Charts 11-26

Here is the revised chart, cleaned-up:

SPX 11-26

This would have us pull back just over the required 3% and top right into December FOMC, where we are greeted with a policy change of some sort, tapering of bond purchases, who knows.

If the top is later, like December 31 or next year, then it's higher.  We're chasing ascending trendlines, so the longer this goes on, the higher it goes.

Of course, there is a shortened session tomorrow and POMO schedule release at 3:00 P.M. eastern is actually after market close.  So, while it may surprise and be bearish, it can't give us that kick in the teeth reversal candle during trading hours.  FOMC on December 18th can still do this, putting a quick end to the holiday rally.

Both the lower daily Bollinger and the .382 retrace of this last leg are down at 1746, along with obvious chart support.  It's also where the previous minor wave 4 found support.

Hey, Bryan

My friend Randy and I were kicking around the idea of topping into the December 18 FOMC, presumably on a real policy shift announcement at the Fed.  So I took the current wedgy-thing we are forming and stretched it out for two more waves -- a 4th wave that retraces us a standard .382, and a 5th wave back up to the wedge trendline at ~1844 on 12/18.

Here's what I came up with (just a quick sketch over lunch at work):

SPX E-D into December FOMC

This looks pretty good as an ending-diagonal formation, but it also fulfills your requirement for a minimum-3% headfake pullback before putting in a final top.

I'll work some more on this tonight.

Charts 11-25

It's so funny to see the liquidity game turned back around at us.  Only now, instead of us creating credit and buying assets from the world with fresh credit-money dollars, now apparently it's the Chinese buying up Irvine and Brooklyn.  All of this, with money conjured up out of thin air.  We'll see if they can purchase the rest of the world's gold and oil along the way.

But Irvine is a national treasure, so this cannot possibly stand.  With that in mind we are looking forward to a strategic reply of real tapering in the schedule this Wednesday.  In any event, it certainly is a very good time for an inflection point on the chart, whether it's the "pullback" everyone expects, or something more sinister.  The wave count is mature and putting up bearish wedges.

The little squiggle I drew this morning did manage to catch the excitement late in the session today.  Yawn.

SPX 11-25

The larger perspective of a top kicked off by a possible taper in POMO purchases this Wednesday.  They aren't going to pull the plug all at once.  Of course not, that would crash the markets.  A taper, even a little one, would give us something better, a real market again.

SPX 11-25 60D

Charts 11-25 a.m.: Proposed terminal wedge, no. XXVII in a series ...

This wedge finishes up at 3:00 P.M. Wednesday, just as the December POMO schedule is announced by the Fed, with the Standard and Poor's 500 Index right about at 1818.50.

Should the POMO calendar show a real "taper" on the purchases, I would bet we will have one of the great final hours of trading in quite some time, losing 40 handles into the close.

VIX did bang out some room on its bullish channel this morning; it still looks headed for the 11s.

SPX 11-25 a.m.