Break

With my current illness, then Xmas and NY, and what looks like a bounce/pause in the declines off that breadth capitulation, I’m going to take a break from what’s been relentless toil this year for little reward.

I can NOT regret my analysis: by the 1st Jan there were around 30 topping indicators for equities, and they have remained in place all year. But 2014 turned out to be a once in a decade or generation style event, taking sentiment, allocations, valuations and leverage to unprecedented stretching.

As a real time test of the influence of a solar maximum on speculation it has been better than could have hoped, but the associated collapse remains elusive for now. Those super-stretched multi-angled indicators suggest it’s coming, however. Plus, a little more hindsight on the solar data front will allow us to tidy up both sides of the equation.

So, enjoy the festivities and thanks for all your contributions.

John

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357 thoughts on “Break

  1. John take care and all the best for Xmas and NY.

    You have not been wrong John because the markets globally appear to have topped and are now trending down.
    The US markets have held up remarkably well but are now also looking very shaky. This bounce won’t last and I see it as nothing more than an opportunity taken by big money to off load.

    The writing is on the wall it’s just obscured, but if you look closely you can read it amd it says…….”buckle up”!

    Cheers

    1. John I will just add that there can be little doubt that there has been an extreme degree of intervention to support markets globally,partiularly the last 18 months.
      They are however losing the war as defation is beginning to outpace them.

      No amount of QE or intervention can stop the inevitable. Abe is about to learn that lesson in Japan. Twenty odd years of deflation and countless attempts to reflate has ended with nil result.

      The rest of the world is just about to get a similar lesson.

      1. Allan,

        I think that you are absolutely correct in this space. My ‘spidey sense’ tells me that things are not as they appear. There is more to the eye than what is being shown and the big boys whom are manipulating this cunning game are about to lose their socks!!

        Cheers mate
        Mat

  2. Thanks for all the hard work you’ve put in John; a clinical and compelling commentary on an extraordinary time. I hope you and your family have a lovely and thoroughly recuperative holiday. All the best to you. Rufus

  3. John, it’s been a pleasure to read your blog this year,
    no one can doubt the huge amount of work
    and effort you put it, or the courage it’s taken to back your
    convictions in the context of a market which refused to fall
    dramatically as you hoped.

  4. Allan, it’s about timing though surely.

    You can see the signposts for the next bear market,
    however a more natural fit for this to begin is the second
    half 2015 imv.

    Will have a look back here sometime in January.

    Wishing everyone a fantastic Christmas and NY.

  5. Please take your deserved break John. I have learned so much from your blog.

    And it is true, the Market globally appeared to have topped around the times of the solar maximum and most are now in down trends. Some in very nasty down trends. Looks like the U.S. Markets were the flight to safety from money looking for a safer home. But we will see how long that will last as we hit global debt destruction.

    I also have a chronic illness that over the years I have learned to moderate. In a way, it is a blessing in disguise as we learn to care for and respect our body temples and learn not to sweat the small stuff.

    Blessings to everyone during this holy time of the celebration of the birth and coming of the Christ in each of us, for when enough of us reach that state of Christ consciousness, we will finally all live in peace, freedom and prosperity.
    🙂

  6. Greetings John, several years ago I did away with the windows in my sleeping room. What a difference that has made with no more nightly cold air “raining” down on me. This winter season, for the very first time, I have started taking immunity food supplements and I haven’t had so much as the sniffles so far this winter. Consider wisely.

  7. John, many thanks for all your hard work and insight that you have brought to so many people. We have all been educated in the process of natural cycles that you have painstakingly been plotting and analyzing for everyone’s benefit. I wish you well and thanks for all you do. You are very appreciated. You are a gentleman and a scholar.

  8. Thank you John for all your hard work and the depth of your analysis , which you have shared without charge.
    I am sorry to hear you are unwell . I wish you better health, and much joy in the new year .

  9. Hi John

    Sorry to hear you are unwell.

    I only recently found your website and I’ve found it fascinating to read. I posted a query on The Lunar Edge page.

    Best wishes for Christmas and the New Year and I hope you get better soon.

    Bill

  10. JH – I’ve followed your posts closely, especially over the last year. They have been invaluable. Your capacity for logic & reason has resonated with my intuition about market conditions through recent times. The consistency in your rationale is enviable to say the least. As a long only investor, your advocacy for caution has without doubt been a major saviour to what could have turned out as “portfolio fire fighting”. Thank you for your effort & all the best for the new year.

    RM

  11. Thanks very much for all your posts this year John and my Best Wishes for the Festive Season and a very quick recuperation.

    You have my blessings on a daily basis for such an amazing blog.

    My Best Wishes for the Festive Season to ALL contributors/commentators too. Despite all our ‘agreements’/(‘dis’) we do make for a some very interesting reading which complements John’s incredible analysis.

    Thank You to ALL here.

    purvez

  12. John, to hope for a healthy and happy new year & holiday season. I agree with your assessment of this ponzi printing market and when it blows…all hell will break loose. I think China going to a consuming type economy will be the catalyst of the US / Fed Reserve bubble pop.

  13. John, thank you so much for all your excellent work. Significance of that work will be fully appreciated only after few months from now and when markets will be much lower.
    All the best wishes for you around this Christmas, hopefully you will recover soon and enjoy better fortunes in 2015.

  14. Hi John, sorry to hear you have been ill. Happy holidays and I hope you will get a much deserved rest. Thanks for your work. Jeffrey Carney

    Date: Thu, 18 Dec 2014 08:53:51 +0000 To: revjcc@msn.com

  15. Thanks John. Hope you get well soon.

    FWIW – I still think we will move considerably higher from here. Likely 2100+ before the end of the year. Ive just added to my long at SPX2040.

    I still nothing bearish that would imply new highs are not ahead of us.

  16. With John capitulatiing for this year, I wanted to congratulate all longs. I do appreciate John’s analysis, but in the end 2014 was another very good year in the markets, as I predicted. The lesson to be learned is never try to fight central banks. I was good buying yesterday from the FED in the high yield market and that suggests new highs are coming. So, keep accumulating your QQQ, AAPL and IBB.

    1. I could be wrong, but I think he’s talking about a break from “publishing”, not capitulating on positions…
      Not really clear, but I wouldn’t assume that from his note…

  17. Thank you John for the hard work you put into this place.
    You are brilliant! Wish you quick recovery and nail them bastards next year! 🙂

  18. John, thanks so much for your in depth analysis and willingness to share it here! Here’s wishing you and all your readers a beautiful Christmas and a happy, healthy, and very prosperous New Year.

  19. Get well soon, John…. It can be a stressful time of the year, to be sure…
    Thank you for your dedicated writing, thoughts, and charts…

  20. For me, added a few more short positions a bit ago, and am at 132% net short now…
    If anyone is confused by that, please read my post from last night….
    If you’re still confused, please ignore my ramblings…

    1. 10ma on nyadv is indicative of a bottom but cpc looks more like a shot term bottom to me.

      I’m 70 cash and 30 short I think – have to wake up! PST and WCCG!

  21. John, please get better!
    Bulls switching tables with what bears have done all year now. Whenever the market screams higher 40-50 points it is taken as sign of new ATH. Not so this time I think.

    Looked at various charts in particular commodities as I believe this is what drives the down-side. Oil has very strong support around $50. Ultimate support at $39-40. This would make it 3.2x wave 1. That tallies with XOP and OSX which both appear in unfinished 5th waves. Possible target for XOP 34 and OSX 174. Down-side tallies with Oil at 40.

    Hui looks to be in wave 3 down which is unfinished (1.26x wave 1). Proper relationship to wave 1 put its possible target at 98 or the lower end of strong support between 100-150. Gold and Silver would be in the 900s and 10-12 respectively.

    Lastly ES and $/Y are tracing out wave 2 highs here (both are in sync which is helpful for the downs-de case in my view). Target for wave 3 1850 and 109.15.

    We shall see what is unfolding.

  22. Sit in sauna for 30 minutes followed by cold shower. That’s why those damn Swedes never get sick.

    John, you are a truly gifted writer, chart o logist, and blogger. The reading of your articles and the excellent commentary have been greatly innovative in terms of my knowledge base of this somewhat unique approach to market timing.

  23. Its confirmed – Bradley standing on his head

    repost 2014.12.16 – solarcycles.net/2014/12/13/state-of-the-markets-10/

    Has Bradley inverted?

    Late Oct, while everyone was predicting a crash in Nov, I said that we were more likely to rally into Thanksgiving to approx SPX 2070 trendline top. At that point we would likely invert the Bradley turn dates which called for a bottom Nov 20 and a rally into mid 2015.

    The current decline supports an inversion. If so we should rally into EOY then fall sharply through April 2015. Given seasonality and Pres cycle, rally top could be 78% retracement (SPX 2050+). Decline could be retest (+/-) Oct lows.

    http://bradleysiderograph.com/donald-bradley-siderograph-2015/

  24. Going long VIX. This rally is so overdone on absolutely zero news. It would be laughable if the rally wasn’t so damn contrived thus making it just down right transparent.
    We may go slightly higher but this is going to turn down hard from lower highs.

    1. agreed but they speak and the dogs eat

      speaking is all it takes now to control the conditioned masses

      have to play the signals so watch out

      this all should unravel in a hideous way but dogs like to eat cat poo you know

      1. The PPT are buying the markets now, that along with the alogs. Would we wise to just dump these markets and buy some Hard Assets with what is left of your money as essentially we know that will be left in the end will only be what they can’t print.

  25. spx cant go higher than 2055 and still have bearish potential

    that would pretty much confirm the resumption of the mindless dogs consuming FED VOMIT

  26. John, best wishes for a speedy recovery and many thanks for your hard work and insight. I found your information invaluable over the past several months and will miss seeing your “new posts”.

  27. John,

    First, let me wish you a speedy recovery from your illness. I am a triple cancer survivor and for sure, know that sometimes recovery takes time.

    As far as trading goes, I have been a professional trader and systems developer for over forty years and I have seen it all. Like you, I am also self-taught as when I began there were no computers and internet, and all of my work had to be done by hand. A good trader learns from doing their own charts by hand.

    Somehow, I was passed a copy of your very thorough research by a friend several months ago and have enjoyed your musings ever since. In the spirit of “quid pro quo” I would like to repay your research with some of my own real world learnings for your consideration. Several years ago, I was right where you are today, so maybe you will consider what I am offering up to you as a way of thanking you for your thorough research.

    As you take a break, maybe you will have time to step back and examine your process. I have put some effort into these thoughts for you as I believe that you have the characteristics to be a consistently successful trader in your arsenal, but I believe you will get much better if you can shift your focus to learning about the psychological aspects of trading. Consistently successful trading is primary a psychological skill acquisition process and very little to do with technical or fundamental analysis. I have seen traders will very poor methodologies make a fortune. Here we go with some ideas for you to consider.

    1. There is always information out there that we don’t accept or know when we take a position. Always. We will never know what we need to know to make sure that our analysis will make us right. In fact, the harder traders work at being “right”, the further away from consistency they get. As their frustration grows in stages, it finally turns into complete exasperation and many of them will eventually call it quits.

    2. Unless we were born into a successful trading family, then we will have the overwhelming tendency to adopt certain beliefs and assumptions about how we should proceed that will essentially render the requisite skills we need to make a reliable income as either unnecessary, irrelevant or even undetectable. It is as if they didn’t even exist. As a result, if we are not taught otherwise at the very outset of our career, it could take us many years to learn what we need to learn, and that will come along with some frustrating and very painful trading experiences, and huge monetary losses. In the big scheme of the Universe, all of this journey must happen before we even start coming to the painful realization that there is something definitely missing in our approach.

    3. Also, our ability to produce consistent results is not at all connected to our analysis except that our analysis will just always produce an “edge” and nothing more. I have learned to guard against the “illusion of analysis” concept in that I should have a winning trade because I know how to analyze the markets. Furthermore, my winning trades are solely as the result of the support of other traders feeling the same way that I do and confirmed with their trading orders. Successful trading is nothing more and nothing less than that.

    4. However, operating out of the theory of “illusion of analysis” will make it virtually impossible to produce consistent results. Operating out of the “illusion of analysis” is the primary force behind most of the trading errors that will keep us in the perpetual boom or bust cycle. Even more importantly than that is the overwhelming susceptibility to catastrophic losses and the ultimate paralysis by analysis. This behavior is by far the most dysfunctional and dangerous thing we can do as traders.

    5. The ultimate dysfunctional belief is to acquire and install a set of assumptions that will make it seem like having the right analysis that can get us into trades that are sure winners and therefore risk free. In the world of speculative trading, there isn’t one single thing we can do that can cause more damage to ourselves than to believe that we are in a risk free or reduced risk situation, when the reality is exactly the opposite. The risk of losing is a very real and distinct possibility with every trade—with no exceptions. And, a trader who believes that the risk of losing always exists would never contemplate getting into a trade without first predefining the risk. And they are never surprised when they find themselves in a trade that isn’t working.

    6. If we trade because we believe that our analysis is flawless, then we will always be surprised but not surprised enough to acknowledge we are in a losing trade. In my mind, we can still believe that we are in a winning trade that just has not manifested itself yet. If it doesn’t manifest itself eventually, then increasing levels of pain will be the only resource we will have to get out.

    7. The more information we factor into our decisions, the greater the likelihood that some percentage of our information will be conflicting and contradictory. Earlier in my trading, I just couldn’t find a way to reconcile the conflicts and contradictions in the information. So, it was very difficult at most times and even impossible at other times to make a definitive decision as what to do. Even if I was able to make up my mind, there was always some lingering doubt in my mind as whether to take this trade or not.

    8. Finally, one of my now very functional beliefs is that my mental skills and their perspective far, far outweigh any trading indicators or analysis. Therefore, all of the processes and skills we need to interact with that information in a way that assures me of producing a consistent income are all mental or psychological in nature. There is a huge difference between the way that the professional traders think and the way a typical trader or analyst thinks. This difference enables a professional trader to perform at a level that usually mystifies the typical trader because the typical trader is just not intimately familiar with the mental skills needed.

    John, if you are interested in some books on the psychological aspects of trading, I would encourage you to add these to your trading library:

    1. Trading In The Zone by Mark Douglas. (I personally wrote part of the dust cover for this excellent book.)

    2. The Definitive Guide To The Psychology Of Trading also by Mark Douglas. (I have proofed the manuscript of this new book that comes out next year and it will easily be the Bible of the psychology of trading).

    3. The Mental Edge In Trading by Jason Williams, MD. Excellent read with respect to developing a trading style that matches your personality profile.

    Here is a chart that speaks to comment #1 above. There are always things out there that we don’t know in advance or won’t ever know that could have factored into our analysis. Here is the S&P and the planet Pluto. There is a very unique correlation between the planetary degree aspects of this planet which offer key support and resistance areas when overlayed on the S&P. Specifically, the recent “big break” in October that you and others were calling the top, went right down to the Pluto Harmonic and turned back up precisely at that point which was known years in advance. No matter how keen our analysis, there is always another factor out there that renders our analysis nothing more than an “edge” that may or may not work.

    Hope you have a restful Holiday Season, John and again, Best Wishes for a speedy recovery.

    Joe Cowell

    Nashville, Tennessee

    1. Joe,
      Thanks for posting. We are here to learn from you – experienced traders.
      I want to ask you where is the chart you mentioned in last para. Also can you pl post more on Pluto and S & P correlation? Thanks again for posting.

      1. Good grief! Are you still short Elvis? You musyt have deep pockets! Emerging market currency crisis feeding the Dollar bull. Feeding Stock markets. Feeding Euphoria. Feeding a soon to come stock market bubble of epic proportions.

        1. good grief johnny dont you ever read – I posted my quarterly returns the other day

          I am not always JUST short

          grow up and learn how to live – then you will know HOW TO TRADE

          and I dont consider 30% short and 70% cash to really be short anyway!

          post YOUR TRADES AND YOUR RETURNS AND THEN OPEN YOU BIG STINK FLAPPER johnny! roflmao!

        2. Credit default fear has significantly subsided for now as shown by IEI:HYG, calming the equity market.

          Bulls are in firm control for now.

        3. Jonathan, how high do you think the dow will go? I am pretty gungho that stocks will run until late 2015 when that sc16vs24 analog converges. Damn index call options are effin expensive. Tons of volatility baked in. Im personally looking for a dow:gold ratio of 20ish before it all blows up. Gold:Silver ratio candlesticks are getting long now and near the 80 mark so we are into the topping process but this can continue for a good 9 months before it plummets. As of right now my personal window for the top is july 2015-november 2015. July would personally piss me off bc everyone would begin nutting to conman hack Martin Armstrong.

      2. Hi BBE ! You sure have deep pockets and a high tolerance for losses. Isn’t your wife a little upset these days with all your losses ?
        It doesn’t matter if there are shorts to squeeze. As long as central banks are supporting the market, it will go higher, a lot higher. It should be obvious by now.

        1. easy peasy foul flappers – my returns dont lie even if you net-posers do!

          post screen shots of your account trades like I have along with your returns…

          LIKE I HAVE

          I am more than happy with the 18% I’ve made this year with this quarter just under the 5% I post the other day.

          again I say – grow up and learn how to live – then you will know HOW TO TRADE

      3. I think a better question would be, are there any shorts ~anywhere~?? hahaha

        It’s certainly been a painful two days here, but can’t control market movements…
        Can only control my reaction to them….
        And my trading system is still 100% short, and while the actual % reading is growing stronger with the move in HY yesterday, it doesn’t seem to be getting quite the same “pop” today..
        Interesting crude is dropping today, again, and ~that~ was a concern just a few days ago… Today, ATM, not so much… Hmmmm….

        And I have to look at this as “just another trade”… Which it is, and they all are….
        But fair to say a little disappointing to be sitting on a several % gain on a position yesterday morning, and watch it go into the same several % loss – within hours – but that’s where we are…
        And this has been a longer-than-normal holding period for the trade, so there’s that too….

        Sometimes hard to focus on draining the swamp, when you’re up to your ass in alligators, and all… LOL

        Regardless, to be sure a “no bueno” day today….

        1. Barry crude was never the real reason for the decline in the markets, it just hapoens to be be declining as part of the overall systemic issues.
          It is amazing how the MS financial media will always look for any reason no matter how insignificant the influence really is to lay blame.
          It is not as they perceive, the tail wagging the dog.
          Crude is declining due to the overall deflationary pressures upon it and that is what is subsequently dragging markets lower, but correctly as you say NOTHING changed in circumstances since the Fed speak that lead to the sell off into Tuesday.
          And that is why it will terminate very soon. Reality SUX!

    1. Break levels on ES and $/y nearby given the steep angle of ascent – 2030 and 118 respectively. Below those levels assume down-trend has resumed.

  28. VIX found support at its 50MA at 16 and is now much higher at 17.7 whilst SPX is at its top. So someone is not complacent.
    What about crazy idea of VIX filling today’s gap before the day ends ?

    1. Also $ index eking out a marginal new high but contained by historic candle 89.70. With yen 300bps below its high a big divergence here in FX land flashing the warning sign that things are not ok with the carry trade engine….

      1. divergence for sure, dow is up about 300 pts, nikkei was up close to 400 pts yesterday and we are more or less flat from yesterday on the $/Y. don’t know what to make of it, is it funds closing their $/Y longs to cover some of their losses on oil related positions?

        1. all previous bull market corrections in $/Y have been 5% (105 to 100, 110 to 105). Now 122-115.5. If it turns lower here and busts this 5% correction then higher pattern game over.

        2. new intraday high for the equities and the $/Y still going no where, i am getting more bearish with the way it is progressing. will be very interesting to see what happens when asia starts trading, we know nikkei will follow the dow up, but will the currency pair follow?

        3. where? i am looking at the 4hr chart and looks like we need around 118.20 to 118 to break the channel/flag.

      2. The only problem I have with $/Y is that its last decline fits more in A-B-C style rather then clear five waver. But SPX traced beautiful five waves since yesterday which I consider C wave of corrective A-B-C

      1. not really – but it could conceivably morph into a complex INVERSE hs if price breaks 11000ish on the NYA

        listen up little nicky! lol

  29. John,
    I hope your health improves greatly. Here’s wishing you and yours a healthy, happy New Year.

    I greatly appreciate your excellent blog and site. Your brilliant letter gives great information and insight that is the springboard for better insignt into the markets for me. They broaden my vista and make for better trading and undersanding of the markets.

    I also must compliment you on the bright community of posters your work attracts and the equanimity with which all views are allowed to voice ideas and agree or disagree (unlike at most other sites). This is the go to place if one wants to excercise their grey matter when it comes to the markets.

    Once again, thank you.

  30. Newt – youre right that this is a pretty good buy signal – shows the one I missed in Oct because of my Dad’s death –

    wont miss this one IF OTHER FACTORS confirm later today

    1. might also be worth pointing out that my biggest positions as of the 15th were BONDS, LEVERAGED BONDS and CASH

      I am never JUST SHORT putzwinkles! WCCG!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  31. Central planers can be well pleased….SARC

    This is anything BUT a healthy market…..happy to be long VIX and will add on strength or weakness. Either way I don’t care.

    This market is headed for calamity. Over 600 pts on the DOW and 80 pts on the SPX in two days?……nothing has changed that caused the fall in the first place.

    1. YES. 8 Hindenberg Omens flashed and almost another yesterday. Such rabid up and down moves usually don’t end well but with the manipulation it’s hard to tell when the Fat thumb will stop manipulating this mkt up. It’s haard to play with dynamite.

    2. I agree completely, Allan. Something wicked this way comes. Major crash on Monday, just as soon as the new gold/silver curbs go into effect? My spidey sense is tingling, that’s for sure.

  32. Sp500 at 2065.

    Again.

    Already.

    The natural forces behind these markets is starting to build. None of us under 85 years old has ever felt them before. A breakthough of the natural barrier at 2065, either now or after a temporary failure or two over the next 2-6 weeks, will be something to behold.

    1. Hi Mark;
      Not going to agree or disagree with you for now, because what you describe “could” happen I suppose….

      But if natural forces are starting to build, wouldn’t you expect to see them build in junk bonds too?? And based on HYG/JNK/HYLD/H0A0, and most HY mutual funds, those bonds are still BELOW where they were at the BOTTOM in October…

      Not important? Am I just over-complicating it? (and I’ve been known to do that too!) haha

  33. On another note, please take care of yourself, John. Not to be presumptuous, but I recommend wheat grass, barley grass, and colloidal silver. I speak from experience with regards to all three.

    And just to reiterate: We all really appreciate what you do here.

    1. colloidal silver?…what is this….1814?
      and grass….yuck!

      John, have a good scotch….Johnnie Walker Blue is my fav…..cheers!

  34. I was calling for 2079 SPX tomorrow and that doesnt look too unrealistic based on futures. Many have said that markets are not being driven by natural forces. But technically it was set up for this sharp move higher.

    Those that are expecting a double top at 2079 will be disapointed imo.

    1. $NYDNV at the close yesterday was so low that I almost dropped my jaw. Immediately bought SSO in the after-makret. Up $6/share today.

      Bulls are in firm control. No need to look at too many indicator and charts.

      Don’t short for now.

      John, I wish you well. Regroup next year and win again. You can do it! I know.

  35. John, hope u feel better…..u r a good man with the right thought process but your timing is off!

    I posted back in September that a collapse is coming but we have to have the blow off top first!

  36. chance of a failed new ATH. That would be a first. Certainly a technically significant day tomorrow. BOJ out tonight. Russian interbank rates blowing out to 28%. Oil unable to take $58/59 looks like it wants to test $50. Not sure all that much has changed from 100 point ago. $/Y not pointing to new ATH unless it can rally 300bps overnight. Big trend line in the area 119-119.5. Staying bearish.

  37. Good healthy plan John. Appreciate your diligent research.
    Suggest you read up on Armstrong Economics blog. His multi-variable
    analysis of international money flows helps to explain why markets behave as they do. He uses world’s most extensive data base showing cycles in human + natural
    realms, minimum he uses is 100 years. Some go back thousands of years. Fascinating + awesome work proving that every aspect of human endeavours, esp. economic factors are interconnected and have ramifications of all the other endeavours influencing politics, wars, booms + musts,
    rises + falls of civilizations, empires, nations, etc. A must read.
    Never have I learned so much from one site except the Holy Scriptures.

    1. Read and believe what Armstrong says at your peril. In a recent article (link is here: http://armstrongeconomics.com/2014/12/16/russian-ruble-collapses-conspiracy-or-warning-of-things-to-come/), Armstrong says the following:

      “There was nothing that survived during the Great Depression from stocks, bonds, commodities, tangible assets, to currencies.”

      That is patently false. Gold not only survived the Great Depression (gold ALWAYS survives), its price went up 75% overnight in 1933 and sparked a massive boom in gold mining stocks. Armstrong is surely cognizant of that fact, so I have to assume he has an agenda and is lying. The question is why.

  38. Dear John:

    Thanx for your diligent research. Have you researched Armstrong Economics blog site ? It’s a must. His work is amazing + awesome + makes lot sense. He’s spent millions building worlds’ most extensive data base on virtually all factors that interact to produce cyclic patterns seen each market dating back minimum 100 years and some back for thousands of years and his computer system can generate forecasts that are eerily accurate in terms of parameters of what to expect and when.
    All analyses fail ultimately due to lack of adequate data base that includes all the relevant factors influencing a particular market or endeavour of studies.
    His work is cyclical work emphasizing international money flows which is the most reliable reflection of market trends. It’s truly a dynamic analytical work correlating
    > 200-300 economic factors influencing markets. Huge computing power.
    When you read his work it will explain why markets have been frustrating to forecast
    past year. Many cycles are converging to create violent volatility as prelude to
    monumental / tidal wave like changes about to emerge over coming years and decades. As Martin Armstrong likes to say ‘majority must be wrong’ before any market turns in a major way. Way too many ‘analysts’ make forecasts based on
    too simplistic and narrow scope of analyses. Predictably, their forecasts are way off.
    You are one of better ones looking at many variables but there are many factors you have not considered. Enjoy a brand new paradigm busting learning experience
    reading + getting familiarized with his decades of work since 1970’s.

    1. I am not sure MA is as great of an analyst as he says he is. I have seen him backtrack on things when he thought they were going in a particular direction and it didn’t quite happen that way. He does have good thinking and conclusions. I just wish he wasn’t go arrogant.

      1. Yes Mae, you are 100% correct. MA is NOT the analyst he nor many others think he is, nor is his computer array the God send he purports it to be.
        Yes he has merit when it comes to his ECM, as far as I can tell?……but as far as having the knowledge about where markets are headed?……he second guesses just like the rest of us.

        He has in recent times made some hugely wrong calls but always seems to deflect attention away from them and that makes me very suspicious.
        I have no doubt that IF gold took off here and marekts cratered he would some how spin it all to say……….” My computer models predicted that we were at a turning point”

        Tails….I win…..heads I win!

        Cheers

        1. I will just add that if Mr Armstrong had the hugely successful knowledge via his computer models then why in hell is he not using it to make massive money on the markets. Surely he could pull millions from the markets?

          Why is he bothered selling reports over the internet if he has this kind of knowledge?

          Why haven’t wealthy traders beat a drum to his doorstep thus making him powerful and wealthy?

          Why does he market his wares in way that is akin to a conman selling snake oil?…….ie YOU need this and can’t be without this under any cirumstance.

          Like I say…..that makes me suspicious amd rightly so I believe?

          “Beware a greek bearing gifts”

  39. Hi John, I hope you are feeling better and happy holidays!

    Do you now think that the year-end peak/double peak is now the most likely outcome?

  40. John, please feel better and take it easy. There is always next year as long as we remain solvent and in the game. Take a well deserved break and come back and i am sure the opportunity to capitalize on a real decline will come. Obviously a mind-blowing move in stocks these past 2 days which beats every expectation including mine as I was only looking for a bounce. As of now, we have to concede a possible new ATH before end of year, perhaps as soon as tomorrow. We have the new moon on Monday morning, and as I have advised yesterday not to short ahead of it. If we do rally into the close tomorrow and make new ATHs, i would consider re-entering shorts. But perhaps the best position is to go flat and just enjoy the holidays.

    https://davinny.wordpress.com/2014/12/19/20141218-what-a-insert-your-adjective-here-rally/

  41. Futures up at SPX 2073.

    As ive stated we should close at 2079 today. No double top. We should see 2100+ before the end of the year.

      1. Duncan, Santa rules until 12/24. But when the new moon effect ends next Friday, I expect a selloff, the year to end on a down note, and January to April to be choppy at best.

  42. I at least caught 11 es points, man my trading has been bad. I have developed a 60 minute system and if I can stick to it with stops I will be fine. I tried to guess Santa rally too early and ignored my own sell signals. Duh…..this 2073 es is a resistance for now…maybe take short scalp with stop a tick above. But probably not worth getting in front of freight train. Better to look for a pullback and stay with trend.

    1. It takes time to get in sync with the price. To see the maket as it is and stay bias free is one of aspects of trading that we must be fully aware of. Always place a stop when entering a trade nad never modify it. Don’t buck the trend, don’t play counter wave, always go with the flow : you will be safe. It’s an illusion to think you can make money by going against the flow. If you experience any issues when implementing your system, it’s because you don’t have enough faith and confidence in it. You don’t have confidence because 1) you didn’t let it show you its potential b) or it’s a bad system with no edge 3) or you have had a losing streak and your faith has gone. But what matters you have a system! (as opposed to funnymental biases).

  43. Get well soon, thanks for all your hard work, if bringing other people interesting analysis gives you pleasure than in that you are a rich man indeed. Merry Xmas and a Happy New Year.

  44. High base breakout should be confirmed on the R2K weekly. Been high basing for a few weeks now. Move up could be a powerful one.

  45. Thank John, your analysis superb. The only problem is market emotion. Look at people’s reaction after FOMC release. They did not know which way to go for an hour. EURUSD up and down crazily, so did USDCAD. Here I found the best of rationale which the west very famous for but faded nowadays

  46. Would be a epic failure if Bulls fail here and print a lower higher. It would not be the first major market to reverse like this in Dec post Fomc. Same as T bond market a year ago.

  47. $/y breaking from wedge – wave 3 down looks to be starting. Also watch impact of Russia fallout on European banks. Plus final greek vote 29 dec.

  48. John,

    Enjoy your family and rest up… And also, please enjoy the significance of the gift of perspective you have given us called Solarcycle. It has all been said already in terms of your astute analysis, your very smart writing and intelligent comments. I would add too that your thinking in terms of aggregating indicators with Solar Cycles for a type of meta indicator is an idea whose time had come. Not sure if you picked it up somewhere and refined it all but from my point of view the Solarcycle connection is pure genius. Thank you.

    Merry Christmas John and Happy New Year.

  49. Hi all ! I just wanted to congratulate all longs again for a tremendous year. Again never fight central banks as they have unlimited buying power. My analysis was spot on. I will take a break me too but I will be back after the holidays, with more analysis and recommendations. I hope you all appreciated my contribution to this blog.

  50. Many thoughts today….
    My trading system is certainly looking more bullish, but not quite enough to trigger a reversal to long quite yet…

    There are some inputs that are already saying long, some are still saying short, and as usual, the HY indicators will be the ones to cause a flip…
    And if we continue higher, we’ll no doubt be there in a day or two…
    But they aren’t there yet, as pretty terrific damage has been done to the HY area lately… The last two days move higher there has been very constructive, but just not quite enough yet…

    That said, looking through many charts, I have to say, the last two days look like a lot of smoke, and a little fire…
    Money-flow is barely budging off the bottom on many, many charts, even while price moves the last two days has been substantial….
    As well, TRIN and TRINQ has my attention too….
    Neither are perfect indicators with 100% results, but I’m seeing enough to make me VERY cautious of holding any longs here….

    Doesn’t mean it didn’t sting a bit in the wallet these past two days, but my wallet and my indicators are two different things…
    And keep in mind, I was 173% net short from the Nov top, scaling it down to 55% net short by the time we hit the bottom this week, and have been building it back up to 132% as of this moment…
    It’s ~a~ trade, win or lose, and more come up all the time…

  51. Merry Christmas John and to your family. Hope you feel better and this is not part of your illness that zapped you earlier this year.

    We are so desperate to see things come into fruition, but until we can forecast cycle length, we are going to have to arrive at the train station a bit earlier then everyone else.

    You were more aggressive then I was in predictions for this year, but I was conservative and it cost me still. I was as middle ground we can definitely say the swings were more turbulent this year then in 2013.

    I do believe 2015 is in for more turbulence giving all speculation about QE4, China, Russia, and Draghi. A great dive in for all your indicators would be to analyze each one in a blog posting and show why they calculate a risk and surmise how QE or buybacks have thrown the indicator off versus previous cycles.

  52. Ok, so before I take a break, congrats again to all those who are still bullish on the US markets. 2015 promises to be another great year for us bulls. My last recommendation is to keep adding to IBB, AAPL and QQQ as they ar still the leaders of the gigantic bull market.

    1. Fortunately, we’ll still all have Nicolas’ “analysis” to keep us on track in 2015….
      I’m looking forward to that, as I’m sure many others are as well…. 🙂

  53. Happy Holidays everyone! It has been a really fun board to read and post to and hope that John continues it in the New Year. Wishing you many red and green candles in the New Year (red if you are short and green if you are long).

  54. Still looking good for a turn in January. Very surprised by the huge upward move in the last two days. I hope 2015 doesn’t end up being like 2014. Hopefully we can get more than a 10% drop at some point. I have lost belief in a bear market though as long as central bank policies remain as they are. It should be corrections in a bull market all of next year however the rising volatility of late may be the indicator of a bull market coming to an end.

      1. still need a pretty good jump in $/Y – so not sure this is comparable. $/Y took the lead back in late October. Not the case here. Euro/Yen just hovering bios away from double top below which picture turns bearish for equities. Therefore see this move as very technically driven culminating in an important gap close.

        1. I do hope it is the top for this leg. If one looks at the hour or 4 hour chart, zoom out, you see another wedge, w/ rsi diverging, at 62% retracement…so much pointing to a reversal but the $/y keeps grinding higher. looks like it wants to reverse but the equity markets keep dragging it up with them. very frustrating.

        2. shhhh, lets keep this real quiet, everybody is on holidays. we don’t want people rushing back and prop up the $/Y,

  55. Wagner on Kitco expects much lower gold prices next year leading to $950 price levels. Since Kitco is a gold vendor this is not spin. May set up an excellent trading opportunity next spring before the Venus retrograde which begins in June and last 6 month. Venus retrogrades have been where most of the GDX gains have been over the last decade.

  56. “The variation in the Sun’s motion about the Center of Mass is characterized by a periodicity of 178.770 years: Every 16 loops about the barycenter the Sun repeats a very similar path. The slight time derivative or torque to this 178.770 year cycle, a time dependant periodic function of +/- 1.05 years is called the torque cycle, determined by nine subsequent synodic periods of Jupiter and Saturn (9 * 19.858 years = 178.720 years) and used by Theodor Landscheidt to forecast sunspot cycles. The projection of this 178.72 Year Cycle (+/- 1.05 years) from the peak of SSC #8 in March 1837 suggests the peak of the current SSC #24 is still ahead of us and would occur in 2015-2016.” Time and Price Research

      1. That’s a very interesting comparison with SC1. It looks like there was solar-induced speculation then too (in commodities, but not exactly a mania) between 1758 and 1763, when the ISN finally fell below its plateau. That was around month 95 to 100 of SC1, which would be late 2016/ early 2017 (if the similarity were to continue).

        Another solar-induced activity faded away during 1763 too: https://en.wikipedia.org/wiki/Seven_Years%27_War

        1. Thanks, I did not know that coronal holes were as important as sun spots to understanding the solar magnetic dynamo theory.

          The sun spots represent one half of the solar magnetism that effects humans on earth and he coronal holes represent the other half of the solar magnetism that effects humans on earth. Thus, sun spot counts are only half the equation and can be misleading towards (total) solar magnetic effects of humans on earth. This means that the magnetic effects of the coronal holes must be considered for a better understanding concerning the timing of effects on humans that is caused by the sun’s magnetism and not just that of sun spots.

  57. Are Andre’ and Peggy continuing their valuable research. Please post with updates. Gravity and tides seem to be highly correlated with market moves particularly in certain sectors. Thanks to both of you for your innovative and useful posts. Mele Kalikimaka (Merry Xmas)

    1. I think Andre posts on Sunday morning early, sometimes on Sat. I look for his post
      in the morning, and Peggy about the same. I am waiting also for them to post …..Nicola2910

      1. Last week I posted this :

        Gravitationally , we are headed for a low on December 28. Next week will be up as of Monday, with a high on December 22 – the new moon. After that a 3rd (!) wave down into 28 (Bradley has major low on 26). Then up into January 5th.

        No reason to change this.

        Cheers,

        André

    1. Interesting, to be sure… Have no idea of any history of what this guy has said in the past, but an interesting read…

      That said, I believe we have no worries, as it applies to market prices…
      Because I have it on good authority….or at least have been told…..”never fight central banks as they have unlimited buying power.”

      So we’re good… 😉

  58. Big oil co. like XOM, CVX and COP stock price are back above 50 SMA, Not suppose to happen when media says we will see $40 oil.

    Geno. You are genius. i added COP upon your post and already up 15%.

    Buy the dislocation.

  59. SPX making new ATH is key. If that does not happen today or tomorrow then bearish scenario is still valid.
    Gold very weak here, may easily test last lows in 1130-1140 range this week

      1. Allan, it seems for me that gold may be in H&S pattern forming since Dec 1st . Moreover, it is finding resistance on short term trendline connecting Dec 10th, Dec 16th and Dec 18th intraday tops. Gold needs to break this trendline first and then reach past 1238 for me to consider bullish scenario.
        In the same time USD seems to be topping as well which makes it really puzzling.

      1. The worst is yet to come. It’s just seasonally bullish at this time of the year so all news is ignored. I have a small dow short trying to scalp a few points but until jan should be flat/bullish barring a major event.

    1. Unless ES and $/y make new highs we are looking at wave 2s.

      Definition of wave 2: consensus believes the former trend is back on. Check

    2. Vol we have seen here recently (biotech, es, $/y) would support a major turning point. Biotech reversal so far looks like silver in 2011. 2100 here we come.

        1. Nasty wedge forming in the $/y. Quoting purvez, not detrimental…if you don’ t fight it. Only thing I can do is place sell stops and as the $/y keeps going up I gradually move my sell orders up.

  60. Newt. – Glad you’re making some money on COP. Took half off and letting the rest run with breakeven stop-loss. I may add back the other half if it dips below 66.

  61. What is happening today ? U.S. markets are levitating high in the stratosphere, while credit, gold, commodities etc. are plunging. Yes this will adjust and in abrupt way. Even if SPX makes new high today or tomorrow this would be pyrrhic victory as January should be real bloodbath. Remember October 2007 and fake new high in Dow ? Once markets start losing faith in CB’s and fear takes over it will be fast.
    Be it Greece, no European QE or any other catalyst. This is one of the greatest setups in history. It will be no different.

    1. Bunell welcome to the ‘rarified’ atmosphere of the ‘holiday season’. At this time of year whoever has the upper hand can levitate markets for very little effort. Since the vast majority are ‘not playing’ the small percentage make their presence felt.

      It’s only temporary and NOT DETRIMENTAL….IF you don’t fight it. I’m speaking from experience here. Lol.

  62. The euro is over sold and the dollar is over bought. Should the dollar fall then the yen will rally and stocks could decline for awhile.

    Thirty year bond futures are pointing towards no long term inflation and that means no rise in US interest rates and that means the USD is over bought. The rising USD and falling euro have been ignoring rising thirty year treasury futures but at some point the realization will set in that there is no long term inflation and the USD is overbought. That time could be now as the holidays shield the fact as to why a major sell off in USD is under way (total reversal in expectations for long term interest rates by the FED).

    1. February Gold futures are looking bullish as per the 50 and 100 day mas. If the dollar tumbles from here then Gold will soar.

    1. U.S. GDP at 5%. What more do we need for a rate hike lol. Soon the US may be growing faster than China! The inflation is coming and hope it bites the FED in the bum.

  63. In the short term the rallies in the DOW and dollar are losing daily momentum. Intermediate “tops” look to be forming.

  64. Inflation?, bond yields and crude are strongly
    indicating otherwise.

    Stronger $, Eurozone near recession,
    China slowdown, the FED does not need
    to raise rates imv.

    DOW futures breached 18k.

    1000 DOW points in a week.

  65. FX driving markets. Probably everyone has realized this by now. $/Y in 2002 topping analog had a 2nd chance to 120.64 equivalent to today after a similar drop to 115. So we are in the realm of historic moves. 10% cumulative vol in this pair the last 2.5 weeks is quite astounding nevertheless and speaks for a major top. Short term wedge break retest here at 120.70. Also first resistance from the 121.82 top from 2.5 weeks ago. Wave 3 down to 110.5 or the next untested major horizontal support (109-111). Then 114.37 retrace and then wave 5 to 108 or megaphone support.

  66. Questin:So why isn’t the Fed acting on rates?…………..

    Answer: Because they know the way GDP was calculated had to be drastically altered to acheive anywhere near 5%. Real figure closer to 1.5-2% on a good day.

  67. Let’s not kid ourselves here people. We have now entered the world of total fantasy where Govenments no longer are concerned whatsoever with any semblance of factual data and are only concerned with priming the pump continuously and lying through their back teeth.
    This is why markets are eventually going to collapse………. CONFIDENCE, or total loss of confidence in anything that we are told by any government anywhere.

    1. Agree with your comments. The bit I struggle with is making money in the interim. I think I’m going to observe Johns solar cycle analysis in 2015 and wait until it starts working as expected before trading on it. Might mean missing out on a major crash or even 2015 as a whole but rather make nothing rather than lose lots!

  68. “Turn around Tuesday” in play for DOW and dollar. (“Turn around Tuesday” is because of CFTC gathering data for Friday report and is also good for weekly reversals).

        1. The stragglers (final stage of a bull market) have yet to join the party. Joe and Jane Sixpack have yet to pour their life savings in the market.

          Price continues to rise; MA for advance issues continues to come; VIX continues to drop, Credit spread continues to narrow. Bulls are in firm control. One must resist the mental tendency to fade the market.

      1. The decline in home sales means no interest rate rise and that means no reason for the dollar at these levels now add to that some words out of German officials that they are steadfast against ECB QEs and an intermediate to medium swing turn in the dollar/currencies is probably in and so could be in US stocks especially given the profit taking already going in in biotech (profit taking spreads to other sectors).

        Note the New Moon and the Winter Solstice.

  69. Could it be that the recent and rare Full Moon top was a “head fake” or “smokescreen” for this New Moon and Winter Solstice top to be significant?

    I have no idea what a Full Moon top followed immediately by a New Moon top does or is all about. I don’t know how rare it is or if there is any research/data about that topping pattern. I also don’t know what data there is with New Moon tops with the Winter Solstice either. This is a big unknown that could be very important to the fundamentals of this blog.

      1. Pegasus – it would be nice if you’re right about the reversal

        i’ve felt for a long time that this bull can’t end without biotech topping first

        IBB reversal looks better than the one in February of this year ….so far

        1. used to when I had active positions. Not now. Looking for strong horizontal support in Gold around 1033-45 as possible long entry. Silver 11-12. Could be wrong.
          Mrs Watanabe does not like the weak yen. With Biotech breaking down should get some action in the $/Y as well pretty soon.

        2. lol ! the watanabes was in my mind also. when the asian trading started i was thinking if anything was going to happen, i.e. a reverse on the $/Y would it be the mrs watanabes to trigger it?

          took a small long position on gold today, with tight stops, looks like it is doing a head and shoulders neckline backtest, will see if the $ will cooperate or not.

          happy holidays to you and rest of the folks here.

  70. Pegasus,

    I always read your posts,
    however just about every one of these
    for months refers to an imminent topping process
    because of ..zyz.

    Now on biotech you may have a point,
    or it may be year end profit taking
    following another up year and
    a 5 year rise of nearly 300%
    (IBB up 272% over 5% years).

    Sometimes worth considering alternative/different
    reasons and outcomes, just my take.

  71. Agreed with Phil White completely. I have been a big fan of John H. However, I have stopped reading or posting on this board for a while. While I believe this is one of the most intelligent online boards, all the bearish calls on this board has been dead wrong. Theory is only the theory until proven by reality. The markets are chugging up and up. Let’s trade what the markets give us, not the crash theory or hope or just pure fantasy. I lost my shirt shorting the markets until the end of October. Been doing a lot better since staying long. Lessons learned.

    I have said repeatedly since Oct that John has been way too early with his calls for the crash. But I believe his points will be proven in 2015. Q1 2015 could be a start of a reversal, ending with a devastating crash in Q3 2015. From the cycle standpoint, I believe we are at the very critical reversal point. We could see a skyrocket rally right into the first week 2015, then a reversal.

  72. Lunar seasonal forecast. Market will be higher than today on 12/31.
    Equatorial crossing this weekend may result in rapid price move Monday.

    1. is that more powerful than the new moon which usually results in a change of trend? i.e. NEW MOON often results in a downturn..

      1. Crazy, you may want to print a few years price data on a chart and place the new moon and full moon on the chart and verify the effects that the lunar phases have on price. You may find prices are weak 3 trade days before to 4 trade days after full, and are strong 4 trade days before to 4 trade days after new.

  73. Well, as is no real surprise after the the price launch last week, my indicators have finally caught up enough to trigger a “Buy” signal in my trading system…
    Which means cover shorts, and reverse to 50% long…

    Ironically, prices ran up so hard so fast this past week that I’ve actually got a few faster oscillators peaking and ready to rollover to a sell, at the same time as the slower trending ones are catching up enough to trigger the buys…

    The REALLY interesting thing is, junk bonds are slowing in their minor move up and are starting to already show a bit of weakness…….as they are at their most stretched divergence between stocks and HY bonds right here…

    And money-flow on the charts I look at, in this current rally (other than the energy sector, generally) continues to show increasing weakness…
    The divergences have lasted about 5-6-7 weeks now, and it’s been getting worse…

    Not going to say prices HAVE to drop now, but if all I was looking at was charts, my response would have be to “GTFO”….

    So, have the dilemma that we all have from time to time…
    One set of info tells me to be long, and the other tells me to be short…
    And have a feeling getting long here will just turn into a price whipsaw, but here we are… Regardless, probably pretty difficult to get out of shorts in any “graceful” way during this current rally…. :-/

    1. Barry,

      Many folks I talk to or subscribe to are baffled like you as to the current direction. We are at a crossroads. However, food for thought many sovereign wealth funds of oil producing countries will be selling assets to help cushion oils blow. Saudi has already stated this fact. That kind of selling can and will move markets. The vaporization of Oil wealth and the implosion of the debt used to fund projects over the last 7 years will have liquidity knock on effects for years to come. Your flow charts are just the beginning of what will become a tsunami of selling. People often sell what they can not what they want to sell.

        1. Shorts will get burnt, ive seen it since the 09 lows time and time again. We will continue up into 2017-2018. Major highs this year in March and June.

        2. Clearly you must be an extremely wealthy hedge fund manager to offer us such precise predictions and thank you so much for your free trading tweets. I don’t know of any other benevolent master of the money world who offers plebs like us such knowledge. I wish Stevie Cohen would share his market views like you.

  74. The 7 year cycle is due to top this month or early Jan. Nothing else has worked. However, the Oct Dow correction below the 200 day ma is frequently the first step in a turn. The utilities usually top in Dec/Jan of the 7th year, 2014, 2007, 2000 ….. the other markets usually top in the twelve months leading up to the Dec utility top. That has only occurred for the NYA and R2000, which is something but not holding my breath.

      1. In the above article note this quote “Things are starting to move,” said Dr Jones. “1997 was probably the last time we’ve seen such [a temperature] anomaly.”

        Many on this site use Lunar Declinations for predicting turns in stocks and gold etc. I don’t know about those things but what I do know is that Lunar Declinations are tied to the strongest El Ninos. Those who use Lunar Declinations to predict El Ninos have predicted that October, 2015, will be when the next El Nino will be at full power and the most powerful of those in the 18.6 year Lunar Declination cycle.

        What this all means is that, soon, Large Specs will start putting a “weather premium” into certain markets by bidding up the futures of those markets.

  75. lol, mrs watanabe and her gang (of mad day trading houswives) will take down the $/Y and the rest of the financial markets while wall street is on holidays…sucks i can’t add on my $/Y short.

  76. Happy Christmas to you and your family today John. I don’t know what is wrong with you but whatever it is don’t overdo things – you don’t owe anyone in this blog a thing, much as we are all grateful – relax. Enjoy silence and peace and be present in the moment when birds are singing.

  77. Happy Christmas to all. Im still of the belief we are going to SPX 2100+ before year end where I will be closing my swing longs from SPX 2020 and 2040.

    I have no doubt about the indicators that John has presented but tops are a process and I still think we have further highs ahead in 2015. My personal view is we actually top out Q1/Q2 next year. Similar to 2000/2007 im expecting a 50%+ bear market. This wont take out the 2009 low but we could see the SPX go below 1000 in 2016 which will, IMO, conclude the secular bear market.

    1. secular bear? SPX is trading more than 30 percent above its 2007 and 2000 highs, and you’re saying stocks are in a secular bear? Or do you mean the secular bear that will begin when the current market tops?

      1. We are still in a secular bear that began in 2000. Within secular bears price trades in a range and often overshoots and undershoots that range. If we fall below 1575 on SPX id say we are still in a secular bear. A good example is in the 1970s. During this secular bear market we have overshot by quite some margin.

  78. I am in agreement with Ducan’s view of the market. You are one of the rare ones on this board who has been correct with your market predictions. I too believe that we are entering the final bubble phase, where SPX will be taken over 2100 level, top out, then crumple and fall. Good luck to you all, long or short.

    1. Thanks Erick. Im expecting 2100+ then a sharp pullback where once again bears will be calling for an end to the world only for SPX to go to higher highs.

      I have a lot of respect for John and his analysis but the short term analysis he presents is always bearish. If you go back for the past year every v bottom is either a lower high or marginal double top. Even when I was calling for 2100 everyone said the market was going to crash in December as it did in 2007. I hope no offense is taken in this post and all I want is John to consider that we continue higher and have an exit plan in place should we move significantly higher.

      1. John’s trouble began when he surprised me with the demographic theme. I used to have so much fun when we all called the bottoms with our similar tools. John surfed the market waves well. Both the up and down.

        As a long time followers, I knew extreme bias reigned when the safehaven and slopeofhope crowd started to showed up and posted.

        I hope John will reassess his trading style/scheme/tools. I would love to see John calling and taking advantage of both the tops and the bottoms.. A balanced approach is a good thing.

        Happy New Year!

  79. It is very possible your scenario will play out Ducan. Geocosmically, I see 2 scenarios, both bearish in 2015
    1. Your scenario, where a sharp pullback in Q1 will be met with another massive rally to complete the bubble phase.
    2. A massive sell off right now, in Q1 2015, taking the market below the Oct 15 low, followed by a weak rally and then final sell off in Q3 2015

    I too admire John’s work. However, crash scenario is rare event that most analysts have been wrong with their timing. John is not an exception.

  80. 2016 march-june is the end of the bear market. There will be no more V recovery’s after that. Where will be DOW and S&P at that point??

  81. And in fairness to John, attempting
    precise market timing is next to possible –
    and yes I am splitting an infinitive ).

    The UKX, MCX have gone nowhere this year.

    I am definitely in the late stage bull market camp
    with a final top in 2015, how we get there I
    can not say – although a January sell off would
    not surprise, as has been mentioned by others.

    1. I believe people can do better if they don’t predict because bias typically causes us to under-perform. New high to new low ratio stands at 6.98 EOD. The longs are in firm control. May be time to short in January, but no one has a crystal ball.

      Happy trading.

  82. Today is the final Bradley date, so perhaps this it it. But I see little point in guessing what happens next any further. With IWM at new highs, I will wait for the next breakdown before speculating again.

  83. Best wishes to John and all readers/posters here for 2015.
    Not a trader me, but the FTSE looks like a spent firework to me, non-stop gaps, very pretty:
    http://www.investing.com/indices/uk-100-advanced-chart

    I envisage growing instability the world over, economically and geo-politically. Money likely to flow back to New York, so (if I were trading), I’d pick the weaker markets, and steer clear of America.

    I agree with others here, gold and the miners such a bargain at these levels, and buy any dips, but with a 2-4 year timeframe for profits.

    Good luck everyone (except Nicholas, who doesn’t need it anyway, as the CBs have it all covered 😉 ).

    1. I think even Nicholas needs some GL…in case the CBs prove ineffective.

      After all it is the ‘Season of Good Cheer’.

      Worst case scenario Nicholas gets twice as much as everyone else. Hmmm I’m beginning to wish I was Nicholas.

      Or not.

      Happy New Year to ALL HERE.

        1. same from here!

          Found the below a very succinct summary of what is going on in terms of a broadening top reversal. Not an easy pattern to trade either s-t or l-t as filled with unexpected and almost unforcastable turns. Pattern looks for 5 touch points. Can count 5 including today. Lower bound 1736. Pattern complete when lower bound breaks. Bear case in my opinion is alive and well. Best Wishes to our host!

          http://en.wikipedia.org/wiki/Broadening_top

          http://www.investing.com/indices/us-spx-500-futures-streaming-chart

  84. Biotech has retraced in a wave 2 50% of wave 1. Wave 1 was 3 waves so impulsive. Wave 3 161.8% of wave 1 should bring us into firm horizontal support around 2763.

  85. “…massive inflows into U.S. equity funds Monday [22 December] …investors poured more than $13 billion into U.S. equity ETFs”. http://www.etf.com/sections/daily-etf-flows/24128-us-etf-assets-cross-2-trillion-for-first-time.html

    Either the mark of a top, or the start of an accelerated mania into a perceived safe haven, depending on your point of view.

    I can only find official EU bank deposit figures for 2005 at the latest, but there must still be in excess of 10 Trillion US dollars worth of Euro in small deposits sitting in EU bank accounts, potentially looking for another home where it will not be subject to Recovery And Resolution.

    1. Another angle on this in this article:

      http://www.reuters.com/article/2014/12/27/investing-fundflows-lipper-idUSL1N0UA0Y120141227

      I thought this sentence was particularly interesting…

      “The inflows into stock mutual funds were the biggest since March 2000, while the inflows into stock ETFs were the biggest since March 2008.”

      Neither of those dates were the exact top, but seems to add to making the case that an important top will be forming sometime early in 2015…

  86. Sunspots & Stocks
    There is a correlation between the Sunspot Cycle and the Stock Market: Since 1933-34 all bull market highs (= start of a bear market) occurred 0-13 months after the peak of the Solar Cycle (List):

    HIGH of Solar Cycle #17 in 4/1937 = bear market starts in the Dow Jones 8/1937 (+4 months)
    HIGH of Solar Cycle #18 in 5/1947 = bear market starts in the Dow Jones 6/1948 (+13 months)
    HIGH of Solar Cycle #19 in 3/1958 = bear market starts in the S&P 500 8/1959 (+6 months)
    HIGH of Solar Cycle #20 in 11/1968 = bear market starts in the S&P 500 12/1968 (+1 month)
    HIGH of Solar Cycle #21 in 12/1979 = bear market starts in the S&P 500 11/1980 (+11 months)
    HIGH of Solar Cycle #22 in 7/1989 = bear market starts in the S&P 500 7/1990 (+12 months)
    HIGH of Solar Cycle #23 in 3/2000 = bear market starts in the S&P 500 3/2000 (+0 month)

    In early 1968 the quasi gold standard was more or less abolished, which lead to the inevitable expansion in money supply and inflation. Since that time every solar top made a bubble burst, in 3 of the 4 cases even in the same or following month which is incredibly precise:

    HIGH of Solar Cycle #20 in 11/1968: stock market bubble bursts 12/1968 (the S&P 500 high of late 1968 was only exceeded nominally but not in real terms for decades)
    HIGH of Solar Cycle #21 in 12/1979: commodity bubble bursts 1/1980
    HIGH of Solar Cycle #22 in 7/1989: Japan bubble (stocks & real estate) bursts 12/1989
    HIGH of Solar Cycle #23 in 3/2000: stock market bubble bursts 3/2000

    The more sun-spots, the more important for financial markets. The solar super-storms of 1859, 1921 and 1989 went along with inflation peaks (Credits: Manfred Zimmel):

    September 1-2, 1859 (highest inflation 1810-1910).
    May, 1921 (highest inflation 1860-1940).
    1989 (highest inflation since mid 1960s).

      1. Bad news is good news in China. While there are too much debts in the private sector, government debts are relatively tame. Interest rate is still very high so it gives its CB ample room to stimulate and goose its market. China may be a frog in warm water but watch out for the bucket of ice poured from time to time. Shorting = fighting the CB.

        1. could be – either way we will find out shortly. Also of note is we are at geomag peak for stocks. Either bulls push through the line or its game over for a couple of months.

  87. Re: the SC24 Progress chart posted by John Li above.

    December’s ISN is likely to be around 80 to 85 (ie. the black “Ri” line) – well up near the highs of the plateau so far. No sign of a waning solar cycle there.

    The northern solar field strength is still languishing around zero, but it could be finally flipping and about to gather strength in its new polarity (it has already flipped, and reverse-flipped back again mid 2012 and early 2014). I think this one will be the final flip, because its timing is in line with the models by Channon and Vukcevic I first mentioned a few years ago (and which have been remarkably accurate so far).

    I also think that an initially tentative strengthening of the northern field will cause a temporary increase in northern hemisphere sunspots; probably for several months, but possibly longer (until the rejuvinated poloidal field becomes strong enough to resist toroidal twisting). When the sun’s southern field flipped and gathered strength during August/ September/ October 2013, it was followed by a surge in southern sunspots as seen in the green “Rsouth” ilne in the SC24 Progress chart above.

    Whether this will create a new, higher SSN maximum (like SC1), or just keep the maximum going at current levels (like SC16), remains to be seen – either way, it will fuel more of the behaviour we’ve witnessed over the past four or five years.

    1. The polar field data is delayed, and the average data is revised for new datapoints. (They seem to average a window that covers the past and future, but for the latest points, they only average the past, which skews the numbers lower until the future arrives.) Therefore, in all likelihood, we will see the final flip you suggest to have occurred in 7/2014. This is an coincidence that the 2013 event also occurred in July, i.e. 7/2013.

      If we repeat the path from 7/2013 to the sunspot maxima on 2/2014, I suppose this time around we might see a flip from 7/2015 to a sunspot maximia 2/2015. However, the monthly numbers so far for 10/2014 and 10/2014 are lower than 7/2014.

      ftp://ftp.swpc.noaa.gov/pub/weekly/RecentIndices.txt

      Therefore, not quite the same pattern as 2013-2014. I don’t really know enough to make a prediction. I am just absorbing the many statements made here and pointing out the obvious.

      For example, I am reading here that Theodor Landscheidt would have thought SC24 would peak in 2014-5, but I can’t find that in his work. The paper I found indicated that he thought SC24 will peak 2011-2.

      http://bourabai.kz/landscheidt/extrema.htm

      1. Yes, the final confirmed polar field measurements are not known until six months afterwards because they’re subject to the same smoothing process as the SSN – a centered running average of the previous six months, current month, and future six months, with the first and last in the series devided by two.

        The monthly sunspot numbers (ISN or Ri) have been higher as you mention, in late 2011 and early 2014. But I don’t think that’s anywhere near as important as the fact that they’re still in the plateau. The SSN timing was important in the last four or maybe five solar cycles, but was largely irrelevant in all the previous ones. I personally would not ignore all those previous solar cycles just because they don’t agree with the current topping indicators.

        For anyone who believes that sunspot numbers fuel market speculation, can you see a downtrend in sunspots by the measurement shown in the first graph here?: http://www.solen.info/solar/index.html

        1. Sorry…I saw that some of my dates were typed wrong on my new iPhone. My point was that either the peak was in 2/2014, or it has to be in by Q1 2015 due to the last polar flip and if so, this is a very slow start.

          The first option, while sounding more bearish, might actually be bullish. If the train is so late, one wonders if it is running at all. The Bayesian updating does not suggest a more imminent crash just because we waited longer. The train could of course arrive at any time. This is all expectations under uncertainty.

          Neuron count is interesting….thank you. Looks like sun activity is still increasing based in that measure.

    1. Allan, what is the trigger for the European and Japanese debt markets to implode? The yields are low because investors perceive the risk of not getting paid as very low. Can you blame them? Week in week out CBs have been quick to do whatever it takes? If you have an investment that is almost gaureented by the government, why should you be paid a risk premium?

        1. And on that theme……..you only need one misplaced card and the whole lot comes down……remember the “C” word that was so prevalent during the Lehman collapse?

      1. Duncan Smith, the trigger is the deflationary spiral rolling downhill like a huge snowball of collapsing debt. The drop in oil prices is the harbinger. An official sell signal will be when th PPI registers a minus 5% annualized rate of deflation. The drop in commodities over the last few months should do that. This is just like 2007 and the housing/subprime situation. Most everybody thought there was no problem even as everything was falling apart. What is falling apart, Russia, Venezuela, Iran, the Middle East, Greece/Europe, Japan and China. Have I left anybody out? Australia Canada, etc. A deflationary environment of -5% or worse is the worst investment environment. The last one was 1930 to 1932, an 80 to 90% drop. Everything except US gov’t bonds get whacked. Happy New Year!

  88. “In a few days austerity bailouts will be a thing of the past.”

    “Lawmakers proved democracy cannot be blackmailed.”

    Latest speech from Syriza party leader. The begginging of fragmentation throughtout Europe.

    1. Greek can claim the end of austerity. No problem. I see these options for both the Greek and ECB to save face. Of the 11 billion euros already set aside for bank recapitalization, they would be extended beyond 2014 and used for Greek debt servicing instead of bank capital….while new credit lines are being established. Everyone wins when bond holders are calmed.

      Watch Greece bond yield. Buy the fear. Don’t be afraid. I own STOXX 50, average price 2,550.

      1. Political rhetoric may be scarey but is the tool for the politicians to try to extract as much advantages as they can. A speculator must see through it. Clint Eastwood had told you “A Man’s Got to Know his Limitations “. In politic…there is reality, and constraints for all sides..the unspoken is that all parties can not afford this situation get out of hand and cause uncertainties.

        Greek 10 bond yield actually down….smart money is not scare yet!

  89. For much of this equity bull market a weaker
    $ was supportive to stocks

    The $ continues to look the best of a bad bunch,
    very difficult to see a major $ reversal at this point.

    And I do not think a $ reversal is necessary for an
    equity market correction IMV.

  90. Hi all ! Just a few days left in 2014. I wanted again to congratulate all longs for a tremedous year. Good job. Here are the lessons all shorts learned this year:
    -never ever fight central banks when they buy stocks
    -never bet against a generational bull market
    -focus on the leaders like IBB and AAPL and QQQ
    -don’t forget that central banks have unlimited buying power.

    I think 2015 will be even better for longs. The ECB should join the parade and buy assets during 2015.

    1. Very naive Nicolas.

      Something works until it doesn’t”. Central Baners can’t possibly always have your back covered. And when it stops working good luck getting filled…..at any price.

      I have been around long enough to know when a market risk/reward is no longer viable and despite continued new highs this markets risks are beyond extreme for any potential reward.

    2. Hi Nicolas!! Congratulations on a fantastic year!! Please give my love to Yellen, Draghi, et al.

      Will catch up with you soon. Please remember us when Yellen and Draghi don’t respond.

      With all Good Wishes for the New Year.

      1. If one really pays attention and read the FED’s mission statement and its responsibilities such as “maintaining the stability of the financial system and containing systemic risk that may arise in financial markets.”…. you would understand their job is to do whatever it takes. Don’t get frustrated or mad at them. Some of us may not even more aggressive of we were put in the same position as Yellen and Mario.

    3. You must be the best student of Mr. Partridge. Congratulations. You are winning the game becasue you understand how the game is played..

      1. Too many smart people talking about what they think should happen to the market (big correction usually) rather than looking at the market and what is doing and taking advantage of its movement.

        1. Newt my congratulations to you too for a FABULOUS year. I hope you remember us during the coming year.

          G’Luck

  91. Duncan, many current valuations appear full to me
    and this looks like a late stage bull market.
    On the UKX you could make a case that we are
    already in a year long topping process.

    I would not expect the next bear market to be
    something of epic proportions, we have
    already experienced a once in a generation major
    bear market.

    Aware that some still maintain this is
    merely a cyclical bull in a still ongoing secular bear –
    looking at 2014 US price action that case now
    appears far weaker, lets see.

  92. This may seem harsh but I have NO sympathy for the Japanese population. You got what you asked for. Abenomics will destroy the Japanese economy amd the Japanese unfortunately.
    Anyone with an ounce of gray matter can see Abe policies are a recipe fr self destruction.

    “The world’s third largest economy is on the ropes as Prime Minister Shinto Abe’s economic policy is failing to lift Japan’s standard of living. The Japanese savings rate fell below zero percent in December (-1.3%), while wages declined the most in almost five years. Clearly, Abenomics isn’t working.”

    http://www.globaldeflationnews.com/abenomics-failing-to-liberate-japan-from-the-grip-of-deflation-savings-rate-turns-negative-for-the-first-time-since-1955/

  93. The best thing the Greeks could do would be to default, walkaway from the Euro and reintroduce the Drachma and rekindle ther once booming tourism industry.

    If they had done it back in 2011 they would be well down the path to recovery instead of being slaves to bankers.

    1. My thinking is that no one will let them do that. Think big picture and where this is all going. Ultimately we will end up with some universal currency unit. There is no need for local currencies.

      1. Big Tuna, getting a single currency within Europe has been a dismal failure. How do you extrapolate that to a universal currency?

        I can see that there will one day be an alternative to the USD as the reserve currency of the world, made up of some arbitrary combo that the IMF think up but that won’t be used within each country.

        In fact I feel fairly certain that each EU nation will slowly revert back to their own currency….simply because the pain to their ‘subjects’ will be so severe that the politicians will be running for whatever will provide cover to avoid blood shed on the streets……their OWN blood shed.

        If you take that to the extreme then perhaps the Euro will survive as the currency of the Germans ….IF Merkel & her troops are still around. In which case you might as well call it the Deutschmark again.

        1. Actually I HAVE thought of a situation where a single WORLD currency would work if we federalise all the countries and start trading with our nearest inhabited planet….whether in our own or someone else’s galaxy. 😉

  94. Damn right Allan, same goes for Ukraine – especially as they are (currently) in a very important geographical position.

    Problem is, the bailouts and all the other crimes against their citizens are usually committed after a regime change (I mean election) that drives these atrocities through whilst grinding the futures of the normal people under their jackbooted heels.

    We need a new system, not a monetary one…imho.

    J

  95. HI BT

    I don’t disagree at least as a stepping stone towards the inevitable collapse. We need to get rid of money altogether of course, but things will need to get *really* bad before that happens.

    A much longer debate of course and somewhat offtopic on my part – apologies.

    J

  96. There’s a 100 pound gorilla in the room and it is going to drag the US economy into a sink hole as the price of West Texas just plummeted to levels not seen for over 5 years.

  97. Nicolas;
    Doesn’t it bother you a bit to tout those same three “leaders”, when in fact those three stocks/ETFs are actually LOWER over the last 4-5 weeks??

    I mean, is there a clue there for you…..to at least think about….??

    Because if you truly believe these are the leaders, I’d think you’d be at least a little cautious here, as the market has gone higher, ~without~ them….

    Certainly, I’ve been wrong before…..but just a thought….

    1. Hi Barry ! Well, IBB was at new highs just a few days ago. Right now, there’s a small pull back but I’m sure it won’t go very far. There will be institutional buying at the beginning of the year, so I’m expecting significant new highs soon.
      For 2015, look for ECB buying to drive the markets higher. Also, don’t forget the Bank of Japan. They are already officially buying large amounts of ETFs to sustain their stock market. They will probably start buying foreign stocks soon. That will be another driver for the bull market.

      1. I suggest we focus on the general health of the market instead of 3 stocks. e.g. today $NYHGH scored a huge 477…$NYHILO scored 399, indicating a strong market…Of course, stronger price must confirm very soon…please back test and see if good things usually happened when these indicators were strong. It is all about your observation, and betting on the probability. It is more fun and challenging than the casinos.

        No internal deterioration yet. Longs should stay long and shorts must e patient.Study your TSI, the PPO zero=line crosses, ….etc…they will give you plenty time to load up on short. No crash around the corner yet..

    2. Hey Barry, you HAVE to give Nicola ‘this year’. Yes what you say is true and what is going to come MAY prove devastating to Nicolas …… BUT for the moment it is Nocolas’ time. Let’s all rejoice for Nicolas!!

  98. Yes crude is ugly today, Greece,
    fears of Euro area contagion .. multiple
    excuses for equities to sell off hard –
    however markets appear unconcerned atm.

    Rapid recovery on the DAX as the day progressed,
    investors still appear confident buying the dips,
    it will ultimately end when the US earnings cycle
    looks like it’s about to turn imv, another 6 months possibly.

    China certainly appears to be slowing, very few would
    take an opposing view, however the Chinese have
    major leeway to unleash huge stimulus if needed
    and authorities have wanted the growth rate to slow.
    A good deal of this is a result of tightening up on shadow
    banking, where the Chinese have attempted to drain away
    some of the liquidity.

    1. EU countries all knew well their reality, constraints and options. George Friedman is the master on geo-politics. I bought STOXX50 after I read his August . 2012 analysis in which he said the Germany had no choice but to bait out the Greece…Spain…..

      All the current rhetoric is about trying to extract more goodies from each other. No countries can afford to create any uncertainties in the end.

  99. Hey people end of 2014 and I’m still struggling to work out what breaks first. In the absence of any consensus I’m going to offer my own: Of course ignoring all the ‘wannabes’ on the list like the weak third world countries or the weak opecs etc.

    In order of who will blow up first out of the big 4…. (which is MUCH better than the ‘reverse’ order that they present TV reality shows in) DRUM ROLL PLEASE!!!

    Europe
    China
    Japan
    United States

    Did some one ask time scales? Aaah! you spoil sport you.

  100. purvez, the US will be last, agree.

    I can understand the rational behind the rush to US
    assets, however ultimately US multinational will begin
    to be impacted by slowing global growth.

    Much of the Eurozone is already near recession.

    Bond yields, crude and many other commodities
    are signalling slowing growth, it’s a demand and
    not just a supply issue imv.

    The seeds of the next major equity bear markets
    are already coming in to view.

    1. 100% agree. The signs are there and they bell is ringing louder each passing day but we are not there yet imo.

      Phil, have to admit your posts are a refreshing read after every other post claiming … This is It! This is the top! The mother of crashes has begun! After a few points off all time highs.

      1. Hi Duncan / Phil;
        Thank you both for your postings… I appreciate them…

        And hopefully I’m not “too” much in the “This is it!” crowd…
        Admittedly, I think we are VERY stretched up here, and certainly under-estimated the EOY 2-week rally we’re still in…
        And still expecting a drop at ANY time here, but whether it’s just another BTD opportunity, or something more bearish, I have no idea right now…

        Anyway, again, thanks for both your comments… You’ve called it well….

  101. Hi Nicolas;
    Going to help you with a little heavy lifting here, and hopefully you’ll at least give it some thought…. I’m sure the market will up tomorrow (why not, right?), and everyone will forget this in about 5 minutes, but maybe you’ll think of this note sometime down the road…
    .

    We have this:
    http://en.wikipedia.org/wiki/Quantitative_easing#History

    “Quantitative easing was first used by the Bank of Japan (BOJ) to fight domestic deflation in the early 2000s. According to the Bank of Japan, the central bank adopted quantitative easing on 19 March 2001.

    The Bank of Japan had for many years, and as late as February 2001, claimed that “quantitative easing … is not effective” and rejected its use for monetary policy. The BOJ had maintained short-term interest rates at close to zero since 1999.

    Under quantitative easing, the BOJ flooded commercial banks with excess liquidity to promote private lending, leaving them with large stocks of excess reserves and therefore little risk of a liquidity shortage. The BOJ accomplished this by buying more government bonds than would be required to set the interest rate to zero.
    It later also bought asset-backed securities and equities and extended the terms of its commercial paper–purchasing operation.

    The BOJ increased the commercial bank current account balance from ¥5 trillion to ¥35 trillion (approximately US$300 billion) over a four-year period starting in March 2001. The BOJ also tripled the quantity of long-term Japan government bonds it could purchase on a monthly basis.”

    So basically, the BOJ, from 2001-2005, expanded their Balance sheet by a FACTOR OF SEVEN, buying government bonds, asset-backed securities, and equities….

    Awesome, right?? And sounds pretty familiar, actually……

    But then we have this:

    I’m sure you’ll notice 2000-2002, when the Nikkei 225 went from appx 20,000, to appx 8,000….
    That’s about a 60% drop, in 3 years, WHILE the BOJ was buying equities…

    Again, I’m not saying the market can’t go higher, now or any time in the future, but AM saying you might want a back-up strategy, just in case your “CB buys up everything” strategy doesn’t quite kick-in as you think it will….

    And again, not trying to pick on you, but you seem to be the most out-spoken on CB’s coming to the rescue, so want you to at least be aware that even if they do, it may not be before you’ve lost a significant amount of money…

    GL…

    1. Great stuff, Barry. Tops almost always have a theory as to why it can’t go down, New Era, permanently high plateau, CB will save us all, etc.

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