Charts 9-05: Let's take the low road

I've gone ahead and adopted Daneric's alt count for this final leg of the rally, but I am looking first for a moderate decline into next week's exciting news.  I'm proposing that the triangle on the indexes right now is b of 4, with c of 4 down coming into next week.  1388-1390 is about the .382 retrace of the W3 wave.

The spike end of the rally will probably kick off 9/12 with an approval of the ESM by the German Constitutional Court, after which, it really won't matter whether the Fed announces QE3 or not.  ESM will be enough to perk up the Euro and the broader indexes.

So my alt is now that we head up immediately to 1440.  But I think we first head a bit lower.

The fast-crash model I suggested is of course not happening -- it should have started by now -- but I can certainly see us top soon and begin a series of declines that build into larger waves into 2013.  This will culminate in a full-on crash from about the 1200 SPX level to lows well below March 2009, in Fall of 2013.  There will be plenty of action between now and then.

With Three Peaks and a Domed House as our guide, I'm looking for the first leg down off the top to target SPX 1260.  It just so happens that the rally trendline up from 666 intersects with 1260 right on December FOMC, which makes for a nice target.  I'll post this chart tomorrow.

If we get to 1260 well before then, say, in November, then December FOMC could be a top instead, and this thing is going to move very fast.  If it's a bottom, then we can speculate for now that we may see a new Administration in the White House this fall, and they will find some way to stall the EOY fiscal cliff.  This could be continuing resolutions or Gramm-Rudman XVI or some other clever play for time, possibly involving Fed intervention as well (December FOMC) to calm the waters in the bond markets.

If December FOMC is a top, fedgov drops the ball on this and we have a minor crash in late December.

As far as apocalyptic scenarios go, I don't see this stuff happening until C down is complete and the economy is in ruins.  No one is going to cut off Food Stamps as an austerity measure, it's much more likely that they will lose their purchasing power overnight as the result of a [petro]dollar crisis.  

Then, yes, we probably have a 3,000 mile wide Yugoslavia on our hands.  Make sure you have a farm with fruit trees and some geese by then, OK?

Completing 4, then 5

Nice old Modern Library edition of The Pit

Charts 9/04: Two paths to a top

Daneric has an interesting Wilshire count of the rally since 1266.  His work is hit and miss, IMO.  He will find new twists on E-W counts and offer up some of the best technical commentary out there, only to turn around and promote yet another leading-diagonal count, which always fails.  Always.  But this one is good.

Apple's announcement of the iPhone 5 on September 12 only adds to the Superbowl atmosphere building around the FOMC and German court decisions.  It could be a top or a bottom, and I'm starting to favor the alt scenario I have here, where FOMC finds us bottoming in the 1388 area.  That is why Daneric's count is useful here, because it saves us from the dreaded wave 1 / wave 4 overlap violation.

Two paths to a top

The pink / alt path here will would rattle call buyers, while not really rewarding put buyers.  Typical wave 4 action.

1388 would also probably mark point 22 on the Three Peaks and a Domed House pattern, too.  The push to a top at 1440+ would give us point 23 and a new season for shorts.

The weekly Bollinger is rising on the SPX.  We will have to chase it, and soon.

SPX since 2000, Weekly Bollingers

Here's the monthly Bollinger, if we really want to blow-off to a top here.

SPX since 2000, Monthly Bollingers

Charts 8/31: rally coming

W4 may be in, or we may have another wiggle left early Tuesday to finish up.  Then we can finish the rally since March 2009 with a move to SPX 1440 into FOMC.

Channel looking good so far

Lost episode of the Deflation Land

Going through some old photos, looking for a shot I took of the old Denny's at Market St. and 15th Ave NW in Ballard (Seattle), I stumbled across a series documenting when Crown Hill was overrun with placards for some nasty townhouses near Bitter Lake.

 

I think the developer liquidated the remaining inventory by promoting them with FHA guaranteed mortgages.  For a while, FHA was the entire RE market.

When your neighborhood is overrun with crap townhouse ads ...

Go out, gather them up ...

Take them to the dumpster ...

And send them on their way.