Wednesday, April 8, 2020

Rollover ahead

It looks like we have one more pop, to ~2882 on the S&P into the holiday weekend tomorrow.

4chan genius


Current chart and count, looks like we are descending in ABC triplets, may keep tripping us up for awhile.  520 on the S&P 500 in August makes sense.

S&P 500 hourly, LOG10

same chart, but linear

79 comments:

christiangustafson said...

Vertical dashed lines on the chart are FOMC meetings; expect them to form local bottoms. The chart does not exclude market holidays in advance, so there are horizontal gaps until those days have passed.

Anonymous said...

BPSPX just hit 90. I have never seen that ever. Someone is trying to put lipstick on a pig. Are you guys falling for it?

Bryan Franco said...

The Fed is buying junk bonds now. There are so many things to be made of this, I don't know where to start.

Anonymous said...

10's of millions of jobless claims in the last few weeks, and stocks are back at 2019 levels. When do you think the huddled masses are going to take to the streets? This lockdown may last longer than we're being told.

umdengineer said...

There is no free market. The economy is now centralized. This is bad for China because the Fed will print money and give it to US companies. The government will place restrictions on this money. Tariffs may resume but are no longer necessary. You just give your companies cash and it's just as good as taxing the other guy's products.

christiangustafson said...

We touched the upper BB on the daily SPX today, lads.

Kevin said...

Riding the trends remains the way to go. Up for now, who knows tomorrow, but the uptrend line off the March lows is key. Stay above that line and the bottom is in and new highs await. Break it, and the bears have their dream.

On the virus front, when are the masses going to wake up to realize its all been a fraud? 30% are already there.

There will be no more shutdowns - ever. Those arguing to keep the shutdown in place till we have a vaccine forget the flu experience, or even the HIV one. The latter we're still waiting for a vaccine forty years later. The former, nearly everyone in the US has some experience - immunity - to the flu. And great swaths of America take the flu vaccine each year. We will still have 20K to 60K people die of the flu each year.

Yes, the flu is bad, and this one seems on par with a bad one, but we really want to risk running out of food so Gates and Fauci and the WHO can run social experiments on us?

Flu season is over, we're all going back to work, and a V bottom for stocks and the economy is very possible. If the globalists like Gates win and we stay in lockdown (doubtful, since Trump is in the WH) then Christian will indeed be able to map out the destruction of the world, and I'll be trading my toilet paper in for guns.

Follow the trend and we should be fine.

Anonymous said...

What experiments are the globalists doing on us? Claims require evidence.

umdengineer said...

That was a very short lived bear market.

umdengineer said...

Take a look at a 1 year chart for this:

https://www.marketwatch.com/investing/fund/lqd

Like nothing happened.

umdengineer said...

https://youtu.be/O1hCLBTD5RM

christiangustafson said...

Yup.

Anyone else watching "Network" tonight? Faye Dunaway is still alive, and I'm still in love with her.

When do /CL futures open?

umdengineer said...

I was looking at CDs a few months ago because the interest rate was slightly appealing.

Those rates are gone now. May as well buy SPX ETFs. The fed has removed any moral hazard now that the stock market is TBTF. The Fed backstop is as good as FDIC insurance. You might have to wait a few weeks in the event of a crash but not to worry, the market will be back where it was in a couple of months.

Throw in a some IG ETFs and even a junk bond fund, why not?

CG I haven't seen it, but you're referring to the 1976 film right?

christiangustafson said...

Yeah, the great Paddy Chayefsky screenplay, great acting throughout, guys like Ron Reagan's pal William Holden. Close to a perfect movie.

Kevin said...

Ken, read some Martin Armstrong to start. That should get you up to speed on what really is behind the panic over the SARS Cov-2 pandemic.

https://www.armstrongeconomics.com/

Alex said...

So the Fed can’t buy stocks directly, but it appears that they are now buying junk bonds. With them removing this risk, and possibly even buying stocks directly in the near future, who’s to say we can’t end up at 4k on the S&P? I know thats not a very helpful statement after a 30% rally, but I underestimated the fed back in 2009 and I’m trying to avoid that this time around.

It seems to me that the powers that be have been very well aware of the inherent risk in markets with repo and lack of good collateral, and now under the cover of the virus, used the opportunity in an attempt to directly correct the problem. Another sleight of hand.

umdengineer said...

Never let a good crisis go to waste

christiangustafson said...

Stir-crazy with cabin fever, cut my own hair with the Wahl trimmer. 3 guard tapered down to a 1, not too shabby. I look like a zek from the Gulag.

Mrs. G pushing back on whether or not this can be a permanent thing.

Prechter said...

hey CG,

Order some stir-fry chicken for home delivery...lol

Does Mrs. G know you are still in love with Faye? :)

christiangustafson said...

There's Faye. But also Kim Novak. And the late Karen Black. It can't be helped.

Bryan Franco said...

I just woke up from a 120 year coma. It appears that still, a man hears what he wants to hear and disregards the rest. Only now, the phenomena has come with greater consequence. Moreover, it seems this bias is just hidden better by people with higher verbal intelligence.

Anonymous said...

Kevin, I took a quick look at Armstrong's blog. I'm always amazed when people try to demonize someone, that they can't come up with anything better than, "Today, the Bill and Melinda Gates Foundation has spent billions on population control in Africa and throughout the Third World." If Bill Gates is involved with trying to reduce population in the third world, I say GO BILL GATES!!!

Kevin said...

Yes, Ken, they're are a lot of people who believe in global warming and the cure is population control - so long as its not their grandkid that doesn't get born. They're also a lot of people, me included, who see such folks as the enemy of all that is good - democracy, freedom of choice, freedom to self-determination etc. As they say, follow the money. The Gates foundation funds the NIH, the CDC, Imperial college (whose scary numbers forced the shutdown of the world's economy,) and we're supposed to remain in shutdown mode until - drum roll - we have a vaccine from the Gates Foundation. No conflict of interest there. Good job we have Mr. T in the WH, who is all that stands between the liberal take over of the world, and the end of capitalism and life as we know it. Once people wise up this is all another grand hoax, another grand socialist/communist experiment, they will riot in the street. Coming to TV screen near you very soon.

Anonymous said...

Global warming aside, do you think the trajectory of human population is sustainable? The irony of claiming Bill Gates is looking to depopulate the world, is that he is directly responsible for the opposite. How many more Sub-Sahran Africans have been born due to his efforts to combat malaria there? Bill Gates is ANTI-NATURE!!! I am pro-nature. If I were running things the population would plummet, because I wouldn't save ANYBODY!!! If a person can't even wipe their own ass, they have no reason to be here. Bill Gates is a bleeding heart libtard!!

Anonymous said...

The following may not seem to be relevant but I assure in these 'special times', it is and will continue to be so all the more in the coming depression.

There is an anecdote from Boswell's 'Life of Johnson' in which Dr. Johnson, when informed that David Hume was indeed a firm atheist, remarked 'Well sir, if you have him for dinner, make sure to keep watch of your silverware'.

Kevin said...

The big question is can we recover from the devastation brought about by the liberals and globalists and the WHO big brother program in the name of a flu just because its new? What would Adam Smith say to all this? If you believe, as I do, in he overwhelming power of individuals doing the best for their families provides the goods and services that helps everyone, then at what cost to the functioning of that miracle when government entities say everyone must stay home, as they know best? What amazes me is the willingness of the masses to give all their freedoms and liberties away - just like that - and all for a simple lie.

Either the alarmists are wrong, and most people already have had the new flu, and we've seen the worst of it, so closing the economy down achieved nothing of note, beyond destroying the lives of 1/2 people around the world who will never be the same again ever.

Or the alarmists were right, and very few people have had new flu, with the worst of it still to come next winter when the flu returns to meets a population with little immunity to it. So all shutting the economy down did was delay the day of reckoning. Worse, by net winter, 1/2 the farms will be out of business, and so too 1/2 the hospitals. And the only reason people are behaving here is because there's amble food in the stores, and an hospital bed available for those who needed it. Problem is, that was because of amble supply that comes with a booming economy. Next winter, we'll have the opposite of that, and people are going to go ape when they realize food will be scarce, and you die at home, because the hospitals are full.

The only hope is open the economy, and pray enough farms and hospitals survive so the world can rebuild and recover. This madness must end, before its too late, and I do fear we may well be past that point of no return already. I'm just no happy about it, and how it all came about: another hoax from the crazy left.

Anonymous said...

"What amazes me is the willingness of the masses to give all their freedoms and liberties away - just like that -" It's important to understand why people do things. Most people are incredibly necrophobic. It's my opinion that ardent leftism is born out of necrophobia. Nothing or no one should ever die, everything must be saved! They are utterly disconnected with the natural cycles of life and death. Seeing thousands die is an in your face reminder of their own mortality, and they will do anything to stop it. More liberal Christians tend to be this way as well. They are one the first to start throwing a fit anytime someone who has been in coma for years is about to be disconnected from life support. Ernest Beckers Denial of Death should be required reading for all truth seekers.

"The premise of The Denial of Death is that human civilization is ultimately an elaborate, symbolic defense mechanism against the knowledge of our mortality, which in turn acts as the emotional and intellectual response to our basic survival mechanism."

Anonymous said...
This comment has been removed by a blog administrator.
christiangustafson said...

Yeah, Ken, Oswald Spengler in Decline of the West, all high civilizations are elaborate attempts to deal with the problem of death.

The "Faustian" Western Civ from year 1000 sought to master the world and direct its forces. But it is ultimately tragic, it secretly knows it will fail.

/ES from overnight and the pop this morning suggesting that wave 2 may be in.

Anonymous said...

I'm ashamed to admit I still haven't read that classic book. I will make it next on my list.

christiangustafson said...

Spengler and Max Weber both died too early at the age of only 56 -- Weber actually by the Spanish Flu.

What we could have gained from another decade or two of these minds at work. Imagine if letters had been exchanged between Spengler and Leo Strauss, what we could have learned.

Kevin said...

Armstrong rant is better than mine:

https://www.armstrongeconomics.com/international-news/disease/how-journalists-are-destroying-their-own-jobs/

Randall Beehomes said...

Deeply disturbing action in our managed markkets

Kevin said...

A lot has to go right for the V bottom to be possible, and that entirely depends on when we reopen the economy and how well it goes. Yep, a lot can go wrong on the political action front, how people react, and of course the healthcare numbers front once we reopen.

However, the V bottom is very possible, and shouldn't be discarded so easily. Not while stocks continue to bet on that, anyway.

I read yesterday cruise bookings for next year and are running 40% higher than we saw a year ago for this year. Only 11% of those were re-bookings by those having to cancel now. That seems to go counter to how I would think people would act. Talk about bottom fishing!

On the airlines, post 9-11 it took 3 years for numbers to get back to the prior highs, though it was business flyer that was late to come back, with pleasure traveler coming back almost immediately.

So there is hope that when we reopen it goes OK, and economic numbers trough and head in only one direction. Stock prices maybe higher than we'd expect given how low that trough is going to be and how long it will take to fully recover, but FED action does historically lead to higher P/E ratios and such valuations. And here we are.

Now all bets are off if they don't open the economy SOON, and God-forbid we have to close again as politicians panic (again) if numbers spike after we reopen.

Stocks say they want to go higher, and I'm fine going along for the ride while hoping for the best. This is our only chance for this disaster to turn out well. But we have to open the economy by May 1 (slow is fine at first, so long as there plan to accelerate is in place and known to everyone by May 1.)

umdengineer said...

https://www.zerohedge.com/markets/investing-now-dead-worlds-largest-asset-manager-says-well-just-buy-whatever-central-banks

Randall Beehomes said...

Poop in punch bowl

Kevin said...

With bonds around the world yielding nothing, and cash in so much demand, where is the BIG money going to go? Risk off assets that yield nothing, or risk on assets that are still working? Seems to me, there's some logical position adjusting going on, where sellers of financials, retail, energy etc, are finding a home in healthcare, the soap stocks, home improvement, social entertainment, grocery stores, and online delivery. So watch AMZN for sign of bull or bear, and that is currently hitting a new all-time high today.

Also note NASDAQ is battling the 50 and 200 MAs smack at the death cross point. Such death crosses work great when the asset is below those crossed over MAs, and work horrible when the assets is above those MAs when in the bear position. What a battle!

Gaza said...

"Cash in so much demand"... big money is already in cash to take advantage of this, imho. Sitting on big piles of cash and gold in a vault. They don't need to take positions in anything right now, just gamble in the futures market...

umdengineer said...

That this is being reported by Faux News means the establishment is finally turning against China.

https://www.zerohedge.com/geopolitical/fox-news-reports-coronavirus-originated-wuhan-lab

This could be the start of a new cold war.

Bryan Franco said...

We won't ever get to know the truth; not about corona and not about all the things that came before it. We merely choose our truth according to the party line that we worship.

Anonymous said...

Oil futures under 19 dollars a barrel. If you think stocks can keep going up with oil tanking like this you're mistaken.

Bryan Franco said...

Ken Smith. The disconnect between oil and stocks is extremely disturbing.

Anonymous said...

Market cap still nearly 130% of GDP.

Randall Beehomes said...

The magic is back. Expect a dingleberry sighting around 2950

christiangustafson said...

Next up ... 2088.

christiangustafson said...

Or this, if you want A = C @ 2894 or so, which the /ES futures were suggesting last night.

Kevin said...

Oil down, Amazon up, seems logical to me. One business is under pressure, the other thriving. Tis all about where to put big money. With bonds negative or paying nothing, can't hide there. So when you sell oil, what do you with the proceeds? Simple: buy AMZN, NFLX,the soaps etc, which drives the broader stock indexes higher. And when oil does the dead cat bounce thing, then the broader indexes will be at new highs.

Anonymous said...

Well.

https://oilprice.com

Kevin said...

Rolling out of the May contract and into the June one is creating the silly headlines regarding oil today. Since holding oil futures at expiration means you have to take delivery of the oil, and you have to find storage for that, there are few buyers of the May contract you want to sell, which is why prices are down so hard. Note the June contract is trading at 22, and so too all other future prices. So oil prices not really down that much at all today. Oil is also in an Elliot Wave 5 swoon, which means about to rally hard for many weeks, possibly months to come. That should do wonders to small cap stocks, and if that starts to happen, the NAZ will be at new all time highs. Bears beware!

Anonymous said...

Supposedly the ETF USO is partly to blame for today's massive plunge in oil futures.

christiangustafson said...

I didn't know that KSA was sending an oil flotilla directly to Tejas to slay the frackers.

Lawdy! they can do that?

Kevin said...

Sounds like doubling - tripling, quadrupling - the strategic oil reserve might be a good idea. Talk about buy low... (Hint: oil is going much higher, very soon. You watch...)

Randall Beehomes said...

When something is minus 37, saying it will go higher isnt saying much of anything

Anonymous said...

Yeah RB, I guess you could say oil overshot the bottom just a wee bit. Another WTF moment in a series of seemingly endless WTF's in these strange days.

Randall Beehomes said...

Da price discovery is Returning!

christiangustafson said...

If we are rolling over into a W3 down, where will it take us?

Here?
2880 - ((3393 - 2189) * 1.618) = 931 spoos

Somewhere else? Will we get an X-wave to Venus?

umdengineer said...

Oil is an interesting problem for the Fed. Can they control the price of a commodity like a stock? Can they print storage space in Cushing? My guess is they will need the rest of .gov to help.

1) Bailout of oil and gas sector
2) Stop imports of oil (should make the Saudis very happy)
3) Reopen the country

christiangustafson said...

We are testing the underside of the rally channel this morning, the pink line from 666 through the 2346 low.

Kevin said...

Trump can buy all the oil and put it in the strategic oil reserve. Build, build, build (oil storage.)

Markets at an inflection point and putting up a great fight at critical support. New highs for the rally very possible. Zero sign yet w3 down has started, although important we don't smash through yesterday's low. I remain long for now, although aggressive short if NAZ closes below 8100.

Randall Beehomes said...

Greta will not be happy. I'm buying 3 Hummers

Anonymous said...

C wave down now?

christiangustafson said...

Is this B or a long 2? if it's a long 2 does alternation suggest a shorter 4 ahead? After a big W3, that is.

Bicycle has been pimping the .618 retrace to the neighborhood of 2933 in private correspondence. He thinks they'll run it up that far, and he's probably right. Bicycle has a keen understanding of the enemy we face and all his tricks.

2933 - (1.618 x (3393 - 2189)) is 985 SPX, you understand. And it puts 520 on the map this summer.

Draw the trendline down from the March lows, extend it out to the June FOMC ... about 985.

Bryan Franco said...

Is there a level for the s&p 500 where it becomes too insulting for the masses to hear on the news just how high it is?

Randall Beehomes said...

Lol. Such a true statement Bryan. I felt that way years ago though honestly.

christiangustafson said...

Trump called it a "bubble" on the campaign trail when it was a third lower.

Anonymous said...

Great thread for the debt deflation crowd.

https://twitter.com/RaoulGMI/status/1254110879479746562

Kevin said...

Wave C or 3 down is not going to start with 50% bears in AAII survey.

NAZ adv/dec volume at new all-time highs suggests NAZ itself headed there. Maybe we need to see some indexes hit new highs, while other lag, while RUT recover half of losses, and maybe even oil does the half recovery of losses thing. If so, rally has much further to go.

Looks like it's going to remain very messy for both bulls and bears, first tricking one, then the other, and so on.

Kevin said...

Looks like the 200 day moving averages are the target for the rally.

RUT 1,500
Industrials 26,500
Transports 10,000

SP Gap 3,300
NAZ gap 9,500

Has there ever been a major bear top without the 200 day being hit on the initial rebound? Don't think so.

Trent said...

Anyone know anyone with cyrus the virus yet? I know tons who have been laid off but nobody who has had the virus yet. Based on the ever changing symptoms i may have had it in Feb, oh and good news nicotine will protect your cells from the virus. This has to be the biggest load of horseshit the public has every swallowed. And its a joy to be unable to post anywhere about this. Just like 9/11, the war in iraq, 2008, the naysayers are shouted down at the beginning, only to be proven correct in the end.

Gaza said...

If antibody studies are to be believed in counties across the Country... perhaps 3-4% of the COUNTRY has already had the RONA'... that's over 10 million+ of us folks... making the IFR less than 1/2 of 1% ...

https://www.medrxiv.org/content/10.1101/2020.04.14.20062463v1

This IFR rate, interestingly, is in line with the study from the Diamond Princess cruise ship that was off the coast of Japan.. where the IFR was a bit less than 1%, but the cruise had a larger contingent of Seniors than the US population at large (avg American is 49yrs old)

This was all well known, or easily accessible, to those in the Power Seats, but it provides far to easy a scapegoat to let it pass....

Fourth Turning is in full kick off mode now fellow travelers.

Deflation Wave about to crest, and crash.. King Dollar will reign.. albeit shortly.. and I will be stocking up from my wish list for the Endgame.

Best of luck to all... Carry On

umdengineer said...

Dow has already recovered half of its losses.

christiangustafson said...

Did you guys notice how the pullback from the FOMC found support right at 2933 -- the .618 retrace from the lows?

With the FANGS off the charts AH and new intraday SPY highs AH, I guess the next stop is the gap-fill, 200 DMA test, and maybe a Bollinger Band touch if we are so lucky.

3008 is the .764 retrace from the March lows.

Trent said...

I just find it hard to believe that with the fed quitting on raising rates last year, then they stop balance sheet reduction, then all the crap going on in repo in september and on......... a virus was the cause for the bailout. Nobody, anywhere is talking about bailouts right now, just the virus. The perfect cover, and you can whip it out whenever you have problems in the future too! The gift that keeps on giving. Will you gents be getting in line for your bill gates approved vaccine so you can have a job or run your business? Wasn't he one of the people who hangout with Epstein frequently?

christiangustafson said...

I am taking both my kids to the Gates Foundation offices next week to get chipped --> 50g extra in my chocolate rations.

If the move up from the lows retraces .764 to 3008 and takes much more time than the original leg down, then it's silly to call it a "2" -- it's a B wave.

Could finish tomorrow. 3008 is close. The 200 DMA and the upper daily Bollinger are right there, too.

If May begins a panic C-wave market crash, then it could be over by mid-July, which means I could spend the rest of the summer tramping in the Pasayten Wilderness.

Linear version of chart (the other is log10).

Kevin said...

I doubt the 200 day for SP stops this rally.

More like, the Dow Industrial one does near 26,500, which would then have the RUT at its 200 day - 1500 - and trannies at 10K. Such a move would close the gap on the SP at 3300, and NAZ 9500.

That would be beautiful and create the most pain and confusion.

Dollar cost averaging out of longs and into shorts on further rally seems a no-brainer to me, and what I'm doing (stop and reverse at new all-time highs.)

Bears beware though, as it is very possible the March panic lows was a Wave 4, which targets SP 4000 for wave 5.(Then crash for real.) That would work too.

christiangustafson said...

If we visit the 200 tomorrow, I'll be looking at May 20 SPY puts, so as to catch all of the oil delivery crisis.

KSA is sending its armada and if we don't take it, they'll sell it to someone else, for something else (not $USD). So we have to take it.

Bryan Franco said...

My guess is that wealth inequality will generate enough unrest to force the fed and treasury to scale back. I have no idea when or where that tipping point is. I would welcome thoughts on this matter. The money illusionists keep showing us that they are the source of prolonged bull and bear markets. Until they are out of the way, I dont think bear markets are allowed to exist. There will be bearish circumstances that yield fleeting opportunities, but no real bear market seems to be allowed.

Bryan Franco said...

...Moreover, the Fed is buying junk bonds. Think about that. Stocks will be next. It is already being done by the SNB and BOJ.

Trent said...

@Bryan Franco

When do the juiced up unemployment benefits run out? I think some sort of mix of those running out and no sports being on television will generate some interesting times in the late summer, early fall. Then again that $1200 is a windfall and could buy the feds breathing room until christmas!