At this point I believe we are going to do the same pattern as what happen prior to the Legatus meeting Feb. 7th-9th and more importantly the 7th… which was the deadline date for the debt ceiling.
As we know we sold off in front of that deadline putting in the bottom on the 5th and then we rallied from there on out until a few days ago. It’s the old “sell the rumor, buy the news” event again.
So, since we have an FOMC meeting next Wednesday the 19th (which the Fed is expected to cut another $10 Billion from the QE) I’m expecting a bottom going into that meeting and then we should start the rally up to 1900-1910 from there. It’s likely to be choppy and should take 2-4 weeks.
On the low side I see the 1810 level as support from a horizontal trendline and 1815 from the 20 week moving average. Of course there’s the “even number” play of 1800, which could act like a magnet too.
In order for that to be the low it needs to happen going into this coming FOMC meeting next Wednesday. If so, then I could see a rally up from that level for 2-4 weeks starting.
Scenario Two:
We could also put in a bottom either today or Monday morning around the 1828.99 20ma on the daily chart and/or the prior low of 1834.44 making a double bottom. From there we could rally (especially since you know about “Turnaround Tuesday’s) up toward the downward sloping trendline of resistance coming in around 1860-1865.
Then at the FOMC meeting on Wednesday we top out with that rally to the 1860-1865 area being some kind of wave B up while the current move down is the wave A down. That would leave a wave C down yet to follow after the FOMC meeting, which could take us down to the 1770 area.
We must rally into the FOMC meeting for that scenario to play out. If we drop toward the 1810-1815 area into the meeting then I’ll be expecting them to rally up from it. Look and listen to the news as if they talk a lot about the $10 Billion more expected to be cut out of the QE then I’ll be expecting a bottom.
If on the other hand you hear them talk with a “positive bias” toward it… like “it’s already factored into the market” (or other words telling us sheep not to worry about it) then you know to WORRY ABOUT IT!
We’ll see in the charts as so far we have NOT put in any positive divergence to indicate that the bottom is in yet. There should be a move up to that falling resistance area at 1860-1865 at some point to make the wave B up and allow for a lower low (1810-1815 area) to happen and make that positive divergence.
When that happens is unknown? If it happens into the FOMC meeting then the following move down (the wave C) should be stronger and allow for a break of 1800-1810 with a target low area of 1770.
But, if we some how rally up to that resistance are of 1860-1865 prior to this coming Wednesday (as suggested in scenario one) and then turn back down for the wave C to bottom into the FOMC meeting then I’d expect the 1800-1810 to be the low, making that wave C down weaker.
The reason I suspect that is based on the time frame needed for each scenario to play out. The first Scenario is much shorting in time and therefore I would expect the distance up and down to be shorter as well.
The second scenario puts the 1860-1865 wave B up top happening on the FOMC day which of course expands the timeline out more on the wave A down and the wave B up. That would indicate that wave C down would have more time to play out too.
Couple that with the “fear factor” of the market hearing that the Fed’s are indeed going to continue withdrawing the QE money and there’s no reason to expect any rally as there’s no further news event to give the market a reason to bottom and therefore rally.
On the other hand, if you bottom into the meeting at say the 1810-1815 area then you might rally from something positive out of the Fed meeting. Since the charts are oversold on many shorter time frames anything “not negative” from the meeting would justify a rally.
However, a top into the meeting would indicate that the market is “expecting” something positive and wants to get a head start into the predicted “good news rally”, but that rally would work off most of the oversold conditions on the short term charts allowing for another wave down to start should the news NOT be as positive as they expected.
So while I would NOT go long I would go short should we hit the 1860-1865 resistance area. The projected move down from that zone won’t be determined until we know when that level is hit.
If hit on Monday then “Turnaround Tuesday” should play out to the downside with the expected low of 1810-1815 going into the FOMC meeting on Wednesday. If hit on Wednesday then I’d be looking for a lower low to follow… like the 1770 area, which should take 3-5 days I’d guess.
All in all it’s a tough call still, but there is still a possible rally to the 1900 area in play, but I don’t see it happening until first we bottom out the coming wave C down, and right now we still seem to be in the wave A down… meaning it might not happen until mid-April.
Tomorrow is Pi day in the month/year of the PI. Also the last trading day before the full moon.
Some indices indicating that a breakdown is occurring right now. Copper basically crashing.
Dax and other European indices already in a precarious condition. Dax already down to its lower BB and now through it with it closing substantially below it today leaving it the potential for a followthrough big move to the downside??? The US Dollar looks to have bottomed today putting in a large hammer bottom and even I don’t think I can jinx that bottom considering all similar bars for the dollar have produced a bottom going back a year. Momentum and rate of change have been lessening with the latest declines. Oil conversely was rallying in a similar manner to the dollar’s recent decline and topped out and then declined, basically freefalling since the start of the month.
A drop below the March lows for most stock indices would probably accelerate the downdraft and all are near there right now. Crude oil already has dropped through its early March low area. And pretty much all of the indices put in monster bearish engulfing reversals today which were similarly seen 4 days off the top in 1987 and 2000.
Gold and gold equities have been following the action of a certain market in a historical epoch right down to the exact timeline and should now be starting a new multi-month decline. Will stocks now follow? Agricultural commodities recently have had a major spike along with gold/silver now setting up for the deflationary collapse? (clearing out all of the shorts in the meantime )
I’ll probably put out a little piece on LOST, Non-Stop and the Malaysian Airlines similarities over the weekend. I did notice in the LOST opener, the debris of the airliner forming first a 111 and then in the next shot a 11, a numerical combo I have mentioned/ seen in the past. (in the Bowie video I am afraid of Americans etc. etc.). A major 700 year anniversary also coming up. The last 700 year anniversary kicked off the last bear market.
I’m still expecting more chop all week long. With next week having another FOMC meeting it’s unlikely that traders are going to do much in front of it. If they rally into the meeting then I’m now looking for 1900-1920 SPX for a top.
If they stay under 1900 all the way up to the 19th then I’d expect some wild swing high to happen on that day around the time the meetings are released. Since we are so overbought now I don’t see anything but down after the meeting.
The only thing I can see that would cause a rally is if they halt the withdraw of the QE that is currently happening. So far they have cut back $10 Billion 2 times now bring the total from $85 Billion down to $65 Billion. I’m expecting that to continue.
Therefore, assuming that Janet Yellen says that the Fed is “staying the course” I think we’ll top out around that date and start our larger move down afterwards, which should continue through the rest of March and most all of April I think.
Until the FOMC meeting is over with I don’t see any major moves up or down and therefore am not taking any positions currently. Daytraders can of course but I’m not a daytrader, so I’m doing nothing.
Considering that we have now hit the lower target zone of 1870 SPX we must rollover later today and put in some type of topping tail for this first target to be valid. If not, then the likelihood is strong that we’ll go up toward the higher target zone of 1890 area before ending this rally.
If we do head up higher there is the “even number play” that acts like a magnet for the market, which is of course 1900… meaning that if they get up to the 1890 area they should push up further to tag 1900 (give or take a few points either side).
Scenario One:
At this point I believe we are going to do the same pattern as what happen prior to the Legatus meeting Feb. 7th-9th and more importantly the 7th… which was the deadline date for the debt ceiling.
As we know we sold off in front of that deadline putting in the bottom on the 5th and then we rallied from there on out until a few days ago. It’s the old “sell the rumor, buy the news” event again.
So, since we have an FOMC meeting next Wednesday the 19th (which the Fed is expected to cut another $10 Billion from the QE) I’m expecting a bottom going into that meeting and then we should start the rally up to 1900-1910 from there. It’s likely to be choppy and should take 2-4 weeks.
On the low side I see the 1810 level as support from a horizontal trendline and 1815 from the 20 week moving average. Of course there’s the “even number” play of 1800, which could act like a magnet too.
In order for that to be the low it needs to happen going into this coming FOMC meeting next Wednesday. If so, then I could see a rally up from that level for 2-4 weeks starting.
Scenario Two:
We could also put in a bottom either today or Monday morning around the 1828.99 20ma on the daily chart and/or the prior low of 1834.44 making a double bottom. From there we could rally (especially since you know about “Turnaround Tuesday’s) up toward the downward sloping trendline of resistance coming in around 1860-1865.
Then at the FOMC meeting on Wednesday we top out with that rally to the 1860-1865 area being some kind of wave B up while the current move down is the wave A down. That would leave a wave C down yet to follow after the FOMC meeting, which could take us down to the 1770 area.
We must rally into the FOMC meeting for that scenario to play out. If we drop toward the 1810-1815 area into the meeting then I’ll be expecting them to rally up from it. Look and listen to the news as if they talk a lot about the $10 Billion more expected to be cut out of the QE then I’ll be expecting a bottom.
If on the other hand you hear them talk with a “positive bias” toward it… like “it’s already factored into the market” (or other words telling us sheep not to worry about it) then you know to WORRY ABOUT IT!
We’ll see in the charts as so far we have NOT put in any positive divergence to indicate that the bottom is in yet. There should be a move up to that falling resistance area at 1860-1865 at some point to make the wave B up and allow for a lower low (1810-1815 area) to happen and make that positive divergence.
When that happens is unknown? If it happens into the FOMC meeting then the following move down (the wave C) should be stronger and allow for a break of 1800-1810 with a target low area of 1770.
But, if we some how rally up to that resistance are of 1860-1865 prior to this coming Wednesday (as suggested in scenario one) and then turn back down for the wave C to bottom into the FOMC meeting then I’d expect the 1800-1810 to be the low, making that wave C down weaker.
The reason I suspect that is based on the time frame needed for each scenario to play out. The first Scenario is much shorting in time and therefore I would expect the distance up and down to be shorter as well.
The second scenario puts the 1860-1865 wave B up top happening on the FOMC day which of course expands the timeline out more on the wave A down and the wave B up. That would indicate that wave C down would have more time to play out too.
Couple that with the “fear factor” of the market hearing that the Fed’s are indeed going to continue withdrawing the QE money and there’s no reason to expect any rally as there’s no further news event to give the market a reason to bottom and therefore rally.
On the other hand, if you bottom into the meeting at say the 1810-1815 area then you might rally from something positive out of the Fed meeting. Since the charts are oversold on many shorter time frames anything “not negative” from the meeting would justify a rally.
However, a top into the meeting would indicate that the market is “expecting” something positive and wants to get a head start into the predicted “good news rally”, but that rally would work off most of the oversold conditions on the short term charts allowing for another wave down to start should the news NOT be as positive as they expected.
So while I would NOT go long I would go short should we hit the 1860-1865 resistance area. The projected move down from that zone won’t be determined until we know when that level is hit.
If hit on Monday then “Turnaround Tuesday” should play out to the downside with the expected low of 1810-1815 going into the FOMC meeting on Wednesday. If hit on Wednesday then I’d be looking for a lower low to follow… like the 1770 area, which should take 3-5 days I’d guess.
All in all it’s a tough call still, but there is still a possible rally to the 1900 area in play, but I don’t see it happening until first we bottom out the coming wave C down, and right now we still seem to be in the wave A down… meaning it might not happen until mid-April.
Tomorrow is Pi day in the month/year of the PI. Also the last trading day before the full moon.
Some indices indicating that a breakdown is occurring right now. Copper basically crashing.
Dax and other European indices already in a precarious condition. Dax already down to its lower BB and now through it with it closing substantially below it today leaving it the potential for a followthrough big move to the downside??? The US Dollar looks to have bottomed today putting in a large hammer bottom and even I don’t think I can jinx that bottom considering all similar bars for the dollar have produced a bottom going back a year. Momentum and rate of change have been lessening with the latest declines. Oil conversely was rallying in a similar manner to the dollar’s recent decline and topped out and then declined, basically freefalling since the start of the month.
A drop below the March lows for most stock indices would probably accelerate the downdraft and all are near there right now. Crude oil already has dropped through its early March low area. And pretty much all of the indices put in monster bearish engulfing reversals today which were similarly seen 4 days off the top in 1987 and 2000.
Gold and gold equities have been following the action of a certain market in a historical epoch right down to the exact timeline and should now be starting a new multi-month decline. Will stocks now follow? Agricultural commodities recently have had a major spike along with gold/silver now setting up for the deflationary collapse? (clearing out all of the shorts in the meantime )
I’ll probably put out a little piece on LOST, Non-Stop and the Malaysian Airlines similarities over the weekend. I did notice in the LOST opener, the debris of the airliner forming first a 111 and then in the next shot a 11, a numerical combo I have mentioned/ seen in the past. (in the Bowie video I am afraid of Americans etc. etc.). A major 700 year anniversary also coming up. The last 700 year anniversary kicked off the last bear market.
Funny Thomas Lee in that article you shared was announced to be exiting JP Morgan…..
You know the top is near now with headlines like this: http://www.cnbc.com/id/101491143
Crude oil update: http://niftychartsandpatterns.blogspot.in/2014/03/crude-oil-support-and-resistance-levels.html
ES Chart Update: http://niftychartsandpatterns.blogspot.in/2014/03/s-500-futures-chart-analysis.html
I’m still expecting more chop all week long. With next week having another FOMC meeting it’s unlikely that traders are going to do much in front of it. If they rally into the meeting then I’m now looking for 1900-1920 SPX for a top.
If they stay under 1900 all the way up to the 19th then I’d expect some wild swing high to happen on that day around the time the meetings are released. Since we are so overbought now I don’t see anything but down after the meeting.
The only thing I can see that would cause a rally is if they halt the withdraw of the QE that is currently happening. So far they have cut back $10 Billion 2 times now bring the total from $85 Billion down to $65 Billion. I’m expecting that to continue.
Therefore, assuming that Janet Yellen says that the Fed is “staying the course” I think we’ll top out around that date and start our larger move down afterwards, which should continue through the rest of March and most all of April I think.
Until the FOMC meeting is over with I don’t see any major moves up or down and therefore am not taking any positions currently. Daytraders can of course but I’m not a daytrader, so I’m doing nothing.
Bank of America analysis: http://niftychartsandpatterns.blogspot.in/2014/03/bank-of-america-analysis-after-closing.html
Crude oil Testing support levels: http://niftychartsandpatterns.blogspot.in/2014/03/crude-oil-testing-support-levels.html
Considering that we have now hit the lower target zone of 1870 SPX we must rollover later today and put in some type of topping tail for this first target to be valid. If not, then the likelihood is strong that we’ll go up toward the higher target zone of 1890 area before ending this rally.
If we do head up higher there is the “even number play” that acts like a magnet for the market, which is of course 1900… meaning that if they get up to the 1890 area they should push up further to tag 1900 (give or take a few points either side).