Sunday, December 10, 2017

Let's say it all works out through EOY

Let's suppose that President Trump gets his tax cuts, whether he has to cuck on DACA or not doesn't matter at this point, but let's say he at least gets it through Congress by the end of the year.  Once we're on the new, lower, rate on capital gains, for nervous sellers, what reason is there to hold stocks a day longer?


December 28 is the first day when stocks sold will settle under the new rules and rates taking effect in 2018.  The upper bound of the E-D on the S&P 500 is about at 2720 on a log-scale chart.

SPX E-D into EOY

The Fed is expected to hike this week, and the 13-week Treasury bill bears this out, and the Fed should reaffirm its policy plans for 2018.  Once the selling starts, however, and does not abate, we will look for the Fed to retreat at FOMC meetings and try to save the situation.  But the dominoes will be falling and they will play out the last, most severe leg of McHugh's Jaws of Death mega-pattern.

SPX Jaws of Death finale

18 comments:

Christian Gustafson said...

Of course, E-Ds can always throw-over a little, but let's propose for now that we reject off the trendline.

Kevin Wilde said...

The jaws of death pattern and targets look good to me - and fits with my bull/bear cycle work - though a move of that magnitude would require two extreme risk moves (of the bull/bear cycle,) thus we would have a 1929 and 1987 crash phase - drawn similar to Christian's pattern, though only cuts the indexes in 1/2, rather than the 80% drop he drew - followed then by a recovery bounce, followed then by a second wave down in persistent down down down zig zag that takes down 80% from peak over the next 3 years. So the 1929-1933 Dow chart, and 2000-2003 NASDAQ chart, are the best fits patterns of expectation. We know this is starting when we see an impulse down move of 15%+ from peak.

Hugh Jazole said...

UVXY under 12 in pre-market. I'll pull the trigger if it gets under 10.

Bicycle said...

trendline from 1987 low through dotcom low on the monthlies also serves as an upper bound and is rising with a target somewhere around 2700 at EoY. current centrally planned bull market as a kiss back to the pre-'08 support

T.Berry said...

hugh, why wait? the vix is going to 100 so buying that is a no brainer right?

as for sellers don't see many that will be selling that will impact the stock market much at year end. we are in the best period of the year to own stocks plus the secular is only in about the 5th inning so why sell now? besides the santa claus rally hasn't even started yet. those who sell now will only have to pay a premium to todays prices in 6 months to get back in.

Kevin Wilde said...

SMH already has impulsive 5 waves down completed and in a B wave partial recovery rally. If so, we have a few more days of rally before grand slide begins. Beyond that expected rally to SMH 104 the best stock market bulls can hope for is sideways churn to limb over the end of year finish line. I would short to crap out of this market once SMH hits 104.

Kevin Wilde said...

That would be middle B of an A-B-C wave 2 for SMH

T.Berry said...

get ready to see inflation tick up next year due to the tax cuts. the economy is already near firing on all cylinders and the tax cuts are just going to add fuel to that fire. think we'll see consumer spending reach epic historic levels in 2018 (american's have never in history be wealthier) along with major cap ex spending for businesses. and hiring will reach new records. the us is basically about at full employment now which will put more pressure on increasing wages even more.

however i believe the stock market returns will only be about half of what this years are. don't expect the dow jones to be up another 24% (4,700 points) next year. nice to see the dow jones & s&p hit new all time records highs again today.

Stockboom said...

Anyone here following or playing cryptos?

T.Berry said...

i heart fomc meetings & minutes : )

santa has a big task this year. dow jones already up 25% show us what you got santa lol

T.Berry said...

no crypto's, too much risk for my appetite. sticking with just stocks & mutuals. can't lose

rotrot said...

"Is the World coming to the end?"
https://elliottwave-forecast.com/stock-market/world-coming-end/

Christian Gustafson said...

We'll get a final burst of swell excitement as they pass the tax bill.

Once we are trading under the 2018 tax rules, why would anyone hold at this point? Even CalPERS telegraphed that they wanted to lighten the load up here.

Once real selling starts, the VIX and margin bombs go off.

Kevin Wilde said...

SMH is set-up perfectly to repeat 1987. Back then, the sell-off took the indexes below the 50 day MA, then they retested the 50 day, backed off (which is exactly where SMH is now,) then conducted a 4 day rally above the 50 day MA. So we are waited for that 4 day rally thing. Then we slide into the crash, the latter occurring at the 200 day MA.

T.Berry said...

looking like a buy the news event for now and a grand goodbye to yellen. she may have had the best run in history for a federal reserve chairmen. hats off to ms yellen!

now question is will santa get the dow jones to 25k this year or do we have to wait till baby new year?

looking back though, it was a good thing we made it through that feb 7 peak.

and.....free beer tomorrow!

Bryan Franco said...

At one point today, the S&P return off the March 2009 lows reached 300%. 666 to 2666

T.Berry said...

nice to see dow jones take a breather. certainly due after an 1,100 point run-up in just 14 days. dont really even need a santa claus rally this year after that huge of a rally

Kevin Wilde said...

Sell into the tax cut news next week tis the plan...