Tuesday Morning Update

No panic selling follow-through from Friday in the Asia and Europe sessions yesterday but weakness hit late in the US, producing the third consecutive >1% down day, taking the SP500 7% down from its peak, and strengthening the steepening down trend. It keeps us on track for tipping into the panic selling, per the analogs, unless the bulls can stop the rot and generate a relief rally, so let’s see how the indicators stand.

It has been a long time since three consecutive >1% down days, last seen in 2010, and mainly associated with bear market action:

Screen Shot 2014-10-14 at 08.07.34Source: John Kicklighter

The SP500 sliced through the 200MA with little resistance. The positive divergence on the RSI has been negated with yesterday’s move.

14oc3

 Source: Stockcharts

CPC put call ratio hit the 4th highest in its history. Other such instances shown below and they weren’t great markers of lows:

14oc14Source: U Karlewitz

In fact they were generally associated with negative returns on all timescales:

14oc9Source: Ryan Detrick

However, capitulative breadth hit 12, which is a washout level. Historical returns shown below:

14oc19Source: Rob Hannah

A drawdown was fairly common, sometimes large, before mainly positive results.

Trin, Nymo and Tick did not make extremes yesterday:

14oc16

Year to date sector performance looks like this after yesterday:

14oc1

Source: Macromon

All year the top two sectors that are associated with post-market-peak outperformance have been signalling a top, but now their relative performance is much clearer to see.

In summary, the arching-over formation and the increasing bear pressure on the stock indices looks very similar to the waterfall decline analogs (see last post) pre-collapse. With all the major indices now having broken through their key support levels, the bulls need to step in fast to prevent a crash. The CBI washout is on their side, but there may well be further selling (drawdown) before the bounce, if it works again. Other indicators are not at this point showing obvious exhaustion. Therefore, some more selling, to align indicators at contrarian bullish readings, seems the most likely, and a voluminous major distribution day, perhaps that ends as a hammer candle (intraday reversal), would further increase the odds of a bottom, if it is to come.

The question is whether some further selling here can be fairly measured and contained, or whether it would quickly spiral out of control to become a major crash day (or days), given the large imbalances in the market (leverage, bullishness, complacency, etc). Either way, I think the situation is looking fairly black and white now. Either we are cascading into panic-selling, per the historical analogs, and, having broken the key supports, that should now happen very quickly (this week if a collapse, or more sustained selling over several weeks if more like 1937). Or, the bulls can yet generate a relief rally to a second-chance peak (springboarding off that CBI) which should last a couple of weeks or so (drawing on the analogs again), before the market tips over in earnest. Right now the first option has the upper hand (closed at lows, sliced through supports, steepening down trend, a lack of alignment in indicators for exhaustion), so the onus is on the bulls to deliver something today or tomorrow.

Posted on Posted in Indicators, Stocks

222 thoughts on “Tuesday Morning Update”

  2. Agreed John. Your final paragraph is exactly the situation. Bulls either make a stand here or we are going much lower immediately.
    Aside from Japan today, Asia again today took yesterdays US action in its stride and Europe also appears to be holding its own today as well.
    Over the intermediate term I think that augers poorly for markets as it shows a lack of fear, but what about short term?
    I think if we get another sell off in US markets today then that will trigger Asia tomorrow amd then the panic begins.
    With all intraday charts and the daily heavily oversold I can’t help but think we get at least an initial rally today that perhaps loses steam again late in the session.
    I will be keeping a very close watch on intraday charts for signs of either a sustained retracement or more selling.
    I don’t know why but I keep leaning toward the thought that we are not yet second chance rally.

    Reply

  3. thank you, John. personally I have been very interested in Vix behavior during stress times and have built a simple model that has been fairly reliable. Today it shows that the vix move to the upside is not yet complete and should make it to the 28-30 level at least (so it stll leaves room for at least 2-3% downside), with the next stop (should 29-30 be breached) being 42. After that, all hell will be broken lose- if Vix breaches 42. Interesting that today RUT sits at a major support line dating back to 2009 low (Rut did not fall as much as S&P yesterday), if RUT breaks yesterdays low, it will be a collosal damage. What bugs me a bit is that we are falling without major news, but same thing was happening in 2008 and retrospectively the market said that the downfall was due to a recession which the market did not see (in the news).

    Reply

      1. Well, i meant bullish correction after last falls.

        You wrote:
        Or, the bulls can yet generate a relief rally to a second-chance peak (springboarding off that CBI) which should last a couple of weeks or so (drawing on the analogs again), before the market tips over in earnest.

        Today, there were worse readouts in UE an Germany but nothing spectacular has not happend. I decided to turn to Long positions. Do you have any idea of range of this bull correction? My view is around 1909 (+/-3pts) on SP500 and around 1919 (+/-4pts) on SP500 futures.

        Reply

        1. According to shown patterns – after October 2014 we will have almost two months to set up Short position. And in December/January crush will start.

  6. John, for your waterfall prediction to be correct, at what point will you be measuring this % decline. will you measure it from the ATH or from when the real selling starts. thanks

    Reply

  7. Hi John,

    Fantastic site & analysis, things appear obey unfolding nicely.
    I am short Dow from 17076 and FTSE from the day of the referendum result @6830(6900-6950 always a long term problem for FTSE in my opinion) . I’ve no intention of chopping and changing, I am short and sitting tight. “IF” scenario 2 plays out and we have a re-trace back up, typically how strong would it be in your opinion.
    I have never seen such precise analysis presented in such an orderly and convincing fashion
    Well done!!!!!!!!!

    AL

    Reply

    1. Thanks AL. See the last post – there are several examples in there of second chance peaks. The average would be something around 2 weeks back up and retracing half the falls. But I reiterate the evidence doesn’t really support a rally back up, the second chance peak should already be in.

      Reply

  9. John, even those (myself included) who may
    have doubted your timing call, never doubted
    the quality of your research, together with the
    huge amount of work and effort you put in to solarcycles.

    Precise timing of markets is hugely difficult, and
    I think anyone reading also appreciates that.

    Reply

  10. Turning data into information is a very rare talent …… and you’ve got it in spades!! Thanks for the clarity and generosity.

    I am still expecting an intraday low followed by a reversal and then a ramp up to atleast a 50% retrace but probably more. This is based on a particular Expanding Leading Diagonal pattern in EW.

    Reply

  11. FYI sub of Cobra “Cobra presented two more historical charts last night showing yet again why a new low below 1874 is highly probable:

    Since the year 2007:

    1) If SPY closes 3 straight days under its BB, then 15 in 17 (88%) cases the SPX makes a new low in the coming few days to a week.

    2) If VIX closes above its BB for 3 straight days, then 13 in 15 (86%) cases the SPX makes a new low in the next few days to a week.

    In both cases there can sometimes be a few day bounce which gets sold.”

    Reply

  14. I hope to see a bungeejump day that would confirm the bradley with a high tomorow and and today is super tuesday…….lets rock and roll..

    Reply

  18. Thanks John. The charts have experienced a lot of damage. The 2022 spx high may not be visited again for a very long time.
    The sell off in SPX is a 3 legger pattern whereas C is now very near equal to A. This is the area a person might expect a bounce.
    A 3 legger pattern suggest a wave 4 pull back or an E wave down may be at work. An “E” wave down of an expanding triangle will typically take out the last low ( 666 in 2009) by a notable amount. The wave 4 possibility suggest a sell off of maybe 38 to 50%, then a fight higher. With most indicators at red line ( near 1929, 2000, & 2007 levels) we should lean toward the “E” wave sell off. This abcde triangle ( also called a megaphone) can be seen clearly on the DOW by making trend lines across the highs and trend lines across the low from the 2000 high.
    Bounces should be sold, but with the down trend taking on a 3 legger design, predicting the strength of the bounces will be far more difficult than the bounces found in a 5 legger down.
    Thanks again John.

    Reply

  19. Short SPX1885 … was too impatient closing my shorts yesterday. Expecting more downside. Probably another repeat of yesterday. Gains will be lost by EOD. GLA

    Reply

    1. This comment is not necessary… Duncan has made some good calls, and yes, covering yesterday didn’t work out, but I assure you, we’ve ~all~ been there…

      Duncan, thank you for being so open about your trading…
      I always appreciate traders thoughts when they are backing it up with real money….

      Reply

      1. Comment from rscott is completely uncalled for and amateurish. Always with these things, it says far more about the poster than the person being addressed.

        Reply

  26. We should get correction back to S&P 1910-1920 area which will offer another good short entry. Downtrend should resume on Thursday or Friday (Opex day).

    Reply

  31. This could become a boaring game: Rallies in the morning, sell off in the evening and playing catch-up with the 1946-Dow-chart, that is reaching the analogue low of about 15000-15200 in 1-3 weeks.

    Reply

  33. BBE you may be right, the indices are starting to exhibit the same patterns that lead to the dsiastrous late sell offs the last three sessions.

    Reply

    1. the internals are just too nasty and not confirming the bottom – some signals are trying to bounce but they are few and unconvincing at this point

      death to the money monopoly!

      Reply

  36. I am paying particular attention to the Transports. With oil cratering, this index should be flying higher (as it is today). If it can’t gain traction, then something is wrong and would be a very bad sign for the bulls imo.

    Reply

  37. Treasuries are tanking, folks, broke major support over the past couple of days, yet equities are up today. Its a bad sign, the bonds are telling us deflation is on the way, some is imported from Europe via strong dollar, so Europeans aren’t bringing anything but trouble to the US stock market imo.

    check this out (we are way past the support on that chart):

    Reply

  38. Another short term possibility is that triangle is beginning to form in major indexes. That could mean short flush down at the end of this week and rally next week

    Reply

    1. Could this be a temporary deflation that will end when Draghi and the ECB ride to the rescue with continental QE.

      Reply

  47. As opined before.. when the Fed is focusing on the lower than expected inflation data, the markets pays attention more closely to economic indicators…

    Today’s 0.8 point drop in the September NFIB to 95.3 (from the previous month’s 96.1) is an ominous signal for Q3 growth… I believe it is why today’s (expected) relief bounce quickly gave way after the data release.

    At 95.3, the September NFIB is a mere 5 points below its pre-recesson average… and at a level just two months before the last recession…

    Reply

  48. I decided not to take the opposing trade in the foreseeable future. I opened several short and will add more on the bounce.

    Reply

  49. Several minor turn dates on Bradley after October. Interesting thing is 2015 is void of them until March 7th, 2015.

    Reply

    1. As I am not a day trader and took some losses between end of September and now. I’m out for now. Just sticking to the money markets. No equities. Think this thing is going to keep falling a little while longer.

      Reply

    2. On the Bradley, as you point out, it is quite until March (I have 4), but there are some consider Bradley crossing 0 (zero) as important. I have those dates as Feb 16 (geo), and Feb. 11 (Helio). I mention this because there are some astro events that are important (e.g. Saturn- Uranus retro).

      Reply

  50. The fall you you refer to in 2010 was simply, just like we are seeing now, the mid term presidential cycle low. The chances of a crash are negligible IMHO, we are at the wrong stage of the bigger cycles. We had the crash just 6 years ago, not time yet for another.
    Look at the 4 Year cycles from 1974, every 4 years like clockwork, usually, but not always,y in October, we get a sell off low. This will be no different. Gann’s 20 Year cycle is right on time.
    Bullish sentiment is under 10% and the bears are frothing at the mouth…perfect!

    Reply

  51. John,
    I think one reason why so many money managers are confused as to what is happening is your theory that the post second chance has ALREADY occurred. Most technicians are somewhat calm, as they are sure a snap back will come, giving them a chance to get in(short) and provide that second chance technically.

    In the history of US markets, have we ever had a decline that does not give us a visible lower high before a fall? (on SPX & INDU)?

    Thank you.

    Reply

    1. I don’t know if that has happened before, but I just look at the evidence behind the scenes that says we should be post second chance. We either print such an anomaly in price, or we print anomalies in various indicators.

      Reply

    2. Per Puetz, no visible 2nd chance of 1637 Tulipmania, US Crash of May 7, 1835, and Jan 14, 2000. 2000 is a stretch, it was the DOW which just fell a little over 10% and most indices topped in Mar.

      Reply

  52. Daveg,

    You may very well be right. I also advocated a bottom in october. The potential for a sell off remains though, as so many cycles came in at the right time, even the lesser known (for instance feb 11, 1948 low + 9732 calendar days= october 4, 1974 bottom + 9727 calendar days= may 22, 2001 top + half of that, say 4864 calendar days produced the september 2014 top. There are some nasty cycles right in front of us, we are not out of the woods. Charts are clearly broken and BB Elvis’ Never-Lie-Chart does not signal a bottom. Yet.

    Steve T presented a fractal analog of 2014, with a shift of 2 TD. In the way the charts unfolded lately I was surprised how much the 901 TD cycle acted in the same way as before. The resemblance in the charts in 2007/2011 and now, 2014.

    August 16, 2007, the bottom before the run up to october 11, 2007 + 901 TD gave the march 16, 2011 bottom, followed by a run up to the the top may 2, 2011 + 901 TD= october 14, 2014. Will this run up happen again, as Daveg suggests?

    Soon thereafter the regular 178 TD wil hit, on october 20, 2014 (with a lot in between, dates already presented by other contributors).

    The 178 TD:

    april 6, 2011 H + 177 TD=
    dec 19, 2011 low + 178 TD=
    september 4, 2012 low + 178 TD=
    may 22, 2013 top + 178 TD=
    february 5, 2014 low.

    Also, march 6, 2009 bottom-june 4, 2012 bottom= 1186 calendar days (almost 170 weeks) x 1.732=2054; march 6 + 2054 calendar days= october 20.
    And 2 x 2054 calendar days backwards from october 20 = december 4, 1997; december 5 was a high, followed by sell off.
    Again 2 x 2054 calendar days backwards= september 7, 1986 with september 5 a high, followed by by a short sell off.

    Reply

  54. daveg, interesting to consider differing views.

    Joanathan recently made a detailed case with a bullish outcome.

    My own view has been similar to yours, however increasing I have to consider that may be invalidated.

    The SPX and UKX are already below levels where I
    would have expected a bounce.

    One big down day, around 2% plus,
    will strongly tip the balance in favour of the bears as
    buy the dips may begin to lose faith in a rapid rebound.

    I remain 100% in cash.

    Reply

    2. Phil…
      “One big down day, around 2% plus,will strongly tip the balance in favour of the bears”

      Mate, playing devils advocate bit here. You do realise you said exactly that before Thursday,Friday, Mondays large moves down?
      Mate you might be siting on the fence a bit too much. And that is not criticismas everyones level of risk tolerance is different.

      Cheers

      Reply

  55. Hi John H.

    The two links below show the influence of the gas giants on the Solar System Barycenter, and subsequently on the Solar Cycles.
    Some interesting graphs on predicted SC min/max.

    http://www.landscheidt.info/?q=node/4
    http://www.scirp.org/journal/PaperInformation.aspx?paperID=36513&#reference

    It is interesting that a number of the cycle values that have been shared on this board, also show up in other cycles within the solar system.

    I recently came across a paper written by Russian scientist in 2007 predicting a lower SC max now. They were correlating volcanic activity with SC’s,. Something that is now, fairly common knowledge. However, they differentiated the types of volcanic activity into subduction plate zones, and separation zones (Iceland). They showed that volcanic activity occurred “after” the SC max began to transition to the minimum, not at the top or bottoms. The timely, but early arrival of volcanic activity suggest that the transition has begun, and that the SC peak has gone past. That should put to rest whether this is “it”.

    I have been researching available data in an effort to determine if we really are going into a Dalton Minimum. The “camp” was divided into 75% moderate, with 25% full on.

    After looking at the available ice core data with emphasis on isotopic profile and distribution (solar vs. cosmic), plus volcanic ash distribution, and then lagging dust (Sahara, Gobi, Central Plains) accumulation, add in the La Nina recharge rate, I am now in the 25% full Dalton Minimum camp.

    If you look at the El Nino/La Nina cycle, it has been “flat lining”. The extreme swings have diminished. The “mean” may represent the type of fixed climate that destroyed the various South American empires.

    It is going to get colder. It would not be a good thing to have natural gas and oil prices stay down for a long enough period, that production gets shut in.

    As stated by so many on this board, thank you for sharing. I am also continuously impressed by the knowledge and quality of the posters you have brought together.

    Reply

    2. how about a different prospective that the genie of fundamentals is out of the bottle? i am hoping giving the recent vol and given that the earnings season is upon us people will start focusing at what really matters and not technicals. And the fundamentals are waaaaay stretched by any historical measure. I think this is exactly what John is trying to say with a twist that the solar activity change brings us this new perspectives paradigm. This madness of money printing and skewed incentives to hand out free money to anything that moves needs to be stopped!

      Reply

      1. The earnings season is what might engender a crash. If reports come in lower than expected, there is little for the market to hang its hat on with QE being wound up here in the States and any QE program in Europe pushed out until 2015.

        Reply

  57. rumors are out that a mid size hedge fund is liquidating its positions. how did late 2007 top was crusted? two Bear Stearns mid size hedge funds flopped.

    Reply

  61. Allen, just to clarify the earlier comment,
    yesterday there were still many buy the dips
    comments on the various stock boards I read,
    posters fully expecting a swift rebound.

    Some of those comment yesterday on here also,
    all be it many thought any rebound would
    be temporary.

    Now, following Europe sharply lower sentiment
    has fallen off a cliff.

    This is the first time during this sell off that I sense
    (and read) signs of some panic beginning to creep in.

    Reply

  62. The S&P has reached the Expanded Leading Diagonal bottom trend line and provided you are willing to suffer another 10 point or so drawdown then it’s time to take a long position.

    The 61.8% retracement would be around 1957 and the 76.4% retracement would be 1980.

    Nice Risk/Reward here.

    Reply

  64. Where’s that jonathan dollar guy. I told him that overseas money would be pumped into T bills and not equities. They have been hedging with both since the beginning of the year, now they have show their cards when sh*t hits the fan. dollar and treasuries are still the cleanest dirty shirt, and it’s better than investing in yen, euro, or Netflix…lol

    Reply

  65. Beware bears – risk of an upside bounce is growing. All about the forced selling that may ensue.

    Quantifiable Edges ‏

    If mkt closed right now, our CBI indicator http://stks.co/b17Ui would be 26-a level only exceeded at 98, 01, 02, 08 panic lows.

    Reply

  67. tlt exploded as promised yesterday! lol – I almost added 15% more short positions yesterday but instead added 20% rydex 1.2x gov.

    that works! WCCG on the way to HELL!

    Reply

    1. ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

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    1. day to day for me, BUT theo had an appropriate wave 1 target yesterday for the dow

      the ED on the dow is probably the biggest in market history and it measures down initially to 15200 so lets see if we get there and how before anything else…

      one thing is sure true – ALL THE LONGER TERM CHARTS I USE HAVE ROLLED OVER TO CONFIRMED BEAR MARKETS

      for the skeptics: THE CHART THAT NEVER LIES!!!!!!!!!!!!!!!! lol

      http://stockcharts.com/h-sc/ui?s=$NAHL:$NATOT&p=D&st=2014-04-12&en=2014-10-15&id=p99223387912&a=369189956&r=1413385431413&cmd=print

      Reply

  71. Big warning folks. Don’t get too cute with this market. The way I see it currently there are bearish flags everywhere again just like the other day.
    We may yet take out the morning lows.

    Reply

    1. Have a first bounce target at 104.3 in $/yen. This is where the big down-trend line hits connecting 1998 and 2007 highs. Nice attck on the carry trade this morning though.

      Reply

      2. we are down, what 6-7% from the central bankers of the world induced all time high and they are calling it a capitulation?? hahaha! it is hilarious.

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      4. I agree, Allan. And all this talk about the R2K outperforming over the past two days being a sign the market is beginning to stabilize. It’s two days for gosh sake!!

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  72. John H, quick question if I may.

    I noted you expect a very minimum of an 18%
    fall (likely more) – are you using the RUT as a measure
    of this, or do you also consider this % can equally
    applied to the SPX?.

    My view has been invalidated by today’s price action, decisively.

    Well done and not quite sure how you held your nerve,
    way beyond my capabilities.

    I don’t short but did go in to cash 100%,
    so I owe you a very big thanks, as it was
    largely based on what I read here – and yes I
    appreciate its never investment advice.

    Reply

  73. USE THE TRIGGERS i’ve been posing for a month or more now – there are no buy signals on any chart I use OR using the KISS 3 bar net line trading system.

    I posted the info many times.

    also the VOLUME OsC that I’ve posted many times predicted the break of the Keltner bands and is still rolling over. THE NYAD has broken all suport and shows no sign of repair. DESPAIR IS INDEED ON TAP…roflmao

    http://stockcharts.com/h-sc/ui?s=$NYUD&p=D&yr=0&mn=7&dy=11&id=t61970935679&a=367854604&r=1413386577634&cmd=print

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  74. A reality check for those thinking about going long. Look at the following chart. Look at far we have fallen and where there is any degree of support. i am not saying we go down in one straight line but there is virtually ZERO support until the 200 wma and even that looks flimsy in relation to price.

    What happens when a market or security becomes way over extended? The way back down is usually a fraction of the time that it took to go up.

    http://stockcharts.com/h-sc/ui?s=$SPX&p=W&b=5&g=0&id=p06660339561

    Reply

    1. Bill not speaking for John but I think you find that his stance has not altered. He is expecting minimum 20-30% declines amd won’t be considering closing his shorts until he sees evidence of a bottom in those targets.

      Cheers

      Reply

      1. but that is why I posted the tyx chart – IT PREDICTS A WATERFALL DECLINE as rates collapse

        look at it carefully

        Reply

    2. totally agree. an almost 15% drop in a benchmark yield this morning, what the hell is going on? and its not like we are at 20% rate, it is barely 2% to start with for crying out loud, lol…)

      Reply

        1. yep, i agree we drop way further down. First, Europe exports their deflation- look at bunds, for example. Second, the Fed mopped up a lot of the good stuff, whats there a good insurance company or a pension fund to do- they HAVE to hold lots of treasuries. But still, these drops in yields over past few days are creepy.

  79. Elvis. I hear ya. The hourly charts of the DOW and SPX are all pointing to much lower lows. It looks like we take out the morning lows possibly today.

    Reply

    1. if we do and close there, lots of long term technical support will be breached- and i will be adding for the shorts.

      Reply

  82. tlt hit 125 as I predicted yesterday…

    now the question is how to lock in what is made!

    AND THE DOW TANKS TO MINUS 2%! the trap door is open to HELL, bloody HELL! lol

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  83. I’m never doubting a Hindenburg omen again. May give false positives in noisy markets, but once again it nailed the top.

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  84. Allan et al: Question: Any thoughts on the VIX vehicles, TVIX, UVXY.. No backwardation yet, so lots more room to grow from here?

    Reply

    1. erick, I am keeping a close eye on things but there is much more room for them to run.
      I have said all along that at some point those two would be skies the limit. When the real panic begins they can easily be 20-30 baggers and I am talking from higher levels than even now.

      Cheers

      Reply

  85. ok, so now it looks like we are really in flash crash territory.

    there is a REAL possibility of a 500 point (or more) down move on the dow right now

    Reply

      1. machines will get very worried and they will shred their algorithms at noon

        lol

        may happen before noon if spx vigorously breaks 1834

        Reply

    1. LNB, mate same technology different package. One wonders how much longer they can keep their fan base loyal?
      A friend bought an iPhone 6 and was…… well, questioning himself why in hell he bought it afterwards, especially considering he already owned a 5. I said to him “simple buddy, a fool and his money are easily parted”

      Reply

  90. Okay, FWIW to anyone, just went FLAT in all trading accounts….
    Went from 160% net short from Sept, to coming into this week 63% net short, and am now flat @ 1838-ish….

    My trading system is still 100% short, but between the relative strength in the RUT, and this Tweet just a few minutes ago, it triggered my action…

    Jason Goepfert ‏@sentimentrader 14 minutes ago
    If we close were we are now, our Stock/Bond Ratio would hit -4.5.
    Since 1962, exceeded only by 10/19/87, 10/20/87 and 8/8/11.

    I am hoping we get a huge bounce out of here to re-short at higher levels, but if we crash lower from here, I’ve already had a pretty good year in the last 6 weeks, so so-be-it…. GL to all, and of course, TY all for all your comments….

    Reply

    1. This could be a once in a century epic financial system collapse, when comparing indicators to the selloffs in the 80’s may not capture the big picture. Are you going to be satisfied if you take profits now? There is no economy that is not completely full of crap and existing on debt. This is a big deal.

      Reply

      1. Could be…. And yes, I’d be disappointed…
        Perhaps I’ve seen too many scorch-up rallies in the last few years to think 100% objective 100% of the time, but again…I’ve had a pretty good YEAR, just in the last 4 weeks, so I’m good… 🙂

        There’s always the next signal, and who knows, like I said, if we see a bounce somewhere I’m looking forward to putting shorts back on….
        Just a tactical step-aside for a bit…

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  91. When almost all the news is negative I thought I would inject some hopeful information. In the current issue of Science magazine there are two interesting articles about demographic trends and their economic implications. The first article points out that demographic growth is not all positive from an economic viewpoint. They analyze the economic outcome in 40 countries for current demographic trends. The major determinant is the cost of capital. A take-away quote: “The United States is exceptional with a TFR [total fertility rate] close to the level best for public finances.” The outlook gets better as capital costs increase.

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  93. the machines and investment banker drones are not going to know what to do since they havent had to cover longs in a very long while. FUMBLE FINGERS COMING

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  96. Catching up to 1926. Day after labor day 1926, Sept 7 to Oct 19, DJIA fell 12%, flat-lined for a week then took off after election to recover 80% of loss by the week before Xmas. Low equivalent today about 15000.

    Supports my thesis that the next BIG event will be Republicans taking over Congress then Presidency with massive corp tax cuts to provide coup de whiskey for blow-off rally.

    Reply

  98. im shocked at the guy from greedometer who has been calling for a crash like john for last 10 months but as soon as we get one he goes LONG at 1905 and 1832, what a complete …… he now says we get to 2000 in next 2-3 weeks

    Reply

    2. Yeah, ~THAT’S~ a little nuts…. Although if we get there, you can be sure he’ll be picking up a LOT of big-bucks subscribers…
      High risk – High reward call, to be sure….

      Reply

      1. what about the big buck subscribers he lost the past few years…didn’t he call DOW 5000 a few years ago…lol. Pretty sure he called SPX 1500 right now back in February. He will eventually be right, but you have to be patience or you end up go back and forth which he is doing right now…the term is called “chasing”.

        Reply

        1. Good point!! I hope he’s right, but yeah, if I was a subscriber I’m sure I’d be both confused and annoyed….

  100. There is no economic boom on the horizon, even for China, and the like. PE ratios have barely moved down on the stocks I follow from historically high values. Companies will begin to get defensive and earnings should start decreasing. Fickle investors and executives will protect themselves immediately by selling. A downward spiral is in the works for many years,

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      1. Regarding your earlier comment about the oversold condition of 1987, the note referenced days in 1987 AND 2011, so it’s not just the 80’s, and I know what happened right after after those dates….
        You do ~not~ want to be short….
        And not saying it ~has~ to work out, but the risk/reward of hoping for further downside moves just stopped making sense to me as of this morning….

        And there’s ALWAYS another trade around the corner….. 🙂

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  106. Haha I closed out my ftse longs at a fairly large loss when the Dow was 400 down. Since then it’s rocketed which is pretty typical after I have closed lol. I still think further downside is ahead but if the market does rally strongly as it is likely based on my previous experience I apologize to all the shorters here!

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    1. Well played, Sir…. Well played…. 🙂

      And thank you for the interesting chart, BTW…
      I’ve added it to my Daily Markets website folder…

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  109. I sold my VIX longs just before the start of the final hour. It looks like we bounce here and possibly hard. I would not be surprised tosee a testing of 200 dma’s at least in the next few days.

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    1. things are getting very strange but it is really best to remember (for me a hard lesson in 2011) that CASH IS A POSITION and that you do not have to trade every day

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    2. Growth may be done for NFLX in which case eps peaks at ~$4. Making it a ~$40 stock. Widely held, and thus widely dumped.

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  111. fast market – 103 $/Y and 1775 in SPY are now s-t targets looking at a standard EW. Also focused on Eur/Yen as the risk barometer. While staying under 136 risk off seems to be in control.

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    1. In all sincerity, I hope you make a small fortune on this….
      And then you let us know when you reverse short…. 🙂

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  115. Nadeem Walayat, the most astute market forcaster I have read over the years is regarding DOW 18350 as the most reasonable target, but doesn’t expect it to be met before mid November.

    http://www.marketoracle.co.uk/Article47715.html

    So according to him plenty of time for a retest of the break down level and a cooling down of the bearish mood. Let’s consult the oex-call-put-ratio-oracle, whether it supports a break or even a premature bottom at 16000.

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  116. “The market does not know if you are long or short and could not care less. You are the only one emotionally involved with your position. The market is just reacting to supply and demand and if you are cheering it one way, there is always somebody else cheering it just as hard that it will go the other way” – Marty Schwartz, Pit Bull

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  117. The move today was flush down from minor triangle formation that was best seen in ES and NQ charts. I closed my shorts. Although crash is possible it is not very probable now. In my view stocks may rally now, maybe after making higher low tomorrow. I would not exclude one more high for S&P in Jan – Mar. Only if S&P 1800 is broken major bear to S&P 500 is confirmed.

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  118. If the after hours serve as any indicators, tomorrow promises to be another bloodbath day, a REAL capitulation. On another note, I haven’t seen the divergences yet on hourlies or daily charts and that virtually always happens in every major impulsive move before a real reversal.

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  119. From Friday the 24th of October until Friday the 7th of November imo here will be a mid term election rally. 85% of mid term elections have up move during this window (mid term election minus 5 trading days, to plus 3 trading days).

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    1. Tomorrow moon in Leo which sets up the 8 worst calendar days of the month according to the moon zodiac cycle. Would expect weakness until at least next Friday.

      http://www.moontracks.com/cgi-bin/astrology-calendar.pl?month=7&style=Grid&year=2014&month=10

      But tomorrow opens with Low Tide (price positive) as does Friday so I expect relative strength to mid morning then lower starting at 11:30AM.

      http://tides.mobilegeographics.com/calendar/year/752.html?y=2014&m=9&d=21

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  121. Dow:
    October 30, 1946 L +17 years minus 1 CD=oct 29, 1963 H.
    2 x 17 years later from october 29, 1963 = october 30, 1997 minus 2 days, bottom crashpanic.
    October 30, 1997 + 17 years= oct 30, 2014 minus 3 CD? = october 27, 2014. Or will it turn out to be 2 x 17 or even 3 x 17 years before..?

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  122. This is an exciting time. Volatility is opportunity. Definitely a day trader’s playground. If VIX makes new high tomorrow, due to expect some 2011 or 2008-ish actions.

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  123. Andre’s work yesterday on declinations was fascinating and well worth research. I did a declination study for a random year 2001. When moon crosses the ecliptic to the south it seems to have a different effect on the markets than when crossing to the north. Will continue to research this.

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    1. Steve S.,
      I have looked for Andre’s work on declinations that you reference, but can’t find it. Looked at the 14 th (and 13). It maybe handing in plane view . Could you tell me the general area. I know it’s kind of a pain to locate , but I appreciate. Thanks in advance,
      SC

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      1. Steve the way to find it is to go to the relevant blog page and hit Ctrl+F. That should allow you to enter Andre’s name in a box and it will find each occurence in turn. However since Andre manages to put an ‘acute’ over the ‘e’ which most keybards don’t have as standard I would suggest searching for ‘Andr’.

        Hope that helps

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  124. I moved to cash yesterday an hour before the close as the 60 min charts were showing reversals.
    I do not know(obviously), if was the correct decision however the trannies and Q’s closed back above their 200 dma and the trannies with a higher close.

    60min charts everywhere are sporting double bottoms and inverse head and shoulders.

    You gotta go with what you see but another collapse would not surprise me.

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