Saturday, August 2, 2014

S&P 500 Crash and Bleed Out

It's Ebola season again in Deflation Land, so you'll want to pick up a couple of extra gallons of bleach and perhaps some triple-ought shotgun shells at the grocery store this week.

"28 Days Later" documentary

The next big test for the markets may come as early as Monday, at the 1941 level of SPX.  If it fails that test, I think we visit the 200 DMA next week.  See the channel:

SPX 08-01

By all rights, we should bounce very hard up from here.  The market is sorely oversold on the McClellan Oscillator, and the small change on Friday signals that a big move is imminent.  But what if that move is lower still?  This will scare the pants off of everyone.  The interminable pattern has been to bounce to new highs.  But if we reject off this pink line, that will be very very bad.

SPX 08-01 1Y

More interesting to perma-bears like me is whether the lower bound of the current down channel becomes the lower support for a fall crash.  This trendline hits several significant waypoints on the tape, arriving right at SPX 1000 on the next "major" Bradley turn date of 20 November.

SPX 08-01 2Y

The overall pattern for this fall crash would be a movement between two divergent trendlines, with longer pauses between each drop, ending in increasingly severe and eventually terrifying crashes.

I promised my girls they would see their first black bear in the wild this year.  We'll give it a good shot in the Olympic Mountains in a couple of weeks, but I have backup excursions in mind just in case we don't see one.  Or they could settle for a black swan.


Christian Gustafson said...

LOLZ . . .

Tuesday could show that bulls are back in business

Permabear Doomster said...

What else could CNBC say?

It is their job to represent the masses, and they do a GREAT job of it.

I'm sure they are genuinely dismayed though at their viewership.. -65% or so since the 2009 low.

Ironically, they could do with a crash as much as the doomer bears.

Phat Repat said...

The good news is we can profit from the remaining viewers. Amazing how an industry can extinct itself; until next time. :-)