Max Short Equities

A reversal in equities at the right time, right place. The closes on the Dow peaked at Friday’s full moon suggesting an inversion may well have occurred. A big up day yesterday for commodities, including 10% gains in natural gas and coffee. US economic surprises slipped below zero as data once again disappointed, and rising input prices (commodities) are, in line with history, threatening to tip an already weakening economy over as 2014 progresses. A significant geomagnetic storm played out yesterday, with another one in progress at the time of writing, and the timing of these disturbances is notable.

I believe yesterday will turn out to be the spot for optimal maximum short equities. Maybe you disagree with the timing, but if you have been a reader of my posts for the last couple of months then you will know I am acting on a multi-angled, multi-layered case. Maybe you disagree with being short at all, but having done a little tally I have published about 50 different indicators since the turn of the year which all individually suggest a shorting opportunity in equities is at hand (either for multi-week, multi-month or multi-year gains), and collectively produce something compelling. Whilst it would be unwise to rely on any one indicator as anomalies can and do occur, I feel pretty confident with fifty. If my specific timing of the optimal shorting point turns out wrong, then that aggregate of indicators calls for that spot being near both in time and price. Until disproven I have now two specific calls: (1) Stock market topped 31 Dec 2013 (Dow, SP500 (double top) and Nikkei) and (2) Optimal shorting opportunity (peak of the second chance) was 19 Feb 2014. A reminder: I am not an advisory service and I am short equities, long commodities.

Click on the two charts to view larger:

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56 thoughts on “Max Short Equities

  1. John,
    One thing I do admire about you is that you are a man – you stick to your principles and also stick your neck out. I hope you are right, but we will just have to see how it goes. Thanks for your hard work.

  2. I agree with your point John.

    This is all just a probability game and when 50 or so indicators say that you should be short and you don’t short it then you are probably in the wrong game. Whether it collapses immediately is incidental – we have no crystal ball – maybe more shorts need to be worked out so it may take a bit longer or maybe they have already closed but either way we all know it’s about doing the trade when the facts say you should and not over leveraging yourself so there is plenty of scope to ride out the timing.

  3. We are in the same boat, John, we are short in markets, althought I don´t think we are in a top like you describe, but it could fit perfectly with my scenario, a huge decline is on the way in the 17-years-cycle.

    This cycle was altered and distorted from oct´12, and the structure was modified to a 1909-16-19 upward wedge in the Dow Jones (the previous one was the 1966-83)

    I ´m not enterly sure if we could see a new top until end of month, in this case I would open new short ETF positions.

    @apanalis

  4. The work I use that drives my trading is instantly clear to a ten year old skilled in computer games;yet, to most adults who are not traders it seems like voodoo magic. The great value of John’s work is that I can show it to friends and family and they grasp the dangers of investment longs at this juncture.

    1. Your relatives are smarter than mine. I show how the mkt topps out on good and that is a time to sell. They say, but the news is good, why should I sell.

  5. Over the next few days I would like to see a slightly higher new high in the SPX without further downside…..accompanied by sell signals at that high…. further selloff would increase odds , at least in my work, at a run to higher highs before the bigger turn down.

  6. Hi;
    First time poster, and new to your site… Looks like a good one!!

    But just wanted to comment that I believe that you will be right ~soon~, based on the all of the indicators you point out that are lining up to go short, but for now, the Fed just seems to be POURING liquidity into the system, and I just can’t see the market cracking much until that weakens….
    So I’m still (and my system is) 50% long….
    They can ~say~ they’re tapering, but I’m not seeing it….

    STRONGLY looking forward to joining you on the short side, based upon everything you’ve pointed out, but still not seeing a “sell” signal yet…

    Thanks for your hard work and postings… It IS appreciated….

  7. WSO has just published its latest solar polar field strength measurements, showing that the overall dipole has weakened back to 10Avgf (having been at 12 a couple of weeks ago). The northern hemisphere is the main culprit, having weakened from 11Nf a year ago back to 4Nf now – it is getting unconfortably close to losing its magnetic field and possibly even reverting back to its previous polarity.

    The weaker the field stregth, the greater the number of sunspots.

    http://wso.stanford.edu/Polar.html#latest

      1. Time to dig out the ol’ long johns..!

        Another indication that we could be looking at a solar peak lasting up to three years longer than we’ve come to expect.

        Interesting to see those concise details about how increased solar activity (at solar peaks) shields us from cosmic rays. We still haven’t seen the significant drop in cosmic rays which usually precedes a solar peak by 6-24 months… (monthly chart)

        http://cosmicrays.oulu.fi/

    1. Hi Mark:
      Thanks for the link to the Neutron count (cosmicrays.oulu). Just for fun, I tried to do overlays with var. markets/signals in an effort to find correlations. Gold price seems to match up. Good data on the site.

      1. It’s a combination of that particular day of the week, the falling of the new moon, and the geomagnetic (inverted) seasonal low time of year. All 3 show some correlation in history with big fall events.

  8. The last two days could be an Elliott one two to the downside plus the drop off and slight uptick in the McClelland Oscillator is a short term sell signal. Time to press the downside as it is emotionally uncomfortable. All kind of ifs and buts, but now not the time.

  9. Very much appreciate the work you do, John. What’s your opinion on going long the VIX here? I have small positions in TVIX and UVXY. Seems like a good way to both play a market crash and hedge long junior gold miners exposure.

  10. Hi John
    My work still sees upside into Feb 24-28 sometime, so we are very close now. Some kind of trigger may break it down earlier, but otherwise we could go another week and even a couple days into March it seems
    Jan 🙂

  11. Critical time for the equities around the world. While many investors have blame the weather for the recent bad economic data in the USA, others analysts are raising the red flag that is not only weather related and wonder about the fed policies. ( http://www.cnbc.com/id/101434634 ) I truly believe your work John and I am fully invested for the start of the waterfall that I expect on Monday.

    Your work is amazing. Your fully support your predictions by so many indicators, host this website and take the time to answer the commentaries, present both sides of possible events, and share your view points and still stick to your predictions. Thanks and wish you a great Monday !

  12. John,

    I considering a few different scenarios for gold/silver.

    1. The traditional 17 year cycle plays out and stocks rollover and gold peaks around 2017.

    2. Your demographic and solarcycle data is correct and we get a very rare 25 year gold bull market that tops around 2025 when solar peaks again and demographic pick up some.

    Do you have any opinion on timing of parabolic gold peak?

    1. I see the 2011-2013 gold bear as a pause in the longer secular bull, with demographics and solar maxima making the likely superpeak circa 2025. But the recent breakout in commodities as a class suggests we are going to get a run up to some kind of a peak this year, and I’m going to cover that this week.

  13. hey John,
    thx for sharing your great knowledge with us…very deep insights (in all your posts)

    i wonder if you have a specific internet sourse that you’re looking at to see K index or some other geometric storms indications and forecasts?

  14. There is an interesting article by Ivan Martchev on the Marketwatch site about causative factors that may lay behind the similar trajectory of the current market and the 1929 DOW. He points out the record high global debt buildup as a destabilizing factor. More to the point, he cites the quantitative easing undertaken by the Fed and the even more aggressive action by the Bank of Japan. These QE programs interacts and lead to further destabilization: “There are many interconnected cycles described above that feed on each other in a classic rundown of a process that George Soros called reflexivity. The main point is that they are not done feeding on themselves, as QE is not done being tapered. All this has caused a violent countertrend move in the yen, and that can carry quite the distance against the policy of the BOJ. It has made USDJPY correlate strongly to the Dow in 2014, and by that virtue, also look like the Dow in 1929.

    If the stock market is about to crash, one valid reason it seems — looking past squiggly lines that resemble each other across the ages — is the tapering of QE in the U.S. which is accelerating carry-trade unwinding at a time of record leverage in the global financial system. As to whether it will crash, I don’t believe anyone knows that for sure ahead of time.”

    1. Thanks. Also, when BOJ announced tapering to start in 2006, the Nikkei rallied for 2 weeks then topped out. The Fed announced tapering to start 18 Dec 2013 and by my calcs the stock market topped out 31 Dec.

  15. Weekly doji…$DJI made no progress since the week of Nov 25th…$SPX made no progress since the week of Dec. 23th….

    Both printed a red doji on the weekly ..rally momentum waning all fitting to a topping process in progress..

    My vote…John is right but I have my (short) stop set at 2% above this week’s high.

  16. From a DeMark perspective, the monthly SPX chart will turn more bullish on a February month–end close above 1793.08 that also sees the first print of March gap higher than the 2/28 close. Doing so would properly stop-out the monthly TD Sequential +13 sell signal from last May.

  17. Chaos in Ukraine anther evidence of solar max behavior? I really feel you are correct in your overall assessment John, but I would not put too much stress on this Monday. The market has a way of defeating expectations just when we most want them to come true. Even if we get a new ATH this coming week it does not negate the preponderance of the evidence. I think things could meander on to early March without effecting your basic argument.

  18. I have just been pointed to your work. Very nice and much is like my own. At this time I have about 10 timing indicators targeting Mar 12-13 as a probably serious low. They include 1928/87 comparisons/Gann timing/Armstrong timing etc.

  19. Interesting and serious work that you’re doing. Thankyou.
    Many TIME events unfolding over the next month. I’ll just comment on the nearest, but all very important. Next week there will be a Squaring out of the S and P 10/8/98 low on the monthly chart. The price was 923.32. That low called the 10/9/13 low at 1646.47. This was 15 years or 180 months. Both prices lined up together vertically on the square of 9.
    This coming week on the 27th the ’98 low of 923.32 will be 1846.64 (2x 923.32)months over in time. Therefore the zero angle at 10 points per month will cross the 5 point angle from 10/8/98 at 923.32. Also Mercury goes direct and it will be 45 days from the Jan 15 top.
    Volatility over the next month should rise rapidly..

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