Throw in the kitchen sink

Ending-diagonals, Bradley turns, expanding-wedge megaphone tops, GDP releases, grinding down the shorts, 1-4 overlap in a terminal move, an October crash, the works, everything!

SPX 07-25

Notice how the wave 4 takes another 6 weeks to play out.  Better to log off and go hiking.

And on the Seventh Day, Karl wept ...

Karl Denninger's doomed BBRY continues to make new 52-week lows -- it's one of the stocks contributing to the three (at last count) Hindenburg Omen days we had this week, putting in sharp new lows while the momo tech stocks fly.

BBRY did touch its lower Bollinger on Friday, so it's due for a bounce, maybe another test of the $8 level before it continues its quest to worthlessness.  Remember that BBRY has only entertainment value for us in Deflation Land, it's a proxy for laughing at that consummate douchebag in the Florida who is shutting down his blog, gee, one of these days.

These memes are addictive once you get started.

Charts, it's do or die for anything bullish now.  My count still wants to see one more high, preferably in a couple of weeks around 2150-2156.  FOMC the big mover this upcoming week.

After another high, then we want to see the ending-diagonal finally break down, hard and fast.  UVXY ought to be at least a triple on this move if properly timed.

SPX 07-24 daily

This all leads, of course, to a fight over the 1820 SPX level that resolves itself as it should, with a complete meltdown of the equity markets and return to the trendline between the 2002 and 2009 lows.  These are the FAS-157 chickens coming home to roost.

SPX OMFG

Charts 09-25: Wave 4 in?

We have what now looks like a bullish triangle for our wave 4, counting it a-b-c-d-e, finishing up in the .382 retrace area of the previous leg up from 1640.

SPX 09-25

SPX 09-25 30D

The McClellan Oscillator had a second day in a row with a small change, so we should expect a larger move on the indices soon.  VIX and the volatility ETFs weren't too worried about the tape today.

Sadly, Karl Denninger has lost all touch with reality now and is off in space with his delusions while his favorite stock swirls the bowl, lashing out occasionally to ban the few remaining thoughtful participants on the ol' TickerForum.  Would you buy a tech-oriented investment newsletter from this nutcase?  I didn't think so.

Asimov will subscribe, if the price is right.  How about ... a dollar?

EDIT:
Hey, wait, I just noticed that with the extra time spent today, now we can count this entire wave from the 1627 low if we wish.

SPX 09-25 counting from the 1627 low

The important thing for me is having an unbroken 2-4 trendline, which I thought we wouldn't get thanks to how we bounced around down there.  But this wave ate up enough time now to give us a legal count on my rules.  And, counting the wave 3 from 1628, now we can see that this wave 4 has actually NOT exceeded a .382 retrace.

I like it.

Charts 09-23: Reader mailbag

I decided that the blog could use a little fresh paint, so I played with the Blogger template editor a bit.  The wallpaper image at the top is Loredo Taft's "Fountain of Time" sculpture located between the University of Chicago and the barbarous and dangerous regions to the south and west of Hyde Park.

"Time goes, you say?  Ah no, Alas, time stays, we go."

Death in the "Fountain of Time"

Today's tape stayed within bounds and did not look impulsive.  We'll look for a flat pattern on this proposed wave 4.  I stay out of the way of wave 4's because they are designed to eat your theta and drink your milkshake.

SPX 09-23

Loyal reader "Joe" asks a scintillating question today:

How in the hell can our debts NOT be paid? THEY ARE DENOMINATED IN A CURRENCY WE CONTROL! WE ISSUE OUR CURRENCY BY FIAT!

Let me ask you this: where does China, Japan, etc get their dollars they use to purchase US treasuries (which is a dollar-denominated ASSET)? They come from the US!!! So how in the hell do you expect foreigners to PAY US BACK in the very currency WE control?!

This is why Karl Donglicker and the rest are so bloody wrong in their entire macro analysis. They fail to understand the nature of fiat currency. We have no fixed convertible currency to gold or anything else; our debts are denominated in our own currency, not the euro, yen, etc.

Your ready abuse of the Karl Denninger tells me that you are a serious and sophisticated man, worldly and refined.  So I will take your question seriously.

The short answer is that our crappy unbacked "fiat" currency is actually very hard indeed, backed not by PMs but by crude oil itself, by the convention of the petrodollar.  As long as oil is priced in U.S. dollars, then any owner of U.S. dollars may trade them in the world markets for liquid energy, the lifeblood of the modern world.

So the entire world scrambles to obtain them, at least they do today.  This is quite a privilege for us, but it's hardly a natural or permanent state of affairs.

[editor's note: here I was forced to work on some work stuff, but I really wanted to post the chart tonight, so I'll finish the answer in the morning.  Promise.]

The fictitious world of fiat ultimately ties back to the real world via energy, which is why the Saudi America meme is pushed so hard to the credulous by propaganda outlets like Forbes magazine.  China and Russia understand the petrodollar very well, and are positioning themselves for the post-postwar era after Bretton Woods.

A debt-based currency system reaches its maximum point and deflates .  Until the first RE bubble blew, we were able to create new credit and debt in the private sector, until it reached its own top via zero-down ARMs and MBS derivatives.  Lately, private-sector credit creation has been student loans and 8-year car loans.

QE is not raw printing, it's a last-ditch effort for the Fed to support credit creation here in the America.  Every dollar added to the balance sheet is another dollar of debt on the national tab.  It only has value due to our faith in the idea that it is money good.  This faith will falter.

I may concede your point if the Fed picks up the tab for the municipal and pension obligations in the country, as well as the derivatives book of the TBTF banks, if things continue smoothly afterwards.

Charts 09-20: October New Moon the next candidate top

RSI on the SPX peaked with the awesome FOMC spike this week, so much so as to suggest it was the end of a wave 3, not a 5.

Diligent Elliotticians should then find the current channel and figure out where we are within it.  I would argue that we completed the (a) wave of the 4th wave correction of the W3, with (b) set for Monday, and further selling-off on Tuesday and Wednesday.

Monday's rally off Merkel's re-election should not set a new high on SPX.  It should be contained around the 1720 area, allowing for (c) of 4 to take us just below 1700, or mid-session Wednesday according to the channel as drawn.  Late this week we will have Durables and GDP, should be exciting.

A top into the SPX 1751 area would make for a decent-sized 5th wave here, about 1.618x the wave 1 from 1628.  Maybe it will even unfold as an ending diagonal, confirming our expectations of it.

SPX 09-20

BBRY may be a zero by year-end.

BBRY 6M

To my knowledge, Karl Denninger is not a registered financial advisor in the State of Florida.  If he has mislead you with his advocacy for BBRY or other benighted stocks, whether with your own or someone else's money (greets, Asimov), I am providing the link to report an Investor Complaint to the U.S. Securities and Exchange Commission for your convenience.

One more thing, I think Fred Reed's piece over at Taki's Magazine is important and should be read widely.  If you're new to Taki, whom I discovered in The American Spectator, geez, a couple of decades ago, then stick around and enjoy the rest of the site.

Good luck this week!

E-D update and a Special Guest Chart from Lunatic_Fringe

First, it looks like the Karl Denninger is in Jim Jones mode again.  Getting just a little cult-ish over there at the TickerForum.

We know how this ends.  Bottoms-up!

TickerForum keg stand

The good news is, I exchanged some email with my old pal Lunatic_Fringe today, and he not only sent me his current chart and count, but he gave me permission to post it up here.  So here it is.  Enjoy!

Lunatic_Fringe 8-22 SPX daily

Luna taught me a very simple and important rule, which he learned from a study of Glenn Neely -- that an impulse wave needs to have an unbroken trendline between waves 2 and 4.  If the wave 3 obstructs a trendline between these corners, then your count is off.

Sounds easy enough, right?  And yet, mainstream Elliottician Daneric violates it with his count tonight.  In fact, if you go back and look at all of his broken and busted counts over the years, his 1-2 1-2 and "leading diagonal" down calls, you will find many instances where his counts break this rule.  Which is why they failed.

I'm told it's not Elliott, it's Neely.  OK, fine.  But I believe it's correct.  And extremely useful.

Lunatic_Fringe is a specialist at fib extensions and identifying wave targets, so I was encouraged when he mentioned SPX 1736 as an area of interest to him.  For the "wave 3" of my ending-diagonal, I had suggested 1740.  So let's go!

I left all of my trendlines and channel crap I drew on 8/19 on the chart, unchanged.  Why?  Because the tape seems to have felt out my trendline to 1740 and is using is as support, so far, at any rate.

SPX 08-22

Bigger picture, now with moons!  You could subscribe to an expensive financial newsletter to find out when all of the lunar cycles are ... but I will share them with you for free!

SPX 08-22 ending-diagonal - with moons!

IIRC, the 2007 top was an ending-diagonal as well, but on a shorter timeline.  Let's have a look at her.

SPX 2007 market top

Looks like a bearish ending-diagonal wedge, followed by that elusive leading-diagonal Daneric has called for the last 10 bounces on the chart, until we made new highs.  OK, I'll leave him alone.

Now let's stretch the 2007 top and overlay it onto the current and projected tape:

2007 top morphed onto 2013 tape with October top

I guess I could have stretched this several ways -- like lining up waves 0 and 2, and letting the rest fall into place.  That would put the top well beyond October 8, so we'll keep an eye out for that.

I'll play with this some more, and see if it's at all useful.  If anything, it suggests that wave (iv) in the series might be very shallow, and not make it down to the lower trendline of the E-D.

Thanks again for the chart, Luna.

Charts 07-03: Denninger likely still very long BBRY

Here is what passes for dissent and discussion on Karl Denninger's dying message board, TickerForum.

Karl's still writing with a peculiar passion about this dead-end company and stock, and not disclosing a position in or out of it.  I interpret this that he may very well not have been flat through BBRY earnings, but that he simply did not add to his position going in, especially with short-term options plays.

Karl is free to correct me if I am wrong, and I will acknowledge it with the grace and humility you have come to expect from this blog.  

Personally, I think Karl is an unstable flake, and I know I am hardly alone here.  Despite his overall bearish stance, he takes up with companies like RIMM from time to time just to boast about how very clever and knowledgeable he is about these things.  I guess today he is an expert on mobile platforms and marketing.  

Underwater TickerForum'ers, at any time did Karl's incessant advocacy of this company and its stock constitute investment advice?  Have fun with this.

Here in Deflation Land, we also see Karl as an unwashed philistine, one of those repulsive libertarian types who feels he has to operate entirely de novo and without a net, so that, like Ayn Rand, he can eventually praise Aristotle for agreeing with him.  

Long-time TF poster EightySixTheBS (or something like this), an articulate and consistent bear, also drew the banhammer for pointing out in The Bar that he was right, and Karl very wrong, about BBRY.  I hope Karl loses his ass on this company.  

OK, done with that for now, I think I need a shower.  Summer is here, and many fine hikes in the wilderness await.

We are still hanging in this range, and the overhead resistance of the decline since 1687 is sitting right above us, just teasing us to bounce hard off of it.

SPX 07-03

Pump-n-dump Denninger

Blackberry took a dump on nasty-bad earnings this morning, and everyone over at ZeroHedge was laughing out loud at Karl Denninger and his expected losses.  Of course, ZeroHedge is rife with gold bugs and inflationistas, so they were only too glad to gloat at his pain.

But then someone mentioned that he had exited his positions prior to earnings, that he was flat.  Just a lowly stock-pumper and platform fanboi now, I guess.

His BBRY Tickers no longer state a position, although I think he picked up some calls today.  Who knows.  So what kind of pain did his sycophants on the board take today?  Will they follow Karl on this buying opportunity?

Face it folks, the value of BBRY is in the toner in the copier machines, and in its buyout value for pathetic, irrelevant Microsoft to launch their desperate mobile initiative number XXXIV (this time, for sure!)  They're done.

At the very least, pump-and-dump Denninger can do better than to encourage his flock to go long a broken mobile company into the maw of a consumer slowdown and epic recession.

So, you TickerForum people, insist that Karl post his positions again, especially if he's going to continue pretending that he's a member of the board, a gifted oracle to be consulted by their C-level executives.

If Karl is really a man, he'll go stand up for himself over in the Thunderdome of ZeroHedge.  But I doubt that ... what a douche.

The upper channel wall and the .786 retrace is at 1634 Wednesday.  Low volume melt-up into the July 4th holiday ought to do it.  Then we plunge again.

SPX 06-28 wave 4 triangle