Will There Be A False Flag On November 9th, 2014 To Crash The Stock Market? (updated 11/04/2014)

(to watch on youtube: www.youtube.com/watch?v=n17FTmLjcpQ)

Here’s the previous notes that I posted back in January…

• 2014 will be a magic year (meaning what?  will you pull a rabbit out your hat?  will you steal money from the sheep without them seeing you do it?)
• 100th anniversary of the first world war in 1914 (strangely when I researched what happened to the DOW back then it was closed down for several months due to the first world war starting.  are we expecting the same here? REFERENCE: http://www.ritholtz.com/blog/2013/02/most-long-term-charts-of-djia-are-wrong, http://measuringworth.com/DJA, https://www.globalfinancialdata.com/gfdblog/?p=1426 )
• 70th anniversary of the Bretton Woods Conference that gave birth to the IMF. (The delegates deliberated during 1–22 July 1944, and signed the Agreement on its final day. REFERENCE: https://www.google.com/search?q=first+bretton+woods+conference+date&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a&channel=fflb Not sure what the hidden message was here?)
• 25th anniversary of the fall of the Berlin wall (Destruction date: November 9, 1989… but what is she hinting at here?  Is the “buzz word” the “25th”or the “fall”?  Does the 25th mean a certain future date or does the word “fall” indicate that the market will fall hard?)
• 7th anniversary of the financial market jitters. (again with the focus on the number 7… meaning what?  are we looking for another move down similar to 2008?)
• The crisis still lingers… (clearly this means we are going down again)
• It will not happen randomly… (of course not, it’s always planned)
• “Global growth is still stuck in low gear” (Hmmm… just a fall guy to blame I guess?  We tank and it’s the fault of slowing global growth)
• It will not be without downside risks, and significant ones (referring to inflation… or was it really meant to refer to the stock market?)
• We are seeing rising risks of deflation… (good for us sheep but bad for them)
• Global growth slowing down as the economy cycle turns… (the “buzz word” that stands out to me there is “cycle turns”)
• Risk of capital runs… (You really mean the gangsters are moving their money out the market before the collapse)
• Dry run back in May of 2013… (Ah yes, the old test where Bernanke hinted at pulling money out the market last year)
• There could still be some rough waters ahead of us… (another clear warning that they plan on taking the market down)
• Overall, the direction is positive (meaning after the downturn the market we’ll go back up again, which should be a final Primary Wave 5 up with this coming correction next month being a nasty Primary Wave 4 down)
• 95% of the income growth went to the top 1% (Duh… nothing new there as that was always the plan!  Steal from the sheep and give to the wolves)
• Tapering will have too be very well timed… (again, she’s clearly staying that we are going to withdraw money from the market)
• Central banks will have to “undo” what they’ve done… (and again, more references to cutting back the stimulus?)
• Removing the threat of the debt ceiling… (meaning what?  They won’t set one, or make it unlimited?  I don’t know what she means with this sentence?)
• A stress test will be done in 2014… (Why?  You already know the banks would all fail.  I guess they have to blame the correction on something)

____________________________________________________

Or Just A Big 15-20% Correction?

(to watch on youtube: www.youtube.com/watch?v=Gi-mqG8gkQM)

I give the odds of a big correction at 95% and a full blown crash of about 50% for 2014...

In the past 3 years all we've seen are these small 4-6% corrections and many people think that's all we are going to have this time around too.  They see the market at or near the 200dma and think it will bounce and go back up to new all time highs again.  But will this time be different?  I think so.  Why you ask?  One simple answer:  "The weekly rising trendline of support final broke down last week and closed below it".

It's been having these small corrections since the 2011 low and bouncing off of that trendline every single time.  It's been great support for the last 3 years but it's finally failed.  This is the first signs of the end for the bull market since the 2009 low.  While I'm sure there will be one more final rally to retest the current high, (which should start this December, 2014 and carry into early 2015) the current trend is down and we should not assume that this correction has ended yet.

My estimate is that we'll see the mid-1700's on SPX by the end of November before the Christmas rally begins.  I suspect the Full Stochastic will be bottomed in the 20's on the chart above by that time and allow a relief rally.  The MACD's should be close to the zero line as well, where other bottoms form and allow a bounce.  Once that rally starts it should last all of December (of course) and carry into the early part of 2015.

It's hard too know how long the rally will last as it could be only 3-4 months or 3 years?  It is called a Primary Wave 5 up in Elliottwave terms by others (Tony Caldaro) that do a lot better job of tracking wave then I do.  It only has to have a higher high then the current high of 2019 SPX to be a successful Primary Wave 5 up.  It could simply go to 2020 in 3-4 months or extend for 3 years to 3000 or more?  There is no way to know what the government will do to try and extend the market but we can speculate based on the past.

What could cause an extend Primary Wave 5 up... QE4, QE5, and QE6?

I don't know the answer there but I'll say that "in my opinion" the QE programs have exhausted themselves and won't work to prop up the pig from here on forward.  This pig of a stock market is much too heavy now with unsustainable debts world wide.  It's like giving a dying patient a fourth, fifth and sixth round of chemo and radiation treatments with triple the morphine.  It might have helped keep the pig alive in 2009 but this pig is dying and no amount of stimulus is likely to work this time around.

What does that leave for the government to do?  I don't have a clue?  You can see in the monthly chart below how we should have crashed in the last few years but were saved by QE Infinity (also known as QE3 [quantitative easing]}.  Looking at the 2011 to 2013 period you'll see the market go from 1400 area to 1100 and stop, then rebound back up again creating the rising channel we see now.  Now look at the ROC (rate of change) during that same period.  It's hovering on the zero line for almost 2 years trying not to fall below.

When you compare it to the level the MACD's were at during that period, and then look back to the 2007 top to see the comparisons you would have thought the market would have crashed but the government intervened with the largest QE program ever... "to infinity and beyond as Buzz Bernanke would say"!  It looked perfect for another HUGE "wipeout" crash at that time from a technical point of view.

You have the 2000 high with MACD's up in the 120-130's, then a lower MACD high in 2007 in the 60-70's, with the 2011-2013 zone peaking in the 50's creating a triple negative divergence on the Monthly chart.  Clearly the market "should" have crashed then, but the Fed's intervened with QE Infinity.  Now they have successfully manipulated the stock market up to historically levels.  The MACD has never been higher in history (from what I read someone else).

What's all this mean you ask?

To me it says the likelihood of a "Full Blown Stock Market Crash" like 1929 is VERY likely to happen between 2015 and 2017.  The biggest drop will likely happen in 2015 I think as I really doubt if we'll make some extended Primary Wave 5 up that last for 3 years or so with upside targets of 3000 or more.  I'm more inclined to seeing a December 2014 rally that will look similar to rally May, 2008 that simply made a lower high and then crashed the rest of the year.  This suggests that we'll top out in January, 2015 and then drop all year.

If the market goes down to the 1700's area where the lower trendline of support is on the monthly chart then that's the scenario I see happening... just a one month Christmas Santa Claus rally  to make a lower high in January and then a crash.  If however the market only goes down to the 20ma around 1795.47 on the monthly chart then there's a possibility that we'll rally back up to make a "slightly" higher high in early January to hit a "possible" FP (fake print) I spotted on the SPY back on September 19th, 2014 showing 202.45 as an intraday high.  Since we never went that high that day it's "possible" that it's a FP signal to the insiders that know how to read it, which "could" indicate the final top in early January, 2015 after this correction is over with and the P5 (primary wave 5) rally starts.

It could be nothing of course... or a "real" FP telling insiders the final high for P5?

Let's talk about the rituals for minute now...

Yes, it's that time of year again when all the elite satan worshiping gangsters meet in secret (but right in front of you... if you are looking?).  Of course I'm talking about Legatus, where we find every snake of importance in the world going to so they can find out the latest information on how the super elite gangsters (the true Reptilians) play to screw the sheep (that's you and me).

Their October meeting is going on now as it started on October 8th and ends this coming Friday October 17th, 2014.  I've done many posts in the past about the importance of these meetings and how the gangsters like to "turn" the stock market before, during, or just after one of these meetings end (http://reddragonleo.com/2013/02/03/the-law-of-equilibrium-and-past-history-with-legatus-and-turns-in-the-stock-market).  I called a very important top on May 22nd, 2013 primarily based on a Legatus meeting during that period, along with technical analysis and numerology.  That date added up to a 33 when adding all the numbers in it leaving 22 as a whole since it's a master number.

Point being is that the gangsters commonly have "turns" in the market around these meetings and they use numerology to pick dates.  Having this meeting going on right now and ending this coming Friday tells me it's likely to be some type of bounce back up wave to retrace possibly 50% of the entire down move from 2019 to whatever the low is... which I suspect will happen Monday around the 1900 area (+/- 10 points).  So "if" we bottom at say 1890 SPX this week we could "should" retrace back up about 50% of the move down.

Speculating here but if we dropped from 2019 to 1890 then we about 129 points and half of that is about 65 points.  So we should bounce to about 1955 area before we have the really big drop start.  I think we'll hit that level by this coming Friday but it could go up a little more the following Monday to some other Fibonacci level like 61.8%, or 79 points from the 1890 low... meaning 1969 is possible.  First of course we have to find the low to calculate from... which should happen early this week.  Then we can guess on the upside target...

Usually high levels of open interest in the Puts for October 17th expiration...

Since I like to trade options I'm commonly looking at the various strike prices, open interest, levels, days to expire, etc... and one of the things I mentioned a few weeks back in a comment and tweet was the very high level of puts in the 190 and 195 strike prices.  On could imply that it's insiders buying them up as they know the market is going to fall below that level.  But that's not usually the case.  Most of the time it's just speculators that may or may not have seen the down move coming and loaded up short.  However, from my experience the "market makers" will manipulate the market back up above the highest open interest levels to make those puts expire worthless.

So will this time be different?  Maybe?  I just don't know?  Normally I'd expect to see 50,000 to 100,000 contracts on any given even number strike price and less then that on the odd prices with the .5's on the end but having 556,194 contracts at the 190 strike price is at least 5 times the normal amount I'm used too seeing.  Then the 195's have 237,554 on them, which tells me the market makers will have to do a whole of digging in their pockets to pay out those put holders if they allow it close below 195 SPY (about 1950 SPX) this coming Friday the 17th.  I can tell you that these guys are similar to card dealers in Vegas and will lose their job if too many people win at their table.  So you tell me what you think they will do?  I think they will rally the market up to make them expire worthless.  In Vegas some manager would come out and have the dealer move to another table to break up the winning streak.

Of course there's no way to know for sure if the "insiders" are actually the one's that are short and know that the market is going down below there by Friday the 17th but certainly we'd expect to see a lot of wild swing "shakeouts" for the retail sheep holding puts.  Then after the market makers sure up their positions they "could" let the market collapse late Friday after most of those puts holders have giving up and sold out at a lose.  Anyway, I'm looking for some kind of rally this week as everything tells me we are oversold short term and due a nice rally.

But after the rally we should expect another HUGE drop the following weeks into the end of November.  I'm looking for that rising trendline of support to be the low are before a bounce, which appears to be around the low 1,700's.  If it's only a shallow sell off then the 20ma on the monthly chart "could" stop the fall, which is just under 1800 SPX.  I'm unsure which will happen but leaning toward the lower target just based on the charts and how many weeks we have left before the end of November when I'm expecting a  bottom to happen.

After that we get a Santa Rally I guess...

Red

P.S.  Let's keep an eye on the Fed's Outright Treasury Coupon Purchases too as they can add to the extreme volitalite as they try to save the market from collapse on these days.

Author: Red