Wednesday, July 20, 2016

It looks like it's up to FOMC again

Markets are at crazy new all-time highs, and the Fed does not want to get mixed-up in election year politics.  That makes next week a likely time for the Fed to surprise us pleasantly with its long-awaited follow-up rate hike.  

If the S&P 500 is above the 2,200 level, how can they not hike?  It would be indefensible.

Up to now, the impulses south on the charts have all been impulsive C waves of various corrections.  But they have given us important clues in terms of the slope and violence of these declines.  A real impulse wave down will be longer and more sustained.  The C wave in this series will return us to the 800 level on the S&P 500.

UVXY will have its reverse-split next Monday, I believe, followed by a couple sessions of pain as it sheds roughly another third of its real value from where it closed today.

Keep trapped shorts in your prayers.  They have another week in purgatory.  I'll be interested in August week 4 SPY puts as we head into the next Fed meeting

SPX 07-20


Depriv said...

"A real impulse wave down will be longer and more sustained. "

Maybe. But, for example if you check that old three-peaks-and-whatever pattern, you will see a ton of head-and-shoulders, with more or less horizontal necklines. Those are the standard: the first waves always pick the previous support, which is often the bottom of the fourth wave. So, the first wave traditionally is more or less is the same length as the previous fifth.
(Also a kind of tradition, that the first H&S is most likely a fake one - a fact what made a lot of bear trapped at the bottom of this fourth).

Another thing which many analyst will miss is, that if one takes the pattern from 2009 bottom to the top as an impulse, then the following pattern will be some kind of correction (!!!), not an impulse.

The Gustafson Family said...

Only the Fed can save us from what they have unleashed.

pb said...

No way in hell the fed ever raises rates again in our life span. This piece of crap economy would sink faster than the Titanic.

Permabear Doomster said...

CG, what if we close the year around sp'2300 ? What then?

Frankly, part of me is resigned to 3K.. before any chance of this wave from 2009 ending.

yours, not short