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.

GLTA

148 comments:

Christian Gustafson said...

Yeah, so that means I'm calling for a 41% market crash into the end of May -- the full moon just after Memorial Day.

If we're at 3070, the VIX will be thoroughly rekt, OTM index puts practically free.

Christian Gustafson said...

David Stockman's not going to like us going to 3070 at all. He does have an excellent piece tonight, like he's the last sane man here in Clown World.

T.Berry said...

we'd need a few more crash calls for that to happen. lol


today is day #4 lol

T.Berry said...
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Hugh Jazole said...

It's going to be fast and furious for sure. Take a look at the insane moves on the TRIN.

T.Berry said...

you a buyer today hugh? it's day 4 of the crash .

although this crash isn't as good as some of the previous calls.

Hugh Jazole said...

I took a nibble earlier in the week, but I'm not keen on holding too long here. So far so good.

T.Berry said...

Lol

Hugh Jazole said...

Come on T. Berry, at least give me credit for calling the recent bottom TO THE DAY!! Remember this from the 2nd?

"Calling the bottom today!"

Kevin Wilde said...

T.Berry, please pay attention. The 4 day crash event is on closes BELOW the 200 day. That so far did not happen, thus the count has not yet begun. That does not mean we won't start that count tomorrow. Repeat: it begins the first day of a close below the 200 day moving averages. And most crash attempts fail AFTER day four. Which means the markets goes below the 200 day for four days to scare the bulls and clean out the stops, though the damage is limited while the VIX soars as people rush into protection. Either way, one buys at the close of the fourth day, for a trade, at least. Maybe wait till you make some money before chiming in?

Christian, you mention the recent sell-off did not look impulsive, though wave C of a wave 4 HAS TO LOOK IMPULSIVE. Which means we still have a fifth wave to go on the downside, at a minimum. A four day move below the 200 day to scare the bulls would be perfect, then you can expect your rally, so long as we haven't dropped 30% by then. The problem is, the more rally we see here, the further away we get from the mini-5th wave to end the correction, and more likely wave 3 of wave 3 - AKA the big one.

Martin Armstrong also looking for further corrective into April and May - panic cycle - with a May new low meaning the correction lasts till July.

Remember this correction started with a strong jobs number that put the FED rate hike cycle front and center. Tomorrow is set up to be a very good jobs report, thus good news remains bad news for stocks.

Christian Gustafson said...

Kevin --

I'm not saying it wasn't a little scary at times, it just wasn't doom. It's easy enough to find 5 waves in that (presumed) c of 4.

Bryan Franco said...

It could be a failed c wave flat, and fwiw, Caldaro doesn't even require the c wave to have 5 subwaves.

Bryan Franco said...

C wave of a flat doesn't need 5 internal subwaves per Caldaro

T.Berry said...

outstanding work hugh, great job you nailed it---the bottom is in

T.Berry said...
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T.Berry said...

kevin,
guess i misunderstood. thought your crash call called for the 200 to be violated. depth of selling from monday through thursday?



Blogger Kevin Wilde said...
Should today end bad then today will day 1 of a crash a 4 day crash attempt below the 200 day moving averages. Such a scare 'em event should provide a good buy opportunity by Thursday. The depth of the selling by Thursday will deter

Hugh Jazole said...

TRIN confirms short term buy. Longterm still neg.

T.Berry said...

place only my 2nd ever margin buy just now.

will flip when we get near 3070

Hugh Jazole said...

The sheep always sell when they should buy. Will they ever learn?

Christian Gustafson said...

See the IHS neckline @ 2671, Hugh?

Kevin Wilde said...
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Kevin Wilde said...

T.Berry, "should today end badly" means did that day end badly? Er, no. This one is a different matter, where the SP is currently under the 200, though everything else remains a small tad above the 200 day. Glad to hear you are adding leverage here. Another percent down and we are officially on day 1 of a 4 day crash ATTEMPT. Markets rally into close then day 1 is POSTPONED. A four day move below the 200 day would provide a killer buy point - assuming we don't crash - though I don't expect T.Berry to accept that nuance and just focus on the crash aspect. He also refuses to accept the crash risk, which is very real. While he is still watching for a bottom, I'm watching for a capitulation phase to mark the bottom. BTW, nothing to do with trade, nor interest rate hikes, and everything to do with the T.Berry's of the world on margin. When they capitulate sell, then buy with both fists...

rotrot said...

https://tinyurl.com/y83uzowg
https://tinyurl.com/yb3ecvj9
some great comments under the March 25 blog post as well as this blog post (April 4)...really worth memorializing...

T.Berry said...

Thanks Kevin. So is the crash going to be 50-90% like last falls?

T.Berry said...

Btw Kevin as I've said many times before not selling for a few more years as the dow approaches 40k

Hugh Jazole said...

You ain't seen nothing yet Mr. Bogle!

https://www.marketwatch.com/story/bogle-says-hes-never-seen-a-market-this-volatile-to-this-extent-in-my-career-2018-04-05


rotrot said...

invest the 4:43 to watch the video...https://tinyurl.com/ybkbfej9

Kevin Wilde said...

T.Berry, all major bear markets are the same in depth, though differ in time. Down 15%, up 10%, down 35%, up 17%, down 20%-25% for a total loss of 50%. These can come in single events like 1987 and 2008, or come in doubles and triples like 1929-33 and 2000-2003.

Kevin Wilde said...

It should be noted the difference between the indexes caught up in a bear, and the average stock caught up in a bubble. Unfortunately, bulls are always bubbles in some form. While the index may only go down 50% - like the Dow 2000-2003 - the bubble stocks - internet, B2B, biotech - got slammed much harder - as they always do - with the premier companies suffering a 90% meltdown, while the non-premier bubble stocks lost everything. Same with the next bubble - housing and mortgage related - where the premier stocks - like PHM and MS went down 90% (sound familiar?) - while the non-premier - like Bear and Lehman - disappeared. So it's not just that stocks take a pummeling during bear markets, it's that anything caught up in the bubble gets near, or totally, creamed. Where are the bubbles this time around? The FANGs, for sure. Boeing and McD, for sure. Oh, and let's not forget the overleveraged companies that go BK during a simple recession that comes when bubbles pop. Think the GM bailout, or the entire banking system here and abroad. Such overextended companies and entities (like CALPERS and every other pension fund) are a recession away from delivering the largest bailout crises the world has ever seen. All it takes is a tiny slither of a pinprick to pop the bubble, then we get a recession, then we get the 90% down move - for premier issues - and total BK for the rest.

Christian Gustafson said...

Market hungry for that IHS neckline at 2672.

T.Berry said...

kevin, only a loss if you sell. most investors cannot time these pullbacks to get out beforehand. rather long term investors should use pullbacks to add and average down. i would certainly be a buyer on a 20+% pullback. because history shows the stock market always comes back 100% of the time. in 5-7 years the stock market will be considerably higher than today. the last thing investors should do is panic----those who sold out in the panic of 2009 missed the biggest bull market in history and it's not close to being over yet.

my margin buy from friday is up over 1% already (that would take 2 years in a money market-lol) plan to be out of it in 2 weeks before cg's 3070 call :)

T.Berry said...

btw, looks like the earnings run up has started. q1 should be another good one but more importantly the outlook should be even better as the tax cuts funnel down to main street.

Bryan Franco said...

T. Berry, I think the market has had ample time to think about the impact of the tax cuts. Nevertheless, I am in the "higher first" camp with CG.

T.Berry said...

no doubt bryan but once earnings start rolling in i believe we'll see quite a few upside surprises and raised outlooks. the econ has been clicking on all cylinders plus we still have the infrastructure bill to look forward to.

as for higher first, i've been in that camp for 6 years and don't see a bear market in sight anytime soon despite the numerous crash calls, final tops, one more highs called during that time. lol. could we get another 5-10% pullback? sure can but longer term (4-5 years out) this market has plenty of upside (we'll see dow jones 40k before it's all said and done). we're in a historic secular bull market creating epic amounts of wealth for the american people. we may never see this type wealth creation in our lifetime again. i've been saying this for the past dow jones 7000 points (or 32 crash calls ago LOL)

we're only in the bottom of the fifth with 2 outs. lol

T.Berry said...

dennis gartman just turned bullish too, you should be feeling pretty good bryan

Christian Gustafson said...

VIX still above 20?!

Got to turn the screws on these mooks. Fed Minutes tomorrow.

Hugh Jazole said...

It will be interesting to see how the VIX behaves around that 2671 area.

T.Berry said...

nothing to worry about hugh, we're going into earnings season, the market is going up for a while

Hugh Jazole said...

Checkout bitcoin. It's happening.

Hugh Jazole said...

Houston, we're ready for take off.

Christian Gustafson said...

We touched the neckline of the IHS this morning.

If it confirms, its target is (2672 - 2553) + 2672 = 2791

That's close enough to 2802 to kick off the next leg up.

Kevin Wilde said...
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Kevin Wilde said...
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Kevin Wilde said...

Hope you'll used today's rally to put some hedges on. We are at a major technical resistance level, with everyone expecting earnings to be crazy great - buy the rumor sell the fact - and this weekend is set-up for major military action - thus big money traders likely to use today's rally to add hedges in preparation. Trend turns positive, I will buy, till then: watch out below...

...kevin, only a loss if you sell....

T.Berry, that actually is absolutely dead wrong. If what you buy goes down 50% you are down 50%, whether you sell or not, and stocks do not always go back up in a timely manner, and often takes many decades or more. Indeed, I believe the south sea bubble took over a century to get back to even.

Hugh Jazole said...

"everyone expecting earnings to be crazy great" Is there a correlation between stock prices and earnings? Asking for a friend.

Hugh Jazole said...

"Rising aggregate earnings do not guarantee higher stock markets. In 1973 profits rose 25 percent and by another 21 percent in 1974. As profits boomed, stock prices slid nearly in half.

Equity prices can rally when earnings take a hit, too. The very next year, in 1975, stocks rose 37 percent, one of the highest one-year total returns on record, and earnings fell 18 percent. And in four of the five years from 1982 through 1986 corporate profits fell while stock prices rose strongly."

T.Berry said...

" takes many decades or more" LOL

the stock market always comes back kevin---100% of the time---SPOT ON! and it doesn't take decades either---

when in the last 60-70 years has it taken decades?


this ain't the 30's. today's market is a lot different.

T.Berry said...

jpm beats---profits soar 35%,

sets the tone for q1 earnings---solid beats


T.Berry said...

looks more like buy the rumor, buy more after the facts! hedge on!

Hugh Jazole said...

Monday should be interesting with the kerfuffle in Syria.

Hugh Jazole said...

Time to troll Caldero. He said we were past the "crisis stage", and Trump getting elected ended it. LOL!

T.Berry said...

troll caldero LOL. hugh

dow jones (day before election 11/8/2016) = 18,332
dow jones today = 24,570

34% gain (22% annualized). quite a ways from 66%/year but still pretty solid

plus numerous lei that are mostly all higher.

americans wealth is considerably higher since. if you aren't better off then shame shame shame shame

bring on a few more of those kerfluffles LOL

T.Berry said...

since earnings kicked off on 4/9 the dow jones is now up 2.9% (23,932 to 24,635) and we aren't even half way through.

this trend has been in place for 9 years.

T.Berry said...
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T.Berry said...

goldman reports blowout (good thing not crazy for the hedgies) sp up 20 in premarket
tis the season up 4% now -one of the easier trades over last 9 years

T.Berry said...

q1 earnings continue to confirm the economic outlook remains very strong. on top of that mortgage apps blew out estimates this morning as a little icing on the cake. the best part is the tax cuts (obviously not been priced in yet) effect in q1 were not as great as they will be in q2. earnings for q2 should only get better.

for those keeping score, since earnings kicked off 4/9, the dow jones is up over 4%, sp up over 4% and nas up over 5%. earnings will continue to be an easy profitable trade for some time.

as for hedging in a secular bull, that money ends up in money heaven about 99% of the time. LOL

my margin buy from 4/6 is up over 5%---granted only my 2nd margin buy but i'm hooked LOL

Hugh Jazole said...

You need to buy MOAR on margin T. Berry! You want to be positioned to take FULL advantage of the summer BULL!!! This thing is going TO DA MOOON!!!

T.Berry said...
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T.Berry said...

hugh,
i'm waiting for you to "ding, ding, ding," thee top. LOL

Hugh Jazole said...

Yawn.

Hugh Jazole said...

How bout those earnings!

rotrot said...

https://tinyurl.com/ycvqgdq7

Christian Gustafson said...

How about this math?

If we finished the last impulse subwave of a W4 triangle today, at 2617 SPX, then we are looking for that one last W5 up, right?

If W1 went from the 1810 low up to 2193, it's 383 pts.

W1/W5 similarity, 2617 + 383 = 3000 on the nose.

rotrot said...

lower prices directly ahead!

Hugh Jazole said...

Good earnings = higher stock prices. LOL!

Christian Gustafson said...

For your consideration. Targets ~3030 on the S&P 500.

Hugh Jazole said...

Do we have a window of opportunity here for a wild full moon ride?

Christian Gustafson said...

3070

$IRX telling us the Fed won't hike next week. And Trump is about to end the Korean War.

The month of May then becomes a wild ride to the top.

rotrot said...

SPX weekly
https://tinyurl.com/yd8t27eq

SPX monthly
https://tinyurl.com/ydd2t6zz

T.Berry said...
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T.Berry said...

earnings season shaping up to be everything expected. the 9 year earnings trend only getting stronger.

cashed out my margin position for a tidy 3% gain.

looking forward to getting more margin in july. ahead of q3 earnings when we'll really begin to see the benefits of the tax cuts. q2 should deliver more strong earnings.

unless the snp ramps 393 by eod we're gonna have to wait till near year end for it :)

which is fine here, content with a nice steady strong sustainable move. just like we've seen since 2009.

the bulls 10th year is off to a very nice start.

T.Berry said...

is strong the same as good? tia
LOL


Wall Street rises on strong earnings, M&A boost
https://finance.yahoo.com/news/futures-rise-strong-earnings-m-120527743.html

rotrot said...

SPX 2018 -25.56 (-0.96%)

T.Berry said...

just hope this panic april/may pullback doesn't do too much damage. almost looks like last falls crash

Kevin Wilde said...

Martin Armstrong just out with a private blog post. Expects the consolidation pattern to continue into June (which I take as a June low resulting in a end of year rally.)

On the US dollar, he expects a big bull is USD into 2020/21, and very bearish on the EURO. If we see another Italian election, the expect the end-the-EURO party to win outright, with a June target for that.

If I recall correctly, a rising USD is bad for gold, emerging markets, emerging market debt, and energy, as well as being a prime player - reason - for the 1987 crash.

T.Berry said...
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T.Berry said...
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T.Berry said...
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Hugh Jazole said...

Scream higher through the new moon?

T.Berry said...

nah panic selling lows in ,apr/may said the armstrong LOL

rotrot said...

"The NASDAQ was up 1.7% Friday...Nevertheless, more points were lost than gained by the underlying stocks"

Skeptical said...

Can you post a source for that, rotrot?

T.Berry said...

wrapping up another solid earnings season. sp up about 3% hope some of you took advantage of this trend --if not there's always q2 to look forward to when the benefits of the tax cuts start really kicking in

job openings at all time record high not a good sign to pass the trIllion dollar spending bill --wages starting to rise watch out for an over heating economy

TSE said...

"I think we are headed there this month."

Et Tu CG?

"After 14 Years, I’ve Had It. I’m Leaving Seattle"

https://www.zerohedge.com/news/2018-05-07/seattle-becoming-city-hostile-middle-class


Christian Gustafson said...

Easy money has ruined much of Seattle. I should post some pix of the awful chipboard townhouses and apartments invading my neighborhood, one of the last affordable neighborhoods on the north end of the city. Can't wait for $AMZN to test its support at $300.

We're back over the 50 DMA -- can we rally all the way to Memorial Day?

There is a major Bradley turn scheduled for 5/29. The last one of these precisely marked the January high.

T.Berry said...

say it ain't so! did we just see "nevar 2700 again" today? paging.....mr bicycle lol. mia

TSE said...

The Book of Spite...

When I read Jonah Goldberg’s book Liberal Fascism, I was a bit surprised that it was popular. I think the main reason for people liking it was the claim that the liberals were the real fascists. The book itself was a bit of a slog and as David Gordon noted, it was riddled with factual errors. I’m not an expert on historical fascism, so I did not take the fast and loose treatment of the facts personally, but the people who were knowledgeable on the subject treated the book as an insult. Paul Gottfried has never forgiven Goldberg.

http://thezman.com/wordpress/?p=13797

Chain Lightening - Steely Dan!

https://youtu.be/-w9xXtNdKQw

T.Berry said...

snp now up 4% since earnings season began 4/9 . not a bad return given all the panic selling in april/may

T.Berry said...

"come on man just one more high"

--said the crack addict

lol

Christian Gustafson said...

Bulkowski's entry on the "symmetrical" triangle suggests a target of roughly 2936 SPX here:

Height of the triangle * .66 + point of breakout

(2872 - 2532) * .66 + ~2712 = 2936 spoos

By Memorial Day would be perfect, right in time for the next Bradley turn date.

Christian Gustafson said...

IMO we still need to re-test the March 2009 lows.

And we will, sooner than anyone else imagines.

T.Berry said...

agree 2936 is coming but don't think by memorial day. however if this april/may panic selling picks up it very well could hit your target

T.Berry said...

sp up 96pt in last 5 days. that's some serious consolidatin'

T.Berry said...

looking like another day of consolidatin'. sp now up over 100 pts since it started. expecting this to last a while

Hugh Jazole said...

LOL @ SBUX! I'm going there to take a YUGE dump! I'm going to flush the toilet at least three times, AND use a TON a paper towels!!

Christian Gustafson said...

... and the general quality of life in what's left of our Civilization takes another tick down to the level of the brutes.

There's a phrase that describes exactly this, but I won't repeat it here.

Good luck, Starbucks!

Love the SPY all the way to Memorial Day.

Hugh Jazole said...

#ClogTheirToilets

Kevin Wilde said...

good charts, interesting data. Now climb that wall of worry!

https://www.marketwatch.com/story/sp-500-should-be-1000-plus-points-lower-than-it-is-today-strategist-rosenberg-says-2018-05-12?siteid=bigcharts&dist=bigcharts

T.Berry said...
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T.Berry said...
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T.Berry said...

keep on consolidatin'----now up over 102 points since it began----(right after all the april/may PANIC sellin') LOL

next LOL

T.Berry said...

nas @7450 is currently 600 points above the top (6850)

T.Berry said...

sp now up over 5% since q1 earnings season kicked off. easy call

T.Berry said...
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Kevin Wilde said...

Earlier this year Christian had a rebound to SP 2740ish as the bull killing level. My target at that time was 2762. Since then, those levels have been challenged three times, with the SP rally dying on all three such kisses. The latest rally recently completed a four advance across the 50 day moving averages, which is the pre-1987 crash "tell," with stocks selling off everyday following that four day trick 'em move smack into a crash back then, with barely on rebound rally days that closed higher. Thus, IMHO, we have moved into a very dangerous position, and the bulls better hope the red ink fails to stick on day over day pattern. Following the trend remains key, which means up for now, though watch for signs of heavy distribution selling that would signal the worst case in becoming reality. Semis failed to confirm this rally leg - and becomes downside leaders - while a breakdown of the EURO puts a rising USD in prime rally mode, and it was a rapidly rising USD back in 1987 that brought the house down.

Bryan Franco said...

Russell 2000 and micro cap indexes too strong, suggesting good breadth, especially on down s&p says. Market higher shorter term

TSE said...

CG said:

... and the general quality of life in what's left of our Civilization takes another tick down to the level of the brutes.

Seems as though Seattle is on it's way..... DOWN!

Update: Amazon is not alone in its anger at Seattle's plans. Starbucks took a moment away from signaling its virtue and lashed out at the city's new tax. John Kelly, senior vice president, Global Public Affairs & Social Impact at Starbucks, said in a statement.

"This City continues to spend without reforming and fail without accountability, while ignoring the plight of hundreds of children sleeping outside.

If they cannot provide a warm meal and safe bed to a five year-old child, no one believes they will be able to make housing affordable or address opiate addiction.

This City pays more attention to the desires of the owners of illegally parked RVs than families seeking emergency shelter."

Despite Amazon's decision to halt construction on a new tower and threats to sublease space in another newly built downtown skyscraper, Seattle Mayor Jenny Durkan and the City Council have passed a controversial "homelessness tax" that will require the city's largest companies to pay an additional $300 a year per full time employee based in the city.

https://www.zerohedge.com/news/2018-05-15/amazon-furious-after-seattle-passes-controversial-homelessness-tax

While the price of gasoline only spikes higher - perhaps reaching $3+ gallon this Summer.

Last year, here in TN - Gas was $1.85 or so - now it's $2.50 +.

OUCH!

Enjoy some Kinks: The Kinks - A Gallon Of Gas https://youtu.be/i6ZLTLyJZpQ




T.Berry said...

after 8 straight up days mkt was due for a pullback yesterday. earnings season winding down may see some profit taking after the huge 5% run up during earnings. outlooks continue to be strong---2nd half '18 should be a good one. economy continuing to strengthen, almost at full employment (ue 3.9 and falling), record wealth, record home prices, rising wages, low inflation, strong auto sales....etc

T.Berry said...

fundamentally there is no reason for stocks to go down more than a few %'s points. basically profit taking. stocks have always and will continue to move based on the fundamentals. you have to look no further than the last 10 years since this secular bull market started.


investing 101

T.Berry said...

hey bryan, good call! russell hit a new all time record high today.

not bad in a churn year. keep on churnin' LOL

T.Berry said...

lol---permabears out today with spelling market doom if 10y hits 3.6. it was only few months ago they said 2.75, then 2.9 then 2.95 then 3.0.

hint: economy hasn't been this strong in DECADES!

T.Berry said...
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T.Berry said...
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T.Berry said...
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Hugh Jazole said...

This is unacceptable SBUX!!! This companies blatant racism must stop! Boycott SBUX!!!

http://losangeles.cbslocal.com/2018/05/16/la-canada-starbucks-racist-cup-beaner-label/

T.Berry said...

bryan--the russell seems like a pretty good indicator of were the overall market is headed. i believe we'll see the dow jones at 40,000 much sooner than later. this secular bull market still has quite a ways to go.



Bear markets don't start when Russell 2000 hits new high

https://finance.yahoo.com/m/60485be7-76f7-32a8-9a1f-2dea3b0770d4/bear-markets-don%27t-start-when.html

Hugh Jazole said...

"Bear markets don't start when Russell 2000 hits new high" Did the R2K not hit a new high in 2007?

Hugh Jazole said...

TRIN blowing its top again. Short term bottom might be in.

Kevin Wilde said...

21 ema of put/call ratio with Bollinger band cross says we are at an important top.

A cross below SP 100 moving average at 2709 would confirm that, which should correspond with a failed breakout reversal of the RUT.

Look for a repeat of the February scariness.

T.Berry said...

it did, you are correct hugh. however what caused the meltdown was deregulation, derivatives, and crazy mortgage lending. the economy was propped up by all that whereas now the economy is about as sound and solid as it could be. we haven't seen an economy this good for decades. there really are no weakness is most if not all leading economic indicators. we couldn't have a better investing environment than we do now and for the foreseeable future.

btw, are you still expecting a summer (2018) meltdown?

Christian Gustafson said...

You are suggesting a failed 5th wave, Kevin?

I was worried we are still stuck in (e) of 4, forever-correcting the January high.

Does the Bradley turn after Memorial Day a high or a low? (or nothing at all?)

Christian Gustafson said...

Or, Kevin, are you suggesting that this triangle isn't a 4th wave on the larger macro count, but a giant B-wave triangle off the February crash?

With a C down pending.

T.Berry said...

scariness = buying/adding opportunity. bring it! lol :)

T.Berry said...

best earnings quarter in 8 years.....justifies the 5% rally in the stock market.

q2 should even be better now that the tax cuts are in full swing. consumer spending is about to hit all tie record high levels due in part my record american wealth.


Expect explosive earnings growth over the next 4-5 quarters

https://finance.yahoo.com/video/nyse-trader-expect-explosive-earnings-174455834.html

T.Berry said...

Glad we put that top in last week


3070 is coming cg !

Christian Gustafson said...

Tick-tock, might not make it. S&P looks so weak now.

We're bumping up against resistance, long-term trendlines. I wouldn't be surprised to see us limp up to 2755 or so in this holiday week, then hit that Bradley turn next week.

February was a stern warning, one that must be respected. The market told us, this is how I sell off now, straight down.

I'll be watching Q2 SPY puts late this week.

T.Berry said...

no hurry to get there cg, by year end is fine. i was only expecting to hit 3k this year anything higher is a bonus. besides we should see a pullback after the almost 6% run-up during q1 earnings.

prefer the nice and steady moves rather than huge spikes up like we saw earlier this year. with earnings showing good solid growth and fairly robust outlook for the next 3-4 quarters, 3k shouldn't be that difficult.

Bryan Franco said...

CG. Need to at least "trap" the March high of around 2800 first

Kevin Wilde said...

CG, I think the most likely count is the sell-off from the January peak was a 1, and we are in a C of 2. Thus 3rd likely on deck next. The alternative is Jan sell was an A of an A-B-C correction, with a scary C still to come. All depends how low we go on the next sell wave. I lean strongly more toward the bearish view, due to how perfect five wave impulsive the February swoon was for all indexes, with what happened since pure corrective threes. I don't recall ever seeing such a clean 5 wave down that wasn't the opening salvo of a big bad bear. Then we have growing negative divergence, with NAZ the lone index making a new high in March - pure 5 wave sell after that, followed by corrective 3 - and now I look for the same in the RUT, where we see a 5 as the others follow a 5 (of a third wave melt-down run) and then all indexes will be in the prime crash position after modest corrective action after that. Libor higher now than in 08, which suggests more stress in financial system than we saw back then. And EEM bonds melting down. I would suggest leaving all bullish hope off the table till after September. SP500 still can't get above your 2742 target from earlier in year...

T.Berry said...

10% is the new crash- lol

Hugh Jazole said...

Too late CUCKbucks!

https://www.wsj.com/articles/starbucks-says-drug-use-sleeping-unacceptable-as-it-clarifies-guest-policy-1526918854


T.Berry said...
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T.Berry said...

look out below = sp up 3.2% in may

lol

sell in may

don't worry

FREE BEER TOMORROW- LOL

T.Berry said...

highest wage growth in 21 years. get ready for some inflatin'.

Kevin Wilde said...

US inflation equals higher interest rates and higher USD, which pops the emerging debt bomb.

The next bear - financial crises - will start with some overseas news event.

Hong Kong PEG about to break - that should do it.

Argentina interest rates at 40% - nice yield, though you won't be getting your money.

Italian yields doubling each month, ready to become Greece.

We know how this movie ends, and it amazes me that we never learn, and always get tricked into believing this time is different, and bulls live forever.

T.Berry said...

higher interest rates have been quite bullish. since the fed began raising again on december 17, 2015 the dow jones has gone from 17,495 to 24,834 for a 42% gain in just 29 months (or 17.38 annualized).

whether they raise or not next month doesn't matter, the fed has been spot-on with every decision they've made since the financial crisis of 2008. they have acted with perfect execution. american's have enjoyed the one of the greatest periods of wealth creation in history.

T.Berry said...

germany, france & uk mkts hitting record highs, the russell 2000 is there as well. only a matter of time before sp & dow jones follow. econ data has been outstanding as well as earnings.

expecting a nice & steady move up through this summer.

(sorry hugh, i know you're calling for a summer crash)

Kevin Wilde said...

Germany peaked in January. Higher interest rates blow up emerging market debt, thus US pension funds, which have bought heavily in search of yield, thanks to the stupid FED. Turkish lira blowing up, so add that to the overseas black swan that is coming to a scary TV screen near you.

Kevin Wilde said...

SP can't get through 2742 (Christian's target from earlier this year, while mine was 2762.) Now it is slated to challenge the 100 day SMA at 2710, which, if broken, is a major sell trigger to big money institutional traders. The Dow closed below its 100 day yesterday. RUT looks like its slated t challenge its breakout point, and looks like the failed breakout for the NAZ from March, which led to a retest of the Feb lows. The next few months should be very scary for complacent bulls.

T.Berry said...

my time horizon is much longer than this summer. sp heading to 3k later in the year so no worries here, really.

only in top of 6th (no outs) in what is one (or the) of the greatest secular bull mkts in history. as of aug 22 this year, this will be the longest bull market in history.

Kevin Wilde said...

And what happens after such long bull markets end? What happened to all the other long ones? 1929-1933 (loss of 89% that took 25 years to recover from - for surviving companies only,) 2000-03 (loss of 80% for NAZ that took 16 years to recover from - for surviving companies only.) This time around will be worse, due to demographic trends, fiscal obligations that cannot possibly be delivered, and global debt mountain set to implode. The time to get excited about bulls is after prolonged bear collapses. The time to be wary of bulls is after they near records.

T.Berry said...
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T.Berry said...

economically, there is really nothing in the foreseeable future that would lead to a bear market anytime soon. the us economy hasn't been this good in decades (i know i've repeated this several times but it is a fact) eventually the bull will slow and we will see a downturn. bear markets last 18 months on average which is a good time to add rather than get spooked out---just stay calm, the stock market ALWAYS comes back. yeah, the dotcom and financial crisis took 4 years to get back to their previous highs but they did come back and soared to all time record highs soon after.

my plan is to rotate into 100% high divy stocks as the dow jones approaches 40k (3-4 years maybe sooner) to provide retirement income. long term investors will 100% of the time. simply investing 101.

Kevin Wilde said...

The economy is always great ahead of a recession. That's how it works.

Charles Nenner said to buy at SP 2616, targeting 2750. He sees yesterday as cycle top, and bounce should be over. Close below 2704 is sell signal.

T.Berry said...
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Christian Gustafson said...

only 40 handles separating the 50 and 200 DMA S&P 500 ...

by the time the financial press mentions the "death cross" it will already be too late

Kevin Wilde said...

The battle remains resistance above SP 2740, and support of the 100 day at 2711. Markets are going to fly or dive when we get through one or either of those. My best TA guess is we close very bad today to breach 2711. Since I'm currently net long I'd prefer to see the expected volume expansion on the upside, though we don't get to trade the market we want. Overall, looks like giant topping process, with clear H&S top in NAZ.

rotrot said...

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