Wednesday, October 29, 2014

Charts 10-28: Speculation on the future

After a week of watching this meteoric squeeze, which puts Bryan's idea of new all-time highs very much back on he table, it's time to throw up a pile of speculative chart rubbish to match.  The gibbons at the Lincoln Park Zoo in Chicago really do try to defecate on visitors, all day long.  Please allow for plenty of room between you and their enclosure.

First, let's take a look at the VIX, whose breakdown through an important support yesterday supports the idea that this will continue in the short-term.  Next support is down in the 12s.

VIX 10-28

VIX dropping back to the 12s would power us to new highs, per the channel we have carved out since the 1820 lows.  2038 SPX marks the top of a megaphone-like trendline coming over from the previous highs.

SPX 10-28

After this presumed top, crash models are very much back in play.  An important deflationista theme is that when things do finally start to move, they will move so fast that everyone who is still playing by the old rules will miss it.  So even bearish shorts will cover too early because some responsible technical indicator told them to do so, and they get to sit and watch the rest of the crash play out.

SPX 10-28 6M crash

Deflation.  What you imagine is money is not, and it is a lot less liquid than you think.

The hour is late.


Christian Gustafson said...


Actually, I just want any follow-up comments to forward to my Gmail.

Permabear Doomster says I need to install a better comment engine. He's probably right, but by the time I do, we'll be debating the ethics of cannibalism, so the effort may be wasted.

Bicycle said...

We are getting a bear rising wedge from the recent low... just like the rising wedge that formed from 2009 - 2014. Perfect fractal geometry at the end of the grand supercycle and so we should put in a tiny megaphone at the top... and embedded in that a tinier rising wedge to finish it off... and inside that the algos will be painting a microscopic little megaphone as they trade with each other over the microwave towers...

...and then we get the largest global economic collapse in world history.

Christian Gustafson said...

"Da Top and Da Crash to End All Pork Chaaps"

Mmmm. Fond memories of pork chop sandwiches from Halsted and Maxwell Street. Probably a parking lot now for the UIC athletic empire.

Bicycle said...

sooner said...

Elliott wave lives on still tracking the rally as a b.

Phat Repat said...

Nice charts CG and Bicycle. Some incredible stuff on the horizon though Bicycle actually takes it and causes me to hug my wubby a little tighter.

The next event will be the elections. IF the republicans have a chance of wresting control of the Senate, and since they are known as fiscally conservative (I know it's BS, but let's pretend) then that could be the tipping point. Tick Tock.

Can't sleep, still, so ran some numbers:

Buy above 1987.95 with Stop 1964.37 and T1 2022.50 and T2 2045.06

Sell below 1955.40 with Stop 1978.93 no T as unlikely to get there.

Bicycle said...

I suspect the Wall Street has already priced in the effect of the Republicans are going to take a bunch of seats from Democrats.

They are not, however, pricing in a significant winter military escalation by Putin.

I still think that Putin will be the trigger. He's going to cut the gas and freeze the Europeans for the winter and he knows Obama will not match his military movements. He is in the drivers seat. The current economic sanctions do nothing to him domestically since Russians have been through a hell of a lot worse and it will just be construed as more propaganda against US petrodollar.

Permabear Doomster said...

CG, if you want help on installing Disqus... let me know....

but really.. its easy to do.. takes just a few minutes.

Anyway...sp'1991... and new high in the Transports.

For me, its all about the sp'1900 threshold.. if it fails to hold... trap door opens... otherwise... yes... new highs into early 2015.

Phat Repat said...

Putin is another angle but that's been playing for a while now too. Much as they've tried to paint him as evil incarnate, it's just not sticking. Who'd a thunk it?

The jig is about up and I feel sorry for my countrymen and how most have been duped. But it is what it is... ;-)

Bicycle said...

When we zoom out, we can see that we're simply making a kiss back to the old large rising wedge...

The only question is if the megaphone fails early and we dump right here, or if this continues to take MONTHS longer as we skate up the underside of the rising wedge to hit the upper bound of the megaphone (and make a new ATH).

I pick #2.... we're just going to grid away slowly up until the new year to a new ATH. Then, in the dead of winter, it'll end.

Christian Gustafson said...

I'd very much like to see this end with new highs as soon as Monday, but I'll take whatever the tape gives me.

If the market gods give us Monday, well, wow, we are setup for an amazing Christmas.

Bicycle said...

It does seem like we will just finish this off right now. We're only a ~2% move from the target on the Dow.

Sally Brown: You blockhead! You kept me up all night waiting for the Great Pumpkin, and all that came was a beagle! I didn't get a chance to go out for tricks or treats. And it was all your fault! I'll sue! What a fool I was! I could have had candy apples and gum and cookies and money and all sorts of things. But no! I had to listen to you, you blockhead. What a fool I was. Trick or treats come only once a year, and I missed it by sitting in a pumpkin patch with a blockhead.

(shakes Linus violently by his shirt)