Sunday, December 30, 2018

Let's go nowhere for a while

We smacked an important .382 retrace in all of the excitement on Friday.  Since all that matters now are the actions of the United States Federal Reserve, it would be useful for everyone at this point to slow things down, get the $VIX back under 20 (15 would be great), and have the market get dull until the next word from the monetary gods.  We need to burn off all of that option theta everyone bought this month, to make speculation great again.

Nice shoes, Bob.

Let's consider Alisdair Macleod's macro analysis, which suggests that we see a spike in the CPI by the second quarter, which forces the Fed's hand (to raise again), in my opinion, at the June meeting.

To get there, we would have already had 3 Fed meetings where essentially nothing was announced, at the end of January, in mid-March, and in early May.  Each of these meetings would leave the policy and schedule unchanged, but only the March meeting would be received as bullish, as it alone has the follow-up press conference, the sort of meeting where raises are normally made.  The January and May meetings, although not hiking rates, by leaving the Fed balance-sheet reduction schedule unchanged, would each be received as super-bearish, resuming the selling.

ecce homo

The only thing that matters now is Federal Reserve monetary policy, not China, not Europe.  And if Macleod is right, in 2019 Fed members will find themselves trapped by actual price inflation following in the wake of the flood of loose credit.

All through next year, we will witness a crescendo of calls from the desperate FIRE sector for the Fed to cut rates again and roll out QE4.  But this cannot happen until the markets are wrecked and ruined, deflated, when the Fed finally has the freedom to intervene.  Longer-term, we're looking at a debt jubilee and large-scale refactoring of our late-cycle civilization, wiping out all of the unsustainable liabilities.  Our credit-money system, political economy based on usury, can only stand so many trips to the well before faith runs out.  Maybe the survivors can discover honest money one day.

Even with a month of sideways, we could finish the entire bearish crash cycle well before the 2020 elections.  What a hoot that will be!

S&P 500 daily

Wednesday, December 26, 2018

March FOMC, but not what you think

Conventional wisdom holds that the stop-run from today is another spike that will reverse in a couple of days, so we can finish up a wave 3 down to somewhere around 2250 on the S&P 500.

I want to suggest something a little different, that we are drawing a larger-scale leading-diagonal on the chart, that we are in a wave 4, to correct the crazy crash wave we may have finished today, headed to 2520.  The move up was so strong that it left us only 10 pts away from overrunning the .382 retrace within the wave 3 structure.

We may sell some of this off, but I don't think we will give it all up just yet.  January sets up to let this wave 4 play out, with most of the gains already in the bag from today.  We are still within the narrow channel of the wave 3 dive, but it will only take a few days and a bit of rally to break us out of it.

January then becomes frustrating wave 4 chop, eating put and call buyers alike, since the VIX is still high, until the FOMC at the end of the month.  The Fed is all that matters now in our credit-bubble asset "markets", so why not make all of the significant turns Fed meetings?

The channel puts us right at 2152 into March FOMC.

SPX daily, leading diagonal proposed

edit: adding the classic extended W3 scenario, so we can watch this bounce carefully.

SPX hourly  classic extended W3

Saturday, December 22, 2018

First important low at March FOMC

We're clearly in the sub-waves of a big wave 3 down, which will reach the 1.618 extension level of W1 at 2256 SPX.

If we draw some channels and add some fibs, we can propose our first low on all of this is the March FOMC, which also lands on a Full Moon.

SPX proposed low March FOMC @ 2124 SPX

Larger question is whether the real crash phase that comes in Fall 2019 can break us out of a very long term, important channel.  Losing this channel probably means the end of the long-term economic cycle defined by the existence and effectiveness of the Federal Reserve itself. 

I'll let you draw your own conclusions from that proposal.

SPX weekly

Wednesday, December 19, 2018

If we do bounce

It is still possible we are finishing up a Domed Top formation.

Positive news, oversold indices, short squeezes ... it is possible the market wants to wait to see Q4 earnings before it finally dies.

It would be a variant of the head & shoulders top off this neckline, target 2083 (election lows).  Would only work if we rally today and tomorrow to get over the intraday highs and trap the bears.

SPX daily

Sunday, December 16, 2018

We are close to the Bear

Friday we closed right on the neckline of a head & shoulders pattern targeting 2260 on the S&P 500.

All we need now is a little push, and we'll be in an official Bear (2350 S&P) by the Fed meeting and announcement this Wednesday.  That will be a sweet spec bounce, as well as a final leg down to the head & shoulders target.

v of 3 down is, of course, a US .gov shutdown as Donald John Trump confronts the Bolsheviks.  May we prevail.

S&P 500 hourly

Sunday, December 2, 2018

Competing counts

We're at one of those junctures where we have plausible setups for both bullish and bearish outcomes, on different scales.

can't beat the Chow Yun-fat

The reason is the impulse wave the S&P 500 has drawn since the 2630 low around Thanksgiving (Full Moon).  Is it the c-wave of a long-in-tooth wave 2 up?  Or is it the initial leg of a larger five-wave structure to new all-time highs by EOY? 

Northy thinks the Santa Rally hypothesis is very plausible here and very dangerous (to bears).  The next two days of this week may clarify things: IMO bearish if the market runs higher, and bullish into Christmas if she pulls back sharply.

With POTUS 41 passing, Powell's testimony Wednesday now falls on a day with closed markets.  This adds to the uncertainty.

S&P 500 hourly

Thursday, November 22, 2018

Bearish alt

Probably where we are really headed, is a close in the Friday trading session back at 2630, a big gap down Sunday night, and a 400 pt minor crash in the S&P 500 next week.

In that case, the massive gap at 2630 becomes the target for a rally from mid-January into mid-March, ending with the March FOMC.

The 2900s will be done on the S&P 500, as well as the 2800s and the 2700s.  This then becomes a theme throughout 2019.

There are cheap cheap crash puts available on the SPY if you need to hedge, or, God forbid, speculate on the future.  Good luck to all.

S&P 500 daily

Wednesday, November 21, 2018

Thanksgiving count

Just wanted to post an updated count before we adjourn for the Thanksgiving.

The weather in western WA will be pretty lousy -- thunderstorms! -- this weekend, so I'm set with reading Murray Rothbard's America's Great Depression.  He applies the Austrian analysis of the business cycle to understand the causes of the 1920s credit bubble as well as the extended pain it caused by the various market interventions and policy nonsense in the 1930s.  Very relevant book for where we are today.

Proposing here that the wave alternation between waves 2 and 4 is a flat 2 and a sharp, spikey wave 4, which finishes our first larger leg down in the first week of February.

Of course, the bounce from that only forces the Fed to hike again in March.  Have a happy Thanksgiving, friends.

S&P 500 daily

Friday, November 9, 2018

Point of recognition

Just fell out of the c of 2 channel.

please read this - even if you are pleb-tier and can't get my 1934 GA&U edition

Now the candles get scary -- 500 pts down in 2 weeks -- and a formally-declared Bear.  

Here's the general idea, sketch I made a couple of days ago:

S&P 500 sketch

The Fed will NOT hike at the December FOMC, and this will bounce us back up in "B" for a final kissback visit to the rally channel since the 2009 lows.

Then we get a bond event or similar dislocation in January.  Sorry.  The market visits the 1360 area SPX by the March FOMC, for reasons I will explain to you next week.

This weekend I'll be out on Six Ridge in Olympic NP looking for my fellow bears.

also read this

Saturday, November 3, 2018

Finish up wave 2 this week

We're in the impulsive C up of 2 up, a deceptive expanded flat (B made a new low at 2604 SPX).  The .618 retrace from the 2628 low can have us back at 2820 midweek, possibly as early as Tuesday.

This may sound ambitious, but we just showed that we can knock off 100 pts of S&P 500 very quickly.  Let's see if the Donald John Trump has a China trade deal to announce Sunday night, after the /ES futures open.

SPX 5 min - expanded flat wave

Big picture view is a crash to the ├╝ber-long-term channel at 1360 this Spring.  If we break that channel, then the Fed has truly lost control and it's time to get scarce.

SPX daily - Springtime doom edition

Tuesday, October 30, 2018

Expanded flat wave 2

And maybe a triangle in the works as well.

I can't find the link at the moment, but Zero Hedge mentioned that the end of the month is when the Fed sells bonds to meet their balance sheet commitments, so tomorrow should have a weak bias.  So maybe we stall out some more and finish up a triangle pattern down around 2660.

Fresh money on November 1 should finally give us the boost to get through the overhead channel resistance from the decline.  Once we're through and retest it as support, we'll keep going, because it's a C wave, an impulse.

SPX 5 min

Saturday, October 27, 2018

Rally time

The .618 retrace of the entire decline also happens to be the lower edge of the old rally channel from 1810 through 2553 on the S&P 500.

We should visit it one last time before the bottom falls out again.  The short-trade into Thanksgiving should be legendary.

S&P 500 daily

All of this was made possible by the stick-save in the final minute of session trading on Friday.  Did you notice it?

Saved!  no crash Monday

Wednesday, October 24, 2018

Save us, Full Moon!

If wave 1 is done, we have Durables and GDP late this week, could send us back up sharply for A of 2.  Lots more data next week, employment and the rest.

$IRX is holding above 225 bps, and may increase in a bounce here.  I maintain that a surprise hike on the non-press-conferenced November FOMC (and New Moon) may tip the apple cart into Thanksgiving (2320 - 2350 SPX?).

S&P 500 hourly

Monday, October 22, 2018

Finishing up the first leg down

We are very close to a very special trendline -- critical support for equities.  Do you see it?

It's the trendline all the way up from the 666 lows on the S&P 500 through the 1810 level, on a log10 daily chart.  It also falls at about the middle of the current down channel at about 2676 on Wednesday.

I think it will hold for now, needing a proper 3rd wave impulse to break it down.  IT IS THE RALLY CHANNEL, for the entire doomed reflation of QE and the Chinese credit bubble, so we will visit it and its sister, the 2-4 trendline from 1074 through 1810, a few more times as overhead resistance in the coming weeks.

Keep an eye on $IRX, the 13-week T-bill yield, into the November FOMC.  My spidey-sense tells me that the Fed may surprise-hike in a non-press conference meeting and make some waves (3rd waves).

S&P 500 daily

Wednesday, October 10, 2018

Cracking up

We are quickly retracing the entirety of the ending-diagonal, heading back to (I think) the 2553 level on the S&P 500 during October opex week.

I think we can reach 2594 this week as the panic wave 3 plays out.

But first, this post needs a soundtrack:

The large gap down tonight is the target for the eventual wave 2, running through the week after opex.  It also tags an important kissback of a trendline from the 1810 low.  These channel re-tests are very important in my work going forward, massive, deadly-serious turning points.

S&P 500 hourly

The next one of these will be the Bradley turn in mid-January, after we bottom in the first week of December.  The Fed will hold the FFR steady in December, not because of the charm of POTUS Donald John Trump, but because rotation the hell out of equities will keep the 13-week T-bill yield under 225 basis points.

But the Fed will leave the balance-sheet reduction schedule in place.  That, and/or scary recessionary macro numbers will hit hard in January.

SPX daily

The first real Fed policy changes arrive at the March, 2019, meeting, when the S&P 500 is back at 1040.  Everyone wants out.  Real estate is already DEAD, especially after this week.  Any suckers left out there, want to buy a house?  Didn't think so.

Equities bottom later in the year around 525, trendline support from the 2002 and 2008 lows.  The Fed will return to the well one more time with fresh QE and balance-sheet expansion.

This next wave of Fed desperation stimulus begins the decline and final fall of the $USD.

Wednesday, September 26, 2018

How about 2953 on the S&P this Tuesday?

Looks about right.  Extended 5th in this ending-diagonal as well.

In the big-picture count, the W5 is also the extended wave.  We just need to finish up just over the 2950 level, and get some sort of vicious key-reversal day.  $NYA daily still showing its divergence -- no new high.  Looking forward to seeing where we are this Tuesday.

S&P 500 ending-diagonal

Sunday, September 23, 2018

End of the housing bubble in north Seattle

In the last real estate bubble, the north end of Seattle -- particularly the Crown Hill, Greenwood, and Loyal Heights neighborhoods, all north of Ballard -- had abandoned projects and vacant lots left in its wake.  In the current stupid cycle, we now have one last wave of frantic development, a desperate effort to build as much bugman housing as possible while the going is still good.

I won't mince words.  The developers and lenders for these projects-in-progress are going to be splendidly fucked, all of them, as the bubble pops and demand evaporates overnight for this garbage.  Did you not get the memo?  Amazon stopped hiring months ago.  It's over.  It's all over.

There are two houses on my block going on the market in the next few weeks, one from a smart friend of mine, a long-time owner, who I'm sure gets it, and the other from the worst sort of scum real-estate flipper.

I'm seeing for-rent signs on buildings, and Wolf Richter is seeing what I'm seeing in the aggregate numbers.

So let's take a look at some of the chipboard sawdust nightmares about to flood the stagnating RRE market on the north end of Seattle.

progress in Ballard

85th Street NW

A large sawdust development on 15th Ave NW ...

... so shitty and shoddy it's embarrassing ...

... I see ... black mold ... in your future

15th Ave NW

future tenements

someone please mortgage your future for this

on my weekend walk, 15th & Dravus NW

almost finished, ready for a bloated market

Good luck, FIRE sector jerks

more at Dravus & 15th.  a Starbucks closed recently near here.

Hurry up and finish these so you can discount the rents

future tenements

big project almost up on Market Street & 15th in Ballard ...

... I think that is actual concrete used in the structure, how about that!

YUGE project going in northeast of the Ballard Bridge ...

... this will be a very special disaster for the developers 
they have broken ground and can't turn back

once there was actual productive industry here

loose credit, credulous tech bubble idiots ...

... and you get this shite on 15th Ave NW

for fuck's sake, read the Austrians already

dead Crown Hill Hardware ... so build more housing!

finished product 85th & 80th NW, ugly as hell

absolutely disgraceful, what they have done to our city

dead shitty Mexican restaurant 15th Ave NW -> more housing!

Crown Hill, replace the brick bungalow with some chipboard shit

dead Radio Shack, re-zone this for condos?

Restaurants gone, new housing coming, dead Pizza Hut

who will blow up the Pizza Hut?  for housing

dead strip club, more housing coming

who will demolish this dead sushi restaurant?  85th & 15th NW

bugman housing going up behind Value Village

I think I saw actual plywood used in this construction

new plots just dug out at 85th & 12th NW, more garbage coming

there were dead vacant lots left on 85th in 2009

black mold and rot ahead in Sunset Hill ...

... the garage has better bones than the house!

Everyone get ready for the panic and crash cycle.  Seattle is so over.