Well, the C of the A-B-C in SPX did make a higher high today, although marginally higher. Obviously, everyone is now convinced of the trend change and no longer need any QE or punch bowl. It seems equities have now reached escape velocity and ready to fly to far away galaxies. It does not matter that the world around is not feeling so good. GDP estimates by the Govt. is below 2% in USA and non-existent in Europe. But who cares. At least if you take a look at VIX, you would think that there are no worries in the world and the sky is as blue as it can get. For the 3rd day running, I am showing the weekly chart of VIX and now it is at the same level as it was in 2008 before the crash.
Europe is now out of the memory and many expert chart masters are now giving all clear signal. We cannot even imagine that there can be a massive and sudden correction. Last August SPX dropped 80 points in one day. Because when we are coming down, gravity makes it that much faster. I do not think now is the time to be cute or smart. Even though the cycle top has been reached and my model is calling for an immediate correction, I am willing to wait little more, because the higher it goes, the harder it falls. And it is going up on hot air.
Gold is not responding to the enthusiasm of equities. So let us see how far the shenanigan carries the market. Let me close the post by sharing a chart from Ed Matts.
Either way the end is not very far. I personally prefer the Bearish and Bearish count which fits with my calculations. So let us have some more patience and see how it all unfolds.
Europe is now out of the memory and many expert chart masters are now giving all clear signal. We cannot even imagine that there can be a massive and sudden correction. Last August SPX dropped 80 points in one day. Because when we are coming down, gravity makes it that much faster. I do not think now is the time to be cute or smart. Even though the cycle top has been reached and my model is calling for an immediate correction, I am willing to wait little more, because the higher it goes, the harder it falls. And it is going up on hot air.
Gold is not responding to the enthusiasm of equities. So let us see how far the shenanigan carries the market. Let me close the post by sharing a chart from Ed Matts.
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With the end of the month coming so soon, will it be possible that the market rally into end-July, and then reverse after Bernanke does not announce QE3 at the August FOMC?
ReplyDeleteAt this present level of the market there cannot be any QE.I think we will see the correction very soon, may be within a day or two.
DeleteWhat do you think the max upside from here? 1375? 1380? 1400? It's all matter of 10 to 30 points to the upside to pull in the suckers. The downside is 1200-1230.
We just have to wait a while longer.
i definitely will miss your post during your travel starting next week. Your post is like my bible reading everyday and make me think of it. Keep going!
ReplyDeleteI hope you can keep a tiny note even you will be super busy during travel.. just few sentenses.... haha.
Thanks for your encouraging words Mikey. I will make my best efforts.
DeleteI think it will test at least monthly pivot at 1390 (I noticed it rarely moves half way between pivots), but really it should reach at least 1400 on momentum. Obviously maximum pain is caused right now by SPX going straight up (check ZH :) - and it won't stop so easy.
ReplyDeleteVIX is being crashed, it's far from finished yet and it's not going to pop any time soon (although it's necessary for any meaningful correction). They will continue to crack it.
Now what's left: if EUR gets back to 1.27-1.28 on short squeeze
and bonds get corrected few points, SPX can easily test previos highs. Check those freaking bonds - they are really tired at 151 compare to SPX at 1370. Also, there is APPL ready to save the market. Man, if that thing brakes to 650...
I am with you Roman 18.
DeleteNow that all the papa and mama bears are initiating shorts expecting a crash soon. This reminds me of the run up from 1070 to 1422, when most was waiting, expecting, then begging for a correction as price was heading up above 1370. Then what? no meaningful corrections until 50 pts later,not until bears were deadly squeezed and went broke. Sometime one gotta respect the trend and stop charting what he wants to see. After all markets make charts. Charts dont make markets.
By the way, there were times when VIX were trading between low 9 and 14 (1992 through 2006). By all means, I am not extremely bullish, and I did take some money off the table from long position. However, I am not ready to short the market at this pt. I think its wise to wait and trade the breakout on either side and not hope for the extremist at this point in time. How about lets break below 1335 first. Other wise, I will see you at 1422.
GL
Keep up the good work YOU ROCK!
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ReplyDelete