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