Thursday, August 10, 2017

Charts 8/9: Setup now for a huge sell-off

We closed right at the perfect spot for a gap and go in the morning.


We could see a 4-5% sell-off tomorrow, retracing the entire five-wave advance from SPX 2328!  Relief would follow next week, at least until mid-session Wednesday, when we rollover again.

SPX 30D

The big picture, including the debt-ceiling market crash in late-September (and face-ripping rally into January):

SPX 2Y

Tuesday, August 8, 2017

Charts 8/8: Bear sighting

It looks like that diamond-pattern that held up for several weeks morphed into a rough ending-diagonal shape and ... ended.


Awesome price action with a key-reversal day, selling off on heavier volume than we had on the rise.  We are now off to the races.

The next order of business is to drop 200 handles to the 2280 level on the S&P 500.  The sooner we get the VIX up to 20, the sooner that the leveraged volatility shorts will be crucified.

The Fall crash gets going in later-September when the government hits the debt-ceiling wall and commences shutdown.  I am very much looking forward to this waterfall -- will it stop around the earlier lows around 1800 SPX, or plummet all the way to the 2007 (year) high of 1576?

SPX 2Y fall crash

Good luck to all ... bears!

Friday, July 28, 2017

Well. What do we make of this nonsense?

Thank you Bryan for the title.  The reversal off the 2484 SPX high looks decent so far.


If we've topped, then the first order of business will be to retrace -- quickly -- the 5-wave move up from the April lows, followed by a bounce.  If I have drawn the channel right, you can see how the close today tried but failed to regain it.

SPX 60D
If 2484 was a significant high, then it begs the question whether it completed a W3 or a "C" wave.  There clearly is a 5-wave move up since the Brexit lows (1991 SPX) on the chart.  The big question then is whether we can look down from these heights, or if we have another 4th wave correction and 5th wave rally left in the tank.  IMO, all of the major legs since the 2009 (year) lows count as triplets, ABCs.

If 2484 SPX marked the end of C of 5, then we can revisit the Brexit lows this fall like so:

SPX 2Y
If 2484 SPX marked the end of a W3, then the .382 retrace of the 1991-2484 leg is 2295 SPX; we will watch for this carefully, because a 5th wave similar to the initial bounce from the 1810 lows would bring us very close to a final high target of 2600.  We have to keep this possibility in mind -- especially if we find ourselves near the 2295 SPX level (and a pink trendline in the chart below) into September opex.

If we are looking for 5 complete waves up from the 1810 lows, and especially if the Fed rolls over at the September FOMC, then E-W suggests that we could indeed approach the 2600 level in a 5th wave up, as shown here with the heavy blue line.

Bullish alt: Fed flake-out blow-off

Thursday, July 13, 2017

Want to see a strong Friday to finish up

Closing at the highs tomorrow, 2466 on the S&P 500, would be a perfect setup for the weeks ahead.

Bouncing between support and resistance trendlines would draw a beautiful head and shoulders to mark the top up here, finding strong support in mid-January.

S&P 500 3Y

Everyone + mother has been comparing crypto-currencies to tulip bulbs lately, which is obvious enough.  I think the South Sea Bubble makes for a better comparison, as it was a whole collection of scams and ripoffs from Exchange Alley in London, of which the South Sea Company was only the first.  At the end of the day, all the cryptos will be blackened craters, worthless.

Sunday, June 25, 2017

If we get a sharp decline this week

I'm usually not one to post a bunch of alts, because you can come up with scenarios all day if you care you care to do so.  But this one is very important, I think, because if it plays out, it is extraordinarily dangerous.



Let us suppose that we get a very sharp decline in this last week before Q2 opex.  Let's say we make it all the way down to channel support at 2320 SPX, a long ways.  Many will think, with good reason, that this is it, holy fuck, doom is here.

But it could be a 5th wave broadening-top megaphone, which means that this move will reverse sharply once it reaches that support, and that it will immediately rocket right back up to new highs!

Something like this.  It is real possibility, and dangerous enough that it will probably waste a few speculators.  Be careful out there.

S&P broadening top megaphone 5th wave scenario

Saturday, June 24, 2017

So where are we now in the count?

We want to see more pullback in the end of Q2, finding support at the 2400 level on the S&P 500.

a rare U-Haul camper, Crown Hill, Seattle, WA

From there, we hit the next Bradley turn for the final (?) 5th wave up.  Along the way we want to see continued market optimism, with divergences in breadth and $VIX if we can manage it.  A few more Hindenburg Omen days would add to the drama, as well.

SPX 60D E-D count

This next chart is based on various support trendlines and their co-incidence with 2017 Federal Reserve Open Market Committee meetings ... let's call it "policy pinball".

SPX 2Y

Monday, June 19, 2017

What we are missing for tomorrow

We have a Bradley turn tomorrow, the market is overextended up into the daily top Bollingers, but we are still missing one very important element for a durable top -- no breadth divergence!

Deflation Landers ready to rumble

This is an important element in all the big tops, market breadth evaporating into a final high.  But we can see new highs with the recent market run up.  Chart from Tom McClellan.



So while we may get a tradable selloff into the end of June, we should propose a short-term count more along these lines, as we levitate into July.  A divergence with NYAD, etc, by then would be a very welcome sight.

SPX ascending megaphone top

Saturday, June 17, 2017

Looking for that long convexity trade

One of my favorite coffee shops burned last night; I heard it was arson.  At the northwest edge of the city, above Golden Gardens Park, Fiore is a natural stop for a long weekend walk.  Hope they can rebuild and reopen the place.



We managed to make it through a yuge June opex without any fireworks, and SPY was up 50 cents or so after-hours Friday, which bodes well for Monday.  We are in a Hindenburg Omen window (quantitative signs of market instability), and FWIW, there is a Bradley-model turn coming up on Tuesday.

Bradley siderograph 2017, from http://www.amanita.at

I'd like to see us get up to the 2455 level on the S&P 500 and reverse intraday on Tuesday.  The first bounce would be minor channel support back at 2322.  We will then need to break that support before we can head lower to test the channel support for the entire 2009 (year) rally.  If the larger pattern plays out this year, key highs will be at Fed meetings, as they continue to hike their interest rate targets and drain the swamp.

SPX 2017 selloff

Wednesday, June 7, 2017

We can make the case for 3 more Fed hikes in 2017

The Fed promised us 3 more hikes in 2017, so why would they not deliver them?  Here's a 40-handle VIX for you, President Trump!


And now, looking at the chart of ^IRX, the 13-week Treasury bill, we can see that this looks very likely.  Why?  The yield is in the midst of a W3 move north.


^IRX 13-week Treasury yield

Next Wednesday's hike is in the bag, but the market's won't dive on the news -- this hike is expected.  We will see a hard reaction from it, but it will take another week to arrive -- after June opex.  For the next few days, it would actually be good for perma-bears to see a little weakness in the S&P 500, so we can achieve w1/w4 overlap on the chart at the 2398 level, for an ominous ending-diagonal.

SPX 60D

The truth is, the markets realize that China is attempting new waves of magic credit creation, when they have clearly already pushed the limits of rank insolvency.  It's time to give China the smackdown, and remind them who really runs Bartertown.  The Fed won't sit idly by while China purchases what's left of the world's real assets with fake money, and sustained hikes in the USA will end this little charade right quick.  Doom is coming to the Middle Kingdom.

Remember, historically, when things go crazy in China, they can get really fucking bad, something we in the West overlooked since our own nasty wars of the 20th Century.

If the 13-week yield keeps climbing in late August and into September, then the Fed will come under insane, intense pressure NOT to hike again at the September meeting.  But if ^IRX is sitting at 125 bps, they will hike again -- a marvelous equity short.  The larger 5 wave impulse can finish up after ^IRX finishes its larger impulse and brings the Fed to hike one last time in December.

SPX 2Y

However, the damage will be done at this point, as spec-u-vestors and riskloves scramble for safety in the 10Y Treasury.  They will drive its yield well under 1.5% -- inverting the yield curve.

SPX 4Y

An inverted yield-curve here signals the hard recession -- deflationary depression, really -- in 2018.  Stocks, real estate -- smoked.  After stocks hit their low, on the lower bound of the "Jaws of Death" mega-pattern, the trendline off the 2003 and 2009 lows, then bonds peak and join them on the bonfire.

This concludes the 20th Century postwar period.  The Fed has got 3 more hikes waiting in the wings for us -- this year.


Thursday, May 25, 2017

At this point we're just waiting for the June FOMC

Market should be dullsville until then, slight drift up and to the right.  We're actually in a little channel that takes us up to ~2428 on the S&P 500 by the June FOMC meeting.

Go outside, watch the grass grow instead.

S&P 500 stairstep back to the 1040 level

Sunday, May 21, 2017

Is it time to test the 200 DMA?

I think so.  It has been a while since we have visited it -- the November election.  Now that it looks like supply-side tax-cut stimulus is dead, maybe we need to test it again.



The problem is, visiting the 200 DMA on the S&P 500 will have us break through a key support channel, a trendline from the 1810 low through the Trump election low.  This is a very big deal.

S&P 500
Something I noticed this week -- the all-time high at 2405 SPX is precisely the same distance from the Brexit lows last June as the Brexit lows are from the 2007 highs (@1576 SPX).  This suggests to me that the Brexit spike lows at 1991 might serve as a support for a true head-and-shoulders top, drawn above, which targets the 1576 level as a technical target and support for a sharp market bounce (the B-wave) late this year.

That made me think, What if the Fed actually keeps their word, and raises rates three more times this year?  They have given us plenty of warning, so why shouldn't they follow through on their promise?  After all, it's on Trump's watch, and he foolishly adopted the market rally as a sign of his Mandate from Heaven.

So fuck it, how will he like it when the $VIX is over 40?  He asked for it.  And he would get it, as rate hikes, in June, again in September, and lastly, in December.

By then the damage will have been done, to bring out the specter of deflation, and a test of 666 on the S&P in 2018.

An ominous wedge pattern on $AMZN since early 2015 looks complete, with the stock starting to break out of a really tight wedge at its peak.

$AMZN topping
This unfolds as a serious crisis for the mega-company, heading to support at $300 and, eventually, much lower.

$AMZN breakdown
I worked for Nordstrom ($JWN) for a decade, and noticed that they just put up another death-cross on the $JWN daily chart.  The last time they did this, they tumbled hard from their all-time highs.  Now the only thing going for this chart are the two unfilled gaps up above.  Otherwise, if it breaks the $35 level, we start to look at $18 or so as the next support.

This channel is brutal and suggests that the company may have serious decisions facing it next year.  That's all I will say about them for now.

$JWN channel of Doom

Wednesday, May 17, 2017

Little C or Big C?

How much angst will we see from the Trump instability this week (and potential scotching of any idea of tax reform)?  Here are two scenarios.

1. Little C: market sell-off returns to support at 2340 SPX into May opex, where we find support and continue to grind sideways in a long W4 that has another month to go.  It's an ascending/barrier triangle with a technical target of 2480 SPX.  The final (we shall see) W5 up begins with the June FOMC, where the Fed holds the discount rate steady.

2. Big C: a Brexxit-like panic sell-off of 120 handles SPX, all the way to the full .382 retrace at 2280 SPX.  Critical support for the rally -- a trendline from the 1810 low -- lives down here.  This capitulation move would exhaust the selling and end the larger W4.  W5 would begin in earnest on Monday.

Both scenarios wrap up for a candidate top in mid-July, 2480 SPX.

SPX wave 4 scenarios

Tuesday, May 2, 2017

It has already started

Incredibly, we have set the lower bound of the crash channel.

"big things have small beginnings"

Check this out.

SPX 3D

Here's the larger picture with more count and detail on the failed 5th wave.

SPX 15D

Now look where this same pink line ends up in six weeks, on June FOMC -- SPX 1622.  By September, the larger rout will force the Fed to announce a fresh policy of the Quantitative Easing.

SPX 3Y

The story of 2017 is of a financial crash which only the most crazy, irresponsible, depraved tinfoil internet cranks could possibly foretell, one which forces the hand of the Federal Reserve to abandon its stated program of regular rate hikes and shrinking the balance sheet, to return to extraordinary monetary policy and direct intervention and support of deflating asset prices in the wider economy.  

This will be the death knell for the $USD, although this process, too, may take several years to work itself out. 

Friday, April 28, 2017

Tuesday, March 28, 2017

Late April to complete the bearish wedge

SPX 2322 was about a 24.8% retrace of the leg from 2083 to ~2401 on the S&P 500, enough for a wave 4, which, if completed, is drawing a very bearish wedge up here in the ether.



This week we need to reach resistance at 2390 SPX on Thursday and chop around for another week, back to support, setting up an inverse head & shoulders for the final high.

SPX 30d

Again, once our situation is obvious to all the players, equity markets will quickly go bidless and collapse in a matter of weeks.  Desperate doomed pension funds will pump up the volume.

SPX 2Y

Tuesday, March 21, 2017

Vive Le Pen

It would appear that we are in a larger degree wave 4 than we had suspected, correcting the leg on SPX from 2083 to almost 2401.  This wave should run into next week, roughly toward the end of March, retracing to support near the .382 fib, around the 2280 level SPX.

Marine Le Pen, you're our only hope

Then we can look forward to some sort of political fix with Trump and the GOP, animal spirits, and a rally to finish the mess.

SPX 20D

The shape of the final rally, into the French elections.  Vive la majorit√© silencieuse.

SPX 1Y

Marine Le Pen elected Maximum Leader of the France will of course save that country from demographic peril, at the cost of Europe and the worldwide ponzi credit money system. 

Again, the Fed will CUT in June, as a desperate attempt to staunch the bleeding.  It will only trigger a vicious short-squeeze and halfway-back bounce.  

Then the crash resumes in earnest, and we re-test 666 on the S&P 500.  

New QE rolled out in September.

SPX 2Y

Thursday, March 9, 2017

Beware the Ides of March?

Short-term SPX is looking at an expanding-wedge pattern that could blow-off upward in a very violent fashion.



This would reach resistance at 2440 as soon as late in the session Tuesday, like so:

SPX 60d

The response post-FOMC and renewed fiscal crisis, looks like this:

SPX 2y

And the long term count since the 2009 (year) lows:

SPX 10y