Friday, January 29, 2016

Charts 01-29: Breakout on death of the Yen

Glad to see the BOJ getting on board now.

Well, it's about time!  More, please.  Thank you, gentlemen.

Package for David Stockman
SPX 01-29

Thursday, January 21, 2016

A long-term count for that elusive One More High ...

In a nutshell, we stayed within wave 4 territory on this last scary plunge, correcting the W3 that ran from 1266 SPX all the way to 2134 SPX last May!

If we have one more 5th wave left to go, it will confound the bears and take us all the way to about May 10, at SPX 2185, touching the top edge of a megaphone.

Weekly candles with RSI make the case here:

SPX weekly candles

Big-picture, I don't think China has any choice here but to attempt to defend the Yuan, at least until they deplete their foreign currency reserves to the point where it is hopeless and they buckle down.

All supports down to 1820 and even 1814 SPX are now blown, so I would argue that the target of the first true impulse down off new highs will target the 1740 area, with a tepid bounce.

By the way, there are plenty of Elliotticians out there who would suggest that the original bounce from the 2009 lows was wave 1, meaning that we have an enormous wave 5 ahead, reaching 2500+ on the S&P.  Thanks to RSI and fibs, I would argue that the epic rally counts ABC instead of 12345.

Friday, January 8, 2016

The case for 2182 SPX

I know you guys think I am nuts or in stark denial, but VIX and the volatility ETFs simply were not confirming that there was any real fear in the tape this week.

Both the VIX and volatility ETFs like UVXY rose to highs this week almost identical to those reached in mid-December, yet the damage on the indices was far, far worse.  I think this is a serious divergence worth noting.

Much of the December rise was hedging going into the FOMC meeting as well.  But there was real damage done this week, but as drips, not impulsive breakdowns.

If this decline fails, then let's look at what happened the last time one of these failed -- we rallied to the 1.618 fib extension of the drop.  A similar reversal from here would target an astounding 2182 SPX, right at resistance from a trendline from the highs in mid-2015 (the year).

The weekly and daily Bollinger Bands should head upwards as well, like they did on the reversal off the 1871 low, only this time we are close enough actually to reach them.

And get our true top, with bad breadth and Hindenburg Omens and stupid blow-off moves on specific tickers.  It's going to be just grand.

SPX case for 2182 top

Yeah, I know it seems crazy after a week like this.  We'll know soon enough.

GLTA, have a good weekend.

Thursday, January 7, 2016

Last call for new highs or any kind of optimism

... would be something like this, I think.  We would bucket this as an ascending broadening wedge.


What I want to see:

  1. Penetration of the SPX daily upper Bollinger Band
  2. A touch or close brush with the SPX weekly upper BB
  3. Divergences -- breadth, volume, etc.
  4. A string of Hindenburg Omens and other signs of market internal instability
  5. VIX and volatility front-running and leading the decline, instead of trailing it
  6. Touches of the lower daily BBs for VIX and volatility ETFs

There's also that 30pt gap overhead in the SPX daily chart.

The surprise China decline, if it is halted here, gives us a lower trendline that sets up perfectly for a kissback in March and a crash to the 1600 level.

GLTA ...

Friday, January 1, 2016

An epic book post to start 2016

Even as the market goes nowhere, bumping around and wearing down its upward momentum, we're still always buying ... books.  You must buy and hold.

As I look around, I notice all kinds of newcomers on my shelves from the last few months.  Here are a few of them.

Herbert Asbury, Gem of the Prairie: An Informal History
of the Chicago Underworld
, Knopf, 1940, 1st ed.
James H. Billington, The Icon and the Axe: An Interpretive
History of Russian Culture
,  Knopf, 1966, 1st ed.
Robert D. Kaplan, Asia's Cauldron: The South China Sea and
the End of a Stable Pacific
, Random House, 2014
Joseph M. Kitagawa, ed, Understanding Modern China,
Quadrangle Books (Chicago), 1969, signed
H.G. Creel, Chinese Thought: From Confucius to Mao Tse-Tung,
Chicago, 1965
Harold Lamb, The March of the Barbarians,
Literary Guild of America, 1940
Thor Heyerdahl, Kon-Tiki, Rand McNally, 1950
Nicolas Thomas, Cook: The Extraordinary Voyages of
Captain James Cook
,  Walker & Co, 2003
Alan Moorehead, No Room in the Ark,
Reprint Society of London, 1960
Brendan Simms, Europe: The Struggle for Supremacy,
Basic Books, 2013 
Garrett Mattingly, The Defeat of the Spanish Armada,
Reprint Society of London, 1961
Homer E. Dowdy, Out of the Jaws of the Lion,
Harper & Row, 1965
Edmund S. Morgan, Benjamin Franklin, Yale, 2002
Kaufmann & Raeburn, eds, Frank Lloyd Wright:
Writings and Buildings
, Horizon Press, 1960
Fyodor Dostoevsky, Crime and Punishment, Knopf, 1992
John McPhee, Silk Parachute, FSG, 2010
Tom Wolfe, The Painted Word, FSG, 1975, 1st printing.
Montaigne, Essays, ed by E.J. Trechmann, Oxford, c. 1960
Charles Dickens, Oliver Twist, Grosset & Dunlap, c. 1930
Poul Anderson, There Will Be Time, Nelson Doubleday, 1962
Charles Alexander Eastman, From the Deep Woods to Civilization,
Lakeside Press, 2001
Pedro de CastaƱeda of Najera, Narrative of the Coronado Expedition,
Lakeside Press, 2002
Norman B. Green, Earthquake Resistant Building Design &
, Van Nostrand Reinhold, 1981
Minnich & Hunt, The Rodale Guide to Composting,
Rodale Press, 1979

We are due for a RYFO rally to start 2016

UVXY was the tell on New Year's Eve -- there is still no fear at all.

I think the market still has a savage burn ready to go comparable to the one we had coming off the August 24 lows.  All shorts must go!

SPX 01-01-2016

A sharp decline over the rest of January will setup a beautiful head-and-shoulders that will send us hurtling toward 1600 into mid-March.

After that, it's every man for himself, and NIRP for all by June.

SPX 01-01 2Y

The Fed will panic and go all-in.

Cheers to a good 2016.