarah Bell said...

Bryan do you see an imminent fall like Bicycle does or do you think think Market chugs along for a while longer

thanks

Bryan Franco said...

Sarah - We are always talking about probabilities, so we first need to concede that absolutely anything can happen. That said, the Hindenburg stuff is legit and points to a market that is becoming increasingly bifurcated. That allows for a slightly higher risk of a crash. The work I have done idependently also opens the door for a crash. But we are talking about going from tenths of a percent probability to perhaps 5-7% over the next few months. Ideally you want to wait for a trigger candle. This is something CG has written about. A surprise reversal would do. Extremely poor market action on extremely good 'news'. That would do. The Dow and S&P up slightly and the Russell 2000 down almost 1% on a Friday. That might do. You want something that puts the wind at your back as a short.

Bryan Franco said...

Sarah - We are always talking about probabilities, so we first need to concede that absolutely anything can happen. That said, the Hindenburg stuff is legit and points to a market that is becoming increasingly bifurcated. That allows for a slightly higher risk of a crash. The work I have done idependently also opens the door for a crash. But we are talking about going from tenths of a percent probability to perhaps 5-7% over the next few months. Ideally you want to wait for a trigger candle. This is something CG has written about. A surprise reversal would do. Extremely poor market action on extremely good 'news'. That would do. The Dow and S&P up slightly and the Russell 2000 down almost 1% on a Friday. That might do. You want something that puts the wind at your back as a short.

Bryan Franco said...

CG- Some beautiful shots of the Sound and all on the US Open. Makes me envious of all who live in the beautiful PacNorWest.

Reverend Nihilism said...

Copper looks set to take its 52wk low.

Reverend Nihilism said...

http://fintrend.com/wp-content/uploads/2015/05/Moore_Inflation_Predictor.jpg


Bicycle said...

china limit down

we are next

Christian Gustafson said...

Hey! Sarah's still around, how about that.

We permabears are waiting for a top, have been for some time now, we know that this process is long and painful. Early entries in either direction are good only for scalps, unless you get the move wrong and just get killed.

If our initial target on a leg down is 1820 SPX, the right SPY puts will be huge, especially if VIX is flat-lined down in the 11s for the entry. But which ones?

If Greece can delay through these IMF payments, the next big hurdle is the 7/19 ECB Bond repayment for 3.5B Euro. There's no faking this one, and the shambles that is Greece today has no chance to pay it.

On Manfred Zimmel's model, there's a Bradley turn on 7/16, could line up well with advance fear before the impending default.

The guts of the market crash will be in September, IMO, pretty much the entire month. Draw the trendline DOWN from 1820 SPX, and that's where I think we'll be -- deep lows at 1300, 1200, with a final low of 1074 SPX in late November.

I've mentioned the need for a Hindenburg Omen, which is now on the board. This is great news.

Don't get caught holding a wasting asset a minute longer than necessary ... like BBRY LOLOLOL ... drip drip drip ....

May our analysis be right and our trades be true. We good Kulaks ...

Reverend Nihilism said...

"The guts of the market crash will be in September." I'm not sure about the levels, but there WILL be a significant correction fall/winter. In fact, I'm so confident in this call, I challenge any bull to an online ego bet on it. For the first time since 2007, I'm thinking about taking a position in SDS. Not sure if we're looking at something like 20% or more. I would LOVE to see your scenario play out, and watch the filthy rats run for cover like they did in 2009.

Christian Gustafson said...

The first leg to obvious support at 1820 SPX will be great fun. From, say, the 2140 SPX level, that would be about a 15% loss.

Still a "correction" -- not a proper Bear market -- yet.

But we'll see a delightful effort from the well-commissioned liars in August to calm the herd and reassure all the mooks that this was the long-expected correction and that now things are better.

We'll collect and post all the links we can from this crowd should it play out.

And if the W3 actually shows up this time, well, how about that, huh?

Permabear Doomster said...
This comment has been removed by the author.
Permabear Doomster said...

Reverend : I would LOVE to see your scenario play out, and watch the filthy rats run for cover like they did in 2009.
--

Rats.... indeed.
-

ps. CG, by the gods, can you please install Disque for messaging? It really would be useful.

I couldn't even edit the prev' post for a typo.

Reverend Nihilism said...

Per Caldero: "When it concludes, which we expect in 2016, the largest correction since 2011 will occur for Primary IV." So he too, is on board. If memory serves, the 2011 correction was around 20%? He had new highs being reached in Q1/Q2 of 2016, I'm thinking before that, but what do I know? Even the bullish Caldero has us putting this sleepy bull to bed by 2017.

Reverend Nihilism said...

Let's also not forget the Irrational Exuberance indicator, Shiller just came out with the 3rd addition of his prescient book.

Bicycle said...

DJIA top BB now resting nicely on the lower rising wedge trend, today is a crash

Reverend Nihilism said...

Bicycle, you just might be on to something here. I would not have believed it before this morning, but volatility is collapsing. Amazing complacency, considering what's happening in the world. A sharp is reversal is on deck, and soon! Oh, and copper tanking further as well.

Bicycle said...

DJIA top BB 18224.98 we just need 50 more dow points mid-day then european banking system starts collapsing

T.Berry said...

looking forward to next crash

T.Berry said...

look forward to next crash. have some cash