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!

18 comments:

Christian Gustafson said...

At some point we will have a bizarre, violent day that they trace directly to a short-vol fund blowing up.

Christian Gustafson said...

Oh, and 8/9 is a Bradley model turn.

T.Berry said...

"good to see 22k on the dow but don't expect it to hold since it's august (usually worst month of the year for stocks) . don't be surprised to see that 5% pullback come this month. then it's off to the races into year end
August 2, 2017 at 10:04 "

i'm sticking with my call from 8/2!!!

Hugh Jazole said...

"We are now off to the races" I assume you've backed up the truck and went long UVXY?

Hugh Jazole said...

Just a little saber rattling to get the sheep shaking.

Kevin Wilde said...

Not seeing much damage in the FANGS, though small and mid caps acting poor. Financials and energy holding up well too.

Hard to get too bearish here while FANGS and financials hold up, IMHO.

Only real bearish sign I'm seeing - something I've been carefully watching develop the past month or so - is the UK stock market rallying strong for 4 days above the 50 day moving average, though is now rolling over without sealing a new high on the 4 day rally push. That, my friends, is exactly how the 1987 crash began. This one needs to be watched like a hawk, cos we're talking the crash run back in 1987 took something like 5 days of selling to breach the 200 day moving average, then crashed for 4 days below the 200 day, with Black Monday the last day, as scary as it was.

So all good, unless we see the UK stocks tanking each days, and the FANGS start to follow in a meaningful way.

I still believe we have another rally push to SP 2600, NAZ 6750 to go before the crash - to complete the 1998 and 1987 patterns, though UK says top already in (if she continues to fall toward the 200 day, which is the crash point. Interesting times.

Christian Gustafson said...

IMO UVXY is headed to $90

then $50

then $500

not trading advice ... etc etc

Kevin Wilde said...

Martin Armstrong just posted a private blog update for the indexes and possible war.

A weekly close below SP 2412 and Dow 21,279 confirms dangerous correction underway, and long positions should be exited.

August has been turning point all year.

Targets for confrontation with NK are Aug 12 and 13, along with Sept 11 and 12.

Looking at a correction into Sept and October, with big volatility expected.

Christian Gustafson said...

I know it sounds crazy, but the trendline from the initial drop off the top suggests that we could retrace the entire 5 wave structure up from the 2328 low -- this week.

Bryan Franco said...

VXX should start outperforming its beta of about -4.5 vs S&P. In other words, I am seeing the opportunity to marry VXX with a core long equity position like DIA or SPY and make money regardless of market direction. So.. Something like 6% VXX, 30% Dow Jones, both long.

Christian Gustafson said...

Looks like yesterday's weak bounce was a W2 -- retraced less than 50% of the drop.

A 3% down day would leave us right around the 2400 level.

Kevin Wilde said...

UK stocks take another step down the crash path.

What happens in the UK is going to happen to the US. The breakout above 7000 for the UK FTSE was a most bullish event, as that was a breakout of a 16 year base. Now the pattern looks like a perfect replica of the 1987 crash. The crash set-up took four or five days of selling to reach the 200 day moving average, and we are day two of that. The crash itself was a four day event below the 200 day, with Black Monday the last day. So we could be looking at that by a week on Monday, which is the day of the solar eclipse. Defo get out of UK stock market. Re-enter if the FTSE hits new highs. What happens there is gonna happen here.

I thought later in the fall. Chart below says crash lands over next two weeks(unless pattern diverges by finding a bullish bid.)

Christian Gustafson said...

3% off the indexes today

And another 3% tomorrow.

That will retrace the 5-wave E-D since 2328 SPX and wake up the stupid world.

Hugh Jazole said...

Permabear has a pretty reasonable analysis.

"US equity indexes closed somewhat mixed, sp -0.9pts at 2474. The two leaders - Trans/R2K, settled u/c and -0.9% respectively. VIX settled +1.4% at 11.11. Near term outlook offers a washout within the sp'2435/25 zone, before resuming upward to the 2500s in September.'

Hugh Jazole said...

Wouldn't be surprised.

https://twitter.com/Eternity100000/status/895332146788696064

"I swear all the elites & heads of state follow the moon phases. in ancient times they did. nothing's changed."

Christian Gustafson said...

A close at 2435 SPX means we get a free gap down in the morning -- island top. See the daily candles.

Hugh Jazole said...

What are you smokin up there CG?

https://www.nytimes.com/2017/08/09/opinion/smoke-heat-seattle-climate.html?smid=fb-nytimes&smtyp=cur&_r=0


Kevin Wilde said...

This is what I just wrote to my subscribers as we face a very tricky weekend (sorry, don't see a way to post the chart referenced.)

‘The bulls face a do or die moment now the BIG MOVE I was expecting was delivered.’

High risk blow off phases are a game of chicken, where each scary dip is bought to drive the stock indexes quickly to new highs as the bears are forced to capitulate buy. Then one day, the bulls go all in on a scary dip, and the bottom falls out, forcing them to capitulate sell, triggering margin call after margin call for the overleveraged. That is how crashes happen, and here we are, facing one of those decision time moments.
It is very important to the bull case that we see some sort of stabilization going into the close tomorrow, which would set us up nicely for the rocketing to new highs to begin Monday, as the missiles fail to be launched over the weekend, or, if they are launched, they are shot down and North Korea keeps their guns silent in response and we go back to a staring at each other stance.
Another big down day tomorrow could set us for the bear slide to begin in earnest early next week, though I continue to believe the NASDAQ will follow the green arrow to a final retest of the steepest of three yellow uptrend lines as a prelude to a fall crash once the bulls are truly all in.
The trend can change quick from this position, and we will issue new trade instructions via a Flash Alert Update 3pm eastern time any day going forward when a change in positioning is called for. We will send an email to subscribers when we issue any Flash Alert Update.
For now, the trend remains up, thus invested long the stock market, while hedged with a small amount of TZA and TVIX, remains the optimum allocation.
Current positioning for the more aggressive Index/VIX/Hedge Portfolio is 94% QLD, 5% TZA, 1% TVIX. This portfolio is up over 43% in 2017
The more conservative 401K portfolio is in a stock index mutual fund, with QQQ used for tracking purposes. This portfolio is up over 22% in 2017.
Next update after the markets close Friday. Have a wonderful evening.