Friday Blow-Off Top?

Was Friday a blow-off top?

It was a higher volume reversal/exhaustion/black-bar candle with similarities to previous peaks.


Source: Stockcharts

It occurred with a super-spike in allocations.


And it occurred at the new moon, which often marks peaks.

Skew is back to high elevation, Trin ended Friday at the very low extreme and we can add to those the recent readings in ISEE put/call and Nymo for an overall case for stocks to move downwards from here.

Additionally, various indexes such as the Russell 2000 and the Dax have now risen as far as they should without jeopardising their ‘top is in’ status. Similarly, the divergences in breadth measures would be at risk if the upward break in equities is maintained. Recall the ‘failed’ top attempt at the turn of 2014: breadth was subsequently repaired and the process began again at the turn of July:

23nov5All year I have kept my worst-case scenario as a bull market top not occurring until the end of December 2014, and I still do. However, if equities were to keep rising from here for another 4 weeks, then I would expect the topping patterns in various indexes and the breadth divergences to be neutralised again. That would reset the topping process for a third time. I have great doubts that could occur but how/why might it?

I don’t see anything in November sunspot developments to suggest scientists have it wrong. The trend is still waning since April, which puts stocks on borrowed time. Yes, seasonality is now positive, and maybe for buybacks too. But the real geomagnetic trend remains down, which pulls the other way on sentiment. With the extreme readings in allocations, sentiment and put/call I doubt there is fuel for yet higher prices. Could we see a middle-ground whereby stocks hold up but trade sideways, thereby not resetting the topping process but holding them up until year-end? I can’t rule it out.

It all comes down to what happens this coming week. Recall the October monthly hanging man candle. By my calculations (positioning in the topping process and analogs) November should accordingly end down. That means we should see at least a 3% drop in equities this week from last Friday’s close. What might cause that? Exhaustion, I believe. See the mid-September topping candle in the first chart above, compared to Friday’s. A similar candle from a similar all-in / stocks can only go up positioning, and a sudden switch to bears in control followed.

If we look cross-asset, the behaviour in gold, miners, junk bonds, Vix and treasuries all support a break down in equities. But it has to happen now.

I was asked if I added short, but I am waiting for a clear reversal. If Friday was a blow-off top then we should see follow through to the downside as early as Monday. Should this occur I will be looking to add short positions with stops as we move down anticipating we won’t come back this time. But I want to see that clear follow through move to the downside.


178 thoughts on “Friday Blow-Off Top?

  1. Thank you John. Sounds like a great plan regarding adding positions.

    I note that Hugh Henry became a capitulated bear at the turn of 2013-2014. That was inline with the divergences, and it seem that the Bears threw in the towel. Thus our bearish positions at start of year was justified.

    Now, he is actually bullish on China, which I believe will be one of the gears of this crash. (1929 hurt Europe as much as US. I believe 2015 will be a global crisis.) And we see divergences again near the turn of 2014-2015. If these do reset and we go higher, he will be proven right the second time to throw in the towel. We shall see of course.

  2. great, John, thanks so much for putting this together. your explanation is perfect and is exactly what i have been thinking. my biggest fear is the sideways movement or a very shallow 4-5% correction that allows the s&p to regain 2000 before year end before the real selling starts. i have a long term short position that isnt affected, but i’m all in short in a short term position through december, so as you said, everything has aligned perfectly and all the indicators are there, but the move has to happen now and i personally believe we have to confirm as early as monday.

    i maintain that the biggest driver here in the short term is the end of QE3 at the end of October and we are now at the post 3-week window where severe weakness began in the past. the boj’s action and whatever limited abs the ecb is buying, does not have the same effect, which is why every cb and their dog was out in force last week. if mario delivers at the december meeting, then all bets are off, but i dont expect him to do anything and believe that will lead to a strong move down. add in some bad numbers because of the november weather in the states, and there are your catalysts. i also believe this move down has to happen starting now through the early part of december, so that there is a chance to retrace and close the year flat or slightly up, similar to 2007. that implies that i dont expect this move to his the 18% target (i’m seeing more 12% – 15%) and believe the waterfalls are to come in 2015.

    the market is nervous and this advance was weak. i would be worried if i saw big 1000 ticks in the buying, but there werent any. sellers have their finger on the trigger and dont want to lose these gains. ironically, we got a 1000 down tick on friday amid the euphoria, which indicates sellers are ready to take control.

    good luck to all in their trading. as the holidays approach i think many of us who have been on the losing side of short bets will be preoccupied with the markets, but let’s remember that family and friends are what matter most. keep your spirits up and enjoy the holidays.

  3. If you want to read about inferior conjunctions, read my morning post (prev. blog).

    By the way, in this analysis we are in the most likely scenario.

    Anyway, the new moon is an inferior conjunction. Now the gravitational pull of the sun gets compensated by the gravitational pull of earth and moon on the sun; gravity works both ways! This gives a low in tidal force and thus a high. It will most likely be down into the 290 degree angle, approximately 1 week before the next new moon. This puts the low around December 15th, when the lunar node turns direct, the solar activity gives an extreme, lunar declination is at midpoint and the sun trines Jupiter. What I expect after that I have already explained in my previous post.

    I would like to add that the huge time gap between the solar extreme and the gravitational extreme is a sign of a very significant turn. In my mind the 2013 top was w3, q1 2014 w4 and since march in w5. W5 is always created when one force has already turned (sol. act.) and the other force (gravity) is on it’s own.

    Given this major top we’re forming we are in a fragile timeframe. This window will close in mid February at the latest. But when longer term cycles are also turning the last 1/8th period of the long term gravity cycle is weak. And we have entered this period. Down into December seems likely. But then we have to pay attention and see if we see the top ahead or in our rear mirror.

    1. 15 nov the moon was @ apogee and moving closer. But at the same time the moon was moving into New Moon, providing gravitational compensation, counter acting the apo peri move.

      But from today (NM) the moon is (still) coming closer AND FM compensation will decrease. So down next week is 100% certain; nothing can stop it.

      Now understand you can never look at apo/perigee without taking the compensating effect of conjunction into consideration.

      That’s why full moons don’t always give a low. When the moon is @ apogee when the full moon comes, the negative electrical FM effect is minimized. FM with Perigee is the worst you can get. from august into October FM and perigee close. Coincidence?

      1. Experiments have shown that during the 4 months centered around the winter stolstice (October 22 – feb 22), the 4 days after FM/NM have 70% greater amplitude in magnetic fluctuations. With the new moon on 22, 23 to 27 (thursday) should see volatile magnetism. This adds to the negative solar- and gravitational effects.

        1. Makes sense since during winter solstice earth is opposing the galactic center which as has been said has the electromagnetic force of millions of suns. Summer solstice earth is between sun and the GC.

    2. I thought tidal forces were most extreme at New Moons because Moon and Sun are both pulling on the earth (and its waters) in the same direction. Why did you say that New Moon gives LOW tidal force?

      (Full Moons have the Sun and Moon pulling in opposite directions which you would think would reduce tidal forces, but not so because of the way tides work. The water on the earth bulges toward the Moon, but on the opposite of the earth, it bulges away from the Moon. On a Full Moon, you have the Sun pulling on that bulge of water opposite the Moon and creating its own bulge opposite the Sun, which is towards the Moon. So you get extreme tidal forces at BOTH Full Moons AND New Moons.)

      1. I speculate that with the new moon the earth and moon together have a gravitational pull on the sun, counteracting the sun’s pull on earth.

        Besides there is an electrical effect associated with NM and FM. This electrical effect is positive during NM and negative during FM and this effect is affected by the apo peri cycle. FM with perigee is a supermoon.

        1. don’t know about the electrical effect, but the way gravity works is that when the Moon and the Sun are in line as viewed from the earth, and the Sun is behind the Moon (this is what you have at a New Moon) the gravitational force that is pulling on the earth’s waters is the combined gravitational force of the Sun and the Moon. The Moon would not counteract the Sun’s pull, it would only enhance it.

          Full Moon is a different story. In that case you have the Sun on one side of the earth, the Moon on the other, so the Moon’s pull on the earth would counteract the Sun’s pull.

  4. According to Armstrong computers, it’s only beginning. The breakout that is unfolding has nothing to do with fundamentals and everything to do with the burn down of the global economy. Foreign currencies are in steep decline as capital panics and rushes to the dollar/US markets as a safe haven. The G20 wants to steal retail deposits to pay for bank failures in Europe. The War Cycle turn date was Nov 19/20, the first time in 300 years where international and domestic cycles converged. There is civil unrest across the globe and the only thing that matters is that capital is running toward the US to escape the deflation, pushing the dollar and the markets up.

    A breakout in the Dow above 18000-18100 will likely confirm the Phase Transition has started. So comparatively we are mid 1928. This is why the indicators are confusing everyone. If Armstrong is right, and I believe he is, the markets will rise rapidly into next fall with the possibility of an extension into 2017 with the Dow target around 23000-25000 and if that is exceeded, the target is 40000. This will end up being one of the longest running bull markets in history, if not the longest. But as all parabolas rise, pulling in every last retail investor at the top, it will crash and burn like all the rest. The fuel for the extended rise will be the loss in confidence in the bond market. As that lovely bubble pops, where will capital that is 3x the size of the stock market go? Yup. Into the stock market.

    On gold: there has never been a point in history where gold has risen while the stock markets fall. We r in a massive deflationary environment and once this temporary rally in gold is over, back down she goes. The 2008 low is providing a bounce but the bear is not over by a long shot. There will come a point where gold will be considered a hedge against government, but that point in time and price is not here yet. Watch out for fake break outs in the miners.

    John, every single thing you have ever written is true and accurate. Except, at this point in time, the circumstances are warning of a different outcome. I think u r starting to see this by ur posts. Watch for the upper channel BO on the DOW. Why the DOW? That’s where institutional money hides.

    1. Alexa RE MA. Don’t forget in October’s decline he was suggesting that the stock markets could be about to collapse and send capital fleeing to bonds thus fueling the bond bubble…….so what happened?

      I will tell you what happened. MA has the tools to pick turns not direction. Back in 2010 MA was predicting $5k gold by end of 2015 and now he is telling gold bugs they are fools for holding gold. I think he has a bit of a hide preaching to others when he made some pretty big calls himself.

      Also you say

      “On gold: there has never been a point in history where gold has risen while the stock markets fall”……I suggest that you re-think that.

      Dot com collapse commenced March ’00 bottomed late ’02

      Gold was $275 poz. in March ’00, by late ’02 it was $350 poz. Whilst it didn’t go up straight up it had several spikes in between. HOWEVER gold stocks in many cases went up over 500%!


      1. Allan,
        I suppose it’s all in the interpretation of MA. In Oct/Nov he did say staying above 15900 ( which we did) would see a rally back into Nov 3 week. But the rally has persisted with great strength, hence his warning now of a BO. Will it happen at this moment? Who knows! But it’s pretty clear that the trend is up. MA can be very frustrating at times to follow, and he has admitted as much, but his macro view ( computer view) is accurate I believe.

        Still, there are various scenarios short term to watch for. 1) the BO as mentioned 2) a small correction into mid Dec with higher volatility 3) retest of October lows 4) January is a turning point so a low into January will complete a cycle inversion

        Watch the European bond market. When that blows up, capital will start to shift more aggressively into the private sector.

      2. Allan, thanks for the 2010 info on MA…..I wasn’t following him back then. He is a very intelligent man but bends the results when it suits him!

        MA could be right but I do not see Dow 25,000/40,000 happening in the next year….imo, the only way that happens is if CBs all around the world embark on trillions of dollars worth QE buying up stocks just as the Japanese CB has done recently……it will happen…but after we crash first!

    2. There are serious odds for the unique narrative you describe to become reality. Rallies to new highs from 6 or 3 month lows as rapid and frequent as never before since 1929 or short interest of an amount that coincides with bear market bottoms at new index highs. Even the spike in allocations above the 2000, 2007 extremes hints to possible unprecedented developments. It’s hard and risky to believe in such unique outcomes, but I think the odds are very real and the narrative is reasonable. Whether there will be a new normal (cycle inversion) should become clear soon.

    3. Right on Alexa, whether you are correct or not, you have nicely summarized the parabolic scenario. Which is why I am from now on going to trade as a price agnostic when it comes to time frames longer than one week. Using GEM, Andre’s work, technicals I hope to ride the wave of price at whatever levels.

  5. John,

    Another great article.

    Was just curious what the average entry price for your dividend adjusted short index positions are currently? Obviously size of position is your personal business just more interested in the entry levels.

    Apologies if this is a personal request and perfectly understand if you’d rather not comment


  6. I have been trading shares since the age of 19,
    46 now so have seen a number of cycles.

    On my take we currently lack a single
    overriding factor that will lead to severe falls
    (right now) – outlier risks aside.

    I think most net short would concede that
    late November is when they planned to close
    out short positions, at least on an interim basis.

    If you do plan to add short positions on any
    weakness, please consider very carefully if this could be temporary weakness
    forming a base before a year end hard rally.

    Maybe Friday was a blow off top and we now go
    hard down, however it looks to me like the beginnings
    of a decisive break higher, all be it that some
    weaker longs may be shaken out
    following more than a month of melt up moves.

    1. agreed. If I were to short this market (which I will not until I see the 5 DMA turn down AND a series of lower lows and lower highs on 30 min or 65 minute charts AND price below the 5 DMA), I would put a stop at Friday’s high or lower. I’d probably use the last lower high on the intraday 30 min or 65 min chart for a stop. The point is: If you’re going to short, know where your stop out price is, so you can determine how much to risk. And if price comes back up and hits your stop, you must honor it.

  7. Hi John,

    I think there is a reason why some old timers have stopped reading the comments here long time ago.

    A glance today, here is one example why this forum has been sadly littered with foolish and outright incorrect claims, as someone here sounded like an expert however with such rubbish: “On gold: there has never been a point in history where gold has risen while the stock markets fall.”

    Not only would these chaotic comments not help formulating investment vision, it could also be a disinformation to the beginners.


    1. Jazzman,

      To be clear, I should have added”in isolation.” And again, these are not my “opinions”, there are the historical observations of MA’s AI computers. Everyone is entitled to comment how they choose. I choose to report what most do not see in hopes that the shorts will not get destroyed.

      No call for shooting the messenger or being insulting.

      For your reading enjoyment on gold:

      The last one is good news for Goldbugs. But you will have to wait in terms of TIME and PRICE.

      1. We used to use Armstrong as a contra-indicator back in the late 90s because his calls were so bad. Yet, even with his terrible analysis, he claims success during those times. And few today seem aware of just how bad his trades were! Oh, well, suckers are born every minute, especially those that do not study history and check their facts!

        1. Armstrong is a charlatan. His spurious rhetoric is amuzing but only serves as a front to clever bullsht stories. He was calling for gold to run to a y2k top back in 1990. He has been wrong for so long. I love his bs government story. Shouldnt this guy be on a billionaire list at the very minimum if him and his computer are so insightful?

    2. Mr. Jazz, this is the most entertaining website because of the unique content and the welcoming of new ideas when it comes to stock investing. Overall Alexa’s post was very informative. If posters have to weigh each thought against every possible metric of market precision, the boredom factor will set it. Viva le approximate!

  8. jazzman,

    I very much doubt anyone makes or forms
    investment decisions on the basis of a single post
    on an online blog – and if they do so without cross checking
    then more fool them.

    We are all adults and entirely responsible for our own
    decision making process and any subsequent actions.

  9. Price targets have been met

    Late Oct with the Dow at 17k and SPX low 1980s, I posted “deja vu Oct 2007” where the most likely scenario was a run to new highs by Thanksgiving similar to 2007 when after a 10% correction in Jul-Aug a run to new highs was made by Oct. (Lag time 6-8 weeks.) A couple days later, I posted price targets of SPX 2067, Dow 17860, and Comp 4730-50 based on 4-year trendline tops.


    Problem with immediate top – no sell signal on buy/sell indicator, warning only

    Possible scenarios
    40% – Trendlines are increasing ~ 3/4% / month with mid-month estimates, so we may go up to end Dec or begin Jan to Dow 18k, SPX 2100, Comp 4800.
    60% – based on BTFD comments of last few days on this site (contrarian), sell signal may be given by BF or CM and decline starts 1st week Dec as bears capitulate or are annihilated. This market devours bear meat.

  10. Hussman provides a clear explanation this week on the impact of QE/central banker actions. His conclusion: it’s a psychological matter only.

    Once investor psychology turns negative, they can do as much QE as they like, it won’t stop nature from running its course, and over-valued shares will revert to the mean, and probably far below the mean.

    Re Martin Armstrong, he does seem to grasp money flows, and so I read him with interest. I don’t rule out 40,000 on the Dow as he posits, but the US indices would be ‘going it alone’ in that scenario, as other global indices would be struggling due to money flowing to the centre (US). However, Armstrong does seem to hedge his bets, so a sudden decline right now would no doubt see him rule out the cycle inversion.

    I will keep repeating however: I have studied the ECB/BIS for many years, and have been expecting they will bid for physical gold via QE. They have recently alluded to this in public, it is a certainty that gold will be the asset for QE from the ECB, so do consider buying some actual physical gold, rather than just trading it, the risk is the ECB shatters the paper market with its huge bids.

  11. WHY I take anything Marin Armstrong says with suspicion.

    QUOTES from 22 December 2011

    “Silver has been the target of the same old manipulators as usual”

    So what is it Martin. One minute PM’s are manipulated the next thing they are not?

    “We should see gold at $5000+ by the end of 2015”

    This man was calling for 5k plus gold by 2015 at the end of 2011 right at the top of the gold market, admittedly after a retest of support, but still calling for $5k or a nearly 500% increase is a huge call.

    And now what?…….He lambasts higher gold price callers and labelling them insane, foolish and whatever else you can think of.

    1. Allan, Armstrong has posted a clarification on the issues you mention very recently. Here:

      He accepts that the big banks carry out short-term manipulations, but they cannot affect long-term trends.
      He does not lambast anyone but the usual goldbug cheerleaders who think gold should always be rising, and when it isn’t, they blame the manipulations. Clearly the goldbug cheerleaders ignored the rise from $250 to $1,900…somehow.

      As for gold at $5,000 by end of 2015? He has been calling for a sovereign bond crisis (starting 2015.75) since the late 90s I believe. I imagine that will cause huge fright in the bond markets. Then there is the risk of widespread bank resolutions in Europe at the same time. It’s a recipe for a gold rocket-fuelled bull market.

      Also if the ECB has started GOMO (gold open market operations by then) the sky is the limit. $5,000 is still a possibility before 2015 is out.

      Armstrong also noted on 11th November the following:
      ‘The major resistance stands at the 17900-18000 area (Dow). Only exceeding the top of that channel area would hint of a breakout unfolding.’

      I think Armstrong is more in tune with what is going on than 99.9% of all other writers you will read online, so ignore him at your peril.

      1. GM I don’t disagree that MA has a thorough knowledge of markets. My point is that he has made many calls in the past that have proven incorrect so you can’t accept that something he says will unfold with certainty because he will change his view as markets unfold.
        Even he admits openly that he does not know exactly how markets will unfold and that he can only pin point turning points and then from that make assumptions on where global capital will flow.
        I just don’t like his writing style as he comes across as beligerent, intolerant and arrogant. As I have said many times in the past his ECM is one extremely valuable discovery but he needs to tone down his approach a bit.

        Alexa, 22 Dec 2011 comes to mind but he did state it on a few occasions.


    2. Same thing in the late 90s… it’s why he lost multi-millions for his clients, pulled the illegal schemes that sent him to prison. One stubborn little man that never talked claiming “government conspiracy”… That strategy worked well as he kept his millions in stole loot stuffed in off-shore bank account trusts. He also garnered a huge crowd of conspiracy believers that back him today! lol

  12. To refute a point made earlier, I submit the following chart link.

    The following link expresses what John is demonstrating with his indicators.
    I definitely agree with the writer’s idea that the the elites will! be taking the short side when they think the time is right. The question is when? Right now I think they have too much company on the short side.

    After observing and studying technical analysis and markets for a long time now I noticed a definite historical pattern about indicators.

    1. a new market indicator discovered that has a great track record for predicting future price behavior,
    2. indicator becomes widely disseminated in the press, and discussed among market pundits,
    3. the newly discovered indicator, flashes a set-up and gives a signal in real time,
    4. since the indicator has a good track record based on empirical evidence, the crowd enters orders to follow the indicator,
    5. the market then proceeds to travel in the opposite direction, people lose money and the indicator is then relinquished to the trash heap of history.

    Has John become victim of his own brilliant analysis? How much higher?

    1. Anyone who wants to understand the essence of a marketplace and how it always conspires to take money from the majority, should read and re-read eclectic’s five points above!

      This process happens to every “market indicator”; to every strategy; to every method; to every guru. The majority want to “follow” somebody or something which has recently been successfull in taking money from the market, but those others who have recently been losing are forced to change their ways – and they do that just as you gain total confidence in your new indicator/ system/ guru. Hence the market changes, and your source of profit is taken away – just when you went in BIG.

      Anyone who doesn’t fully understand eclectic’s point, has plenty of pain to look forward to…

        1. They’ve been high on the list on this very website for a good five years – hence the name of the site!

  13. History repeats but it doesn’t repeat exactly. The best model is not 1937 but 1929. American stocks are not going to correct 18% but crash as far as 90%. It has happened before and it will happen again.

    The rise of a “class” of Americans wildly buying autos, phones, stocks, and putting large numbers of Republicans in all political offices from city, county, state, and national offices recently is just like the roaring 1920s. But what is different is that the American CB (The Federal Reserve Bank of New York) has learned some lessons. One lesson it learned is not to raise interest rates and drain the system of liquidity like in did in 1929 that caused stocks to crash 90%. But that is not the only lesson it has learned.

    The second lesson that American’s CB has learned is that Bernanke’s infusion of liquidity has inflamed and empowered those who want changes in America’s CB. The Republicans were boasted into power by those people. The Republicans don’t want the CB to be done away with but they are open to a change in ownership so that European banking families no longer posses the stock certificates of The Federal Reserve Bank of New York (a private and closely held corporation) but that they posses those stock certificates of the newly issued stock certificates of a replacement CB. This is such a serious “threat” that America’s CB ended is QE program days before the elections. The American CB is through providing liquidity to the markets. This doesn’t mean that it will pull liquidity out of the system like it did in 1929 BUT neither will it add anymore.

    The liquidity crises, this time around, is going to come from outside the US of A. The world wide collapse in liquidity that will crash world markets is going to come from the reversal of the Yen Carry Trade. And what CBs will step up to counteract it? Any who want to EXCEPT America’s CB. Thus, it is every CB for themselves.

      1. Good point. Will the PBOC provide liquidity to the world’s markets? No. They don’t even act to provide liquidity to Chinese private businesses let alone businesses outside of China. All that the PBOC provides liquidity for is the large government industries that back the continued ascendency of the Communist Party: Military. The PBOC lowered interest rates Friday because their large government owned industries are in serious trouble as can be seen by the falling Australian Dollar and Copper.

        Is the ECB going to provide liquidity to the world’s markets? Not with all those in Europe who actually have good credit but have been paying down their debts for years combined with the German government expected to have a balanced budget in 2015 for the first time since the 1960s.

        So where will the liquidity come from to counter act the collapse in liquidity caused by the reversal of the Yen Carry Trade if it doesn’t come from the FED, PBOC, or ECB? Brazil? Yea, right.

  14. Allen, a guy named Trader Dan, once a confirmed gold bull; who turned a confirmed gold bear, claims no market manipulation. When he got caught short the soybean market, he posted about how the funds had manipulated the price upwards. I had to laugh. I personally believe that ALL markets are manipulated. You are right about Armstrong. The guy is a master of opaquity: if that’s a word. Another thing about Trader Dan. I think at one time he was asking for donations for his website. Donations! Where is his pride as an independent trader? He’s a good writer and knows a lot about technical indicators; but so do a lot of guys on this site.

      1. In all fairness to TD, it is human nature to not want to believe that something you participate in could be rigged. Even if only slightly.

        And that is why MA needs to accept that markets are manipulated including gold. It doesn’t matter how much or how little, manipulated is manipulated. Just as you can’t say, “I just killed somebody slightly”

  15. John, I agree with you. I remember not long ago someone asked about the miners to which I said there was massive accumulation as seen in the volume. It did go lower but only to shake out the weak longs. As it turns out, metals and related assets are now picking up steam. That was the background in place.
    By the same token, we have had the background of distribution in place for both the Dollar index and the index futures. You’ve rightfully pointed out the exhaustive and trap up move on Friday, it was clear on a 15 minute window that there were no subsequent strong buying demand.
    Many here have pointed out the fact that the Yen is declining to drop further. That is really the reason for the shift of dynamics.
    Judging from the way this top is formed, the correction will not be short and easy. I still call this a correction as nothing suggests an end in the bull trend.
    Good luck!

  16. Can anybody offer well reasoned arguments as to why neither the PBOC nor the ECB will “step up to the plate” to provide liquidity to replace the collapse of liquidity (world wide) that is going to be caused by the reversal of the Yen Carry Trade? If you can’t then you might want to consider turning over your financial decisions to those who can.

  17. Richard,

    imv that is a large oversimplification, you are viewing
    assumed events in an all or nothing context,
    global liquidity is far more complex.

    If that is your view and you are happy with it fine,
    trade what you see.

  18. Richard wrote:

    “The Republicans were boasted into power by those people. The Republicans don’t want the CB to be done away with but they are open to a change in ownership so that European banking families no longer posses the stock certificates of The Federal Reserve Bank of New York (a private and closely held corporation) but that they posses those stock certificates of the newly issued stock certificates of a replacement CB.”
    Richard, I thought that the Western representative in the global banking cartel was represented by the Rockefeller’s interest? And yes, the is a top dominance by foreign interests; namely the Rothchilds. But I haven’t heard any narrative about
    any other domestic ownership? Ted Cruz’s wife, for example is a VP at Goldman. Can you see him saying anything about the Fed? Apart from that, why would they want to share their criminal enterprise? To add to the mix, I thought the end game was to transfer power/ownership from the West to the East; having sucked the U.S. resources dry? Appreciate your thoughts and comments; and thank you for sharing your talents.

    1. The real issue is “liquidity”. I only discuss Politics as it concerns Markets which at this point in time means Liquidity otherwise I could care less about discussing Politics.

      Concerning Liquidity:

      1) Will Liquidity be added.
      2) Will Liquidity remain the same.
      3) Will Liquidity be reduced.

      It was the reduction of Liquidity by the Federal Reserve Bank of New York (America’s CB) that exasperated the Great Depression and cause US Stocks to decline by 90%

  19. On Caldaro’s weekend update, someone asked him about the market cap to GDP ratio, saying that today’s numbers are extreme. Here’s what Caldaro posted in reply:

    Have different numbers using the Wilshire 5000.
    1998 peak 25% premium
    2000 peak 59% premium
    2007 peak 9% premium
    2014 24% premium
    no bubble yet

    I’ll see if I can research these numbers a bit and find out what he means by “premium”, but if these numbers are apples to apples, then we’re clearly above the 2007 peak and just slightly below the 1998 peak, but not even close to the year 2000 valuations.

  20. Here’s an interesting chart showing SXP in real terms (instead of in dollars that have been devalued by 100+ years of inflation):

    1. To understand this chart, we have to know what they’re comparing the S&P to. What does ‘real terms’ mean? In my opinion, there’s only way to accurately calculate the real value of the Dow or the S&P, and that is against gold.

      If you only measure the stock market in nominal terms, meaning in U.S. dollars, you’re making a big mistake. You have to value it in real, tangible goods, with a comparison to gold (real money) being the most telling.

      In 1999, the Dow:Gold ratio hit 44. Today it sits a bit below 15, meaning the Dow is down 66% from 1999 to now, when priced in gold. The ratio reached 6.4:1 in 2011. I fully expect we’ll break below 2011’s 6.4:1 within 18 months from today, and I expect the ratio to hit an historic 0.5:1 before the current precious metals bull market has run its course.

      1. gold stopped being “real money” when Nixon turned the dollar into fiat. It’s a relic of the past. Read terms to me would be the US dollar adjusted for inflation.

        1. Gold never stopped being real money. It just stopped being used as currency due to the government enforcement of the use of unbacked paper as money, essentially at gunpoint. You say real terms would be the US dollar adjusted for inflation. How would you suggest we accurately calculate that inflation? Using the government’s official inflation numbers, which are obviously fraudulent? Using gold as the measuring stick is the only way that makes sense. You can believe it’s a relic of the past all you like, but central banks are buying it at a record pace for a reason. They certainly don’t consider it an anachronism.

    1. I believe John’s opinion is that 18% is the MINIMUM decline he’s looking for, not the maximum. His waterfall decline scenario will likely result in much greater carnage than just 18%, and I think he’s well aware of that. (Please correct me if I’m wrong regarding your opinion, John.)

      I’m personally expecting a drop of 65-70% from peak to trough, but more would not surprise me. But I expect gold to up in price considerably during the decline, so in real value terms (as measured in real money, i.e. gold) the major U.S. stock indices will lose far more than that.

    1. At this stage all trends remain up and im a longer term bull, indicators will continue to stretch into 2015. Dont fight the trend. I know its difficult to believe but ask yourself how many times before have we been here since the march 09 lows. Be prepared 2-5 December.

  21. Andre’,
    Great post on prior blog, you’re uncovering a lot of cycles within cycles. I did have question/comments regarding your use of ‘Heliocentric Venus Declination’, as distinguished from Declination (Geocentric). I have always believed there was just Declination, which is only from the perspective of Earth centered. Information on this is readily available. However, you have educated me that there is indeed ‘Helio Declination’, but the understanding/calculation/information of it seems somewhat sparse/little used as best I can tell – I don’t see that Solar Fire has such a calculation, only Geocentric (if you are aware of data, please let me know).

    Correct me if I am wrong. My understanding is that whereas Declination is planetary movement compared to the Earths Equator (relative to ecliptic), Heliocentric Declination is planetary movement to the Sun’s Equator. Because the Sun is plasma, that calculation is not easy.

    It is also interesting that some of the distinction between Helio and Geocentric Declination may have been created by George Bayer in his ‘Trading Rules’ where he specifically refers to Heliocentric Declination. However, there are indications that Bayer was actually using Geocentric Declination. There are legitimate experts in Gann, Bayer, Jensen,… that have commented to me that Bayer had a habit of disguising his information by throwing down rabbit trails of misinformation (like Gann, he also disguised his information in veiled commentary like Egg of Columbus). I am reaching out to others for any insight on this.

    Note withstanding the above issues, I believe I can see some benefit in a construction of Helio Declination, and I think I have found correct data. If I am analyzing this correctly, Venus is at Max. negative Helio Declination on 12/5/2014 at about -24.4*. It should also be noted that Maximum negative Geo Declination will be about -24.2* on 12/13/2014. As you pointed out elsewhere, 11/22/2014 saw Venus Latitude (both Geo and Helio) cross from + to – . In August, Venus Helio Declination was maximum positive at 24.+* on August 15, 2014. Geo Declination reached a maximum at 22.8* on 7/22/2014. Venus Latitude (geo & helio) crossed from – to + on August 3.

    I just want to be sure you are making a distinction between Helio and Geo Declination, meant Helio Declination, and that my understanding is correct. Any confirmation, or correction, of the above would be appreciated,

    1. Steve,

      This discussion gets way too complicated for this site. And you seem to be one of the few others that are on this page. I’ll respond with email.



  22. I do not claim to be any expert, their are many here.
    But the bottom line as far can see is CBs are buying SPX futures and holders/markets are selling them at a controlled level on open to close.

    Futures up, market selling on open to close for the US, just one silly panicking fat finger and all is lost.

    Jawboning will not carry this market on forever, do not expect anything other than words from Mario. And for kamikaze Abe, of japan IMHO he out of a job by year end along with his mental QE programme.

    The gallows are almost complete.

  23. I made the following post here back on Sept. 9:

    September 9, 2014

    “My indicators show SPX has to get to 2,045 – 2,063 before any significant drop !

    If 2,063 holds then we are going parabolic towards 2,200 !!”

    AND we closed Friday right at 2,063.50

    1. Obviously a good call, and this might be a stupid question, but I take it from that statement that you don’t (or didn’t) see the October drop as “significant”?

      I suppose one could look at it as insignificant since we’re where we are currently, but what would be significant?

  24. Thank John.Always great !

    For others, could you please stop blaming FED, market manipulation…Don’t try to explain the move in the market, it always too late. Just focusing some part of FA and starring to the chart, COT report, seasonals, sentiments and price action. Those will be enough for you to read the market. That all about Dow Theory 100 years ago. It can not be wrong

    Those who whine endlessly about “broken markets”, Fed “deception”, “propping up mkts” etc are just making excuses for their own poor performance. Robert Rhea made this EXACT SAME POINT 80 years ago (Rico in danorcini blog)

    Professional soccer player don’t blame weather, unfair tactics from opponents or favoritism from referees.

    It also could help John blog tidy and neat.Thanks

    1. Have you ever watched a soccer game. The players are constantly nagging, exaggerating fouls, questioning calls, etc.. It keeps the emotions high.

    1. And the President of the ECB stuck his foot in his mouth last Friday. It is unlikely that the markets are going to respond favorable to all talk and no action by all those CBs last Friday this coming week. Liquidity was –not added– to the markets last Friday as was originally believed. This implies that the markets were overbought last Friday.

    2. The first cut is usually late as the economy has already gathered significant downside momentum and continues until several cuts have been made. Similar to Edson Goulds 3 steps and a stumble rule in reverse – 3 cuts and a rally. It sounds like the Chinese are not really cutting thereby exacerbating the situation.

    1. GEM forecast matches exactly tidal action Battery Park, NYC.
      GEM high 3 AM, Battery Park low tide 3:14AM
      GEM low 9 AM, Battery Park high tide 9:11AM
      My research indicates that on average stocks crest at low tide, then weaker;
      stocks flatten into high tide and then fall off.

    2. High tide at 9, on average price from 6 am to 9 am will be flat, then 9 to 11 will sell off.
      Low tide at 3, on average price will rise into 3 am, and then sell off from 3 to 5.

        1. Peggy, comparing the Spiral in expansion and contraction verses the Battery Park Tide data the dates of max expansion April 25, May 25, June 20, July 18 match to the day with the lowest monthly low tide.

        2. Based upon reviewing the NYC tidal data the spiral has a mirror reflection in tides, with lowest monthly low tide corresponding to maximum expansion and highest monthly low tide to the day being maximum contraction. Also, from reviewing SPY data expansions correspond to price strength and contractions to price weakness, with Oct 9 being the most recent example. Thank you very much Peggy for presenting this data in graphical format as it is much easier to see the patterns.

  25. John, agree if we get this drop, it has to be now. Wed and Fri are seasonally most positive days, so ideally we decline into Wednesday before the Thanksgiving relief rally. Then I see further declines during first 2 weeks of December before the Santa Claus rally.

    Did some statistical work over the weekend in the QQQs to see historically what gap up intraday reversals near the highs meant. I look back since 2000 there were only 7 days with similar candlestick pattern. On the following session, 5 out of 7 times was positive, however, 3-day 5-day and 2-week returns were all decidedly negative, which supports our view. last time was May 28th, 2013 which preceded a 5% correction into July.

  26. Back to my EWZ 5/2008 analogy, I note that the Fed cut rates all the way to 2% by 4/30/2008 and held it there for a while. The market rallied thinking rate cuts=good, ignoring WHY they were needed.

    Currently, we are in the same mood. Europe has been cutting. China just cut — does that mean a few more weeks of rally? Who knows? The point is that we are closer to 5/2008 stage of crash, compared to 7/2007. China bad economy, so more cuts, so more rally. Yes, it is insane, but I have half a mind not to fight it anymore, until we are off the highs.

  27. John, I just wanted to point out to you to NOT look too much into any potential weakness early this week beginning Nov 24 as a sign of a possible trend reversal. Looking back at the SPX chart, ever since the top of mid-May 2013, it appears every additional new incremental 52-week high encountered some small sell-off whether it was a minor 20 points or something greater such as 100 points.

    In other words, since mid-May 2013, the market has been climbing an ever continuing wall of worry where participants simply cannot believe that the market could continue going to ever increasing higher levels.

  28. I said 3 weeks ago to watch the Hang Seng because it was painting a very bearish scenario. Then last week the PBOC cut. Look at the HSI today.
    It is obvious IMO that the PBOC reacted in a timely manner in an attempt to thwart decaying health within their banking industry.
    Hong Kong is extremely dependant on China and Hong Kong banks have huge exposure to China and I believe that is why the Hang Seng was beginning to show signs of severe stress.
    I have it from a Chinese contact that China is facing a potential crisis in its shadow banking industry and I believe that the politburo are gravely concerned and are reacting.

  29. Thanks all. To answer some points:

    I am significantly underwater with my shorts, but mentally I have prepared for my worst case scenario of a late Dec final peak. If stocks keep rising into 2015 then I will accept defeat. However, we started 2014 with 30+ topping indicators with many different angles on the market and they are still in place, plus there is an identifiable topping process as the year has progressed.

    Frankly it is lame to suggest that none of these indicators work any more. Single out one or two for doubt, but the whole set (sentiment, leverage, sunspots, allocations, valuations, dumb money flow, technical indicators and more)? And this ties into the dominant belief that central bank policy trumps all. I believe this will be proven to be the mantra for this mania not the driver. The fact that many on this board now believe that CBs are fully in charge fits with what we see in sentiment and allocations: that stocks are guaranteed to go up. Befitting of a market peak.

    The crazy stretching of indicators means one of two things: this is a mania heading imminently for a crash, or something epic and unprecedented is going on: everyone including central banks are piling into US stocks for a lack of a better alternative and as a safe haven, and this has a long way to run. However, the stats don’t bear this out: they rather paint a picture of a market driven by buybacks and retail, with both borrowing to buy, i.e. a tower of sand.

    I won’t be shifted in my analysis, because I believe it is too multi-angled and cross-referenced to be wrong. My target is a minimum 18% drop, but I am of course looking for a bear market. And I have reasoned why I see a crash as likely, rather than low probability. All will be definitively validated or invalidated within the next couple of months.

    1. Stand your ground John so long as you can handle the pain because your are right.
      We heard the same arguments over and over in 2000 and then disbelief initially when the markets fnally rolled over.
      The CB’s are having an influence on sentiment but they are not in control of deflatonary influences and are losing more grip by the week.

      1. the market in the year 2000 was WAY above where it is today in terms of valuations. If we have to get to those levels before we head south, we have a lot more upside left.

      1. It should be noted that with Monday’s close the S+P 500 just tied is greatest number of daily consecutive closes above its 5 day ma which was set back in 1986. This means the odds are very great that Tuesday the S+P 500 will close beneath its 5 day ma. And if that happens then its daily MACD will give a sell signal too.

    2. John, we could be in a mania. We could be near the top of a mania. Or, we could be at just the beginning a mania. My concerns about betting on an imminent mania collapse are two:

      1) I haven’t seen indications that the public is significantly involved, and
      2) mania’s can go on much longer and go much higher than most people expect.

      Leaving CB’s out of the picture, we have a strong trend in place, virtually all news events are used an excuse to buy, and we’re in a time of year that nearly always supports rallies. Until we start seeing selling in response to news events, along with lower highs and lower lows on the charts, we just don’t have indications of a top being in place. These things could start today, I have no idea. But when they do, we’ll see it the charts. Good luck!

    3. Comments and opinions generally swing with price. I appreciate your talent seeing beyond the price movements.

      Apart from the large cap price movement, there is not much to support the bullish case. The central bank narrative is still in the news but yield seeking is diminishing as evidenced by high yield bonds. The top is playing out but the process is much slower than expected.

    4. John may peak as early as 28 November so hopefully you will get some $ back, be prepared for a rise into March 15 however. Cheers

  30. I would urge caution if you are looking to short. For those that did not read my previous post we have now past the traditional crash window of October, we got the low that usually occurs in October and November rarely marks a top. We are now also entering a favourable part of the presidential cycle and of course the traditional xmas is not far away.

    Obviously the market needs to work off overbought conditions but like ive said in the past trying to front run a bear market is an impossible task. Its a bull market until it isnt.

    Lastly the Russel could be the one to lead higher. Many are pointing to the index going nowhere in the last 4 weeks. However this could be a high base waiting to breakout higher. Certainly if mid caps are telling the same story:

  31. A little off topic, but may influence events just the same.

    John Casey is in the video. If you can, first check out his credentials. The “meat” is at 20 minutes.

    The next heads-up might through a blanket on another rally. Nothing like a foot of snow from Boston to Baltimore to encourage shopping.

    1. EA, not really irrelevant, because a mini ivpceage would spell disaster for the global economy. Ken Ring of predictweather has been saying for over a decade that global temperatures would begin declining and that global warming was a myth.

  32. Reminder:

    ” Three Years and $1.3 Trillion Later

    According to the report, over the past three-years, the total amount of
    stock buybacks by S&P 500 companies ($1,318 billion) has eclipsed Capital
    Expenditures ($1,276 billion), Research & Development ($376 billion) and
    common stock dividends ($605 billion). The report also mentions that the
    total shares repurchased during this period amounted to 38 billion shares,
    which equates to 12.5% of the current outstanding shares.

    On a sector basis, Information Technology has led the buyback bonanza with 21.65% of the aggregate buying, reducing its share count by
    3.95%. Conversely, the Financials sector has accounted for 20.93% of the
    buying, increasing its share count by 7.49%.”

    The above was from late 2007 Q3 report on share buy backs.

    Buy backs are even more extreme now and very little has changed except that at that time back then the cracks that were beginning to appear were much greater than now.
    It just highlights how stupid CEO’s really are and how they always buy the top.

    This time is NO different.

  33. CBS buying US futures again, not as much as I expected, might be keeping there powder dry for post open on US.

    I know most would like to see a drop, but if the CBS stepped back for a bit and it did drop a few percent then surly that would encourage retail to step in.
    Just IMHO

  34. Hagel’s resignation will bring significant profit taking/selling of heavy industry/military stocks and, thus, declines in major American stock indexes.

    1. We could be seeing the start of a week or more of negative news:

      Monday) Hagel’s resignation
      Tuesday) Riots in Ferguson
      Wednesday) More accurate heavy snowfall forecast for Black Friday
      Monday of next week) Reports that Black Friday was less than expected.

      1. Should Black Friday’s sales be less than expected would point to the fact that this year’s Winter will cause a greater slowdown in the Velocity of Money than last Winter. It should also be noted that next year’s predictions of earnings in the Eurozone are for less than this year and that no One changed their predictions with last Friday’s CBs flapping their lips in the wind. P/E expectations are major legs that support stock valuations and that means no greater support coming from that leg for Eurozone stocks. Should Black Friday’s sales disappoint then the question will be should next year’s American earnings be lowered which would greatly add to declining stock valuations (lower prices).

        1. A negative news cycle may have begun and you can throw in a Union strike or slowdown on the American West coast.

  35. See, CBs exit buying futures, market opens and sell it, no confidence at all.

    All. The same it should finish above today, and same old rubbish starts again,rinse and repeat.

    Shame about the poor cousin FTSE always lagging behind

  36. We appear to be in a wave v:5 now. This v:5 could be unfolding as a dia. tri. If it is, we can expect one more push high that may end near 2088 + or – 10 points.

  37. the leg up from 1820 is a 5 wave move and the good news is that the waves 1,2,3,&4 are complete. SP is working in wave 5 now, that may be unfolding as a dia. tri. 5th wave. It appears to have completed wave 1 of 5 at 2056, wave 2 of 5 at 2039.68, and wave 3 of 5 at 2077spx. Now in wave 4 of 5. I would have expected the wave 4 to drop down closer to 2050spx and maybe it still will. Then we get the final v:5 up to the 2088 area plus or minus 10 points.
    If this is a dia. tri. 5th wave it usually ends near the trend line drawn off the 2056 spx high and the 2077 spx high. Depending on how long the wave 4 last that area might be near 2088spx.

    1. thanks for the heads up!

      I think you mean SPX 2071 for the top of the 3rd wave of the diagonal triangle, right?

  38. New ATH on the DJT, RUT trading up,
    new high on AAPL.

    Does this look like a blow off top?

    Possible that today’s further gains
    reverse here, otherwise it’s looking
    as further evidence of a decisive breakout imv.

  39. Once again the most important markets may be the currency markets. Look at the Euro; it is reversing last Friday’s sell off. What does that mean? It could mean that the market is considering that the ECB will not add liquidity as it was believed last Friday that it would. In other words, today’s action in the Euro is pointing to the ECB “crying wolf”.

    If so, then any lack of liquidity or withdrawal of liquidity from any major CB is very negative for Stocks especially with stocks being heavily overbought.

  40. It pains to do this but as of today i began accumulating spy and qqq calls. I see the market as an income distribution center where the few take from the many. I knew in 2013 we needed a significant rally to suck in the many. It was finally when mkt breadth began to deteriorate that i cashed out my calls. All the while i continued plunging into the bloodbath known as gold and silver. Unfortunately my options didnt cover the continued bleeding from the latter. I’m continuing to accumulate miners in fixed intervals and fully anticipate that miners will bottom before mkts top. So if this month was the gold bottom then within six months should be the mkt top. So IF in fact November was gold’s bottom, which is convincing given its digestion of price coming out of the bottom w/o leaving gaps, the mkts should begin to go into some type of meltup… Nasdaq crack y2k high, relics like msft and wmt to reach new highs etc. I was not fully convinced of this until this weekend. I met up with some old colleagues in the same type of field im in (analytics, actuaries, data scientists,…) and many of them were in cash b/c they saw the mkt as risky. Those same ppl explicitly said that they cannot bear another year of not making money and will be buying stocks for 2015. Let me tell you something. For all the smarts the aforementioned types have, they are some of the dumbest investors. Next week will mark my 10th yr in the market. In those ten yrs I nailed 2 monster homeruns and both those times my career cohorts were the last to the party. I can also tell u this working for an insurance company. They are going to allocate their invested premium going forward to target returns that match the 5yr avg return of the S&P. Career risk trumps logic. The key in the coming weeks for my accumulation program for miners will be this swiss ref. Its a long shot that its a Yes, and even if it is a Yes there are more hurdles for that to actually pass. A yes would also render a monster gap up Monday morning on gld’s chart and we all know the big ones get filled. Although it means more red ink, id prefer gold to finish 2014 in red subsequently extending the general mkt’s manic run to around June of next yr. I was one on this site that also always favored the sc16 vs 24 analog which suggests the final top to be around mid to late 2015. Of course the issue with analogs is everyone is using them so their failure rate skyrockets. Eclectic alluded to it in that post about indicators. When everyone uses them they either render higher failure rates or they must converge to new extremes in order to get retail all on one side of the seesaw. Good luck all. Place your bets.

      1. After a offline discussion w/ someone who frequents this site, I am fairly convinced a nontrivial probability space exists for a djia run to 20k. 20k would be the level around the megaphone pattern but in log terms. 20k & 1k gold give us a 20:1 dow:gold ratio, a level that will act as extreme resistance (see 200 yr dow:gold ratio chart). Also a gold:silver ratio of 80:1 has been the area of trend shift and we missed it in the November plunge. I may have to put miner accumulation on hold and accumulate index calls only going forward. Think and drink on this i will.

    1. Be sure to keep track of when your friends start buying stocks then. lol An ultimate contrarian indicator. It is unanimous at that the market is only going to go up. Buy The All Time High (BTATH) and BTFD. The divergence pattern I mentioned has been negated. No signal pending. Back to wait and see mode. The negative rates over at EU are driving capital flight into the US market. It is madness but you can’t tell that to MBAs who use historical returns as proxy for expected returns. No old timer expects this to last, but everyone is in the game. As you mentioned, career risk trumps market risk. All the money is concentrated in chasing the big cap liquid stocks now. Of course it is all going to end in tears. But meanwhile the music is still playing.

  41. It may be that Obama has already given the “wink and nod” to the West Coast Longshoremen’s Union. But they have been around a lot longer than Obama and are experienced with political betrayal. So, they may be waiting to see how Obama handles the Ferguson Riots before they turn their Slowdown into a bloody Strike. Given the recent elections raises the odds that Obama will support a Strike by the West coast Longshoremen’s Union.

    1. The next two years will see the greatest Union activity than has been seen in a generation. The Democrats and Obama will support this wave of Union activity ONLY because it will be necessary to “get the vote out” two years from now. After the Ferguson Riots and West coast Longshoreman’s Union Strike will come radically increasing Wildcat Strikes for increases in the minimum wage all over America.

      1. Ironically it was a New York Democratic Governor who had to find out the hard way that National Guards are part of the US Army. He did not want the New York National Guard to go to Panama and it took a Supreme Court ruling to remind him that state governors have the PRIVILEDGE to muster the National Guard and not a right. As Union activity increases over the next two years it may be Republican Governors who will be reminded of this fact as their National Guards are taken away from them during major Union Strikes in their state.

    1. I would not be surprised if BBE got banned from this site. For every one or two of his useful posts he follows up with twenty “one-liner” posts that are completely nonsense garbage and often ridicule and make fun of others.

  42. I thought the blowoff top was Friday 9/19/14.
    It turns out that it wasn’t.
    This past Friday, 11/21/14 looks like an even bigger blow off top.
    It may turn out that the whole last 2 months might have been a complete waste.
    The Japanese CB went all in.
    The Fed panicked and said they’d do QE4 if necessary.
    The ECB said they will do anything … it takes.
    Even the PBOC cut rates.

    It may turn out that despite all that nature is still gonna take her course.

    TLT, VIX, EEM, JNK, HYG, and even NYA say it’s all for naught.

    1. “This past Friday, 11/21/14 looks like an even bigger blow off top.”

      I humbly disagree. I was monitoring UVXY that day and despite SPX hitting new ATH and then reversing sharply and selling off through most of the day, UVXY was merely trading sideways for the most part and even failed to make higher prices when the market was dropping to its lows intraday. That was a tell that there was no fear in the market and it was only a subtle pullback after reaching new highs and no significant sell off anticipated.

      There might be some weakness this week but it is merely yet another buying opp before another leg up at this point.

      1. It’s nice that you are sharing what you understood better than others about the signs, the markets are giving, but it’s futile. „I won’t be shifted in my analysis, because I believe it is too multi-angled and cross-referenced to be wrong“. Can it be said clearer that on the part of John this site is not about discussing and learning, it is about being right and waiting to be proven right in the long term, point. That is a luxurious attitude and absolutely unsuitable for shallow pockets.

        1. Is is logical to say that since the moderator is expressing a bearish outlook that the entire site only entertains bearish opinions? There is more interesting discussion on this site both bullish and bearish than ever.

  43. It’s good to see John is becoming more realistic in this article. We are living in a crazy world where cash has negative yields. So, not being long some kind of assets or just holding cash is technically being short. You’d better think it over and over again before you adding shorts.

    But it’s not a good time to add long positions either, for the even the hardest bear seems hesitant.

  44. Bear in mind that the xmas rally doesnt kick in till later in December. It quite possible we will chop around at the highs for a couple of weeks to work off overbought conditions.

    In my opinion we are not in a bear market. The definition is a minimum 20% decline which we are far from – we cant even manage a 10% decline. Secondly, the 200dma usually acts as resistence – we cant even trade below the 5dma! Lets get those before contemplating a bear market.

  45. People are talking about the “Xmas rally” as if it is definitely going to happen….why? I mean statistically it is likely, but why construct a narrative that indicates certainty…?

    1. only because the stats give the rally higher odds than expecting a fall. I think we all know there are no certainties in these markets, only probabilities.

  46. There has been many years without a Xmas rally, just we have forgotton them.
    Don’t forget the market dropped at the turn of the new year which did indicate a shaky year which did not materialise.

    Most hear are saying the bear market will come around March next year, if that is true you will not see a Santa rally before a new bear market the following year.

    “If Santa Claus should fail to call; bears may come to Broad & Wall.”


  47. There are no certainties in market timing,
    probabilities yes.

    The market is known as the great humiliator
    for a reason.

  48. I still see the market holding up into early January, as it sticks with the 15 Year cycle movements. If it does that then I would expect a fairly sharp fall to last until near the end of the Q1 2015. After which the major uptrend will resume.
    Certainly we are very overbought (and RSI’s etc are useless in trending markets), but do appear to be working that off by going sideways. That said, there is not much value in going long here IMHO.

  49. Quite a few of the ECB council are saying that putting in place QE has legal challenges or in probably illegal. I hope for the longs on the DAX that they find a way to revoke the laws in place to protect the taxpayer in order to devalue ordinary people’s money further. Hopefully they will also bail out banks again with taxpayer money when it all goes wrong.

    1. Monthly 30 year T-bond futures gave a MACD buy signal in August and Dec futures gave a daily MACD buy single last Friday. It looks like that the daily December DOW futures will give a sell signal Tuesday and, if so, it raises the odds of a monthly sell signal for November with follow thru selling.

      With the usually “buy treasuries and sell stocks” those technical indicators point to the “top” in the DOW being in and a major decline to follow.

        1. Projecting forward to an expected decline. The Ferguson Riots will expand tomorrow which will be very negative for US stocks. I actually expect a gap down opening of the cash market which will make a two day island top potentially a major top thereby. Outside that fact, on Tuesday, the 3rd Quarter GDP is expected to be lowered from 3.5 to 3.3 and that “number” will greatly help to sell off all US stocks. In addition to that expected lowered revision there is the statistical fact that Monday’s close was the 27 consecutive daily close of the S+P 500 above its 5 day ma which ties the previous record in 1986. I don’t know what happened in 1986 afterwards, which may be something someone might want to research and post a chart, but that greatly implies high odds that Tuesday the S + P 500 and DOW will decline and –close– beneath their 5 day ma at least if not much more. Should that happen then their Daily MACD will fall beneath its “signal” line which is a “sell signal” implying more selling in the days to follow.

  50. Just browsing through twitter some are speculating that SPX may hit 2250 – 2450. Keep in mind this would be in keeping with the Nasdaq hitting all time highs back in 2000. Would not supprise me in the slightest if this was to happen.

  51. Hi John,
    Have followed your blog a long long time in silence. Love your work its exceptional. My work suggests we are turning the corner here and now as we speak. I do aggregate stats on multiple planetary along with symmetry work. My stats are down big time into December and January…no Santa rally this year ..Santa has been here and is gone and the street is still singing jimgle bells. Not this year anymore. Santa has flown the coup.
    We will show weakness into Black Friday have a bit of a chop into first week and then the plunge begins aka Dec 8 is the end of this rally..until mid January at the earliest. My stats also predict high probability repression in equities t through April 2015 unless central bankers spice the pot again..most likely they will have to come in. Martin Armstrong will wait for his cycle inversion until later in the cycle.
    I know this outcome is highly divergent than what is being commonly touted but I spent a couple hundred hours on data mining my stats and back tested them profusely so I trust what I am seeing is quite real. Keep up the great work. You are on to them. Time symmetry also supports the fact that this market is on borrowed time…which is close to expired. Gann: “when time is up price changes”. Time is up as of yesterday the 24th.

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