We're approaching another "candidate top" here, near the top of a long-term trendline of serious overhead resistance and plausibly-complete wave counts. The SPX is close to its daily and weekly top Bollingers, while the VIX and volatility ETFs are close to their bottoms. A decent short-term Elliott structure and pre-holiday break week are an excellent setup for a final run up into the 2020 (!) area on the S&P 500.
As expected, I'm bearish and looking for the right entry here.
|Black bear, Bogachiel Trail, Olympic National Park|
First, the market needs to move sideways for a few days, pretty much like Friday, biding time with enough space on the chart for an unbroken W2-W4 trendline. Then we have the second release of Q2 USA GDP late this week into a couple of low-volume pre-holiday sessions.
|SPX 08-22 20D|
SPX 2020 late this week is long-term overhead resistance and an excellent opportunity for a change in trend. Note that the timing here lines up for September FOMC to be some kind of bottom. We sell-off ahead of expected austerity and bounce on the actual announcement mid-month. From here we start to chop south through the levels of the long-term Domed House.
|SPX 08-22 1Y|
Here is the larger "Three Peaks and a Domed House" structure and count, with its final target of SPX 1074. I'm willing to be more realistic now and push this low off until mid-March, 2015, followed by a B-wave bounce. Still, the descent will be relentless and truly vicious.
|SPX 08-22 4Y 3PDH|
This model makes sense if you think about it. By removing QE stimulus, we return to our starting point, the September 2011 lows. Please note that this will be wave "A" of a larger deflationary depression epic crash. K-winter, ladies!
VIX and volatilities have room to drop as well; UVXY at $20 or better would be great.
|VIX 08-22 9M|
Last week I took the girls out to Olympic National Park for a two-part adventure: 3 days on the coast on the Ozette Loop trail, and 3 days in the mountains at Deer Lake above the Sol Duc drainage. The girls are developing a really solid sense of trail etiquette and now carry their sleeping bags and clothes in their packs.
So first we headed for the beach.
|Olympic beach south of Sand Point|
|Sea star in a tidepool|
|More tidepools off Sand Point|
|Hundreds of Velella jellyfish washed ashore|
|An offshore haven for sea lions|
We completed the circuit and spent a night at a motel in nearby Sappho on highway 101. The town of Forks, WA, is looking really bad again, following the faddish boomlet of tourist visitors from the "Twilight" books and movies. Now many of the Goth-y tourist shops that had opened up are closed and empty. Buildings on the main drag are visibly falling apart. The coastal towns are hurting.
We headed over to Sol Duc and up the Canyon Creek trail, and managed to get the best tent site at Deer Lake. Here we watch deer frolic outside the tent.
|Deer at Deer Lake|
|Sol Duc Falls|
After arriving at the lake, I made camp and parked the girls in the tent for an hour while I scouted the upper basin for bears -- I saw two. The next day all of us returned to see if we could find them. We failed to see the bears again, but the girls gorged on alpine blueberries and huckleberries. We had ten different kinds of berries on this trip.
|Picking alpine blueberries|
|Searching for bears in the "Potholes" basin|