12/07/2013 Weekend Update

[KeiZai]

Weekly candle and $NYSI look, lagging indicators but good sense of general market.

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Agree support was defended once again so until is holding there is possibilty to see new highs (SPXchart), I prefer one more leg down next week tho (c-wave, SPY chart) to set the low before year end rally down around 1750 area

O: viewtopic.php?f=2&t=1135&p=148990#p148990



download/file.php?id=55596&mode=view

SPX chart

SPY chart

Why I prefer risk off next week is mainly because of the structures in EU indices, rebounds are in my opinion clearly corrective and after impulsive 5 wave sequence so at least one more leg down is very likely together with US market.



DAX: corrective ABC after impulsive 5waves (imo)

Bigger picture with my preferred game plan

I closed the SDS puts on friday for 0.80 (viewtopic.php?f=2&t=1138&p=149188#p149188) and opened same calls (32 13dec) for 0.15 for the c-wave down so let's hope we will get it If so there sould be good buying opportunity for a christmas rally into january IMHO GL everyone!

[StudentBill]

Gold miners GDX broke the double bottom and is now on track to test the Oct 2008 low, and the dome target of $15.
Keep an eye on BPGDM the miners bullish percent (second panel), now at 10, which is in the bounce zone.
But this year the BP groveled between 10 and zero before a decent bounce took hold.

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Beautiful charts. Agreed. I was waiting for this DB breakdown and got re-positioned Friday. Dust looks like it has been in an ascending triangle of sorts for the last few day but it looks like it should bust free shortly.

[Royal Flush]

Ghost of 1929 crash reappears
Commentary: Pay attention to the signals

http://www.marketwatch.com/story/ghost- ... genumber=1

They say those who forget the lessons of history are doomed to repeat them.

As a student of market history, I’ve seen that maxim made true time and again. The cycle swings fear back to greed. The overcautious become the overzealous. And at the top, the story is always the same: Too much credit, too much speculation, the suspension of disbelief, and the spread of the idea that this time is different.

It doesn’t matter whether it was the expansion of railroads heading into the crash of 1893 or the excitement over the consolidation of the steel industry in 1901 or the mixing of speculation and banking heading into 1907. Or whether it involves an epic expansion of mortgage credit, IPO activity, or central-bank stimulus. What can’t continue forever ultimately won’t.

The weaknesses of the human heart and mind means the swings will always exist. Our rudimentary understanding of the forces of economics, which in turn, reflect ultimately reflect the fallacies of people making investing, purchasing, and saving decisions, means policymakers will never defeat the vagaries of the business cycle.

So no, this time isn’t different. The specifics may have changed, but the themes remain the same. Read Mark Hulbert’s take: The chart that’s scaring Wall Street.

In fact, the stock market is right now tracing out a pattern eerily similar to the lead up to the infamous 1929 market crash. The pattern, illustrated by Tom McClellan of the McClellan Market Report, and brought to his attention by well-known chart diviner Tom Demark, is shown below.

Excuse me for throwing some cold water on the fever dream Wall Street has descended into over the last few months, an apparent climax that has bullish sentiment at record highs, margin debt at record highs, bears capitulating left and right, and a market that is increasingly dependent on brokerage credit, Federal Reserve stimulus, and a fantasy that corporate profitability will never again come under pressure.

On a pure price-analogue basis, it’s time to start worrying.

Fundamentally, it’s time to start worrying too. With GDP growth petering out (Macroeconomic Advisors is projecting fourth-quarter growth of just 1.2%), Americans abandoning the labor force at a frightening pace, businesses still withholding capital spending, and personal-consumption expenditures growing at levels associated with recent recessions, we’ve past the point of diminishing marginal returns to the Fed’s cheap-money morphine.

All we’re doing now is pushing on the proverbial string. Trillions in unused bank reserves are piling up. The housing market has stalled after the “taper tantrum” earlier this year caused mortgage rates to shoot from 3.4% to 4.6% between May and August. The Treasury market is getting distorted as the Fed effectively monetizes a growing share of the national debt. Emerging-market economies are increasingly vulnerable to a currency crisis once the taper finally starts.

U.S. adds 203,000 jobs; unemployment rate falls to 7%

U.S. employers continued to add jobs at a steady pace and the unemployment rate fell in November to a five-year low.

The Fed knows it. But they’re trapped between these risks and giving the market — the one bright spot in the post-2009 recovery — serious liquidity withdrawals.

But the specifics of the run up to the 1929 crash provide true bone-chilling context for what’s happening now.

The Bernanke-led Fed’s enthusiasm for avoiding the mistakes that worsened the Great Depression—- a mistimed tightening of monetary conditions — has led him to repeat the mistakes that caused it in the first place: Namely, continuing to lower interest rates via Treasury bond purchases well into an economic expansion and bull market justified by low-to-no inflation.

(Side note here: As economist Murray Rothbard of the Austrian School wrote in America’s Great Depression, prices dropped then, as now, because of gains in productivity and efficiency.)

Here’s the kicker: The Fed (mainly the New York Fed under Benjamin Strong) was knee deep in quantitative easing in the late 1920s, expanding the money supply and lowering interest rates via direct bond purchases. Wall Street then, as now, was euphoric.

It ended badly.

Fed policymakers felt like heroes as they violated that central tenant of central banking as outlined in 1873 by Economist editor Walter Bagehot in his famous Lombard Street: That they should lend freely to solvent banks, at a punitive interest rate in exchange for good quality collateral. Central-bank stimulus should only be a stopgap measure used to stem panics, a lender of last resort; not act as a vehicle of economic deliverance via the printing press.

It’s being violated again now as the mistakes of history are repeated once more. Bernanke will be around to see the results of his mistakes and his misguided justification that quantitative easing is working because stock prices are higher, ignoring evidence that the “wealth effect” isn’t working.

Strong died in 1928, missing the hangover his obsession with low interest rates and credit expansion caused after bragging, in 1927, that his policies would give “a little coup de whisky to the stock market.”

[koolblue]

I beieve your analysis is valid Royal, but your using the method of extending a rally or decline... my current method is low to low gives a high and high to high gives a low ...

What I did koolblue, was to extend a low to low and also extend a high to high. They both landed on the same day (because the 2nd retracement was significantly less duration than the 1st) so the 200% projects to either a late low or a near term high. If there's someting wrong with my analysis please point it out.

...my apologies ,friend! when i went back and really looked at your chart, i now see you have 2 examples on the same chart and as i said ..valid (i suspect it may be a high!) great work!

[Royal Flush]

It seems too good to be true so it probably won't continue but...
I overlaid a CCI 20 of the 60 min XIV (purple) on the CCI 20 of the SPX (red) and find I have a divergent leading indicator of the last 3 turns. When the divergence is > 50 CCI points enter on the close of the 1st SPX bar for which the SPX CCI is > +100 or < -100. Dotted lines are placed on the chart using this criteria. If this happens again I will definitely be on board for the ride

[Royal Flush]

HERE is trin upvolume ratio....my thought was since there is generally upside bias in stocks, what if we look at relationship of advancer, decliners and downvolume....bottom panel hints that something is currently out of jive with breadth and prices (correlation)...the dark vertical lines appear more often when there is a positive correlation (my eyes, not scientific).

Also the ratio of new highs to advances typically drops very low (red histogram) below .05 before prices can really begin a new leg up. This makes intuitive sense that new highs might lag while advance spike higher. Also upvolume as percentage of tl vol has not fallen to levels that suggest downmove is over yet.

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except, most the I/T and L/T trend following technicals seem to point at ongoing bull market.
Vix (McClellan idea) ROC does not indicate higher stock prices, and it seems rare that a correction is this shallow, and seems more likely to indicate that duration of correction will be longer when it really begins.

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Nice analysis joegamma, if you take a look at my daily VIX you will see that in every prior correction the VIX has pulled back to the 13 + region after beginning a correction indicated by red dotted lines. So this retracement of the VIX is not out of the ordinary and the current pattern looks similar to that of the end of August. I speculate that we will get a double top at a bullish minimum in the SPX and then down. I still expect this correction to be shallow as the 2nd half of December is historically very bullish but then what we expect and what we get seldom conjunct.

[Al_Dente]

Last year Byron Wien, whale guru and Backstone’s Vice Chairman, made 10 macro predictions for 2013.
Here’s how they did:
http://www.businessinsider.com/byron-wi ... 13-12?op=1

[fehro]

HERE is trin upvolume ratio....my thought was since there is generally upside bias in stocks, what if we look at relationship of advancer, decliners and downvolume....bottom panel hints that something is currently out of jive with breadth and prices (correlation)...the dark vertical lines appear more often when there is a positive correlation (my eyes, not scientific).

Also the ratio of new highs to advances typically drops very low (red histogram) below .05 before prices can really begin a new leg up. This makes intuitive sense that new highs might lag while advance spike higher. Also upvolume as percentage of tl vol has not fallen to levels that suggest downmove is over yet.

The attachment 1207CHIN-UP.png is no longer available

except, most the I/T and L/T trend following technicals seem to point at ongoing bull market.
Vix (McClellan idea) ROC does not indicate higher stock prices, and it seems rare that a correction is this shallow, and seems more likely to indicate that duration of correction will be longer when it really begins.

The attachment 1207vix roc.png is no longer available

Nice analysis joegamma, if you take a look at my daily VIX you will see that in every prior correction the VIX has pulled back to the 13 + region after beginning a correction indicated by red dotted lines. So this retracement of the VIX is not out of the ordinary and the current pattern looks similar to that of the end of August. I speculate that we will get a double top at a bullish minimum in the SPX and then down. I still expect this correction to be shallow as the 2nd half of December is historically very bullish but then what we expect and what we get seldom conjunct.

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I see FOMC meeting Dec 18 http://mam.econoday.com/byweek.asp?day= ... =mam&lid=0 followed by a double dose.. http://www.newyorkfed.org/markets/tot_o ... edule.html

[kongen]

Royal Flush "Ghost of 1929 crash reappears". You and other readers should be aware that this story has been debunked as pure bogus several times. For a good review, see Jeff Miller Weighing the Week Ahead, SA, Nov 23.

[rhight]

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I'll be honest. I read that chart multiple times and cannot make heads or tails of the fibonacci time cluster histogram. Wish I could but I just fail.

The results of the histogram are shown on the chart, not the histogram itself. This is a screenshot of my spreadsheet for the current period. These are for Daily swings. If a new high is made next week, then I will have to recalculate. Of course, garbage in / garbage out, and so choosing the reversal points to enter is the challenge. The reason no histogram hits are shown for the latest blue box is because none really stood out, there were no more than two hits for any date. This is my own implementation of Robert Miner and Carolyn Boroden's work. It can be deceptive when a longer cycle is changing. The current swing cycle appears to be extending, and that can be seen on many charts. In looking back over the past 4 years, there were bullish turns in each November. This year the Bull turn occurred early, in late August or early October, depending on how you count it. Everything appears over-extended to me, but until selling pressure occurs, light upward buying pressure appears to all it is taking. So I guess we are waiting for some kind of catalyst to induce a correction.

[koolblue]

There are a lot of ominous signs pointing to a 200 point correction beginning soon. It seems to me we are beginning to run out of time!

[Al_Dente]

THANKS TO ALL FOR EXCELLENT COMMENTS AND CHARTS THIS WEEKEND.
This from a simple trend follower who is not allowed to predict turns, thus is a bit late in following.
The 8/34 ma cross on the 30 minute, now bull, works good for me. When it crosses to bear, I will too.

[BullBear52x]

Weekly candle and $NYSI look, lagging indicators but good sense of general market.

1.PNG

2.PNG

Agree support was defended once again so until is holding there is possibilty to see new highs (SPXchart), I prefer one more leg down next week tho (c-wave, SPY chart) to set the low before year end rally down around 1750 area

O: viewtopic.php?f=2&t=1135&p=148990#p148990



download/file.php?id=55596&mode=view

SPX-8dec.png

SPY-8dec.png

Why I prefer risk off next week is mainly because of the structures in EU indices, rebounds are in my opinion clearly corrective and after impulsive 5 wave sequence so at least one more leg down is very likely together with US market.



DAX: corrective ABC after impulsive 5waves (imo)

DAX-8dec2.png

Bigger picture with my preferred game plan

DAX-8dec.png

I closed the SDS puts on friday for 0.80 (viewtopic.php?f=2&t=1138&p=149188#p149188) and opened same calls (32 13dec) for 0.15 for the c-wave down so let's hope we will get it If so there sould be good buying opportunity for a christmas rally into january IMHO GL everyone!

Thanks KeiZai, 1750ish? a trade lower than 1772 it will discredit the C-wave no?

[BullBear52x]

Last year Byron Wien, whale guru and Backstone’s Vice Chairman, made 10 macro predictions for 2013.
Here’s how they did:
http://www.businessinsider.com/byron-wi ... 13-12?op=1

whale wien_png.png

and he got paid doing it. that's even better.

[KeiZai]

Thanks KeiZai, 1750ish? a trade lower than 1772 it will discredit the C-wave no?

No no from bigger picture perspective 1730 or 1710 are key lines that could trigger bigger selling if my count is correct one, till 1750-30 holds bulls are fine

[BullBear52x]

Thanks KeiZai, 1750ish? a trade lower than 1772 it will discredit the C-wave no?

No no from bigger picture perspective 1730 or 1710 are key lines that could trigger bigger selling if my count is correct one, till 1750-30 holds bulls are fine

SPX-cc.png

Cool, Thanks boss


*** SAPE is breakout material. not my best setup to go evil on.

[gappy]

For the EWers.[attachment=0]Capture.PNG[/attachment]http://5waves.blogspot.com/

[rhight]

THANKS TO ALL FOR EXCELLENT COMMENTS AND CHARTS THIS WEEKEND.
This from a simple trend follower who is not allowed to predict turns, thus is a bit late in following.
The 8/34 ma cross on the 30 minute, now bull, works good for me. When it crosses to bear, I will too.

128ma 834_png.png

Hey Mr. Al

That would be easy to model in Prodigio. It's a free download. I've been trying it out for a few weeks now. Just a paper account, and I didn't have to supply any personal info (except email). I haven't received any junk mail, and their tech support has been prompt and helpful. I have found a couple errors in the actual OHLC data (as compared to Stockcharts), but the code seems to work fine. I've backtested with 60min data going back 4 years, and I think I could go back further, but haven't yet. You can only do 1 year at a time, which isn't much of a restriction, I just download and import the data to an Excel SS and join the years together into a single SS. And, when I run a test on a single symbol (SPY for instance) it only takes about 90 seconds to run a 1 year simulation. Then you could tweek your ema's to see what difference that would make.

[koolblue]

(Nanex)–On December 6, 2013, at 8:29:53, which was 7 seconds before the 8:30 AM scheduled release of the Employment numbers and Personal Income, the price of gold as measured by the February 2014 (GC) futures contract plummeted almost $6 on about 600 contracts traded in 50 milliseconds.
At 1.6 seconds before the news release, about 2,000 March 2014 5-Year T-Note Futures contracts sent prices down so fast, that trading halted for 5 seconds: which included the time of the news release (chart 6)! People weren’t able to trade these treasury futures when the news was released. The same thing happened during the Employment numbers release in June.

At 1 second before the news release, the Dow Jones Industrial Average (DJIA) as measured by the ETF symbol DIA, rocketed 170 points higher. The DJIA futures moved the equivalent of 193 dow points at the same time. Both came crashing back seconds later...... LETS FILE THIS UNDER THE LOADED DICE DEPARTMENT!...rofl

[KeiZai]

Thanks KeiZai, 1750ish? a trade lower than 1772 it will discredit the C-wave no?

No no from bigger picture perspective 1730 or 1710 are key lines that could trigger bigger selling if my count is correct one, till 1750-30 holds bulls are fine

SPX-cc.png

Cool, Thanks boss


*** SAPE is breakout material. not my best setup to go evil on.

Thank you too buddy! yeah sure I know I meant for a long