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

86 comments:

Christian Gustafson said...

Kevin, I thought I would work this idea out here. The 2630 level is great for now and a rally/revisit channel kissback in March.

Christian Gustafson said...

On this count the "Christmas Rally" is just the wave 4 bounce, rolling over into EOY and the first few weeks of January.

FOMC decisions:

December: hike
January: no hike (rally!)
March: hike ($IRX is driving this) ... market meltdown

Kevin Wilde said...

I do think we have to be on the look out for Hugh's "what about the FED" caution, where they came in to save the day in 1998 meltdown, and the 2011 one, with massive stimulus on both counts. Of course, those were different times, and the NASDAQ was down 30% before they acted in 1998 and 20% down in 2011. We get there fast if your pattern plays out, and during that I fear the 1929 forces potential puts the lows way deeper than your chart projects. Surely the FED WILL act to help to the markets, so the December hike is off the table (unless we see stocks rallying back in the safe zone going into that meeting.)

We also have China trade as another "surprise" market help that could cough up an even larger melt-up rally to come, though first the markets have to survive the push into deeper stock prices smack toward the crash zone.

Sideways for a few weeks would be very constructive to the bull case as time allows some unknowns to be be known, where as a rally back to SP 2800 (without FED and China trade surprise help) would likely lead to the ultimate kiss of death - while continuing to slide has me searching for my Dow 10,000 rally hat.

All charts say this will be over in a couple of weeks and we will know our fate.

john said...

US markets need some plunge protection action on Monday to reverese this “correction” ehem.
If they don’t get it , bing dang ow.

Hugh Jazole said...

Holy sheeeeit, check out crude! This thing is going down.

Hugh Jazole said...

I try not to make crash calls, but Monday is setting up for a major waterfall. This mornings nearly 7% decline in crude does not bode well for stocks. Kevin, without the FED I would be on board with these uber bearish calls.

Christian Gustafson said...

Perfect close today for the extreme bearish scenario. We can gap WAY down Sunday night, then fill the gap in March.

On latté duty here, cranking out Cafe Ladro bean lattés on demand for the whole clan.

Good luck this week, let's reap the whirlwind!

john said...

Jesse has a great chart comparison of our position

https://jessescrossroadscafe.blogspot.com

Kevin Wilde said...

Is that 5 waves down for the NASDAQ on a weekly closing basis?

Only 3 for other indexes.

A push near the highs for SP and Industrials, while NAZ rallies some to complete A-B-C on weekly chart to get us all in synch?

Either way, we should bottom over next couple of weeks, though we could be way down there before that happens...

Christian Gustafson said...

If BitCoin is any indication, we may test the 2532 low as early as Monday.

I absolutely love a monster gap down from here, as it is the bottom of the rally channel -- the 2-4 trendline of the entire rally since 2009 -- in mid-March at the FOMC. So we get decent confidence for targets for heavily-leveraged risklove trades.

Hugh Jazole said...

You beat me to it CG. Crude and BTC are the canaries in the coal mine. The normies are about to get the living shit scared out of them. This is big, I haven't seen anything like this in a long time. If crude loses 50 in a meaningful way, stocks are toast in the short term. Deflation indeed.

Randall Beehomes said...

Deeply disturbing market action

Kevin Wilde said...

I think the patterns in the video are what we face if markets survive the next week or so of major challenge. Basically a fake 'em down move to complete a year long wave 4, with blow off into next year followed by repeating this disaster set-up later next year. O course we have to survive the next couple of weeks, which is likely to be a nail-biter...

Scroll forward to near the hour mark to see the pattern on the stock market

https://www.youtube.com/watch?v=kPR-Z2xfWVo

Christian Gustafson said...

Could go either way here. We did just have a Full Moon -- bottom? -- which would put the December New Moon as a top, likely into a .gov shutdown.

Will Trump push what's left of a legislative agenda into the lame-duck session of Congress? It would be cool to see Armstrong's "panic cycle" hit here, too.

I wouldn't mind either outcome; with the short-term bullish one, I could at least get a good entry into UVXY for that leg down.

Randall Beehomes said...

Tear gas at border always bullish

Hugh Jazole said...

Was just informed by a friend, that one of her coworkers has lost 70K in their 401K! Being a normie is expensive.

Randall Beehomes said...

She was never going to retire anyway. She just didn't realize it

T.Berry said...

did she sell hugh? if not, it'll come back. the stock market has come back 100% of the time. it's no different this time. patience grasshoppa! LOL

Randall Beehomes said...

We need to go higher when retards like Cramer say this

https://www.cnbc.com/2018/11/26/cramer-on-monday-surge-in-stock-futures-classic-bear-market-behavior.html

Hugh Jazole said...

"the stock market has come back 100% of the time"

https://en.wikipedia.org/wiki/Normalcy_bias

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

"I try not to make crash calls, but Monday is setting up for a major waterfall."

dont stop , you make the best ones. LOL

ofer

Kevin Wilde said...

Tomorrow is a very big day in the 1929 versus 2007 battle to decide where we go over the next month or so, with the decision held hostage to the presence or absence to any significant follow through to today's rally tomorrow. Any break of last week's lows would be a disaster for the bulls as it keeps us on the 1929 crash path. So that offers a last line of defense for complacent bulls giving it one last chance to hang on. Bears should pray for further rally so they can back up the truck on the short side. As Sherlock put it, the games afoot.

Hugh Jazole said...

Hey T. Berry, I'm UP about 5% for 2018. How much are YOU up?

Christian Gustafson said...

I will buy the dip at 2240 on Friday if we make it there.

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

very impressive hugh. did most of it come from playing your 2018 summer bear market call?

tia

Christian Gustafson said...

Do you guys know what's about to happen?

Can you feel it?

Randall Beehomes said...

I feel bloated.

T.Berry said...

a big rally?

Stair ClimbLunatic said...

I saw that idiot Jim Cramer calling yesterday's big rally a "Bear Market Bounce" - and that makes me think this pig is going to rally solidly into year end. When he gets bullish again, it will then crash. Always have to fade that clown!

Christian Gustafson said...

Must never taunt others -- it's an invitation from the Market Gods to bring real pain to mortals.

Especially while we are drawing this bearish wedge mess today, not a good idea to tempt Fate, especially for something so petty.

Unknown said...

Filled the gap today on the daily candles from a week ago for SP500, we can resume the decline. Does every call Cramer makes have to be a fade trade? No, CNBC was talking bearishly during the 2008 crash, even though they fraudulently tried to pump the markets a few times (remember Gasparino's Ambac pump?). So yes, the markets can still drop even with Cramer saying it'll drop.

T.Berry said...

cramer has been one of the few who's pegged this bull market to a "t". he's been spot-on for 10 years.

we may have seen a taste of santa this afternoon.

new ath's but not till '19

Kevin Wilde said...

Today's reaction to news was positive, for sure, though we still remain in the 1929 last turn point, thus no survival cigar for the bulls just yet. Any break of last week's lows and the bears can break out the crash cigars. Here? On a significant trading pivot, for sure, which can go either way. Sell into big rallies, buy the crash - for a rapid reversal trade - remains the way to go.

T.Berry said...

kevin, it's still the longest and strongest bull market in history no matter how you slice it.

it's year end rally time. bought aapl 175.28 in after hours. ho ho ho

Hugh Jazole said...

Normies have lost all animal instincts, if they ever had them to begin with. Animals are always alert for possible danger, ever watchful, and listening. This "faith" people have in markets is why so many just got their heads handed to them, and will again.

Hugh Jazole said...

"I saw that idiot Jim Cramer calling yesterday's big rally a "Bear Market Bounce" He's just covering his ass. These TV/radio stock jocks are ALL charlatans. If the market rallies one/two more days, he'll declare the bear over, if it tanks he can say I told you so.

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

""kevin, it's still the longest and strongest bull market in history no matter how you slice it.""

Yes, but we know how these bubble movies end, THAT is what you're missing.

What this blog is doing is discussing the when. I can see another rally leg up in 2019, though I can also see the market near cut in half by the end of the year. All depends on what happens next.

T.Berry said...

kevin,
been waiting for the big day for about 8-9 years now . someday it will come but as we all know it'll be temporary as the sun always rises again and so does the stock market. the key is to not panic sell like many did back in 08' only to see the stock market begin a historic run.

as a bull you must remember, the stock market has come back 100% of the time. and that dates back to 1817 (201 years!)

T.Berry said...

"why so many just got their heads handed to them"

is this in reference to those who've been calling for a crash for the last 8 years? lol

Hugh Jazole said...

"is this in reference to those who've been calling for a crash for the last 8 years?" It's referring to those who made margin buys near the ATH. I haven't been making crash calls for 8 years, in fact the comment history here will show I was bullish in 2017 (the last time I had any significant stock holdings), and called for a bear market starting in 2018. Both were correct, but the bear market started later in the year than I expected.

Kevin Wilde said...

Yes, the market bounces back 100% of the time, SO LONG AS YOU CAN WAIT DECADES TO RECOVER YOUR LOSSES.

for today, any reversal keeps us on the 1929 crash path (red line in the chart I just posted at Danerics site at 0930 today - for your viewing convenience ), so keep an eye out for big money using the open this morning to sell into the rally.

I'm hoping for the blue line projection rally into resistance rather than the red one, though the pattern so far has been for rallies to fall short, and selling to push deeper, along the lines of the red line.

http://danericselliottwaves.blogspot.com/2018/11/elliott-wave-update-27-november-2018.html#disqus_thread

Christian Gustafson said...

Original scenario of c up of 2 up to the upper daily BB @ 2812 looking better now, after the grim Thanksgiving week. The Full Moon may have marked that low for us.

We are certainly not rolling over into panic wave 3s down, are we? Not quite yet.

Christian Gustafson said...

And if this is c of 2 up, it should go on a tear, a real short-squeeze impulse.

Kevin Wilde said...

Christian, if we close in the red today we WOULD be in wave 3 panic wave. Till then, wave C is the hope...

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

I'm OK with this C going on a tear, all the way to the upper daily Bollinger S&P, by Friday.

Wave 3 can then run from a break with China this weekend until the FOMC meeting in December (no hikey).

T.Berry said...

i love your bear market hugh LOL
they're the best

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

It's not MY bear market. One of the indicators I use is BPSPX, which does indeed have us in a confirmed bear market. That is of course subject to change, but we will need some serious buying to turn it around.

T.Berry said...

i always thought bear markets started at a 20% decline. not expecting one for a few years

i'm guessing a day like today may push the crash back till next year. tremendous volume very impressive gains.

when powell talks, shorts beware lol

Christian Gustafson said...

Roger, 2352 on that.

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

kevin,

can you please show were it's taken "decades" for the s&p to return to all time record highs?


just a simple answer noting the years

thank you

Randall Beehomes said...

Bearish Cramer on Monday was the tell

Christian Gustafson said...

No! it was the Full Moon last week.

And time for a 5-wave c of 2 up to play out.

Kevin Wilde said...

1929 thru 1954 (Dow down 89% in between.)
1966 thru 1982 (Dow down 75% inflation adjusted in between.)
2000 thru 2016 (NAZ down 78% in between.)
1989 thru ???? Japan (still underwater.)

Since we are correcting a 100 to 120 year bull market, the correction would be expected to be at least 1/2 of that, thus to to 60 years, thus like Japan post 1989.

Fundamentals and demographics are also more like Japan, though THEY had a fundamentally healthy US/Europe/China to help smooth over the first three decades of their troubles, where as we won't have anyone this time around.

The only question is: when does it start, and whether it will be deflationary or inflationary that destroys your wealth.

Kevin Wilde said...

Christian, five waves up like on intra-day basis (today wave 3,) or more like what Daneric is currently showing, where we rally in five waves on both the daily and weekly charts to say mid-December?

T.Berry said...

nice try kevin. spoken like a true perma-bear : )

you might want to read the question again.


btw we aren't JAPAN either! --sorry that doesn't count- : ) nowhere even remotely close!


checkmate lol

T.Berry said...

our stock market regained previous highs in less than 4 years. proof, we ain't no japan! not even close.

Kevin Wilde said...

1929-1954 USA Stock market down 89% took 25 years to hit new highs
1966-1982 USA stock market lost 55% nominal, 75% inflation adjusted, 16 years to hit new highs
2000-2016 USA stock market lost 78%, 16 years to hit MODEST new highs.
FACT. USA.

Christian Gustafson said...

Because we try to keep an open mind here in Deflation Land, if we are drawing a "Big W" pattern, the upside target is:

(2815 - 2604) + 2815 = 3026 s&p

This would be a Santa Rally for the ages. Instead of c of 2 up, we would actually be in an impulsive 1st wave of a big impulse north into EOM December.

This leg would correspond the original rally from 1810 to 2111 way back when.

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

sorry kevin wrong, the answer is zero. the longest it took is just less than 5 years.

3026 looks real good cg, but probably not till next year since we're in a bear market.

T.Berry said...

nice to see nov finish up positive for the month. we could be in for a december to remember! ho ho ho santa's on his way!

Christian Gustafson said...

In the absence of (a) reaching 2352 on the S&P, (b) building a proper impulse structure down, the "correction" case must be considered, and the wave count since the 1810 lows can handle it.

If Powell pumps the S&P to that level, he will feel dirty and used and cheap and probably hike again at the end of January, tho.

T.Berry said...

"Nenner out again saying rally into TK, then down into mid-Dec, then rally into Jan before bottom falls out.
November 9, 2018 at 9:28 AM"


well since tk, the s&p is up about 100 points.

another nenner miss

Kevin Wilde said...

Nenner is tweeting his intra-day service said to go long, though he's getting flack for that, including from me.

On the other hand, is it mid-December yet? Let's see if we hit a lower - more important - low by then.

Christian Gustafson said...

I'm also factoring into my analysis an upcoming McHugh phi mate turn from his newsletter that I can't share.

His last two dates were 10/3 and 11/8.

Kevin Wilde said...

Chritian, I have a few indicators that say whether a trend change is for real, thus should be a head's up if any end of year rally is headed for new highs or not. So far, trend remains down, though all depends on how markets react to any China news this weekend.

Here's some good info on the kind of TA elements to look for to see if this rally is for real (so far not...)

Enjoy!

https://www.youtube.com/watch?v=ft4MuxdMG9Q&feature=youtu.be

Christian Gustafson said...

Also notice how close we are to a Death Cross now on the daily S&P 500.

Kevin Wilde said...

A QQQ rally into its death cross is my hope to go short.

On the McHugh turn, not asking for you to reveal proprietary stuff, though I hope you sure mention when you think its a good place to sell and sell short :-)

Randall Beehomes said...

I'm afraid the evil liberals connected to Mueller are trying to hurt our stawks

Hugh Jazole said...

Crude breaking down again.

Christian Gustafson said...

Good vibrations ... market needs 2775 today.

Kevin Wilde said...

My strategy calls for me to be positioned short here and I'm in cash. If we get SP 2775, is that a good place for shorts, or wait to see how markets open Monday, or start to rollover, or wait closer to new moon after next week? Putting it all together, what's the best plan, for someone itching to get short?

T.Berry said...

good chance cg. it's friday and stocks more often than not rally on feel good fridays! nice way to kick off the weekend and get people in the holiday shopping spirit! this years sales are going to shatter all previous records.

Randall Beehomes said...

Dollar is too damn strong

Kevin Wilde said...

US dollar is strong because the rest of the world is a basket case, especially Europe. Armstrong talking about renewed banking crises over there, ratcheting up in December. The question is, when Europe catches a cold do we follow suit, or catch their money, as Armstrong believes?

T.Berry said...

nice month end finish. the rally could be one for the record books! (to go along with record holiday sales!)

Christian Gustafson said...

T.Berry -- you would love the long I sold at the close today. 6.4x bagger.

Event risk, any negative open Monday would have killed it dead. Better to cash in this weekend's time. Beers for all.

T.Berry said...

good job cg! never had a 6+bagger.


still think the markets rally hard into year end. too much good news to ignore. december could end up being one of the best months of the year. the bull is a long way from being over.

Michael Gauzza said...

3-month Libor sitting at 10 year high!! I believe we are entering the 9th inning folks.

Kevin Wilde said...

The European banking system is on the verge of collapsing. That's what Libor is saying, that's what the action of DB is saying. THAT is why Powell is pulling back...