Monday, August 24, 2015

Three Peaks and a Domed House may complete by Christmas

This week is all about banging out the margin calls and completing our descent to support (?) at 1820 SPX.

September FOMC will hike rates and initiate the next plunge to the 1530 area, by the October 9 Bradley turn date.

A final crash from the next Bradley turn in mid-November brings us down to 1074 SPX, just in time for the Fed to announce its next package of Quantitative Easing.  We will then be running on faith and fumes the rest of the way.

The descending trendline here is so steep, that this cycle may finish entirely by Christmas.

SPX 5Y 08-24 3PDH

VIX only 28 on a 100-handle S&P gap down?  Is that weirdly bullish?  Margin calls coming.  Edit:  VIX quotes bad on my end this morning.  UVXY!  OMG.

35 comments:

Christian Gustafson said...

Think we can close a 100-handle gap?

Reverend Nihilism said...

Stunning move on BPSPX.

http://stockcharts.com/freecharts/gallery.html?$BPSPX



Bicycle said...

This is why we stopped at current levels this morning. Question is... will it hold.

T.Berry said...

thxk bears! put remaining cash to work. looking like the bottom is in. market always comes back

rd said...

Always looking at the Domed House and where different people see it.

Look where Karl Futia placed point 23

"The top chart shows the Dow labeled with point 23, the top of Lindsay's domed house. I don't think there can be much doubt about what is happening here. The entire three peaks and a domed house formation now calls for a drop in the Dow below its October 2014 low (solid blue line at bottom of chart)."

http://carlfutia.blogspot.com/2015/08/bear-market.html

Reverend Nihilism said...

http://www.independent.co.uk/news/uk/politics/stock-up-on-canned-food-for-stock-market-crash-warns-former-gordon-brown-advisor-10469509.html

Bryan Franco said...

Come to think of it. This would be a weird way to kick off a new downtrend. Almost feels too too steep at this point and reminds me of how downtrend end ( not begin). I am starting to think this is a wave 4 down. Even if so, I would expect an attempt at new highs to fail in a 5f.

jeffrey solomon said...

you are a clueless moron !!!

Reverend Nihilism said...

Wow! Between T. Berry and Jeffrey we have some incredibly valuable insight.

T.Berry said...

reverend, what's wrong with buy & hold and price average in for long term? it works for me and is about 100% safe. in 5-10 years the markets will be considerably higher. notihng against traders but that's not for me. good luck.

Bryan Franco said...

T. Berry - Statements like "100% safe" are rather misleading and dangerous.

Christian Gustafson said...

Hey you kids! Leave Mr. (Ms? imagine that!) Berry alone.

He's an institution, and always welcome here.

Depriv said...

Too fast, too many people were sucked into happily suppoorting this fall.
Be careful, if this will be proven to be a bear trap (just like the previous one), it'll not stop till new significant ATHs.

Christian Gustafson said...

Or we're in "wave 2" to close that gap at 2040 and kissback the ol' rally channel on Friday.

That would leave a mark.

Depriv said...

Even that would be painful, but I more worried about being in some tricky fourth wave. We are very close to the ideal levels of a fourth.
Fourths are expected to break the initial channel, so that alone would prove nothing.

Bicycle said...

100-Year DJIA to Gold Ratio

Bicycle said...

Oh and go have a look and play with this chart. We can call this the "dollar-oil cross".

You can see that the dollar-oil cross happens at key inflection points: 1977, 1982, 1991, 2005, 2009, and right about now...

Christian Gustafson said...

Of course the best way for our Efficient Markets to convince the Fed not to hike rates would be to retrace all the way back to 1040 SPX in time for the September meeting.

That would truly be the Only Way To Be Sure.

T.Berry said...

Bryan, the stock market has always come back so being a long term (10-15 years) investor that price averages in you will make money. i wont look at reducing exposure for another 10 years. only invest in s&p and dow efts and collect divy's the whole way. i'm not good at trading like you guys. good luck.

Bryan Franco said...

T. Berry -

In the last century alone, there is precedent for the U.S. stock market to take 20+ years to get back to its high point. Japan is still not there, and could perhaps take 50+ years. There are countries that will never get back to their high points. Before the advent of publicly traded markets, there is precedent for entire centuries to go by before markets return to a high point. Sure, dollar cost averaging helps lower that "high point", but there is no guarantee that it will be enough. My larger point, however, is that you are focusing on a rather small and narrow sample.

Bicycle said...

100-Year CPI and PPI

Reverend Nihilism said...

This just doesn't look like it's going to last, we're headed down again by Fri. There just seems to be NO ONE willing to buy here.

Christian Gustafson said...

There is a really scary alt count out there that I want to mention, but probably still keep at arm's length. It first came to me in forwarded charts from a blogger named 1fe.

Suppose the drop from 2103 to 1867 SPX is a completed 5-wave impulse, and we are now actually in "wave 2" instead of some minor 4-5 series headed to new lows.

1. We would know this if the bears drop the ball and fail to make new lows here (especially the obvious 1820 target).

2. We would see an INSANE short-squeeze for the rest of this week, closing one or more of the big charts gaps overhead.

3. We would then get a real breakdown, a real crisis, much more deadly than Monday, a true crash before the September Fed meeting.

Again, imagine if we retraced all the way to 1040 SPX into September FOMC. I maintain that this is possible, if historically extremely unlikely.

Oh, but everyone is supposed to get an exit, right?

The past week demonstrates that this kind of bearness is possible. Please be careful.

T.Berry said...

thx bryan. i don't think we are close to japan. their stock market never made it back from the 89' crash yet we recovered from ours in about 4 years and have made many new highs since. difference i believe is our fed did a far better job plus we have the largest economy in the world which rebounded much quicker. never in history has our stock market not come back. as a long term investor the odds are in favor of doing well especially if one price averages.

Christian Gustafson said...

So ... 1250 SPX next week?

Reverend Nihilism said...

We're headed lower and soon. I managed to pull off my best short term trade ever, 21% in 4 days this week. I bailed this morning. Did you notice oil? How much longer is THAT going to happen and not slam the market lower.

Christian Gustafson said...

The most bearish wave count imaginable is that we failed a 5th and that the new "wave 1 down" ran from 2103 SPX to the 1867 low. Monday.

And that the "wave 2" retrace just completed at the bell. Today. Just now.

I guess we should know on this tomorrow.

Bryan Franco said...

May it be so, CG

Bryan Franco said...

Btw, what grand plan are our fearless leaders coming up with out in the J-hole this week? Surely they are not taking about how most consumer staples stock charts look like computer glitches. Just have a gander at PEP, CL, et all. Surely they must be talking about optimal control theory and zero lower bounds. Yes, that's it.

Bicycle said...

DJIA?

Even the SPX still has a pattern like this lurking about. Significant new ATH's are still on the table, unbelievably.

Reverend Nihilism said...

Bicycle's recent dollar/WTI chart is timely. Oil looks to get very interesting, very fast. I'm really not an uber doomer, but something about the recent action of markets looks quite ominous.

Bicycle said...

Speaking of WTI oil...

Bicycle said...

WTI is up, what, almost 20 percent now in the past 36 hours? That is massive spike low potential.

CC said...

CG - Is there any way that this correction could have been Primary wave 4 and we are on our ways to new highs in wave 5? I'm no Elliot Wave expert so thought I'd ask. There is one very good swing trader on twitter (dcarrtrading) that placed a big bet for 2,250 and people are calling him crazy.

Also, reading through twitter and blogs, the majority are looking for 2040 to short into. Makes me think we either correct from here (2000) or blow through to ATH.

Bicycle said...

Definitely possible CC, see here: http://canyoupicturewhatwillbe.tumblr.com/post/127487501445/sp-500-hellfire-wave-4-bear-rising-broadening