Thursday, October 3, 2019

Not ... yet ...

This perma-bear may be the only one who believes right now that we still have that one more high left in the tank, and soon.  We are close to the top and the start of the meltdown, but there is a very simple reason why I think we have one last rally and high ahead.


Trump must resolve the stand-off with China.  He simply cannot proceed into the turning of the business cycle into recession with the China tariffs in place.  Any third-rate reporter from the USA Today could mail this one in, about how Trump brought back Smoot-Hawley and destroyed the great Obama economy.  A China deal must happen, any deal, any face-saving compromise, or Trump will be on the hook for what is coming and not see a second term.

And China needs this, too.  They desperately need our food.  The pork crisis in China is dire and threatens food prices and social stability.  At this point, Xi, too, would like nothing more than to settle this for now and take it up later, return to playing the "long game" for a while longer.

The tariffs kick in again on October 15, but I don't think Trump will wait that long.  We through a pin through critical support today and managed to close back inside -- a stern warning that the next break will keep going.


SPX daily

Trump is out of time and must make a deal now with China.  Even subjects like Huawei can be tabled for the moment, because no one is really looking forward to the cap-ex spending on a nationwide 5g wireless network anyway.  What if they eased the limits on Huawei but no one bought their wares?  We do not need 5g, and can't afford to implement it at the moment.

A trade deal, leaked soon and signed over the weekend, completes the rally at 3094 SPX by next week.  There is resistance at 3050, which we will probably take out, an "overthrow" of a trendline.

After October 10, the Fed closes out its latest repo program and we will see if anyone still needs fast cash.  Coincidentally, October 11th marked the high for the year 2007.  There is some symmetry here; let's start by looking at the beautiful 2008 crash tape.


SPX crash 2007-2009

We take the tape and copy it, as a graphical representation, and drag it into the present-day, fit it to the curve and constraints of the giant megaphone top we have drawn since January, 2018.  See the retests and well-proportioned bounces?


SPX daily with 2008 tape overlay

The narrative is plain enough.  We test the lower supports, bounce into January again, with all eyes on the Fed, and when it declines to provide a full QE program at its January meeting, we lose that support and experience something far worse than the last cycle.  Perhaps by the time the Fed is ready to intervene, events and leverage are in motion and a grim trend cannot be stopped.

2020 off a cliff - who knows?

But won't it take more time?  Why should it?  That is the meaning of a true crisis, the point of recognition and scramble for the exits.  Forced selling.  Margin calls.  Who still believes that we can get growth out of debt?  Oh, are there value investors out there prowling for diamonds in the rough?  How about stock buybacks with corporate debt?  Will the VIX break 100?

Trump can blame the Fed, or the Democrats, or Brexit, but he absolutely cannot have the tariff issue around by then if he wants to be re-elected.  He could even be impeached and convicted (of whatever, because reasons) in the Senate.  And I do think he can see a second term, even with this disaster, if he is able to expose and implode the Democrat party apparatus with their scandals and high treason against the nation.

But let's see if we can complete this topping pattern first, on positive trade news.

Sunday, September 22, 2019

Sell Rosh Hashanah

Here we are waiting once again for the next likely inflection point.  Two weeks?



The current count and recent channel projects out to a high of about 3087 on the S&P 500 into Rosh Hashanah at the end of the month.  There is a New Moon over that weekend (top).


S&P 500 hourly, count

This gives us a slight overthrow of the top trendline in the giant megaphone since the January, 2018, highs.  I expect that Trump will kick the can again on the trade war in mid-October, since he does not want to be blamed for what will be underway at that time.  Support is down around 2160 the first week of December.

S&P 500 daily, megaphone top

Expect a halfway-back rally into Christmas, possibly out to the end of January, when all eyes will turn to the Fed to monetize all of the worthless debts and lies that hold up our economy.  Powell will decline to help once again, and Trump will campaign against the Fed and the swamp monsters all throughout 2020.

Also watching for continued weakness in the 10Y Treasury; recession arrives when it un-inverts from the short-term bills.



Tuesday, August 13, 2019

The Feds panicked today

Not "The Fed", but the Trump Administration itself panicked today with the tariff delay, because they can see for themselves how quickly the situation is deteriorating.  They can see it; they know.




Ths short-term count still has 5 waves down and three up, and has not breached the .618.

SPX 5-min

Spicy time is coming.  Support @1380.

SPX daily


Monday, August 5, 2019

It's all so beautiful

... watching the ponzi implode.  How soon will we reach support @ 2220 or so on the S&P 500?


Wednesday, July 31, 2019

Welcome to August, 2019

Let us burn this thing to the ground, and salt the earth!

say hello to my little friend

The market, when she declines, she declines very steeply now.  Écrasez l'infâme!

SPX daily megaphone

Sunday, July 7, 2019

Are we there yet? Are we there yet?

Friendly reminder: Deutsche Bank is on fire, and the Fed is still tightening its quantitative.



Something has got to give -- faster than expected, and more severe.

SPX daily

Wednesday, June 26, 2019

Let's wrap up these megaphones into July 4th

Mnuchin has suggested that the USA and China are close to some sort of trade agreement, and maybe we are.  If they manage to save face here with something, it still won't save the next dozen Baoshang Banks that some down the pike.  The Chinese banking system is beyond insolvent.  But it will rally the markets to new highs.



We have this smaller, local megaphone.  It's in five waves, although the third is the shortest -- hardly an "impulse" wave.  It's one of those very bearish expanding ascending wedges my old friend Lunatic_fringe used to hunt.  Timing is good into the July 4th holiday.

S&P 500 hourly

And here's the big megaphone.  The S&P 500 really wants to tag that area right over 3020.

S&P 500 daily

And then it's just a matter of how quickly this implodes.

S&P 500 doom series


Monday, June 10, 2019

Two megaphones

There are two megaphones in play.




There's this one:

S&P daily


But also this one:

S&P 5 min

What piece of good news could drive the market to such heights (3018) by Thursday afternoon?

Sunday, June 2, 2019

Next big test at the 2650 level

The target on the confirmed head-and-shoulders on the S&P 500 is 2644. 




The halfway-back level for the rally since Christmas is 2650.  We could test this area this week, and the reaction from that test determines whether or not we finish the giant megaphone (McHugh's "Jaws of Death") pattern we have been in since the January 2018 highs.

The 2650 area is decision time, where we either find support, and make it to the promised land over 3K on the S&P, or we bomb down to 2250 or so into June FOMC, and monetary policy gets involved.

I'll take either outcome, and I don't mind the higher high, because that only gives us more to short when the final reckoning comes at last.  There is a fib extension target around 3025 SPX along the top of the megaphone in mid-July.  Before then we will have the June FOMC and a G-20 meeting in late June that could fluff the markets to get us there.

The restrained $VIX and weirdly buoyant $JNK and $HYG ETFs are telling us that we are just not yet in panic/crisis/liquidation mode. 

We are patient as always.



Broadening wedge top, where (E) touches the top

Friday, May 17, 2019

Will PBOC devalue the Yuan this Sunday night?

It sure looks that way.

Please do not disturb the Amazon.com wagie

USD/CNY weekly chart, nice cup-n-handle.  Kyle Bass may have exited his famous Yuan short just as it was about to pay off.  This is headed to 8, then 10, then to 100.  Gee, that's too bad.


USD/CNY weekly

This also explains the sudden surge in BitCoin and other cryptos for the last couple of weeks; insiders know this is coming and are fleeing the scene.

If the market tanks in 2019 -- say if we plummet to the lower support in the next 2 weeks -- then the Donald Trump will have absolutely no choice but to go full scorched earth on the Bolshevik Democrat party in 2020.  He must destroy the evil party and salt the earth.

Note how we kissed back the Christmas rally channel this week.  The big bounce into early July is to the .618, likely after the Fed gets on-board here.

SPX hourly

I've been saying this for a long time, the way we defeat China is by pulling the plug on their cancerous financial ponzi and letting the Chinese people finish off their rotten elites.  Maybe they can end up with a proper representative government instead of another Oriental despotism.

Sunday, May 12, 2019

Gotterdammerung

Futures off 30 tonight, and we could see something truly beautiful this week into May opex.


It has always been my personal thesis that when this thing finally goes, it will throw a rod and fall much faster than anyone thinks.  Shock and awe, bloody destruction, again and again.

We could be testing the Christmas lows as early as this Friday.

SPX nightmare

Market longs are simply in error.  And the S&P 500 is due for a good culling.

Good luck to all bears.

Sunday, May 5, 2019

THANK YOU, THANK YOU, PRESIDENT TRUMP!!

It will not take much at all to implode the ponzi Chinese shadow banking system, and every lie that rides upon it.

Thank you, my POTUS.  You have done well today.



Expecting a FFR cut in September -- not in June.  The lack of a June rate cut from the Fed will actually crash equities back to the 2007 highs (1560s SPX).

But the FOMC will come around in September when the very long-term channel is threatened, with the S&P 500 under 1370.


S&P 500 daily

GOOD LUCK TO ALL BEARS.

Thursday, April 18, 2019

One more time ... one more high ...

I guess I should be angry about this.

sofia leung tweet

But she's exactly right.  I agree completely.


We should thank Sofia Leung for being direct and honest with us about the matter.


Books and libraries are just so much whiteness.

$NDX made a new high this week, so we can expect the same for $SPX, etc.  Timing works well for a few weeks from now, in May.

SPX hourly

Support is down around the 2260 level before they do something at the June FOMC.  But they may just kill the balance-sheet normalization schedule, leaving rate cuts for when things get truly desperate.

SPX daily

Real price-discovery puts the S&P 500 back at 500; it would be nice if we could get it over with this year, so Trump can start working on his 2020 campaign.

SPX daily again

If the market implodes, though, Trump will have no choice but to dump everything he has got on the treasonous Democrats.  The 2020 election would then be the most epic event of our lives, after the market panic and meltdown.

We'll get MMT eventually -- it's the logical conclusion and exciting finale of the path we took in 1913.

Thursday, March 21, 2019

Desperately clawing at the old rally channel

Since we kicked off the Bear Market in Q4 2018, we have been desperately trying to regain the old rally channel up from the 2009 lows.



Run the trendline up from 666 through the 1810 low on a log10 daily chart.  Q4 2018 is "A" down on our count, and we are finishing up "B".

SPX daily, long-term rally channel

When "B" completes, we will lose the rally channel and sell off again, to support at the trendline from prior lows, roughly 2280 by May opex:

Support from prior lows

"C" is a massive 5-wave impulse, with each leg lower ending on a Fed meeting, with promises of free stuff given out each time.

SPX daily, 5-wave impulse lower

The Fed then cuts rates at the September FOMC when we are right at urgent support, the bottom of the long-term channel, 1387 on the S&P 500.

SPX weekly

This rate cut will stanch the bleeding, and -- maybe -- get us through the 2020 election, on the next cycle B-wave.  If we break down and out of the long-term channel, policy has failed and we are now in deflationary depression hell, complete with cascading debt-defaults and an S&P 500 of 500.

We've got through EOQ1 before the current B wave retrace equals "A" down from 2018 in time.  April would be a 20% decline in equities.

Monday, March 11, 2019

Die, Facebook, die!

So I guess Zero Hedge is fake news?  When the time comes, we will not mourn the death of Facebook.  Why do they deny their users access to objective financial news?



Bears should actually be encouraged by the rally today.  This looks like a five-wave move up from the Christmas lows.  Once we breach 2816, we'll keep heading up, seemingly on autopilot, on crappy low volume.

A couple of Hindenburg Omens this week and next would set up the next window perfectly.  By FOMC next week, the middle of the channel is right about at the 2872 area, where you would want to see a five -move impulse wrap up.

Did the Fed promise no hikes this year, none at all?  We are very close to inversion on the 13 week, 5 year, and 10 year bills.  Will watch the $IRX very closely over the next week.

SPX daily

The Fed can't cut until we reach the 1400 area on the S&P.

As soon as September?  That would allow for some excellent fall hiking in the Cascades.  Sign me up.

SPX daily to long-long term support

Until then, enjoy my dear uncle on the drums.  Happy Ides of March.

Sunday, March 3, 2019

Resistance @ 2872 late this week

Futures making new intermediate highs tonight, and we should keep going on whatever short-covering is left and whatever trade deal hype they can gin up for the next few days.


There's a New Moon this week (high), and one of McHugh's splendid phi mate turns coming up ... soon.  Dr. McHugh absolutely nailed several important chart turns in 2018 with his cycle dates.

Current wave-count, looking at a long-in-tooth 5 wave structure here.  Is it the first leg of a much larger wave way up above 3,000 on the S&P?  Is it a "failed 5th" wave that dies at 2872 (last January's VIX-splosion high) and gives us proper impulses down?  We know for sure later this year.

I don't see how we can reach any real agreement with the Chinese on the issues that count, save for complete capitulation on the level of treason by the administration.  They will never respect IP rights, and we cannot accept Huawei (née Nortel) anything on our soil.  A turn late this week would fit either a failed "deal" or a meaningless agreement, where the hype has already been priced-in, and the selling starts.

S&P 500 hourly, wave 3 on peak RSI

Deep-Throat IPO thinks we may see bulk-selling of US equities soon.  He has a larger thesis about deflation in China matched with a bad policy response here, resulting in rampant dollar inflation.  Whichever track we take, what is most important is that we zero out the bad debt, unsustainable obligations, and immoral promises (e.g. .gov pensions), so that we may one day have sound money.

If we can get a proper turn this week, and real impulses south, then this bear would like to see us test the long-term effective Fed policy channel on the S&P 500, around the 1400 level, late this year.


S&P 500 daily, megaphone, supports, down to 1400

IMO, it is this channel on the S&P that will determine the final outcome of this crisis -- whether we break out below the channel into a severe and cleansing deflationary depression, or whether the Fed can force-feed debt and credit into this clown-world system (MMT and teh helicopter moniez)  to send us to hyper-inflationary nirvana.

S&P weekly, with the Fed clown-world channel

Monday, February 18, 2019

Parabolic Path

Assuming Trump wilts like microwaved lettuce in the trade talks, and then a second time in the wall talks.




/ES hourly