Saturday, July 7, 2018

Book thread -- what's on my shelves?

Summer reading time.  What's on my shelves?

I'm just crazy about this cool one-volume edition of Spengler printed by George Allen & Unwin in 1934, which I ordered from a bookshop in Brighton, UK.  How I love this press.

Oswald Spengler, The Decline of the West,
London: George Allen & Unwin, 1934

You should use a 500 million DM Weimar note as your bookmark when you read von Mises.

Ludwig von Mises, The Theory of Money and Credit,
New Haven: Yale UP, 4th printing, 1963

I'm reading this cover-to-cover at the moment.  Volume 2 has always been good for its tales of the camps and the White Sea Canal, but you really need to read all of Gulag to understand our enemies.  I found this at a thrift store on Mercer Island, WA, for $10.

Aleksandr I. Solzhenitsyn, The Gulag Archipelago,
New York: Harper & Row, 1974, 1st ed


Goethe, Works: Gottingen Edition, New York: W. I. Squire, 1901

und Schiller

Friedrich Schiller, Werke in vier bänden,
Hamburg: Hoffman und Campe, 1957

John Stuart Mill, Principles of Political Economy, New York: Appleton, 1868

Talcott Parsons, The Social System, Glencoe: The Free Press, 1951 1st printing

Devereux Bowly, Jr, The Poorhouse: Subsidized Housing in Chicago,
1985-1976, Carbondale: Southern Illinois UP, 1978

Arnold R. Hirsch, Making the Second Ghetto: Race & Housing in Chicago,
, London: Cambridge UP,, 1983

Count Eric Oxenstierna, The Norsemen, New York,
NY Graphic Society, 1965

Ending-diagonal 5th wave finishes up EOM July

It looks like we can close the gap on the S&P 500 right into the first US GDP release at EOM July.

If w4 of the ending-diagonal ended at ~2692 on the S&P, the minor w5 will equal the w1 and fill the chart gap up around 2856.  Then we can begin our trip back to real support at the 1810 level this fall.

S&P 500 daily


Adding an alt in case the larger W4 did indeed resolve as a triangle.  This would drag the ending-diagonal out for more time, taking it close to FOMC season in September!  Still looking at Q2 GDP as a minor turn, though, but 20 pts higher than the 1st chart.  We would also see new ATHs on the S&P.

S&P 500 alt count with larger W4 triangle

Wednesday, June 27, 2018

Crunch-time for the Ending-Diagonal

Need a big finish here with GDP, EOQ2, and the holiday break next week.

2823 on the S&P 500 mid-Tuesday would complete the E-D and the bounce since 2009.  IMO the ending-diagonal count still wants a dramatic C of 5.

SPX ending-diagonal

Thursday, June 21, 2018

W4 is in -- minor W5 up to go

It looks like W4 from the proposed ending-diagonal count completed at 2744 SPX today.  It doesn't look like we'll make it all the way down to the .382 at 2715. 

It retraced right to the .236 fib of the larger W3, and completed a very nice c of 4 impulse today.  Now there is a nice fib extension upward -- the 1.618 extension of this retrace -- pointing to the 2820 level right into the July 4 holiday.  /ES futures looking good now this evening.

SPX 06-21 ending-diagonal count

When this breaks down, we have channel support at 2430 or so at EOM July, followed by the August 1 FOMC (no hike) and a decent bounce.  The logical target of that bounce would be a retest and hard fail to retake the 200 DMA from underneath.

SPX path to 1810

The actual rate hike at the 9/26 meeting gives us the last leg down to firm support at 1810.  Then we can rally through Christmas, all the way to the mid-January Bradley turn date, before the real credit crisis makes landfall.

Tuesday, June 19, 2018

Ending-diagonal count: lower, then higher, then done

I'm counting the current mess as an ending-diagonal, which I think still has some room to go lower here over the next two days.  Has China responded to the latest tariff move?  When do we uncover the next corpse in their shadow banking system?  Who's the next corporate bond default?

We have a rising 50 DMA, which is also right around the 2715 level, where we would see a W1-W4 overlap on the ending-diagonal.  It would then bounce sharply, rallying to around 2820, closing a gap into the July 4 break.  I pray that we still celebrate Independence Day.

The problem with the New Moon 2791 high recently is that RSI made a similar extreme, suggesting that this move was the W3 in the series.

SPX daily 06-19

McHugh has quietly noticed we are in a new window for a Hindenburg Omen and subsequent crash.   Sssh!  Don't tell anyone.

Wednesday, June 6, 2018

S&P 500 going parabolic again?

It looks like the 5/29 Bradley turn marked an important local low.  It was on a Full Moon, which should have been clue that the turn would be a bottom.

Now it looks like the S&P 500 is going parabolic again.

Next week's FOMC happens to fall on a New Moon.  We're less than 4% away from making new all-time highs on the index -- we could easily make it there by mid-session next Wednesday.

An FOMC can give us a reversal without gaps.  The February decline left giant holes in the chart, as well as an excessive RSI.  This parabolic needs to make a marginal new high, fill the existing gaps, while putting in a lower, divergent RSI.

$IRX is only 10 bps from glory and another .25 hike, maybe the one to break the camel's back.

SPX daily 06-06

Tuesday, May 29, 2018

Bradley turn today

The last one was at the end of January.

The 340 pt dive in February was a warning -- this is how we decline now.


Bradley siderograph, 2018, Manfred Zimmel

Wednesday, April 4, 2018

The case for 3070 on the S&P 500

I think we are headed to 3070 on the S&P 500.  I think we are headed there this month.

Getting there will piss just about everybody off.

The bears will be squeezed, again and again as they reload their shorts.  Bulls and bubble types will watch this proceed as a true blow-off top, and miss the OTM index calls which return high multiples.

It will be a most hated end for the most hated rally (since the March 2009 lows).

Tonight the /ES broke out of the old bearish channel.  It looks done now.  The overall decline never became truly dangerous and impulsive, did it?  The 2553 W4 low was made right after the Full Moon this past weekend.

/ES breakout

So here's the case for 3070, a true blow-off move into the end of April.

1. It's a 1.618 fibonacci extension of the drop from 2872 to 2553

2. It is the target for a Big W pattern per Bulkowski.  The psychology of this is simple -- we grind our way back to 2872, squeeze anyone covering at the new high, and push unimaginably further north.

3. The blue dotted line, which is the overhead channel trendline on a LOG chart all the way back to the 2009 lows.  IMO we need to test and reject it one last time.

4. The January highs put in historic extremes on RSI for the SPX, indicative of the 3rd wave of the series.  IMO we just wrapped up W4, so now we get the 5th, with higher index values and lower RSI, the final divergence marking the final high.

I still have the pet theory that the next great window for the start of a real Bear market (via a 40% crash back to the 1810 level on the S&P) will be the first estimate of Q1 2018 GDP, due out at the end of the month.  A miss on this would torpedo any remaining illusions of growth and expansion and animal spirits still in play.  Any bounces will be sold mercilessly.


Sunday, March 25, 2018

It's not 1987 ... yet

We still have gas in the tank.  Quite fine with me.

It's going to take 2 things to kill this market dead:

1. Q1 earnings season badness.

2. The first estimate of  Q1 GDP due EOM April.  If this misses, markets crash and stay crashed, until the FOMC can regroup with a new QE in early November.  A weak GDP read upsets the entire recovery/growth/animal spirits narrative, and the Fed is not yet ready to do anything about it. 

But first we need to touch the dotted blue line one more time.  It has stopped every attempt in this eternal credit-expansion rally.  It's not all that far away, and we are setup well to visit it.

The slope of the recent declines since January point to ominous targets.  Let this run for a month, and we're back at the 1810 lows.  Let it run into the Fall, and we're at scary new market lows under March 2009.

The leverage is there, the crap debts are there, the big players (pension funds, 401ks, ETFs) are all ready to sell and keep selling, at this rate of decline, at the slope shown here.  

And crashes are three-wave ABC affairs. 

SPX touches the dotted blue line and dies

Tuesday, March 20, 2018

Do we need to touch this blue line on the S&P?

The dotted one, in the long-term chart.  Is that where we need to go?

SPX endless credit expansion

It would be about 3065 into April opex, crossing a more recent channel.  After tomorrow's hike, a dovish "3 hikes this year" consensus would get us moving higher to test this trendline.

SPX daily, rising channel into April

What fun out in the St. Patrick's Day parade here in Seattle.  One of these kids is mine.

Saturday, February 24, 2018

No! the bear case is hardly finished

Do not forget that the job of a wave 2 is to fool you into believing that the previous direction of the market is still viable.

But we still have a perfectly good 5-wave impulse off the 2872 high on the S&P 500, and, IMO, a decent wave 2 count as well.  Spike A from the low, a brief .236 retrace in B, and the long C of 2 in 5 waves whose aim is to fool us into expecting new highs.

S&P 15 min wave 2 count

The market has ignored the Anbang and HNA stories for the moment ... basically that the entire narrative of China saving the world with its growth is exposed as a complete fraud.  It turns out instead that China is just an extreme example of uncontrolled credit expansion and capital consumption, which is now on the verge of imploding into a deflationary black hole.

So the bear case eagerly awaits fresh news from the Far East on Sunday night.  If this was indeed a "wave 2" retrace, then it has now achieved its goal of flushing out the shorts, and the markets can collapse again with astonishing speed.  It is a long wave 2 precisely because it is important, we are determining right now whether the great Bear market is finally here.

SPX at Brexit lows into March FOMC

Wednesday, February 21, 2018

Bond-pocalypse for the win

W1 down was 340 pts on the S&P.  A wave 3 impulse here should extend to 1.618 of W1, i.e. 550 handles.  Our first 50 are already in the bag, and if the 10Y Treasury collapses overnight to 3% yield or more, then the remaining 500 should be easy -- only 100/day through the end of February. 

We already visited the 200 DMA, so now we can crush it.

We are so due for this sort of move -- a quick 20% crash in equities.

Tuesday, February 20, 2018

Markets on the brink

IMO we have a date with 2180 on the S&P 500 very very soon -- within a week.  That's what a wave 3 point-of-recognition panic sell means for us here.  The Fed needs to play catch-up on their balance sheet plans in what remains of February.

It also means we collapse back to the 1000 level before the All-Star Game.  Don't worry, they'll announce a significant policy shift at the September Fed meeting that will bring back the animal spirits once again.

W2 to 2180 EOM February

Monday, February 12, 2018

Crash leg setting up post-Valentine's Day

It looks like we completed A of 2 up at 2573 today, leaving B to correct and a final C up.

SPX 15-min

This sets us up for the next crashy leg off the thin green trendline either starting Valentine's Day (@2740), or soon thereafter (slightly lower).

The market is moving fast enough already to leave those waiting for a fall 2018 crash as spectators to the disaster that is unfolding now.  The months of May and June could destroy many trillions $$$ of pretend wealth.

SPX daily

Monday, February 5, 2018

Bleak -- 50 DMA annihilated, 200 on deck

Well that didn't take long at all.  If the 50 couldn't hold up, then maybe the 200 can provide a bit more of a bounce, at least a few days of sideways.  From the pace of things, it looks like we are headed straight back to the origin of the blow-off top, the 2421 level on the S&P 500, late this month.

Any bounce from that level would have to be on hope for policy accommodation at the March FOMC.  We closed right on channel support today, broken now with continued heavy selling AH.  This red line becomes the target for a kissback rally into March.

SPX doom

Final cycle lows EOM May @1810 on the next major Bradley turn date.  We'll see if the 2/25 and 3/9 dates mark the actual low and rally highs of the respective upcoming moves.  The yield on the 13-week T-bill actually rose today, which means a rate hike for sure in March if this continues.

Manfred Zimmel's 1/29 Bradley nailed the top.

Bradley turn dates,

Saturday, February 3, 2018

Now the S&P tests its 50 DMA

The parabolic run up to the 3K level has ended with a bang, so the next step will be for us to test the 50 DMA (this week), and the 200 DMA (after Feb opex), while chopping our way down to a significant low like the spike lows from Brexit.

Resistance on the big bounces will be from the 2/4 trendlines of previous wave sets.  The epic W3 crash begins at the July/August FOMC, when the Fed reaffirms its policy of shrinking its balance sheet as planned in 2H 2018.

SPX supports and resistance


Thursday, January 25, 2018

It's do-or-die time for the 3K parabola

Have the last two days of sideways tape built up enough tension to launch us north into the January FOMC meeting?  We will need to put in a blistering 140 pts in 4 sessions to hit the 3,000 target, a truly vertical move.

SPX parabola

This is how it ends?

Tuesday, January 23, 2018

From 3000 back to 1000 on the S&P 500, with all inflection points FOMC meetings

And then one day the clouds disperse and the one true path makes perfect sense.

SPX big turns on Fed meetings

If this chart plays out, I get to spend all summer climbing in the Cascades. 

Monday, January 22, 2018

Insane parabolic finish? 2990 on the S&P next week?

Mrs. Northy put her finger on what seemed too terrible to be true.  We could be at 2990 SPX in 5 trading sessions.  It's set to go even more insanely vertical.

S&P 500 parabola!

Will the 10Y Treasury yield also go straight up?  Serious resistance is up at 3.5% -- rates we cannot afford as a broke, debtor nation.  Equities must be sacrificed to Moloch.

10Y Treasury yield, log scale

The good news is that this can have a happy ending.  After cresting at 2990, we can be back at the 1000 level on the S&P 500 by Christmas.

S&P 500 bounce off Brexit lows, retest, crash