Sunday, June 25, 2017

If we get a sharp decline this week

I'm usually not one to post a bunch of alts, because you can come up with scenarios all day if you care you care to do so.  But this one is very important, I think, because if it plays out, it is extraordinarily dangerous.



Let us suppose that we get a very sharp decline in this last week before Q2 opex.  Let's say we make it all the way down to channel support at 2320 SPX, a long ways.  Many will think, with good reason, that this is it, holy fuck, doom is here.

But it could be a 5th wave broadening-top megaphone, which means that this move will reverse sharply once it reaches that support, and that it will immediately rocket right back up to new highs!

Something like this.  It is real possibility, and dangerous enough that it will probably waste a few speculators.  Be careful out there.

S&P broadening top megaphone 5th wave scenario

Saturday, June 24, 2017

So where are we now in the count?

We want to see more pullback in the end of Q2, finding support at the 2400 level on the S&P 500.

a rare U-Haul camper, Crown Hill, Seattle, WA

From there, we hit the next Bradley turn for the final (?) 5th wave up.  Along the way we want to see continued market optimism, with divergences in breadth and $VIX if we can manage it.  A few more Hindenburg Omen days would add to the drama, as well.

SPX 60D E-D count

This next chart is based on various support trendlines and their co-incidence with 2017 Federal Reserve Open Market Committee meetings ... let's call it "policy pinball".

SPX 2Y

Monday, June 19, 2017

What we are missing for tomorrow

We have a Bradley turn tomorrow, the market is overextended up into the daily top Bollingers, but we are still missing one very important element for a durable top -- no breadth divergence!

Deflation Landers ready to rumble

This is an important element in all the big tops, market breadth evaporating into a final high.  But we can see new highs with the recent market run up.  Chart from Tom McClellan.



So while we may get a tradable selloff into the end of June, we should propose a short-term count more along these lines, as we levitate into July.  A divergence with NYAD, etc, by then would be a very welcome sight.

SPX ascending megaphone top

Saturday, June 17, 2017

Looking for that long convexity trade

One of my favorite coffee shops burned last night; I heard it was arson.  At the northwest edge of the city, above Golden Gardens Park, Fiore is a natural stop for a long weekend walk.  Hope they can rebuild and reopen the place.



We managed to make it through a yuge June opex without any fireworks, and SPY was up 50 cents or so after-hours Friday, which bodes well for Monday.  We are in a Hindenburg Omen window (quantitative signs of market instability), and FWIW, there is a Bradley-model turn coming up on Tuesday.

Bradley siderograph 2017, from http://www.amanita.at

I'd like to see us get up to the 2455 level on the S&P 500 and reverse intraday on Tuesday.  The first bounce would be minor channel support back at 2322.  We will then need to break that support before we can head lower to test the channel support for the entire 2009 (year) rally.  If the larger pattern plays out this year, key highs will be at Fed meetings, as they continue to hike their interest rate targets and drain the swamp.

SPX 2017 selloff