Sunday, January 6, 2019

A triangle would work well here

We have overshot the .382 retrace of the big drop from 2800 SPX, but this bounce has done the important work of kneecapping the $VIX. 

A bear would want to see it back off and resolve as a triangle into the FOMC at the end of the month.  We can still find our way back to 2520 in a sensible way, preferably with a $VIX of 18 or lower.




The break from the triangle would be violent, potentially even more steep than what we are counting as the third wave.  But it would mark a climax in the selling that would then reverse in a stronger and more sustained retrace.

At some point this year the real damage is done.

SPX daily

38 comments:

Bryan Franco said...

Yes. Needs to do some "time"

christiangustafson said...

Oldie but goodie, the George Brett story.

rotrot said...

rotrot | November 12, 2018

During July 2016, I was introduced to an individual with expertise in technical analysis and stock market cycles. After reviewing his work, I discounted his 'forecast'...how could the stock market continue to rally for at least another year and a half? Well we know that it did! As a result, I reached out to the individual. We have since established a sound working relationship. I have been actively following the financial markets for more than two decades...there is no one better than this individual...an absolute master of time and price...the next few years could be interesting...thanks Christian...be well!
_____________________________________________________________________________________
rotrot | November 21, 2018

reference is made to my prior post on November 12, 2018 at 6:09 PM...on July 1, 2018 the referenced individual provided me with a chart that identified the single best time to short the S&P500 during the next several years...the chart also mapped out the BIG picture trends (down and up) expected during the next several years...sometime after the first of the year I will post the 'short the S&P500' date...in the meantime I will ignore the quibbling relative to the daily squiggles and wiggles...see ya!
_____________________________________________________________________________________

reference is made to my prior posts dated November 12 & 21, 2018...four months before the fact the individual forecast the secondary high (best shorting opportunity) would occur on or about November 12...the actual date was November 8, a whole two trading days off...the individual just provided me with an updated DJIA cycles forecast...the next few months (years) will be historic!

Kevin said...

Christian, such a triangle is exactly what I'm looking for, with the 20 day moving averages providing the upside resistance that keeps pushing ever lower till we break to new lows. My patterning has a deeper A wave sell-off to start the triangle, and the likely wave 5 break to new lows is likely to be pretty small in size. The exact low should land when the MACD turns negative again, matched with a reversal candle to next day or so. That's what I'm looking for. Next trade is 12.5% down, then long for the ride back up here.

rose2797 said...

Kevin so what spx low u are expecting. At this point r u expecting 2600 right now

Anonymous said...

Only one way to go from here.

https://stockcharts.com/h-sc/ui?s=%24nymo


Kevin said...

The kind of low I'm expecting is SP 2280-2320, though it happens in like one bad day, so will land where it lands. Just keep an eye out for when the daily MACD turns negative. New lows at that point equals time to buy for a ride back up here. Then we will see if we're in a bear, or headed for a larger blow off. One trade at a time...

christiangustafson said...

Expanding bearish wedge to 2000 SPX on March FOMC.

Fed cuts rates, and we retrace the whole thing by June FOMC. The greatest long ever in the history of history.

Then the bottom falls out again.

Sal said...

ES came upto 2597 without any significant pullback from 2438.5. I was expecting a 3 waver like the (a) and (b) before in this chart below:

Click here for ES chart

Now I am not sure if there will be dip so close to the target ES2612 and start b of (c). Either way I think the bull bear line is at ES2612. If it tags it and turns around, that would mark the end of uptrend from 2317 on ES.

Playing sub waves has been more difficult than trying to predict overall direction. I was harping about 2318 since nov first week when it was at 2800+ but by the time it got there I was in and out couple times and it wasnt well timed.

Same thing on its way up.. made some good and some bad moves trying to time the waves to 2612. Case in point was the upturn at 2464 didnt materialize. Instead it went to 2438.5 before turning up.. Then tried to get b of (c)..

I think it makes sense to just sit out the smaller waves and give more time. One of these days I will get it right.

But for now, Soros maybe getting ready to strike with the forces of king solomon at ES2612.

Randall Beehomes said...

We go lower from here

Kevin said...

Look at the topping candle on the Dow Industrials yesterday. Compare that one to the one at the October peak, then the November peak, then the December peak. Dow about to suffer a 500 point drop to close hard below the 20 day moving average, on the way to new lows.

christiangustafson said...

If we are done here, next stop is the 2000 level on the S&P 500 -- 1st week of March.

Extended 5th wave, ladies, a real doozy.

Kevin said...

Christian, what makes you think we're in for an extended 5th wave of such magnitude, versus say what happened in 1998, 2000, 2007, 2011 5th wave move, which were one day events at new lows that immediately reversed?

christiangustafson said...

Let's see where we wind up today -- this looks so weak and sad.

W3 did not extend, so a fully-extended W5 imo would be W0 - W3, or 594 pts.

Skeptical said...

Just finished the best 10 day streak for stocks since the March 2009 low. Trump nailed the low on Christmas Day when he said it is a "great opportunity to buy." Obama said something similar on the day of the 2009 low. Who knew the Presidents were the best market timers in the world?

Kevin said...

Good timing on the Prez side. Or, maybe he's a chart reader, as his comments came right at the end of wave 3 as shown on Christian's chart when such a bounce would be expected to land. If Christian's chart is correct, the prez is about to get his head handed to him on his bottom call.

Kevin said...

Nenner sees wave 4 over on a close below SP 2570, with a cycle turn expected next week. No downside target as of yet, though Steve Grasso - who has also played this near perfectly - sees 2200 as the low for the next sell wave. Looks like it's about to get real interesting again...and should be very tradeable and profitable.

Unknown said...

Yes, the presidents have timed the lows perfectly. Of course, when you have the Federal Reserve at your disposal to skew the markets that tends to help. But hey,as long as the stock market hits new highs, it does not matter that no one can afford a home, or that 80% live paycheck to paycheck, or that zero savings is made by anybody,or that employment has majorly shifted to retail and service sector. But all that matters is the stock market is up, and get excited because it'll be going up more when they putthat printing press into higher gear.

Enjoy the demise and failure of America. Rome was much more prosperous and advanced for its time and they still failed. We'll have our turn.

Randall Beehomes said...

doom begins tomorrow

Anonymous said...

Big flush incoming! The bottom just fell out of utilities.

https://www.investing.com/indices/dj-utility-average

Skeptical said...

So we have had around 12 straight days of dip buying. Seems like past periods of dip buying went on even longer. Will this time be different?

christiangustafson said...

You mean this endless sawtooth pattern of a lower open, followed by a low-volume melt-up?

Perhaps the Bradley turn this week breaks this logjam and gives us the (extended) 5th wave down to new lows.

Depriv said...

One of my friend asked me that why I'm so bear.
I said that I'm no bear at all: can't wait to get my longs (around 600 in SP).
I don't think he got it...

Joke aside, still not decied if up or down. Right now it is a bit more like about a new top.

Prechter said...

Bicycle,

Ocasio-Cortez Term 1 cannot happen - not yet anyway!

She is only 29 years old - President has to be 35 years of age :)

lgp said...

Ian Bezek here...

I lost access to my Yahoo email account. Could you guys add me to the thread at irbezek33 at gmail.com ? Thanks!

Anonymous said...

"If they do not hike we will be somewhere at 3k to 3100 by year end." Now you're getting it. Many have been saying they will cut, and that it would be the ultimate sell signal. Why would they cut? All they have to do here is hold tight, and the market will scream higher after the first quarter.

Anonymous said...

God this never ends, it just keeps going and going. I don't even recognize America anymore from ten years ago. Can't we just pull the plug on this already? Kudos to everyone making money on stocks, but if we're all in agreement that society is falling apart in the process what is the point? Sjw, shitty gig jobs, no jobs unless you have the right amount of degree and exp. 50,000 plus master degrees! Where does it end?

Anonymous said...

"Sjw, shitty gig jobs, no jobs unless you have the right amount of degree and exp. 50,000 plus master degrees! Where does it end?" Don't forget about woke capitalism. Gillette, the best a toxic man can get! I've long viewed myself as separate from "society." There are many groups who retain their own culture within the greater one. It's best to try to focus on your own life, and find others who agree that the world has turned to shit.

Anonymous said...

These egalitarians will fail as they always do. It's only a matter of time before the IRON LAW ruthlessly asserts itself, and puts their utopian dreams back to sleep. Just knowing this FACT allows me to laugh at their childish charade.

Kevin said...

I don't think its about rate hikes or cuts. It's about the balance sheet, and till that changes, the FED are tightening by removing 50 billion every month from their balance sheet. They can change that, though till they do, they haven't.

Nenner turn tomorrow for SP...top

Path said...

Agree Kevin global central banks balance sheet key, it seems that looking at the recent charts BCE has not already frozen the size, maybe is it coming in the second part of January. No doubt that the US market is the main beneficiary of the current flow...as long as it lasts...

Skeptical said...

Will the Fed be able to put corporate bonds on their balance sheet during the next financial crisis? There are some huge companies that are leveraged like never before. You already know about IBM and GE. But have you looked at the balance sheets for KO, MCD, HD or even AAPL?

Randall Beehomes said...

Great post skeptical. The next one they will surely go below 0 on Fed Funds. Further, they will buy shit wrapped in tin foil as they've already shown they have no conscience. Of course the public will not be as easy going about their TARP garbage this time around.

umdengineer said...

I don't know if the public can stop TARP the next time around. I had asked on my first post here whether the Fed can turn things around quickly enough when it comes to policy.

The answer is yes. Powell's flip flop means he's not really a hawk. The Fed cares about the market and nothing else. A lot of special interests reinforce that, and with any normal President it's unstoppable.

The only person who could stop a TARP 2.0 is Trump, and maybe that's the reason why the Fed won't tempt fate with a crash. They know a pension crisis is coming. They know a corporate bond crisis is coming. The only way to delay these crises is to keep the market going up. At least until there's a new President and the swamp can refill.

Let's see how long this shutdown lasts. I have a feeling once riots break out the market will dip again.

Randall Beehomes said...

Would not be shocked if that spike to 2645 today on fake China news is it for a long while

T.Berry said...

randall, it's a new bull, prepared to be shocked a lot. the average bull lasts 7 years. this one's not even a month old. i don't think it lasts 10 years like the last, but even if only 5 years we still have 1770 days left : ) . this bull is bringing s&p 4,000+

happy new year and good luck to all in 2019. it's going to be an outstanding year for the bulls. counting down the days till 2021 retirement : )

Randall Beehomes said...

Thank you for the laugh

T.Berry said...

you're welcome, i'm going to save my laugh for about 3-4 years. btw, keep that doom coming too : )