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

91 comments:

Christian Gustafson said...

GLTA bears!

Bryan Franco said...

VXX

Kevin Wilde said...

could be a competed 5 wave down for C wave, which targets new highs starting next week. Depends on whether NK tensions increase or decrease over the weekend. My money says things calm and we have to wait till the fall for the final top to be in and crash begins.

Hugh Jazole said...

About North Korea.

https://twitter.com/CiovaccoCapital/status/895970478308958209

Christian Gustafson said...

Bounce OK here; the current decline still points right at 2280 SPX over the next two weeks. I don't the short-vol crowd escapes this one.

T.Berry said...

hope you all loaded up on the puts wednesday. enjoy the pullback!

Kevin Wilde said...

the bull/bear line is the 100 day at 2412. The crash point is the 200 day at 2239. All good for bulls while we stay well clear of those levels - and watch out below if they are start to be challenged. NK talks seems to be calming...

Bryan Franco said...

What if this has very little to do with NOKO, and everything to do with Trump just not winning. This was merely a catalyst for a change in sentiment. This alone could completely undo the Trump "bump", NOKO or not.

Bryan Franco said...

NOKO or not, there has been a lot of damage in my view. Look at the long term trendline breaks in Small Caps, Transports, High Yield Bonds (HYG), Preferreds (PFF). Even the S&P is just below its intermediate trendline from May. No new intermediate high in Semiconductors (SOXX). Vix index closed the week not in contango with one of the largest wedge breakouts I have ever seen in any chart

Kevin Wilde said...

Doesn't matter what the reason is that drives people into fear mode. The bulls will buy, and it either works and we head to new highs to washout the bears again, or the dip fails, and we crash. That's the mode we are in. I say one more high before the bears get their crash, though NK could have a different opinion. To say NK isn't a factor is foolish, IMHO (though I agree that at this point NK is simply the excuse of the day for fear to land. Did you see the OBV line for UVXY/TVXY. Whowser!

Bryan Franco said...

Backwardation is a friend of VXX

Hugh Jazole said...

Dennis Gartman has turned bearish. That is all.

Bicycle said...

Gartman went mega bearish basically at the bottom of that wave. It was probably 4 of 5 on the DJIA in a rising wedge.

We should get one more new high for a 5th, but not break the inflation adjusted trend for the Dow in place since 1929. Thus we should crest the current high of 22179 by a bit, but not a whole lot. 5th can also fail here and fall just shy of that. In any case we should see far more severe declines at the end of the 5th than the ones that came with that last wave down... it wasn't impulsive enough.

If we rocket through 22500 or so on heavy volume anytime soon... know that we are in a completely new paradigm, probably hyperinflationary. I don't truly expect that, however, until the conclusion of the coming bear market.

Hugh Jazole said...

Kevin, what's your current top for NAZ?

T.Berry said...

ugh, one more new high. just one more. : )

T.Berry said...

"which targets new highs starting next week"

kevin, so far, looking like a pretty good call : ) the mkts are now all less than 1% from making another new all time record high.

could within a couple days. it's been over a week since we saw the new all time record headline

: )

Kevin Wilde said...

I'm still in the camp that the NAZ has to hit the +25% on year line, just like it did in 1998 and 1987, which were past recent high risk blow off bull years, and is a perfect representation of average trading expectation is such phases. That targets NAZ 6729. The crash post 1998 was 30% down from peak. The crash for 1987 was 50% down from peak. Both is similar time frame. Thus magnitude of crash path dictates whether we had to new highs in an even larger blow-off (like 1999,) versus the real big one has begun (like 1929.) Planets do seem to be aligning for such a top to land in September, or October (like 2007.) UK chart says we crash right here - next week - if we start to slide again in the next day or so, though there's an awful lot of big name bears out there right now, and markets rarely are that easy. Thus wave 5 blast off to get everyone super bullish much more likely, IMHO. Follow the trend is the best trading approach for such tricky times.

Hugh Jazole said...

Thanks Kevin.

Hugh Jazole said...

LOL!

https://www.wsj.com/articles/household-debt-hits-record-as-auto-loans-and-credit-cards-climb-1502809205

Bryan Franco said...

Yesterday market went into a 4 hour long 10 basis point range. Range. Almost all day today, market in 20 basis point range. Range. The transmission mechanism is probably through vol crushing via the SNB. Starts overnight with BOJ Nikkei purchases.

Bryan Franco said...

And that.. After a near doubling of $VIX in 10 trading days. Settled down THAT quickly???

T.Berry said...

kevin,
less than .004% from your call last week for new all time record highs this week. lookin' good. time to push another crash back lol

T.Berry said...

bryan, i believe the vix got spooked on the possibility of war. the move was over exaggerated to the upside and now that things have calmed down, its back to reality. the vix is in my opinion heading for tbe single digitts. the low should/could be around 5. stocks are clearly the place to be for the foreseeable future.

Hugh Jazole said...

More fake doom news. The big boys are likely buying hand over fist, as their media lackeys crank up the fear machine.

Kevin Wilde said...

We either rally to retest the old highs in the FINAL rally push ahead of a fall crash (VIX 10 then over 100...) or we crash over the next week or so (VIX over 100.) One final rally to go seems most likely, though down 2% today by the close and I will be in the crash now camp.

pb said...

Kevin your subscription page does not work you might want to look into that

Hugh Jazole said...

BTFD!

Kevin Wilde said...

PB, what happened when you clicked on the sub page, or are you talking about the free trial sign up process? The sub page seems to be working for me, and I received new sub payments this week. Anyone signing up for a free trial let me know (via the contact us box at AK, or emailing alphaking.update@gmail.com) and I will extend the trial through year end.

Hugh Jazole said...

Are the powers that be trying to dump Trump?

Kevin Wilde said...

"Are the powers that be trying to dump Trump?" or turn him into one of them. Resistance is futile, we are the Borg

Kevin Wilde said...

Here's the view of a couple of guru's I follow:

Charles Nenner is screaming to get out before September. Dow going to 5000 between now and bottom in 2021. Massive war coming.

Ex B is screaming rally to SP 2490 before we crash, though crash we will, and 2490 is last chance to get out of longs, or enter UVXY at favorable prices.

Martin A has close yesterday as a biggie, with Dow 21,665 needed to confirm painful correction underway. We closed at Dow 21,674... A weekly close below Dow 21,227.9 confirms sharp decline into September and October, with possibility for a royal crash into 2018, followed by a blow off into 2020. If we hold here - or rally quick after crash - blow off into 2018, then crash into 2020. Left and right gonna war on the streets going into mid terms next year, and even worse in 2020 election. European financial crises set to resume any minute...

I'm just trying to ride the trends, which means long though hedged for now, though subject to rapid change.

Hugh Jazole said...

"If we hold here - or rally quick after crash - blow off into 2018, then crash into 2020" That's pretty much where I'm at, still do NOT see a crash in 2017.

T.Berry said...

ahh, well if the crash doesn't happen this year, there's always the next year. : ) lol

Hugh Jazole said...

Where to now fellers?

Christian Gustafson said...

DJIA from the April lows looks like it still wants a 5th wave up.

We have Jackson Hole this week, then the next big test is the GDP release at the end of the month. What to do if it comes in hot?

Christian Gustafson said...

DJIA needs a 5th, IMO, then PANIC into FOMC.

T.Berry said...

still waiting for the 2012 crash lol. and the implosion of the usd.

Kevin Wilde said...

5th wave up to NAZ 6729 then crash. Either way, yesterday's low = the crash point, whether we hit that after a 5th wave to new highs, versus right here, tis the only question.

T.Berry said...

still waiting for the 2013 crash lol

Bryan Franco said...

Interesting movement in VXX after hours.

T.Berry said...

bryan, had a guy in our subdivision say over 2 years ago the easiest way to make money is to short vxx. he has been doing it for a couple years and has done very well.

wish i would have listed :(. that is a zero lol.

Kevin Wilde said...

Those shorting the VIX products will be a large part of driving the stock market crash as they hedge a rising VIX by selling SP futures. VIX initial target is 100, though when the next financial crises gets going I expect the VIX to bounce repeatedly between 100 and 200. Bet there won't be any folks shorting the VIX products by the time the bottom is in. This week's low for the stock market remains the crash line (though I still expect - hope? - we have another run to new highs to complete the top.

Hugh Jazole said...

AAII bullish sentiment 10% below historical average.

http://www.aaii.com/o/sentimentsurvey

Bryan Franco said...

Why should any crash happen when the SNB puts a bid under equities every morning at 3 a.m... The ONLY question at this point is: What could cause the CBs to stop buying equities directly?

Kevin Wilde said...

Bryan, the answer to your question is currency movement. Like now, the YEN is rising pretty hard, which is why the markets have struggled of late. That causes a reversal of the YEN carry trade, where overleveraged big money in Japan are forced to bring their money home as losses start to mount and they get margin calls. It is forced selling of margin calls that brings the house down, as well as busted hedge funds, or busted big money in some form. Think back to 1998, when the Russian Ruble brought Long Term Capital Management down, and forced selling from that busted hedge fund nearly brought the entire financial system down. It was busted hedge funds that delivered the 2008 financial crises. This time around, we are looking at the collapse of the European financial system. That will drive money in the Swiss Franc, creating massive losses for SNB purchases of outside assets. Thus they will sell those assets to save themselves. The only question is when will this all start? I say next month (like 1987,) maybe October (like 2007,) though a break below Monday low and we crash right here (like 1998.) Watch those currencies as this unfolds...

Bryan Franco said...

Kevin. Thank you.I get the forced selling argument. But the CBs know this. They are bigger than the sum of said forced selling. And they have gotten much bigger and more aggressive in their tactics. If SFR strengthens too much, the SNB just sells it for USD and buys more of Everything. If JPY strengthens too much, the BOJ sells it for USD, and buys Everything. This time around, it includes equities.

Christian Gustafson said...

With a lot of happy-talk this week in Wyoming, we could close Friday back at the highs.

The slope on these drops, though, oh boy. When we finally roll over, we'll see big, big waves like this.

Kevin Wilde said...

Bryan, every currency PEG in history has always given way, including the Swiss Franc one just a few years ago. Thus I wouldn't put much credence in CB buying to prevent their currency from rising when European banking system collapses (starting next year, according to Martin Armstrong cycle world.) Whenever has CB stopped a major bear market collapse? One could say 1998, though only after a 30% melt-down, and even then all we got was a larger blow off push (1999,) which led to a larger collapse (so at best CB postponed the collapse for a while, though made matters worse in doing so. Maybe we can say CB prevented a melt-down in 2011, though, like 1998/1999 experience, all they did was give us a larger blow off, thus the ensuing bear collapse will likely be all the more larger for it. NAZ continues to flirt with disaster today, though hanging in there on the cliff of death.

Hugh Jazole said...

LOL!

https://www.cnbc.com/2017/08/24/most-americans-live-paycheck-to-paycheck.html

Bryan Franco said...

And now this. Timely...

http://www.zerohedge.com/news/2017-08-24/one-trader-says-dont-fight-fedor-swfs-or-snb-or-buybacks

Kevin Wilde said...

I won't fight any of them till the trend changes. Then I will fight 'em all.

Bryan Franco said...

Kevin. Didn't say you were. Appreciate your analysis. Thanks.

Kevin Wilde said...

Bryan, I didn't take offense. I was simply replying to the zero hedge link, using Marty Zweig's "don't fight the trend," and "don't fight the FED," mantras, by morphing them into my plan of: "don't fight the FED....unless the stock market is fighting the FED (by going down in the face of FED intervention)....then fight the FED." In other words, the trend trumps everything else.

On the markets today: while a break below Monday's low would have me turn very bearish, I'm seeing some interesting charts on the bull side, namely: 3 step down corrections for the big cap indexes, such as QQQ, DIA, SMH, and SPX. Even the bearish side of the tape looks bullish in the short term, with Trannies, MDY, and IWN having completed 5 waves down, thus even if in new bear market one would expect a big partial retrace of the losses. The FANGS look like bouncing of neckline of H&S top, which would put us in the right shoulder making process. All of that should leave the biggies at new highs, while all of the laggards would fail to make new highs, setting up some pretty bearish negative divergence.

All of this goes to hell in a basket if we smash through last Monday's low, though for now things are looking like the final 5th wave has begun.

Bryan Franco said...

Question.Poor people don't buy stocks. Lower-Middle class people don't even have meaningful allocations to equities. In other words, the vast majority of the American public won't be direct beneficiaries of the Fed's desired wealth effect. What is more, the low natural rate of interest guarantees that those who benefit from higher equity prices won't be sending that wealth to the lower classes (by definition, the low natural rate of interest reflects the lack of meaningful roi opportunities). Is this an intentional or unintentional side effect?

Hugh Jazole said...

"Is this an intentional or unintentional side effect?" I think it's unintentional, I also think they don't give a fvck. The country will inevitably become less free as a result of this. The ever growing mass of poor will be unstable. Choose where you want to live long term wisely.

Kevin Wilde said...

I think financial regulations have helped foster this environment, especially things like Glass Steagall repeal. Prior to 2000, rising corporate profits was matched with rising average income, thus companies kept with the 1/2 profits to workers, 1/2 to owners, which has been the norm since labor union deals since the '30s. Then since 2000, corporate profits rocketed to new highs, while incomes have been flat. That says, the 1/2 to 1/2 ratio has been broken. That mainly is due, IMHO, to the implementation of earnings growth via financial engineering, while cutting costs on the employment productivity front (AKA not investing in their workers.) The problem with this great for owners of stocks, terrible for everyone else, is that those everyone else need wage growth to be able to buy the company's products. Central banks are important to financial regulations, and they should be adjusted to remove the reward of the few for financial engineering.

Bryan Franco said...

More on Fin Engineering... CEOs are rewarded for EPS, not earnings. The incentive is to leverage the firm and buyback stock at all costs. In theory, the multiple applied to earnings should go down owing to the added riskiness of the firm, but multiples have gone UP. And we know why they have gone UP... Thanks to the people at Jackson's A-- Hole. What a mess.

Hugh Jazole said...

LOL!

https://www.nationalpriorities.org/cost-of/war/

Kevin Wilde said...

So buybacks are falling. Interesting. Click on link and scroll down
https://realinvestmentadvice.com/riding-the-storm-out-08-25-17/

Hugh Jazole said...

Transports need to get it in gear quick.

Bryan Franco said...

..semis, transports, small caps all need to ... Quite possibly the 3 most important sectors/styles

Kevin Wilde said...

We remains on big move alert status, with a 2%+ one day wonder move likely setting the direction of the next big tradeable move.

Bryan Franco said...

If S&P 500 can lose that 2440 value zone decisively, we'll have a classic 1-2 1-2 nested look suggesting a move sharply lower.

Hugh Jazole said...

Copper is the one lone bullish holdout.

Bryan Franco said...

HJ. More on that point. Some people look at the Copper:Gold ratio. This removes $USD distortions, and this too looks constructive. But the move appears to be Chinese-driven.

Kevin Wilde said...

Bryan, 1,2, 1,2 patterns have not worked since the 09 low! and the dream of the bears. More like a-b-c and a-b-c, which could morph into a larger C wave (first a-b-c = A, second a-b-c = B, and smash to new lows could be a C.) A move to new highs is required to nix the bearish potential. VIX has a monster cup and handle pattern, and targeting 25 (minimum) if 16 gets taken out. Still expecting a 2%+ monster day, which opens the door to next rapid 10% move. Flip a coin as to the direction, though we should know pretty soon!

Bryan Franco said...

Kevin. Agreed. Double zigzag is far more likely. But the price and time structure look right for one of those outcomes regardless. And the double zigzag into Mid-October would be ugly too. Need to lose this value zone first.

Christian Gustafson said...

Classic pattern would be to gap over R at 2450 and set off some short-covering.

A @ 37 pts, B wave tri finished today? C @ 1.618 x A is 60 pts to the 2500 area. Pre-holiday break week, EOM August.

Bryan Franco said...

NK

Kevin Wilde said...

For bears who like to roam in packs
http://stockcharts.com/public/1957888

Bryan Franco said...

Well this is eerie:
http://www.bbc.com/news/av/world-asia-41078766/north-korea-missile-triggers-japan-warning-alarms

Meanwhile.. Too news on t.v. land is "liberal bias", "Harvey", "statues", and "sheriff Joe" ... Something is not right. White House silent.

Hugh Jazole said...

"Meanwhile.. Too news on t.v. land is "liberal bias", "Harvey", "statues", and "sheriff Joe" The media a giant distraction machine, as is politics for the most part. It's designed to keep the proles distracted and at each others throat, so they don't figure out how fvcked they are. It's probably for the best. Without it there would probably be even more of these knuckle draggers roaming the streets.

Hugh Jazole said...

Are the transports getting some traction? Haha, I'm so funny.

Bryan Franco said...

HJ. You're off your rails.

Hugh Jazole said...

Yep! I think everybody is these days.

TSE said...

HJ said:

"The media a giant distraction machine, as is politics for the most part. It's designed to keep the proles distracted and at each others throat, so they don't figure out how fvcked they are. It's probably for the best".

Probably so.

For the Eclipse, I went down to the Georgia Guidestones - the Ode to the coming Technocracy. Unfortunately, it turned into a Circus - so I went to Sullivan's Island, Charleston SC to see the Eclipse - making it just in time.

A message consisting of a set of ten guidelines or principles is engraved on the Georgia Guidestones in eight different languages, one language on each face of the four large upright stones. Moving clockwise around the structure from due north, these languages are: English, Spanish, Swahili, Hindi, Hebrew, Arabic, Chinese, and Russian.

Maintain humanity under 500,000,000 in perpetual balance with nature.
Guide reproduction wisely — improving fitness and diversity.
Unite humanity with a living new language.
Rule passion — faith — tradition — and all things with tempered reason.
Protect people and nations with fair laws and just courts.
Let all nations rule internally resolving external disputes in a world court.
Avoid petty laws and useless officials.
Balance personal rights with social duties.
Prize truth — beauty — love — seeking harmony with the infinite.
Be not a cancer on the earth — Leave room for nature — Leave room for nature.


Technocracy is the future - as embodied in the Georgia Guidestones.

http://www.technocracyinc.org/

BTW - for all you Peak Oilers out there - M. King Hubbert was a member! And I will argue that as populations are brought down sensibly - a Guaranteed Minimum Income will be a part of the plan.


Technocracy Inc. is a research and educational organization formed in 1933 as an outgrowth of the Technical Alliance, a distinguished group of scientists, engineers, economists, and educators formed in late 1918 to study the effects of technology on our social structure. For some 14 years this group gathered data and came up with the following conclusions:

The Earth contains sufficient resources to provide every man, woman and child with an optimum standard of living.
We have the technological know-how, the infrastructure, and the physical machinery to realize this goal.
In the face of advancing technology, human labor is being replaced, thus removing consuming power from a large portion of the population. Therefore, we must seek a sustainable means of distribution of goods and services to all citizens.


Hubbert Investigated

A historical document that shows the past programs and ideas of Technocracy.

http://www.technocracyinc.org/1943-m-king-hubbert-investigated/


TSE said...
This comment has been removed by the author.
TSE said...

Not sure if this will work - but here is a link to my pictures of the Georgia Guidestones and the total Eclipse - taken from Sullivans Island - SC

https://postimg.org/gallery/19r5hdgyu/

Enjoy some Pink FLoyd!

https://youtu.be/XiimzQ0KqBA

TSE said...

A close up of the Eclipse - taken with a cheep Nikon Cool-Pix Camera - and the Van.

Enjoy!

https://postimg.org/gallery/1b3fn77za/

T.Berry said...

well we got through the 2nd worst month for stocks pretty unscaved . mkts were flat. was expecting a 5-ish% pullback but given the strength of earnings and lei, that wasn't going to be.

given september is the worst month for stocks, a 3-5% is very possible,. then we rally into 2018 for the next leg higher.

and yes, the crash gets pushed back to next year. (like since 2012---lol)

T.Berry said...

as for hoping the crash will come with the debt ceiling debate, under President Obama the debt ceiling was raised 5 times and the stock market almost tripled.

short away, lol

Bryan Franco said...

T. Berry - What is your view of the U.S. Dollar here vs Euro or Yen?

T.Berry said...

bryan, sorry i don't really follow currencies. not sure what if any effect they have on the economy or stock prices. haven't paid attention to them over the past to know what to look for.

Bryan Franco said...

Thanks T. That is valuable information in its own right.

T.Berry said...

one big rally before the big sept/oct crash everyone's talking about. lol

we shall see

Kevin Wilde said...

T.Berry, the crash point has been set - under last week's low - and that remains the same even if we rally to my NAZ 6729 target, or if we peak today and slide into that day of reckoning over the next week or so. Currency movement have given every stock market crash in history, and this one will be no different, which I believe is Bryan's point, and I agree with him. I'm watching the YEN pushing to new highs (very bad for US stocks) and the EURO. We have Sept election in Germany to mess up the latter, and a war potential with NK the former. Martin Armstrong - a must follow guru, IMHO - has Sept 11 as a potential war start date, so watch for that. The end is nigh, for sure.

TSE said...

The "Crash" will merely usher in the Age of Aquarius.

As the Earth travels around the Sun, the Sun appears to pass in front of a succession of constellations. The linear path that the Sun describes across the sky is called the ecliptic. The constellations on that path are collectively called the zodiac and extend a few degrees above and below the ecliptic line.

https://www.wwu.edu/depts/skywise/a101_zodiac.html

No need to Freak - as your "money" becomes worthless - whatever you hold it in.

The AGE OF PISCES - is passing - Birth - Death - Destruction - Insurrection - part of the ever expanding infinite Universe. Change - is frightening....

https://youtu.be/jJSpujHhaGQ

MONEY!nGET SUM!

https://youtu.be/X7H4_uudWiE

TSE said...

The coming AGE - that of Aquarius - the Water Bearer -

https://youtu.be/kjxSCAalsBE

Kevin Wilde said...

Doesn't wealth, prosperity, leaders of civilization simply pass from one sign of the zodiac to next, such as the age of pisces, to the age of aquarius, and onward, in a western projector, from Greek empire, to Roman, to Napoleon, to Britain, to the USA, to? While there was no doubt some dark times throughout the thousands of years in transition, live in Greece only got better, even as others grew in power. Even today, there are worse places in the world to be born than Greece, or Italy, or France, or Britain, despite those countries falling from the empire tops many eons ago. So while I see some very dark times ahead, those dark times are more in-line with generational bear markets following generational bull markets, rather than end of times. Indeed, trade these mega trends right - especially on the bear phase - and you may become king of the next generational bull phase.

TSE said...

Doesn't wealth, prosperity, leaders of civilization simply pass from one sign of the zodiac to next, such as the age of pisces, to the age of aquarius, and onward, in a western projector, from Greek empire, to Roman, to Napoleon, to Britain, to the USA,

You are asking a complex question there....

Gradualism vs. Sudden Transformation.

Since Darwin - Scientists have been looking for the transitory fossils.

They haven't found any.

Does this answer your question?

Gotta keep a Running" - The Godz.

https://youtu.be/9FRATeocV2I

So too will be the Passing of the Age.

TSE said...

Good news.

HONOLULU (AP) -- Driverless trucks. Factory robots. Delivery drones. Virtual personal assistants.

As technological innovations increasingly edge into the workplace, many people fear that robots and machines are destined to take jobs that human beings have held for decades. For many affected workers, retraining might be out of reach -unavailable, unaffordable or inadequate.

What then?

Enter the idea of a universal basic income, the notion that everyone should be able to receive a stream of income to live on, regardless of their employment or economic status.

http://hosted.ap.org/dynamic/stories/U/US_FUTURE_OF_WORK_UNIVERSAL_BASIC_INCOME_QA?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2017-09-04-17-15-51