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.

37 comments:

Christian Gustafson said...

Hey you mooks. The Seattle Antiquarian Book Fair is this weekend.

I'm going Saturday.

Hugh Jazole said...

I would love to get a nice house on the cheap, when they finally come back down to earth.

Hugh Jazole said...

SOX is looking ugly!

Hugh Jazole said...

Who's the stunt devil in the GIF? WTF kind of safety net is that!?

Kevin Wilde said...

SMH holding the neckline of a H&S top at 96ish is the key IMHO. So far so good for the bulls, though bum squeaker into the close today. NAZ is about to enjoy/suffer a very quick 400 point move. So either NAZ 6900 by Monday, or 7800/7900. Only a thousand NAZ point difference....

Jeff said...

Techs are flat now ,but I'm hoping for a panic plummet across the board this afternoon. If so, I'm going long for a bounce. Sticking with my call for 2730-2760 short term support range - although the further down today, the better.

Jeff said...

By the way, CG, the book fair looks fantastic. I'm jealous. Wish it wasn't 2,700 miles away from my home here in Georgia.

Christian Gustafson said...

Jeff, last year I had a bookseller from Portland willing to give me a PAPER INVOICE for ~$220 of fine analog books I was taking off his hands. He didn't even ask for ID or get my name.

I quickly ran outside to the ATM and settled my debt. But can you imagine a more high-trust environment than this? I'm looking for a nice copy of Bertram Thomas's Arabia Felix this weekend. But who knows what may turn up. There's so much amazing stuff at this show, books that would put my marriage in jeopardy.

I'm good with either 2594 or 2553 as the final low for this mess next week. McHugh thinks 2600 area. I can make either target work in my system; one just has wider swings. Both end up at 1991 Brexit lows support in early December.

Hugh Jazole said...

Here we go.

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

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

For better or worse, I'm all in long, removing hedges at the close and holding QLD/TNA/SVXY for a quick trade back near the SP 2900 area, where I expect to go all in short for the meat of this flash crash pattern.

Jeff said...

I'm all in long at the close. SPX, QQQ, etc are all completely outside the lower Bollinger Bands - I've never seen that. (CG, the collection of signed Ray Bradbury books at the fair is pretty incredible. I'm on the lookout for early editions of Richard Wilbur and W. H. Auden.)

Hugh Jazole said...

Speaking of never seeing something before. Yeah, I would say we've bottomed.

https://www.barchart.com/stocks/quotes/$TRIN

Bicycle said...

too many knife catchers

DJ weeklies pierced the 50MA, barely through the middle BB and hasn't even touched the bottom BB since 2016.

this is kindergarten so far

Hugh Jazole said...

"too many knife catchers" Perhaps. That's pretty serious selling though.

Kevin Wilde said...

"too many knife catchers" here, sure, if you call two people a lot. TV ain't talking bullish, nor NAAIM. And tis just a trade, based on past flash crashes similar to this week. Looking for an up Dow 1000 day, then I will be going all in short. If tomorrow ends bad then I will likely step aside in case of a black Monday repeat over the weekend. QQQ already reversed today's red ink in after hours trading, though a lot to go through before we get to the open tomorrow, including the reaction to JPM earnings. Reaction to news tells a lot regarding money wanting in or wanting out. Tomorrow is likely to be a big tell as to how this crash phase wants to unfold.

T.Berry said...

jpm officially launches q2 earnings with, surprise, a nice beat. stock is only 8% from all time record highs in pre-m. c & wfc follow up with better than expected and are both up in pre-m as well. rising rates are bullish

'tis the earnings season officially. game on


pay no attention to the finnies lol

Christian Gustafson said...

so ... 6% mini-crash today?

Hugh Jazole said...

If we don't get some buyers quick.

Christian Gustafson said...

Hugh -

there are no real buyers

there are only games

technical levels, support and resistance

if ~2785 /ES is our new OR, we are about to crash here, today, and we will retest this level 2 weeks from now


Hugh Jazole said...

No more death penalty in WA? What's going on up there CG?

Christian Gustafson said...

There hasn't really been one in a de facto sense when they let Gary Ridgeway get life in prison in exchange for identifying the final locations of a number of his victims.

If you can't execute a monster like that, your entire baseline is rekt.

Again, I must remind readers that my grandmother served on the murder jury for none other than John Wayne Gacy back in the Illinois.

Hugh Jazole said...

Feeding and housing these creatures is a sure sign of a sick society. They need to be eliminated.

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

Caldero goes full bear.

Kevin Wilde said...

Martin on the Dow for this week.

He sees 2 scenarios, all dependent on what happens today:

1) Dow trades down today, yet holds last weeks lows, then will enjoy a rally into end of this week.

2) Dow trades up today, above Friday's high, then will suffer a sell-off into end of this week.

Martin sees overseas buyers pulling back on fears over the US election, which is evident by pullback in Dow since start of October. Indeed, he terms it: it's the election, stupid.

My own target to exit longs and enter shorts are Dow 26,000, SP >2850, QQQ >179. Trend turned negative last week, so want to sell rallies till trend turns positive again. I'm agnostic on the bull v bear dilemma, just riding the trends till the markets prove themselves. Either way, should be big up and down moves that offer potential to profit for those willing to ride the swings.

Bicycle said...

there is an inverse H&S formed on the DJIA since the beginning of Friday session when it gapped up out of a multi-session downtrend channel. Could simply be a re-test of 2785 level on the S&P (then subsequent hard rejection). Or this would also be a beautiful place for a bull trap

Kevin Wilde said...

Tom DeMark was looking for a late October peak. See video:

https://www.bing.com/videos/search?q=bloomberg+Tom+Demark&&view=detail&mid=F8DF4C6B32764B84E773F8DF4C6B32764B84E773&&FORM=VRDGAR

Christian Gustafson said...

Scenario 3 -- S&P sells off to close @ 2594 on Tuesday. Someone says something nice overnight.

Then market rally to the 2803 old channel resistance about 10/26.

T.Berry said...

"I would go short at Dow 23K."

August 4, 2017 at 7:27 AM


that one left a mark lol.


the dow jones hasn't been below 23,000 since.

Hugh Jazole said...

I'm looking to bail on a couple of recent positions in the next week or so. How high are we headed, before the next leg down? 2850/2900?

Christian Gustafson said...

I don't think most of these fools see the trendline we are visiting this morning.

You are about to get what you deserve.

T.Berry said...

hugh earnings just kicked off friday
you have some time ---besides everyone is a bear now after last week's mini correction --- they're gonna need a bigher slaughterhouse lol

what they don't realize is nothing fundamentally changed last week---- the economy is still as strong as it was the week before and getting stronger


s&p heading for 3k

Jeff said...

One difficulty for the bears (and fuel for the bulls) is bearish sentiment. Inverse etf volume as a percentage of total etf volume hit a record high (by far) last Thursday. T Berry, please don't gloat. We all make mistakes. You said in late September that you bought on margin when the S&P was at 2919.

Kevin Wilde said...

The problem for the bulls is the technical damage that is being led by the majority of stocks. McClellan Summation is close to triggering a bear confirming drop. If we get that - which will likely happen if we revisit last week's lows - that will stay in effect for a year or more. All if good if Summation rockets when stocks do the partial rebound thing, and bulls b dead if Summation lags.

My target remains Dow 26,000, Sp 2850, QQQ 179-180, which is where my QLD/SVXY/TNA becomes QID/UVXY/TZA. Hopefully we get there tomorrow...

Christian Gustafson said...

Need a close under 2790 here.

T.Berry said...

not gloating jeff, my position is the same as it was 4-5 years ago---the stock market is in the strongest & longest bull market in history and will continue to rise with occasional 5-7% pullbacks along the way and an occasional 10% every 3-4 years.

i did buy on margin jeff as i post all my buys in real time----i've averaged in as i always preach----made purchases on 9/24, 10/4, 10/8 & 10/10.

i'm not concerned as we are just at the start of earnings season and the s&p is already up 3%

fundamentals will continue to drive stock prices higher. remember zero has changed since the week before last. if anything, the economy has become stronger.

#nevar2800 lol