Friday, October 30, 2015

U.S. equity markets will crash in January

They'll crash in November-December, too, but should find the next support down at 1737 SPX.

It all keys off the FOMC Minutes released November 18th, and a promise to hike in December.  The market will front-run the move all the way to support from the 2009 lows trendline, forcing the Fed to kick the can again.  Once we are through the EOY bounce, the market will collapse.

When all the shorts are driven from the field (on marginal new highs), there will be no buyers left in this market.  Hedge funds and large financials blew that SKEW number out in the September-October cycle of this, so they are unlikely to hedge now until it is too late.

SPX rally into FOMC Minutes release 11/18
Long-term count


7 comments:

Christian Gustafson said...

Lower UVXY daily Bollinger Band has stabilized over $20 now. I might be a buyer down there in a couple of weeks.

Bill Bober said...

You've come around to my way of thinking. I think there is a chance for another ATH. People think the bear is over, take a look at the greed index. The market will be TOAST in Jan.

Christian Gustafson said...

You're a fund manager at some big financial.

Late this summer your manager let you purchase huge lots of SPX puts to hedge against 100pt down days on the S&P.

We didn't get any more of those days. The expensive insurance expired or was sold at a loss.

Maybe the next time you'll just sell instead.

Bryan Franco said...

Bingo.

Christian Gustafson said...

Of course, the Fed could also actually hike in December, since the sell-off / front-run is "priced in". We would bounce on the decision.

scott said...

http://stockcharts.com/h-sc/ui?s=%24SPX%3A%24USD&p=D&st=2004-12-12&en=2015-11-01&id=p30480067903&a=430342556

the cycles match up - no higher highs and the Octoberfest will fail in November...

bear market confirmed; only question to answer is how low and when does it stop

Christian Gustafson said...

Alright, Scott.

Looks like we've got two weeks to go. This week the minor wave 4 in the count.

The 8/24 swoon triggered off a set of Fed Minutes. This next one can, too.