Wednesday, July 30, 2014

Charts 07-30: Still waiting for the break

It took some time to work our way out of the channel we have been in since April -- dark blue on the chart.  Now we need to see some selling -- 1925 by Friday would get us on track.

I had been really interested in the 7/16 "major" Bradley turn window.  Bob McHugh had one of his "phi mate" turns, which he calculates from time relationships of the significant highs and lows since the 2000 highs on the Dow, scheduled for 7/17.  The Dow made its all-time nominal high on 7/17, but we have not had a hard reaction -- yet.

Instead, the divergences are building up, which you can especially see on the McClellan.  At the all-time market highs on the SPX, the McClellan Oscillator was logging very negative readings, a flashing red light.  So we're still waiting for the break.

SPX 07-30


Bicycle said...


Looking like we're gonna throw in a monthly red candle too which will *just barely* keep us in the megaphone on the Dow...'s potentially setting up something real ugly for August...

It's positively hilarious watching the perma bulls struggle to explain the post-GDP drop.

Bicycle said...

What did I tell ya...

...nice red candle before the end of month July.

Party's over folks, we are now 6 months out from rate increases.

pb said...

Bicycle -how far down do you see on the first drop before the bounce???

Bicycle said...

I don't know. Is that an allowed answer ;-)

If this is really *it*... who thinks we will trigger a Level 2 or 3 circuit breaker before the end of the year?

Christian Gustafson said...

We could reach support at 1925 by close today, amazing.

Of course, I thought I saw a RSI divergence earlier and covered my shorts way too stupid early.

The noise up at the top makes for a confusing array of possible channels and supports to sort out. Ack.

Christian Gustafson said...

No, even better is that we get 1925 tomorrow. We would need a bounce in the morning from the employment report, up to SPX 1944 or so.

Then the margin calls arrive. In rough (bear?) markets 5th waves are powered by margin selling. You get a straight-line drop that frightens everyone and then ends.

This would be a very profitable move for riskloves with same-day weekly puts.

I'll write about this scenario tonight.