Perfect Set-Up?

Speculation increasingly looks to have peaked out exactly at the solar cycle maximum again, as demonstrated by these 3 charts:



22m2If you have doubts about that beautiful triple cross-referenced set-up, then there are plenty of supporting indicators to shore up confidence:

22m3 22m8 22m9 22m10Once again: I am not an advisor, so don’t follow me. I see as perfect a set-up as I will ever get for a medium-long term trade, and the market is giving me plenty of time to position optimum short. If I wanted an opportunity to make a life-changing amount of money, here it is, and so I am positioned accordingly. Why front-run the market at all? Timing a top is very much possible, and not the game of fools: proponents of that mantra just don’t know the tools. My strongest case short was for the RUT and therefore the home of my biggest shorts – it is already down over 10%. My guess is some traders now see a potential short in that index but are waiting for a retrace that maybe never comes. The wider indices are an elastic band at snapping point. Some traders will be nimble enough to catch it, others will stand like rabbits in the headlights. Those still playing the long side at this point are the dumb money: not just my opinion but as evidenced in indicators.

A historic opportunity, which I hope we will all be celebrating together.


133 thoughts on “Perfect Set-Up?

  1. Thanks for your analysis John.

    The wave structure looks like a large bearish wedge playing out:'s+Elliott+Waves)

    The overall market in the Wilshire5000 looks very tired and is just holding the support. The question is for how long.

    I think you will be rewarded for your analysis and your willingness to take a position. The broader the top, the bigger the drop.

    Just curious, not asking for advice, what vehicles do you take positions with that you can manage time?
    Futures, ETF’s, Options, Spreads

  2. John, I don’t know where you find the time to churn this research out? Excellent article again, but please remember to not over extend yourself.

    I could not agree more the evidence certainly supports the case that the speculative phase has topped.
    We are now in the distribution phase among the majors after rotation out of the RUT and COMP.

    1. Hello John,
      have you been noticing the Indian Markets, the indexes are at record high. Can you devote any analysis to there also,

      kind regards,

  3. Jon. It has been mentioned on this blog by a reader, that his view all bets will be cancelled upon a total collapse. I do see this as a real concern.

    Essentially spread betting is a bookies. If they aren’t properly hedging their risk in the real markets they could easily go under. You could be right but unable to collect your deserved profits.

    Just wondered what are youre thoughts on this matter. I’m sure its something you’ve considered.

    1. I use the most reputable provider, and part-balance FSA regulated, but accept there is always a risk. Drawing on 1929, the shit didn’t truly hit the fan until 1-2 years after the initial stock market collapse once the deflationary depression set in and there were bank runs. I’ve mentioned before that I see similar risk ahead and thus risk of unorthodox intervention and rule changes, particularly with shorters as targets, hence I am looking to make my money early. I don’t believe we go from here straight to systemic trouble, it’ll take time to unfold.

      1. Hello John
        Thanks for all you do first of all. I have not thought about that much but are you saying if shorts ate canceled we lose our whole initial investment?

    2. A few years ago I had to use the FSCS (UK equivalent of the US FDIC) to get my money back from a failed UK spread betting company. I found the FSCS to be efficiently run, and although it took many months I eventually had the money paid into my bank account.

      But this procedure has been changed by the recently-introduced Recovery and Resolution legislation:

      Note the convoluted language, especially in paragraph 34, which is designed to give the impression that under the new rules “insured depositors themselves would remain unaffected”. In fact, what it means in practice is that the FSCS/FDIC/DGS insured money will be paid into the failing financial institution, and not to the insured depositor. The authorities are claiming that depositors will be unaffected by this change, because proping up the institution with your insured money will be just the same as paying it to you directly.

      Also, its worth bearing in mind that the FSCS/FDIC/DGS schemes only hold 0.2% of the value of deposits they guarantee. So if more than a few minor financial institutions fail, these schemes wil be inadequate. And we have already been warned repeatedly that “some banks” will fail (or be failed) later this year:

      This widespread transfer of wealth from private and business accounts into the banking industry will have to co-ordinated accross at least UK/US/EU to avoid bank runs.

    1. Have you seen the tapes of Bernanke saying sub-prime was contained and housing prices would not fall, only slow their rise. His predictions for the economy have been consistently wrong. So what are they paying for? He was there when the bubble was going parabolic and then presided over the weakest recovery ever, but is given credit as if he saved the system.

    2. “He [Bernanke] gave this stuff out, but I didn’t realize what he was saying at the time, so I didn’t do a great trade,” Mr. Tepper said at the conference in Las Vegas last week.

      Everybody should now see that the Fed has been rigging the market all along.

    1. Yes. On the other hand, if you watch the intraday movement, ‘someone’ will negate every rally in the open by smashing gold/silver prices back to where they started. This has been going on for a long time, it is clear that ‘someone’ seriously does not want gold/silver go up at all costs, or they are trying to frustrate the diehard bulls.

  4. From Ned Davis Research:

    While a 20% market decline may sound rather harsh, it actually happens more frequently than you’d think. During Secular Bull Markets, we usually see 1,105 days before the dreaded 20% decline. Whereas Secular Bear Markets only manage on average 486 days before the 20% tumble hits.”

    Today it is fact that we haven’t seen a 20% market correction in the US market for a very long time – 1,277 days to be exact.

  5. “Timing a top is very much possible, and not the game of fools: proponents of that mantra just don’t know the tools.” sorry mate, don’t mean to be rude or anything and massive respect for your work that you make available to us for free but when I read this I couldn’t help myself to burst out laughing. Are you aware that you have been calling for a top for HALF A YEAR now?

    1. We are a few days short of 6 months into the year, and the real inflation-adjusted Dow peak stands at 31 Dec, along with the Nikkei, at the new moon. Various cross-asset measures also inverted at that turn-of-the-year. So yes, I respect that John has gotten his call spot on within a few days so far. I would say John has the tools he is talking about. Your laughing may have been at your own inability to believe it can be done. John has proven it and is being rewarded by the confidence he has in his understanding of the theory, the tools, and the system that uses those tools. I am sure the same thing happened when the first caveman sparked a fire. I for one am not laughing, but rather being grateful that someone shared his hard sought insight, for free mind you, with people he doesn’t even know. That is an act of a true gentleman and scholar. Well done John.

      1. peterslane1

        Well said

        One element i have noticed is that much of the current wall street stock market cheering has been based on two things:

        easy money and energy independence

        that report on california shale oil reserves really shows that 1/2 that market cheering was based on flawed assumptions. California shale oil reserves were overestimated by 96%. and they represented 64% of the entire US reserves.

        96% of 64% is alot of missing oil reserves

        so much for energy independence.

    2. I’ve called out 3 dates for a top: 31 Dec; 28 Feb and 14 May.

      The first was a broad topping call made in early Jan, which still has validity as the Nikkei top, the Dow inflation adjusted top, and various x-asset relationship inversions.

      The second was called on Mar 2 specifically for the Russell 2k and Biotech, and they both topped within 3 days of that.

      The third was called last week anticipating the fake out top in the SP500 and Dow, which is so far valid but still very tentative.

      These are very specific topping timing calls and I believe all show promise to be proven valid.

      I did not make any other specific topping calls, but what I did get wrong was the timing of the waterfall declines, drawing together those historic analogs which was a compelling model, I thought, and being wrong-footed by the extending solar cycle.

      1. Hi John,
        This is a follow-up to my May 16 post in which I stated that the current weakness in the market was being predicted by the S&P Futures Continuous Contract Seasonality chart that indicates a dip in May before bouncing to a high in June. The same chart also may predict the waterfall decline from the June high into October and after that a bounce into the end of the year which I think may last until the 2016 presidential elections.

        As of now, the market appears to be following the chart by bouncing into a higher high into June. Let’s see if there is a June high and a waterfall decline after the high. And let’s see if the decline stops around October.

        Thanks for all your hard work. It is stimulating.


  6. Nearly perfect A-B-C upward correction in ES contract. Where A equals 24.5 points from 1859 low on May 15th to 1884.5 on May 20th. Then C equals 25.5 points from 1865 on May 20th to today’s 1890.5 overnight. A=C in that pattern and futures already retreated 5 points. SPX 1892 is now key resistance.

    1. Of course A=25.5 and C=25.5 so are in fact perfectly equal. Also, B wave correction was 19.5points which it makes for perfect 76.4% Fibo retracement of A wave (76.4% being mirror image of well known 23.6% retrace). So it seems it is nothing but computerized trading that rules now as nature is never so perfect.
      Of course this beautiful setup can be immediately blown away by bulls gapping above SPX 1892. We’ll see today..

  7. I just want to make some comments on your analysis. In the long run you are certainly right about a serious market correction but, as you know, getting the right moment is always about timing and that is the difficult part. My own experience is that even when I got the signals right I positioned myself to early and got washed out of my short positions just before the serious drop and in frustration could watch from the sidelines what I could have earned if I would have had my timing right.

    So my question is: How do you set up your timing buying your RUT Puts, how far out do you place them to be sure of success. I just wonder because you’re announcing the big drop since the beginning of this year, so time-wise, how do you structure your short positions. My own Puts expire in July, is that too early? I know that you can’t give personal advice but I think that it would be interesting for many readers to show how you time your own short positions.

    And thanks for your great work to provide us with your interesting graphics and commentaries, I really appreciate that.



      1. Yes but either you pay rollover fee and dividend adjustment if you bet on daily indices, or you have to reenter after expiration, once a month or once a quarter, and this can be costly too at times. Holding positions is not free.

  8. Unlike John, I am not at all sure of where the market will go. My stop will keep my losses small. If we break the highs, we are likely going to 1950+, perhaps even my highest target 2250. If we get to 2250, then John’s 10% profit on the RUT will be gone as RUT will likely make all time highs. The problem is no one here use a stop. If you are right, then great. If you are wrong, you toast. Why no one learn the simple lesson keep losses small, protect yourself, keep gains big, I do not get it.

      1. Alex Red you seem to be so good at this so why don’t you create your own website and your own indicators. You will get some followers and then you can be proud of your work. Coming on here and being completely opposite of everyone else and trading very short term really doesn’t help your cause. I may even follow you if pick every single one of John’s indicators and provide analysis of why they suggest huge upside rather than downside and your analysis is stronger. Until then all your efforts here are being wasted as you don’t have significant analysis like John to back you up. I would also advise not posting short term trades as this chat is currently interested in a long term view. There are plenty of day trading sites where your views would be much appreciated as they have been reasonably good.

  9. Hi John!
    excellent stuff, as always.

    while I still don’t fully understand timing with the sun, I am looking at your work and then my own to see if any agreement.

    luckily, I have only tried one small short this year (ending at a loss), while about 9 long trades, which all made money. Having said that, my work also needs a larger decline to set up for what should be a much bigger top (to follow).

    In other words, I am looking for a decline of 10-15% off the top – which could play out at anytime going forward. the next key timeframe for me is the early-July turn with the Bradley indicator. based upon what I am seeing, I would not be surprised to see this ending up as your major high as well, with a countertrend decline first into early-to-mid June. then, higher highs into early-July, on even stronger technical divergences – setting up for that larger percentage decline into the Autumn months!

    short-term, a turn is due May 28th, which is Wednesday of next week (plus or minus), which I am speculating could end up as the peak for the current upswing, down into early-to-mid June, then for a marginally higher high into early-July.

    either way, good reading, we will obviously see how it plays out 🙂

    Jim Curry

    1. Thanks Jim for your comments. Please continue to post your views. Also, if you don’t mind please also share basis for your predictions above, we all could learn different approach.

  10. The markets are often seen as nothing more than a reflection of human nature. Market blogs seem to crystalize that. I appreciate the opinions of all here when they are presented in a neutral and uncritical fashion. Any honest trader should want to give thorough consideration to both the bull and bear cases as well as the time frames they are using (day trade vs. long term, etc.) I am mystified as to why comment sections seem to create interpersonal conflict.

    Personally, I want to be made aware of my own biases and weaknesses so that I can defend against them.

    1. John, I too am on the bear side as well however I’m seeing a lot more folks thinking a parabolic top is coming and the fact that there is still no other attractive investment alternatives for yield forcing increased risk for returns. Then if we add in Euro QE early June do you see a bull spike to wash out bears thru summer with a fall decline as a real possibility at this point?

      1. Markets are arching over rather than going parabolic. Where there were parabolics they have largely been broken. To resume decisive upside we would need to print anomalies in various indicators. We would also need new buyers or increased leverage but indicators have been suggestive of all-in. My worst case scenario remains that the hard falls don’t occur until October or so. If we move higher ahead of that, I short higher.

  11. I disagree with John on many things, but I don’t expect John to throw his systems away and to follow anybody else; I wouldn’t throw away what’s mine. I suspected that idea of making big money came first, then strategy to satisfy those plans. I wouldn’t personally spend so much time holding onto a position that defies expectations (we were supposed to get waterfall falls some time ago). I am also confident that if a correction comes, I will profit from it more than most of todays bears, just because of my technique, despite that I am long = dumb money. I dont care, my General Dynamics almost at new highs today….But yesterday it dawned upon me, I mean I received form God an idea (as everything else in life) that opened my eyes…can you believe, after so many years in the market, to see something obvious as it were always here but never known. I skipped testing, skipped paper initiation period. I think I will be rich.

    1. No it’s not the idea that a bear is round the corner. The only sell off I can see from here is bears rushing to sell their shorts and shirts. Dumb money is talking today about breaking up or down, so I think we will spend it this range condition even more time.

  12. What brought me here long ago is John’s solar cycle approach, that is to relate human activities to the cycles of nature. It is an esoteric view in today’s Western society, but is in fact the fundamental concept of certain ancient civilizations (e.g. I Ching, lunar calendar, etc.). Now is the time to see if human beings, the unimaginably arrogant TPTB, can manage to suppress the force of nature.

    Many thanks for sharing, John.

  13. In 200 years The U.S. will not exist. All those superpowers : Roman Empire, Polish-Lithuanian Commonwealth, Russian Empire, Austria-Hungary and Prussia didn’t last more than 300 since they accepted Jewish minority.

      1. Mr Bernanke, you’re not that young, dude. I think you’ve made a logical mistake : truth can be pure, but not filthy. It is very relevant. Every day I woke up, I think how many innocent Palestinians will be killed this time by Israeli madmen. I worry when Israel will start another conflict that can spark WW3. Worrying affect my investment decisions.

  14. Thanks John. I still think it is amazing setup for epic crash. As long as S&P and Dow remain below their highs it is still best option. This will be one for the history books. Although I have to admit that Thursday was torture for the bears. Next week should be entirely different story so stay cool.

      1. A composite indicator helps in this regard e.g Citi’s panic/euphoria model, which I’ve shown several times this year in euphoria at levels only exceeded into the 2000 mania (NYSE short interest ratio, margin debt, Nasdaq daily volume as % of NYSE volume, a composite average of Investors Intelligence and the American Association of Individual Investors bullishness data, retail money funds, the put/call ratio, CRB futures index, gasoline prices and the ratio of price premiums in puts versus calls)

  15. Just a brief note to say thanks to John. You have been generously sharing a great deal of knowledge. I have become a better trader reading your blogs over the years. Also thanks to all the critics, Alex Red included. I think it is healthy to have different opinions, as long as we have indicators, facts to back up our arguments.

  16. An interesting comparison with another weak solar cycle (SC14) is now entering a critical stage. I mentioned it on 18 December 2014 here:

    And it was discussed with eclectic here:

    The comparison is that during the first half of a weak cycle SSN plateau, increasing speculation effectively lifts all boats. But then commodities correct, losing around half their gains while stocks surge ahead. Then (still only about half-way through the SSN plateau) speculation switches, causing large falls in stocks and a huge rally in commodities. This scenario is typical of cycles such as SC14, SC12 and possibly SC5 (older data becomes increasingly unreliable). SC16 was an exception, in that speculation did not switch mid-plateau but continued into stocks.

    Interestingly, we are getting very close to the equivalent timing of the 1907 panic.

    At the moment, the sun’s magnetic field is gradually continuing to weaked backwards towards zero – the weaker the field, the more sunspots, so there is no evidence that we are near the end of SC24 maximum (much the opposite in fact).

    And comparing SC24 to SC23 is of very limited validity, because one was a typical high sunspot/short duration cycle, and the other is a typical low sunspot/long duration cycle.

    In eclectic’s estimation, May/June is the most likely timing for renewed precious metals bull. My estimation is only slightly later during late July…

    1. Hi Mark, the development of the solar cycle is essential to the developments in the markets, IMO, so always read your comments with interest.
      Add 6 months to the black line here:
      and that’s where we are: into the waning from the max on all the similar cycles shown. And this fits with the projections of NASA, NOAA, Solen, etc.
      On the SC14 comparison we at the end of the plateau, circa mid-1907. The smoothed solar peak was the start of 1906, which is when the market topped, then the biggest monthly sunspot spike was the start of 1907, which is when the market started to collapse. So in both regards developments in the market fitted well with what happened in the solar cycle.
      Meanwhile, SC5 took the longest of all cycles in rising to the smoothed solar max, and that doesn’t fit with the above comparisons in that we would not yet be at the peak, and we can see here how it could be a relevant one to look at:

      Like you say, the data for the markets is ropey going back so far. But I get your point about these lower intensity cycles – we can point to the possibility of either the smoothed max extending beyond the norm or a higher monthly sunspot spike still occurring during a waning from the max. But both possibilities are outliers, as I see it based on the solar cycles history, rather than probables.
      So generally I am looking at three things. One, the collective predictions of the best solar scientists, and they are fairly agreed on us now waning from the max, and they know better than I. Two, the daily/monthly solar data to ensure the reality matches the predictions, and so far we see a waning since February. Three, a cross reference with market indicators and how likely it is we have a current market peak versus the juice for yet greater speculation ahead. Based on leverage, demographics, asset allocations, euphoria, valuations, technicals, etc, I see it as very unlikely that we are yet on the way to a super peak. Rather, we see various hallmarks of a peak already. If that is so, might speculative money rotate then into commodities, like you suggest? I am watching to see, but the deflationary recessionary collective demographics have made me more doubtful. Plus, if SC24 is now on the wane, then we can point to the first hump of the max for when commodities peaked out and the second hump for when stocks did.
      Those are my thoughts.

      1. Thanks John, it seems you are looking at the end of the plateau as when sunspot numbers begin to decline from their highs, whereas I regard it as when they significantly fall away from the final shoulder (even if that is well below the height of previous peaks). So, I believe that speculation continues to build thoughout the wider plateau, even as sunspot numbers are declining.

        In other words, sunspot numbers decline only gradually, and keep coming back for longer than humans are used to in the more common stronger cycles. For example, looking at the Solen comparison (the first link in your reply above), we are now about to complete month 66 of SC24 – but in SC16 speculation did not peak until month 73. The corresponding point in SC14 was beyond month 80 (or possibly even month 90).

        So what could drive persistent sunpots during that sort of timeframe? – the sun’s persistently weak (and currently still weakening) magnetic field would. Sunpots are caused by that weak field; I would genuinely love to see an explanation as to how sunpots could significantly decline now or soon.

        I can understand why you want to rely on the best solar experts – they have expertise,knowledge and intelligence far beyond mine as to the sun’s physical processes etc. But in general their forecasting record is abysmal! Here’s a list of dozens of expert SC24 forecasts (Table 2) ranging between SSN24 and 185:

        The cyclical models I’ve occasionally posted over the past couple of years have been the most accurate by far – and they don’t anticipate any strengthening of the solar polar field strength until 2015…

      2. Mark, I have read all your posts on solar cycle. You have been spot on till date. Please do share your valuable inputs regularly. If I understand correctly, you use sunspot cycle to trade Gold. If you don’t mind I request you to post your views on S & P 500 and Gold.

      3. Thanks Jigs; yes I have been concentrating on the sunspot cycle and gold, not because I’m a goldbug, but because I see the precious metals as the biggest and best bet. There is a perfect storm brewing where they can be bought at or below the cost of production, when sentiment is literally at zero, when interest on the blogs has all but evaporated, when the sun and moon are starting to cause chaos, when war cycles are starting to ramp up for several years, when timing cycles show a huge trend change in a couple of months time.

        As for SP500 etc, I couldn’t argue with all the extrememly bearish indicators, analogs and analysis. But I wonder if it is all to overwhelmingly bearish – too obvious – too clinical? Does it fully take into account the very essence of the marketplace; speculation, and the irrationality that it creates? I’m not sure either way, so I’m not committing much money those stock markets.

        I think the markets are driven by the same underlying forces that drive nature – namely a continuous and fierce competition for limited resources. In nature, its a matter of life and death, of survival. Not so in the financial markets or course, but the survival instinct is still there – that’s why all animals, plants and humans continuously strive to find new ways to out-fox the competition.

        That’s why the future is rarely how we expect it to be..!

    2. Thank you Mark and to John for all the valuable information and wisdom that appears from you and others

    3. I’m also favoring a late June / early July gold bottom and the start of wave 3, ( if the EW scenario plays out 2k-2011 was wave 1, 9/2011 to late June / early July 2014 wave 2). There’s a 26 week gold cycle coming to a close in that time frame. Therefore my bias is for the current triangle to break to downside without breaching 1200. This will essentially clear out the weekly gaps on my radar in the sector and set us up for the surge up. April 2013 breakdown was fast and furious. The trip back up should be just as breathtaking.

      It’s also good to keep a perspective on the very long term as far as gold / miner corrections are concerned. We are now within a year of cumulative time in this correction for setting the record in longest gold silver miner corrections looking as far back as the 1800s.

  17. John and Mark, this is very useful – thanks for the high level discussion on solar cycles.

    Despe906 – please keep your racist comments to yourself. I invite you to leave this site and quickly.

    1. How are his comments racist? Agreed that he is misguided on the collapse of the dollar. I recommend The Great Rebalancing, by Pettis.

  18. Perfect set-up is a perfect title. John has an exquisite and elegant situation. Sports Analogy: You have been practicing your soccer bicycle kick your whole life, and in the World Cup finals with seconds to go and the score tied there it is, what are you going to do go for it or pass it up?.

  19. Creators create while haters hate. To those who actually contribute to debate with real data and thoughtful and respectful presentation, keep up the good work. It is very appreciated.

  20. Mark, thank you for sharing your keen insights and original research comparisons on the solar cycle. In that connection; I thought the following information relevant to the discussion.

    And this also: the history of gold and silver during that time period.

    The price history of gold doesn’t appear to provide much new information during
    that time period. An analog on the silver price in the 1907 panic looks like the pattern gold traced out subsequent to the lows in 1999. A huge rally ensued in gold (38%) in 2000 only to retest the lows in 2001. Mark is probably right because the technical picutre may not be resolved for a bullish outcome until the week of August 11 – 15; at the latest. Since I expect 1525 minimum in gold the directional movement may come earlier in July, as Mark suspects.

    Just my input; but the same geocosmic signatures that were in place at the lows
    in 1999 were also in place at the lows in June, 2014. Hence my bullish posture.

    Traders will find such talk somewhat foolish; since nobody can predict the future with any degree of consistency; although I remain delusional in that regard. Timing is difficult; especially with regards to the future. (:-)

    1. Cheers eclectic – the final chart in your dshort link is a truely shocking reminder of the uphill battle we all face against the money-printers’ inflation. And the chart in your second link shows that the American public were finally allowed to buy gold on the very day (01-01-1975) that it started a decline from $200 to near $100!!!

      Here’s an interesting article about wealth confiscation through debt and inflation:

    2. Our greedy brains seem to only remember gains as normal. Reminds me of the folly of video poker addicts, who systematically never quit when they are ahead.

  21. Me racist? I think it’s offensive and some guys owe me apologies. Linda Rashke is my trading guru, Jesus Christ is my spiritiual guru, Mike Tyson is my favourite boxer, Lewis Hamilton is my favourite F1 driver, I had a gf from Ghana, I don’t consider any of them to be inferior to me because of a ‘race’. Please read and understand the definition of racism. Hateful? I hate criminals, injustice, discrimination, slavery, usury, mafia, mobsters, banksters and propaganda; this inspires my creativity to fight for a better world.
    Lunatic? Maybe, never been to a psychiatrist.
    Telling truth about genocide in Palestine is not anti-semitism.
    Saying that Einstein was a plagiarist is not anti-semitism.
    Saying that M. Yellen is of Jewish descent is not racism.
    Saying that ‘Long time ago in America’ is a movie about Jewish criminals is not racism.
    Belief that I cannot tell the truth or have my opinion – that is worrying!

  22. Ignore despe906. I know his parents were Jewish, I saw them at temple last week. They say he is a little too old to be staying at home, but they love him and want him to stay.

  23. Since we bottomed on Tuesday, using 60 minute candles, we have had 3 red candles total. Yes, three. That means simple trend following would have kept you from shorting as the entire move was step stepping. This is a simple market and not to be over-analyzed. SPX 1901 is here.

  24. Are there any psychologists here?

    I finally figured out why certain posters are here. It seems their only objective is to prove John wrong. Now i just need to figure out why. why?

    Judging from the bear baiting on other sites we must be approaching a top – i don’t know enough to know if it’s just a minor or major one

    but bull psychology has reached an amazing level

    1. I would say you are overthinking it. I am not selling any service. I am not out to prove who is better. Do you want a blog where everyone says the same thing and has the same ideas? My only reason for posting…to keep people aware that an open mind is very important in trading. I can be bearish too if there is evidence.

      For example: The Tuesday 5/20 high is important now for bulls to defend. If we push back into that day’s range, I would cease my bullish cheerleading.

  25. Food for thought:

    By hitting around 1920, this 5-year bull run of S&P500 will match the entire move of the 10-year bull market from the 1990 bottom to the 2000 top.

  26. I’ve been posting here for two weeks. It is enough for me and I will be deleting this site from my bookmarks. Whether we see 1950 first or 1850, you should be prepared for either scenario. At this point, if everything I wrote doesn’t help you, then there is nothing more to say.

  27. Final thoughts… Bears blew it clearly. There were two potential bearish setups. Bunell mentioned A = C of a 3 wave rally from the 5/15 low that should have stopped at 1892. I tried a short there and got stopped out -4. The other was NDX in an overlapping ending diagonal triangle but that required the high to stay under 3663. I shorted that yesterday, it sold off after HP earnings but ran over my breakeven stop this morning. NDX is 3677 now. And That shows the point of trading, all scenarios are just possibilities. If they don’t work, or become invalid, you get out of the way to avoid taking bigger loss.

    Some people seem to think that all I do is daytrading. It’s been hard to come up with a long-term trade when the market is just flapping around between 1850-1900 and it traverse this entire range in 2-3 days over and over. But ALL trades start short-term and MAYBE build into long-term. For someone To say I am in a long-term trade, so I will take 60 points loss against my entry is not even trading but just holding and hoping. What I mean is I take a short-term trade and if it starts moving my way, and I still like what I see, I may move my stop to breakeven, and make it a long-term trade. That is how all trades work: ST -> IT -> LT

    That is really all I have to share. If it helps you, great. If not, then sorry to waste your time.

    1. You can’t resist but to return time about time. How many “final thoughts” will we hear from you? Lol.

      Why are you trying to “help” others here when no one ….I repeat…no one has asked for you help. It is all in head. Do you get it?

  28. John, thank you for your devoted sun analysis.
    (Forgive my poor English) Just for your reference.

    According to the Chinese astrology, based on lunar analysis,
    there are great ups and downs starting from June 6. The worst
    month may fall on October. This is the micro side.
    In terms of macro, ever since the autumn of 2015, there may come
    a serious recession. 2015 is similar to 1835. Many of your predictions
    coincide this, and consider prudent.

    Email me should lunar astrology about the market interests you.
    (I am a private investor in Taiwan, MBA of U Pittsburgh, ex-banker in
    Morgan Chase, with 30-year Chinese astrology studies.)

  29. Markets are not an exact science. Ph.D., tons of books read, intelligence and wisdom are not a prerequisite to make money. One cannot gather evidence, facts, history patterns, ‘inside information’ and say : this should happen, that cannot happen. Chess players are usually poor at trading, the same applies to people with engineering background. Scientific approach looks very appealing, but is it profitable in the long run? I would even risk a thesis that education and knowledge are the major obstacles to make money. Like in a class room, mood swings every day, topic of the day send waves, leaders set the tone, laggards will set the tone when the leaders are absent. A grim doctor may sit in the class room with the nose in his papers and say : this cannot be happening because of X and Y, DeMartin pattern, and DiElliot law. Therefore this will stop from happening, and what I expect will happen instead. That doctor even don’t look at the class room. He doesn’t see that everybody else look out the window and don’t give a damn about his papers.

    This is trading trading : to see the market as it is, not as it should be.

    1. Discalimer : this is not an attack on engineers, doctors, scientists. My sister’s got a Ph.D, my parents are engineers, I love them all.

  30. I’ve been a regular reader since this was “the amalgamator”. So, that goes back a ways. You always put together a lot of good, interesting stuff.

    I was never too inclined to leave my lurker status and step out of the shadows to say “thanks” but I think it might be time to. So, thanks.

    I’m long the SP500 but hope to get out Tuesday on any strength to 1910 and go short, for what it’s worth. It’s going to be an interesting summer.

  31. real money comes ever from long side and I smile reading of ‘one lifetime chance to going short and to become rich , state-controlled market is relentless going higher throwcurrency devaluation and all the system is concentrate to save itself. short is a short term play for smart investor and sp500 is one of the worst asset class to short in the world because it is the place where money want to stay. 2000 point are just around the corner. sorry, but it is a losing game this time. it is not like 2000 or 2007… this is a stupid engineered bubble by the real power, banks and multinationals…it is foolish to stay short, if you don’t believe in them you should find

    1. Interesting. So, “this is a stupid engineered bubble by the real power”, and we have to believe in them.

      Why were 2000 and 2007 not engineered bubbles? If they in fact were, why did only those two burst but not this one? Because this time is a ‘different’ stupid engineered bubble as you said?

      I am sure most longs at that time even had faith in “the real power”, not only believe in them.

      1. Because this time they are saving the system that was very damaged and now is much stronger (yes there are a lot of problems but slowly all will be “corrected”)…this implys devauation and only correction are allowed (in nominal terms, that is what we must looking at for our short positions)… but the trend and policies of central banks of the whole world are unquestionable. I was thinking a correction in the mid 1700 was probable, healthy, reasonable…bubble are unreasonable and when a significative correction will come (from higher levels, so has been decided) there will be more and more money printing… so, yeah, I think this time is different. But I wrong so many times, maybe this time is the same.
        2000 bubble is the end of a twenty years trend… 2007 bubble was a transition phase… now we are in a new normal…money printing with no limit, zirp environment, maybe some revolution ahead (or just something for sheeple to believe in and justify this foolish and unbelievable uptrend (that is breaking to the upside a five months price compression)).

    2. They really want you to believe this time is different that all is to be fixed by printing money and central planning/rigging, and the status of reserve currency will never be shaken.

      But if you pay attention, various trade agreements between countries using local currency to settle are growing in recent years. Just missed the most recent one between Russia and China? This tells us the status of the reserve currency.

      Good luck.

  32. I think the reason why this last few weeks has been such a “tug of war” is because the rally from the lows in Feb were negated by the Ukrainian crisis. if that hadn’t happened I believe the SP500 would have rallied up tp above 1950.

    Instead it was held down by an event that was known but could have developed into something major.

    As I’ve said before the upswings in price in the second Pres term are usually bigger. In 2010 the rally before it topped was about 9% so It’s possible that this could be exceeded now. 2000 – 2050.

    The bollinger bands (daily 67,2sd) have only been this tight twice in recent years. Spring 1998 and summer 2007. In both cases the market rallied hard first and then failed.

    It is of course possible to just die from here but maybe the rally is needed to squeeze the bears out?


  33. Scott, thank you for your post on Chinese astrology. According to a long term chart of U.S. stock prices; a major high occurred in 1835! And there may be more validity to the idea of a lunar calendar as opposed to a solar one. As an example; a lunar year = 354.36 calendar days as opposed to 365 CD. 354 + 365
    = 359.5 where 360 = a circle; or cycle. I’m in the process of beginning to do extensive research into this arena to discover any scientific consistency regards predictability. John, if it’s not an imposition; feel free to provide Scott my e-mail address. Cheers.

  34. We must finish the bull super cycle. Do you know where we are within it?
    Elliotticians should also be examined, cursory at least – even if they are dull and unfathomable and thereby caste in with the unwashed. Also the Presidential cycle weighs in, albeit on the small scales, (that would be with ethereal influence).
    For me, for now, the main market indices appear destined to go up some more (zigzag to 2070 SPX) then hurry down twenty-something percent and then commence up again (all this year) to a higher high possibly concluding within the following year.
    After that it is a bear super cycle.

  35. I am no expert in H&S, but I think I can see an inverse H&S in Dax (mid Jan- mid May 2014). The neck line was broken on May 12, and then it worked as support that held in the recent sessions.

    1. Also I’ve checked some retail opinions on the net : most are shorting, shorting but stopped out, some complaining about low volatitiy, some saying that DAX goes nowhere. No one talks about potential inverse H&S, small minority being moderately bullish. So it looks like dumb money is shorting or seeing not much to talk about. If H&S pans out, there is potential of 600 points move up.

  36. John

    Would appreciate your thoughts on how the potential crash/correction could play out from here.

    I can see we have had what could be viewed as a ‘second chance’ on the nasdaq and russell. So potential for an immediate plunge.

    However, there hasnt been a second chance on either the spx or dow from what i can see. Looking back historically it would seem odd have both spx and dow freefall from here. Would value your thoughts on how it could play out?


  37. Are we on the cusp of a parabolic move in markets?
    should know that by the end of this week.

  38. Right I’m fed up of waiting for this crash with a large short. Have cut shorts to 50% and will hold them out now hoping for Johns scenario to play out. Taken a reasonable loss but should more than make up if we crash heavily.

  39. Hi, John & folks, Thanks you for your interest in Chinese astrology.

    The following are my immature personal forecasts for your reference.
    ( I try to make it as simple as possible without any terminology or theory)

    In Chinese astrology, a cycle contains 60 years. In other words, 2014 is a modified 1954/1894/1834/1774 with similar issues to occur in approximately the same month. Therefore, if you combine the stock trends in 1954/1894/1834, you will have a 2014 trend table like this.

    month: 2 3 4 5 6 7 8 9 10 11 12 1(2015)
    ↘ ↗ ↹ ↗ ↹ ↹ ↹ ↹ ↹ ↗ ↗ ↗
    (↘down, ↹choppy, ↗up) July and October may see big corrections.

    My strategy from June to Oct is as follows.
    1) If June and July down, I’ll wait and buy at October bottom.
    2) If June rallies, I’ll buy in July and October, which will down a little.

    In general, 2014 and the first half of 2015 will see a turning point,
    to a negative direction for a long recession, similar to that in 1835.
    2016 may be blessed with a rebound, and worsened 2017 to 2020 can follow.
    I believe John will concur this.

    Astrology study is a subjective matter. Please bear with me if you hold
    different opinions. Astrology makes me position long, not trade short.
    Bless you all.

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