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, http://www.amanita.at

38 comments:

Hugh Jazole said...

The bears are going to need just a bit more patience. Those insane spikes in volatility were overblown imho. They are a warning sign of the rest of the year though.

Christian Gustafson said...

Yes.

But this was going to happen at some point, like burning out decades of undergrowth at Yellowstone.

We still have support levels down here somewhere, and resistance overhead to visit and reject.

Kevin Wilde said...

Sign up at alphaking.com if you want to view the chart referenced in the text below. If you sign up, mention here or email me at alphaking.update@gmail.com, and I will give you a year for free.

As the squiggles in the chart below show, we were expecting a quick retest of the uptrend line for the NASDAQ, and while some are surprised by the speed of the decline, the squiggles in the chart projection wasn’t.
What is happening is simple, and a repeat of the Long Term Capital Management debacle of 1998. Back then they – a big money trading unit - used a computer program that leveraged bought on every dip. Every win enforced the computers power, and the amount of leverage it advised. A sure thing to buy every dip, it said. Then one day it was forced into margin calls on its debt as a dip failed to hold, and then those that gave them the debt margin forced them to sell via margin calls. So what worked for years sets the stage for disastrous losses.
Such a thing is happening here with holders of short volatility on VIX rallies – akin to buying stocks on every dip – and now their positions have been blown out of the financial waters and they are trapped in the margin call cycle. What happened with Bitcoin over the past few months, is happening now in the VIX products in a matter of weeks, maybe days.
The expectation now is to wait for day four of the melt-down (attempt) before buying. That says the close on Wednesday this week should provide a good entry for going long the market. Expect a wild ride between now and then. Blame the FED, if you need to blame anyone.
Keep an eye out for a Flash Alert Update at 3pm eastern time each day this week, for trades to be executed going into the close that day. We will send an email to subscribers when we issue such a Flash Alert Update.
Next update after the markets close Tuesday. Have a wonderful evening!

Depriv said...

No rush. Patience. Most likely still not 'that'.

http://keptarhely.eu/view.php?file=20180115v00nf4boe.png

Christian Gustafson said...

One more market high? I'll believe it if we bottom at about 2570 this week.

The insane RSI in that last leg to 2872 were telling us that it was a third wave of some degree, so this would be a 4.

Depriv said...

At least I think so. Bitcoin is really a good example for this type of extending-accelerating madness. Both the way up and down.

Some of my woodoo suggests that the top is expected around the end or March.

Christian Gustafson said...

Look @ IRX today -- it's pricing in the next rate hike.

Plus we have Yet Another federal $$ deadline at the end of FOMC week.

Bryan Franco said...

A climb back to 2/3 of the way before rolling over again would be very 1987-ish

Hugh Jazole said...

OMG.

http://stockcharts.com/freecharts/gallery.html?$BPSPX

Hugh Jazole said...

Uber bull Caldero joins the dark side.

"While 4th waves have been fairly mild since 2016. This one has been quite violent. This is normally sign that the next run to new highs will end the bull market. In example: 1987, 2007 and 2014."

T.Berry said...

end of the bull in 2014? comic lol.

Bicycle said...

It is over. There will not be another nominal new high. We already put in a 5th wave in real terms on the DJIA with a rising wedge that started in 1965. The past week has been a hard rejection after putting in 5 of 5 on that text book pattern.

T.Berry said...
This comment has been removed by the author.
Kevin Wilde said...

I'm expecting three or four more days of sell-off that takes us modestly below yesterday's low. That would then have an impulse look, and Bryan's 2/3rd retrace would indeed smell of 1987. Yes, we could pop to new highs as 2/3rd becomes 1+, though so is the possibility of a failure of the rebound setting up a larger melt-down. Fun, fun, fun...

Bicycle said...

Up to high 2700's either today or tomorrow. 2790's today or 2780's tomorrow. That puts in an E wave on a broadening wedge off the top. Then it blows up again, either Thurs or Fri. 2800's never again

T.Berry said...
This comment has been removed by the author.
T.Berry said...

just like never 2000 lol

Bryan Franco said...

The degree to which bonds are affording no protection to equity downside is interesting.

Bicycle said...

descending broadening wedge is also possible off the top here... with 4 of 5 just being put in and we are headed down to 2400's. Then a rip back up to just shy of a double top or new highs before plummeting.

Kevin Wilde said...

2007 saw the indexes hit the 200 day moving averages to complete wave 4, bounced a little, then broke below the 200 day for 4 days. Before rocketing back to the 50 day in wave 2. So wave iii of 1 may not be complete yet. The 200 day for SP is 2550. So an eventual break of that would indeed put the 2400's zone into play to complete the first sell wave.

Kevin Wilde said...

I'm looking to reverse hedges and buy more if SP trades in the red today. Tom DeMark on Bloomberg this morning also looking for a bottom should SP close down today. Buugger must be reading my AK newsletter ;-)

Bicycle said...

USD/CNY

Bicycle said...

the world is now STFR

Sell Tha F****** Rip

Hugh Jazole said...

No complaints from bears not taking at least a small/short term long play here. Should bounce into the spring/early summer, then LOOKOUT BELOW!!!!

Kevin Wilde said...

As I said earlier, I'm buying. Later? We've just had a taste of what is headed our way, though for now, the bulls can breath again. With "for now" the optimal word.

Hugh Jazole said...

Will we make it back past 2800 or nah?

Christian Gustafson said...

No.

Hugh Jazole said...

You're a real curmudgeon CG.

T.Berry said...
This comment has been removed by the author.
T.Berry said...

hugh, did we make it past 1,500 (about 29 final highs ago)? the answers the same for 2800

Kevin Wilde said...

I'm looking for SP to rally back to 2762, then the bull/bear decision is made at that point.

Christian Gustafson said...

I like OR @ 2726. So ... are we set to crash starting Thursday?

Sitting on the tarmac at SFO, Dali's Car playing on the iPod.

Christian Gustafson said...

I'll see if I can get back home in the Seattle in time tonight, but I seriously think we could be back at 1000 SPX a couple of weeks before the All-Star Game.

We're in the early stages of this, but it follows from the low we will set @ March FOMC.

Bryan Franco said...

The NBA all star game?

Bicycle said...

be nimble folks the gap up this morning pinged off the bottom of a channel / potential giant bear flag forming since early '16

there is no guarantee that we even make it back over 2700

Christian Gustafson said...

Kevin --

Your 2762 target is very interesting ... a deep retrace, greater than .618 of the drop. It also retests the trendline where the S&P 500 jumped the rails for its throwover.

It probably assumes a cool CPI number early this week to power us up there.

Don't forget that there is a New Moon on Thursday.

T.Berry said...

another $1.5T pouring into an already strong economic climate-----

todays move is no surprise. buy the news


sp 3000 months away. consider last week a gift to the perma-bears and an amazing buying opportunity.

Hugh Jazole said...

Bubblelicious!

http://www.businessinsider.com/new-navigator-suv-25-million-investment-2018-2