Saturday, February 29, 2020

It could be all over by June

Now that China can no longer create the credit to carry the world, I guess it will have to revert back to the Fed and CBs to try their collective dirty hands one more time.  Meanwhile the $30-40T synthetic fun debt created ex nihilo and backed by 65 million unfurnished apartments and warehouses of rehypothecated copper ingots is about to return to the void.  You know what that means.

Is wave 1 down finished?  If so the .618 retrace is at 3187 this week, if we can break above the initial down channel.  This makes for a tidy 5 waves down to the lower bound of the Jaws of Death megaphone at 2107 into the March FOMC.

5 perfect fibby waves down to 2107

We retraced the dumb rally from October to within a single point on the S&P 500.  That low needs to hold for a last ditch effort of denial.

retrace of terminal overthrow rally since October

The 13-week Treasury yield is telling you today that the Fed will cut at least 50 bps, maybe more, or some policy fun.  This will only buy us a B-wave .382 retrace into EOQ1.

Breaking down the lower bound of the giant megaphone top means that free-fall is imminent again and SPY 100 puts will pay.  Here is how A-B would pair with a C from 2008, targeting a 500-ish destination.

ABC with C the 2008 tape

What happens to cities like Vancouver, BC?  "So what exactly would you say you do here?"

At least some high school kids got to drive Lamborghinis.  That's got to count for something.

Sunday, February 23, 2020

Point of recognition? 3100 Monday?

Did Friday opex only manage to keep the lid on things, to get through the day?

Bearish channel, 5 waves down, if Friday was all we could manage from a very weak wave 2, then we're in for a bit of a shock.

S&P 500 5 waves down, ending mid-channel, extremely bearish

If so, OK, then we bottom Tuesday and regain most of these losses by EOW.

Monday, February 17, 2020

Black swan - Corona Virus - FULL STOP

The .382 retrace from the 3385 high on the S&P 500 back to the 2009 low @ 666 is precisely 2346, the spike low from Christmas, 2018.

What's your favorite analogue?  Northy likes 1937.  I like 2008, a beautiful shape for a disaster.  From 3385 we get a head & shoulders with 2346 as the neckline, followed by a violent collapse to 1000 on Election Day, 2020, and subsequent dives much lower.

S&P 500 daily with 2008 tape overlay

Vertical pink lines are Fed meetings.  They will do all they can, but it cannot possibly be enough.