Wednesday, August 20, 2014

Charts 8-20: Shot at 2000?

More of the low-volume, overnight gap-up action.  The channel we're in allows for a shot at SPX 2000 this Friday.  Sure, why the hell not.  The upper Bollinger on the daily SPX is up there, with the lower sitting back at 1900.

SPX channel
From a "Three Peaks and a Domed House" perspective, the question has been for a while now, where is the point #22, the one that precedes the run-up to #23, the final top?

Was it 1737 SPX?  Or 1814?  It might very well be the 1904 low we set the week before last.  That would set us up for a megaphone structure up here that would finish with a kissback off the 1985 level going into September FOMC.

I'm thinking that the September FOMC is the point when the market finally gets it through its thick skull that the QE experiment is wrapping up. 

Megaphone top, please

And here's a black bear I spotted out in Olympic NP last week.


Christian Gustafson said...

Or ... if this week and Jackson Hole doesn't do it, the same channel projects out to SPX 2024 by EOM August. Lotsa bearish wedge trendlines etc come together on about that point.

That is an interesting level b/c a sheer drop from there points precisely to SPX 1074 by the November 20 Bradley turn.

One principle of this perma-bear is that when the real sell-off finally starts, it will be much more severe and truly violent than anyone else imagines.

Each downleg of the Jaws of Death since the 2000 highs is increasingly steep and vicious. I expect that this cycle will quickly go no-bid and astound and frighten even the most bearish observers.

Bicycle said...

+1 to that last comment.

Getting increasingly worried that the Fed will not be the ones triggering this crash, though. As I've mentioned before I think they'll be increasingly reactive in a quickly approaching era where rates are increased to force conservation of resources--the complete opposite of everything everyone has been trained to believe since the early 1980's. We've been trained to waste, and now we'll need to be trained to save.

Did you see the speculation this morning that on the back of the James Foley killing, they are thinking that Assad may have been supplying ISIS up until this point, so that he could later fight them and show the west that he is preferable to ISIS rising up?

The implications of that are fairly concerning as Putin has been heavily supplying Syria with military equipment.

It would imply that Putin is indirectly supplying ISIS in an effort to draw the US into another conflict.

Putin has a front in Ukraine, now one in ISIS, and has Europe in his hand for the natgas this winter.

This historical analogues are incredibly similar to pre-WWII Germany in that you have a former regional power that lost a major war and had a border break-up (WWI vs. Cold War), subsequently went through a currency crisis, and then elects an authoritarian type who is affirming past notions of national unity and strength, with a desire to re-form the former boundaries of the prior empire (and perhaps more). Throw in some human rights stuff like treatment of minority groups in Russia including gays, trans, and Muslims and it all feels a little too similar...

Never mind Germany's expansionary warmaking to feed their war economy in hunt for natural resources. There is no doubt that Vlad wants the mideast oil and the Mediterranean and European natgas.

The US will not have enough oil by itself, to support an Atlantic supply line and save the Europeans this time. Putin will finish what Stalin started.

And it has to only be a matter of time before ISIS strikes out with attacks in Europe and the US. That is your black swan event. The most frightening thing is the way they have tried to one-up Al Queda at every turn. We're getting trapped-- no one in the US wants another Mideast war, but it's going to come to us whether we want it or not, just like the last one did.

Hold your assets close and befriend your neighbors. The goal is to survive it... not to get rich.

Bicycle said...

I read today that ISIS now has upwards of 50,000 troops.

The George Patton landed for the Sicily campaign on D-Day with a US Seventh Army of 90,000 men...

How long before these guys make it to Beirut, Tel Aviv, Cairo? Rihadh? Tehran?