Saturday Markets Update

Stocks ended the week on some buying. We are approaching this coming Tuesday’s new moon and Thursday’s ECB meeting, at which we should expect some kind of QE or new programme of action, given the Swiss central bank’s pre-emptive action this week. Therefore, I expect a little more strength in the first half of this coming week and then a sell-the-news resumption of the equities downtrend, which ought to be the definitive breakdown in stocks, as we head into the geomagnetic low of March/April.

The Dax made a new high on Friday, but this has to be seen in the context of a fast-weakening Euro, and the majority of other global stock indices still dictate the overall peak around mid-year 2014. Shown below are other European indices in comparison to the Dax plus US stocks, together with breadth, volatility and junk:treasury bonds.

17janu1 17janu2

 Source: Stockcharts

Here we see the deflation problem Europe has to address with policy response.

17janu5Source: FT

US earnings season is underway for Q4 2014 and is currently reporting a blended earnings growth rate of 0.6% and a blended revenue growth rate of 0.8%. This the weakest in some time, and earnings forecasts for 2015 are also weak, due to the combined impact of rising dollar and tumbling oil. Meanwhile, economic surprises for the US are dropping towards the zero level and leading indicators for the US continue to flag red:

17janu3Source: DShort

Therefore, supports for the bull continuation have been significantly weakened.

Here is combined smart and dumb money for US stocks: a rare lop-sided agreement that has been a marker of previous major peaks:

17janu11Source: Sentimentrader

Similar topping flags have been raised throughout 2014 but at this point we see a more united degradation in leading indicators, negative divergences, earnings, and cross-asset action. Below we see how December to January has produced intensifying developments in government bonds and currencies.

17janu6 17janu8 17janu9

Industrial commodities have also seen acceleration to the downside in that period, whilst gold has taken off. All these developments make it unlikely stocks can continue their levitation, and this divergence in growth-dependent commodities versus safe haven commodities ought to continue. But what about agri/soft commodities? Largely unloved, but climate could give them a boost. 2014 ended up as the hottest year on record:

Screen Shot 2015-01-17 at 06.38.41

Source: NOAA

Perhaps when the US dollar finally turns, agri may attract buying interest. Positioning in the US dollar remains extreme, whilst the Euro is showing signs of capitulation. Again, I would the see ECB meeting this coming week to be the sell-the-news event.

In summary, developments are now much more supportive of stocks breaking down and gold breaking up. Post-solar-max, degradation in leading indicators and earnings, sharp moves in commodities and currencies, and a lot of data pointing to a mid-year 2014 ‘real’ peak. Back in 2008, stocks and leading indicators were tumbling whilst commodities levitated, but commodities could not levitate for long under those circumstances. I see the same here in reverse, with the cross-asset and cross-indicator breakdowns the prelude for the collapse in equities.

I previously looked at the ‘second chance’ peaks of the similar examples from history, e.g. Nasdaq 2000, Nikkei 1989, Dow 1937. They all showed a main peak followed by a lower high (failed) peak, which was then the trigger for waterfall selling. Looking at stock indices charts for 2014-15, we don’t see obvious such second chance peaks. The most parabolic of the indices was the Nasdaq 100, but this has produced more of an up-and-down range over the last couple of months, than a clear second-but-failed attempt at the high. So, we need to see price develop further to assess, but the picture may be one of a topping price range instead. It does not alter the likely subsequent collapse, which is already written in highly lopsided sentiment and allocations, extreme leverage and the post-solar-maximum rug-pulling.

17janu15

 

 

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180 thoughts on “Saturday Markets Update

    1. That volatile consolidation just above the 300 level (highlighted by your red circle in the Dow chart) started in January 1929, which was 8 months after SC16 SSN peak.

      Now, here we are 9 months after SC24 SSN peak, with a volatile consolidation having appartently started in December 2014.

  1. The apogee/perigee table gave an inversion between nov 27th (peri) and dec 12th (apo). This gives a midpoint at December the 4th.

    So the orthodox high of december 7th (indicated by lunar standstill extremes) was postponed by the inversion. This also created a phony low in the lunar standstill timing on the 21st of December.

    Once this inversion window closes all inversions are off and we can start the downtrend into march 26th (real LSS low) as the first wave down with more downtrend to follow.

    So the last question is : when will the inversion end?

    Tuesday the 20t is one of the strongest turnpoints of the month. We have a new moon close to perigee, and a major solunar cit. Mars will conjunct Neptune and be parallel with Neptune the same day (GC). HC mercury will square Neptune.

    The earth/mercury cycle gave a square on monday 12th and is headed for a conjunction the 30th. Conjunctions create lows.

    From dec 7 th, there are 44 day until jan 20th. This is 2 times 3 moon phases. Not sure this closes the inversion window but it is would be nice if we could understand this inversion completely.

    I said before the lunar eleptical orbit makes a 413 day cycle from one fm @ perigee (supermoon) to the next.

    The NM@perigee’s are the midpoints in this cycle and midpoints tend to give inversions. Maybe this inversion tuesday/wednesday (it is exact feb 19th) closes the apoperi inversion window.

    No doubt that gravity is pushing down the markets. But an inversion postponed the real top, indicating a final desperate leg up. The end of this inversion will time the real decline.

    I need to do more research on this apogee/perigee inversions, but it is clear we are nearing the end. Tuesday is a major candidate and will at least push he markets down this week. Wallstreet tends to start declines after a hoilday (monday).

    Cheers,

    André

    1. Some more thoughts.

      I can see 22 day cycles in gravity, consisting of 3 lunar phases. December 7th was the orthodox high. The first 22 day move down should have been the start. But now we have an inversion that wants to postpone the top. So we need a 2nd 22 day cycle up to restore our starting point (a high). Otherwise highs and lows would get messed up.

      This could explain the 44 day between dec 7th and january 20th. The high will be tuesday early morning in Europe and in the S&P future. The cashmarket will probably open with a gap down.

      André

      1. This same reasoning shifts the march 26 low to may 9th 2015.

        So the roadmap for 2015 :

        1) dec 7 high inverted to jan 20th
        2) march 26 low inverted to may 9th
        3) june 16 high
        4) july 1 low
        5) sept 21 high inverted to nov 11 high
        6) dec 12 low inverted to jan 16 2016.

        Pretty sure this is right now I understand the inversions. Notice how all inverted cit’s are 44 days after the orthodox cit’s.

        Real turns can be 1 or two days off from these dates. If this works I go bezerk.

        Cheers,

        André

        1. Fascinating analysis Andre’. I am working on a model that is called the Lunar Chord made up of 1. Phases, 2. Declination, 3. Distance. Thinking about adding monthly tidal action as have observed monthly lows often correspond to monthly lowest tides. Thanks again for sharing your research.

        2. By the way all of the Lunar Chords are positive thru next Friday.
          Phase: New Moon
          Declination: Rising from South
          Distance: Approaching closes distance (perigee)
          Low tide: Monthly low tide was last Thursday corresponding to price low.

    2. Andre, you said”The apogee/perigee table gave an inversion between nov 27th (peri) and dec 12th (apo).”. Could you please explain that or refer me to where I can see the table and understand what you mean and how you saw it.

  2. Thanks John. I see weak internals and dont expect much upside before a strong move to the downside. I went short just before the close on Friday at 2019.

      1. Wow Duncan, I always thought you were not a perma-bull but it does help to also prove so by making a call.

        Oh and for those that suspect I am a perma-bear let me remind you that I turned short term bullish at the Oct lows. I have just seen no reason to remain bullish into the bounce despite new highs.

        And yes Duncan I agree on internals. Also AAPL was very weak on Friday and it has been a great indicator for this market.

        Cheers

  3. Even though I’m been 99% bear, I think next week will be a strong move up.

    Markets have dismissed the Greek exiting/election next week as some kind of side show, after the Swiss move this week it seems a controlled QE is on the cards next Thursday.

    A lot of volatility but I think it will be mostly a rise up all of next week.

  4. Is anyone following Mahendra Sharma? He is predicting sp500 to be 3200 points in 2016.
    He has been quite right in his predictions so far.

    1. His makes a lot of predictions some are very precisely correct and many are completely incorrect (Gold Miners to thrive in latter half of 2014). I prefer shorter term predictors closer to home, such as moon effects which seem to predict short term price tendencies with enough precision to be used month after month

    2. Betafish points out that some of his calls have been way off. However, Mahendra has definitely had the hot hand regarding stocks for the last couple of years. (Other markets not so much) If he continues to nail the stock market, then we’re not going to see a crash for a year or two.

      (I’m not a sub, but a buddy of mine follows him and subscribes from time to time.)

  5. Voltaire, you read my mind, as bearish as I may be right now. I quess shortly after midmarch we will know more about the direction in an overall bullish year, based upon on history. A repeat of 2014 is also in the cards. Down during january, up we went after february 5.

    Dow: February 5, 2014 bottom- october 15, 2014 bottom= 175 TD; 175 divided by 2.236 = 78. October 15, 2014 + 78 TD= february 5, 2015.

    More promising though: december 31, 2013 high – august 7, 2014 bottom= 151 TD; 1.25 of 151 is 120, august 7, 2014 + 120 TD = january 28, 2015. Plus august 7, 2014 – september 19, 2014 high= 30 TD, followed by 61 TD to december 16, 2014 bottom. And 30/31 TD from december 16, 2014 would target january 29/30 2015 as a CIT.

    1. January 30th will be a minor cit, with earth conjunct mercury, venus square saturn and mars sextile pluto.But this will just be the low of wave 1 in a 5 wave downcycle. Besides, we have the full moon feb 3 and a solunar cit the 4th. So either Friday before the weekend or monday/tuesday after.

  6. The Technical market report for January 17, 2015 from Mike Burk states that next week the market will be entering a period of seasonal strenght. “The market is oversold and seasonally the period of weakness we have been experiencing should end some time next week.” He also mentions that the parameters for Jim Miekka’s Hindenburg Omen were met every day last week.

  7. As I said André, I am bearish and for some solid reasons. About a year ago or so I mentioned once the expectation we will experience some sort of political/militairy crisis during april or may this year. It ‘s no coincidence -using cycles, as always- that the rubel faltered, because of the connection with october 1997. And now, not expected by me, at least not the rapid decline we just witnessed, the euro dives too.

    But unlike John, who for good reasons maintains a bearish,stance, we all know markets do have a mind of their own. Voltaire picked the right place I had in mind as a possibility. After the riproaring upmove following the october low you better be prepared for a moonshot than assuming you can let your shorts run and in the mean time enjoy the Donald Duck- as I would prefer. So even the minor CIT’s put me on guard, despite my own bearish view.

    1. Fair enough; but I disagree markets have a mind. The market is just a bunch of people who are very susceptible to natural forces. That’s what John says, and I agree. Just take notice of the roadmap I gave above. Soon we will learn who was right.

      And I maintain we are seeing the turn of a 19 year cycle. The 2007-2009 decline was mild as the 19 year cycle was still up. New declines will be different. I can’t see a low before 2017.

      Just my 2 cents 😉

      André

  8. How bizarre, Peter and Duncan – bullish but atm bearish, John and Aaron bearish but atm bullish. It’s nice to see so many different views. Myself I think that now we go up. Can we get to aths now – I don’t know.

    1. Gary, the same way Lehman Bros collapsed in 2008. Leverage in this system is beyond ridiculous. This is not the end of this, just the beginning.

      Leverage and confidence is all these markets have. Take them away and it’s game over.

  9. Putting together a jigsaw puzzle these past few years…..

    If the ECB and SNB have a mutual goal (currency stability), then it made sense for both for the SNB to initiate the peg in 2011.

    Why would the SNB now abandon the peg? Other questions that (when answered) provide some clues: Why has China been reducing its UST Treasury holdings over the past 3 years? Why has Saudi Arabia recently chosen to bring the oil price down to these levels? Why did the SNB say openly they wanted to make speculators suffer (as they did when initiating the peg)?

    I believe Draghi will announce a disappointing level of QE next week, or none at all. The Euro will rise as a result. Suddenly the SNB don’t look so stupid.

    Plenty of action around the world, and all of it designed to weaken the US dollar’s position as reserve currency. When the mainstream is writing this sort of article, you just know we’re at the beginning of the end:

    http://www.bloombergview.com/articles/2015-01-16/switzerland-currency-surprise-makes-japan-deflation-fight-harder

    Much more to follow, but there is a plan being followed here, in my opinion.

  10. Hi GM,
    Enjoy your thought process and comments…. Either I feel a little smarter after reading your comments, or you give me something to think about… Either way, good stuff… Thank you…

    I also believe the dollar is at a top, or very soon will be… Technicals I follow look VERY bearish for the dollar…

    Also agree that the ECB is going to disappoint this coming week…
    I just don’t see how “everyone” can know the ECB is going to unleash another QE, and “everybody” can know it’s just going to be huge, and yet “everybody” doesn’t ~already~ have their positions on for that….
    And if just that doesn’t happen?? No bueno there, to be sure…

    I suppose just another way of saying, if everyone knows something is going to happen, in the market, that something is pretty sure ~not~ to happen….

  11. John this is compelling, but I just don’t see it until rates rise solar activity was still high after the mid year peak you are suggesting for equities. I think after the March and April low stocks will reach up new highs this year. I waited for it last year and still waiting. I made my profits on Gold mutuals in 2014. I’m out for now but ECB isn’t gonna do QE even with Swiss issue. Think it’ll shift but not be at least until later this year. Oil price will slow down economy in USA via corporate bankruptcies in shale. Dollar and EURO parity going to spur QE. Solar cycle has more steam left. M class flare couple days ago. Think we need to look into coronal hole history vs cycle endings vs markets. 2008 was a correction magnitude more in line with last. Keep saying also…US QE isn’t being retracted only halted. Ergo that equity is of different type. Said in 2013 must ignore run up through 2010 that bull market started in 2011 and if so late 2016 into 2017 is the worry but nothing on magnitudes of 2008. Maybe like 1999 to 2000. Great article just think the lard is still too hard.

  12. Just getting caught-up from driving all day yesterday….
    Friday was 3 steps back, after 4 steps forward Thursday…. :-/

    That said, looking through charts, that really didn’t seem to be much of a rally Friday, technically or indicator-wise, for me…

    Still holding shorts, and unless we sell off from the get-go Tuesday, am leaning towards adding to shorts Tuesday… I was hoping we might get a short-lived pop – up to 2020-2030, but didn’t expect it to be all one day – Friday….

    Have no definitive thoughts which direction it’ll go Tuesday morning, but just plan to take a look at how we open and trade a bit, and then go from there..

    System is still 100% short, and I’m currently at 127% short…

    GL

  13. Cam Hui aka Humble Student of the Market has a accurate market timing system that has just gone to buy side. Have no idea how he formulates calls but he has managed to catch most of the moves over last 24 months.

  14. Beta: I was referring to reading comics. Most of the time I’m bored to death watching the tape.

    D.V.Dend: I pointed out that the smart money-indicator on the DAX declines very fast during this ramp up on the DAX. More so than it did before the 10 % correction during the summer. That’s not what you expect to see, unless ‘they’ prepare for a sell the news event. Your remark confirms my suspicion.
    I have my doubt about QE, for the reason that politicians Europe don’t want the ECB to make any move before the Greece elections are over and done. (“Run on Greek Banks Spreads; Four Banks Request Emergency Liquidity; €77 billion in Nonperforming Loans Another Reason to Get Out. Read more at http://globaleconomicanalysis.blogspot.com/#mglBWTXHGQ0WyWpS.99)

    1. What do call someone who obsessively watches the stock market minute by minute: “a tape worm”. Like a book worm, who is someone who always has a book open.

    2. Peter: I agree ECB talk has more effect than ECB actions. I believe any European QE will be like Japanese QE = ineffective. Market will see this when the official details come out.

      Longer term, QE does nothing to repair the insolvency issues.

    1. I would soon like to share my new Lunar Chord. It is 4D. The dimensions are:
      declination, distance, diameter of illumination, and depth of tide. All four of these masterful aspects of moon earth relationship have their own special characteristics.
      Declination: as moon moves from S hemisphere to North price increases
      as moon moves N to S price decreases
      Distance: as moon approaches and crosses thru apogee price declines
      after apogee sell off, price rises to perigee
      Diameter: amount of illumination, full moons lower price, new moons higher
      Depth: monthly lowest tide often matches lowest price of month

      If you like comics, using the new 4D Lunar Chord may lead to a lifestyle enjoyed by Scrooge McDuck, Donald’s wealthy and wise relative.

      1. Beta,

        Just a suggestion; you could take a look at the sun/moon angle. When the moon comes closer, but is moving towards a square; you get a compensating effect as the gravitational force of the sun is minimal at the squares. Could ad an additional dimension!

        1. Good. If the moon is a transducer of solar electro gravity then that would explain why equatorial crossing are energizing to prices as more solar energy is being transfered via the moon to earth. When moon is far South or far North the transduction will be attenuated by the off center position of the moon.

          As usual your suggestions have resulted in a better understanding for me. By the way, could you explain what causes a square in the sun moon angle?

    1. A Poem on Moon and Money

      The wind rises thru the trees upward to the moon,
      like a bird climbing air to its sylvan porch.
      The wise trader eats by moonlights silver spoon,
      Studying the tape by the nightly shining torch.

  15. To those that think that Central Bankers will always have your back ie Nicolas, the SNB move is a warning. At some point ALL CB’s will cave in under market forces….yes including the US Fed. I also believe that that day is closer than many realise.

    This should be a massive warning to all market participants and believe me as I said last week SNB heads will roll, unjustifiably of course because they had little choice and the fallout of the collapse of two minor brokers was just the beginnng.

    Sit back and enjoy the show.

  16. I generally can find no fault with your sources, John, but the NOAA is a well-known fabricator of data. I strongly believe that entire chart is fabricated.

    I have a friend who’s currently doing research in the Arctic, and she assures me that global average temperatures are certainly NOT increasing. Her team is measuring YOY sea ice growth, not diminution.

    “Global warming” (now “climate change”) is a myth promulgated by the most powerful forces on this planet for many reasons, one of which is to effect an accelerated wealth transfer (via the imposition of new taxes).

    1. How does the NOAA manage to show that the earth is getting warmer, when most of us know through our own experience that it isn’t?

      Its a very simple fraud:

      “NOAA . . . systematically eliminated 75% of the world’s stations with a clear bias towards removing higher latitude, high altitude and rural locations, all of which had a tendency to be cooler,” the authors say. “The thermometers in a sense, marched towards the tropics, the sea, and to airport tarmacs.” http://www.globalclimatescam.com/climategate/scientists-using-selective-temperature-data-skeptics-say/

      1. I agree Mark amd GM the whole Global warming scenario is a scam. Universities get massve grants to research global warming and the alternative energy industry has grown exponentially following global warming fears.
        GE is making massive $ from wind turbine manfufacturing and the push toward nuclear from coal hasn’t hurt them either.
        Then there is the push for increased ETS’s which of course global banks will find a way of raping.

        A total scam, which many of the worlds most competent scientists have completely debunked.

  17. Just some Sunday morning ramblings. I have been convinced of the power of gravity for some time now; I’m sure you know.

    Many times I said that in 2014 the multi year gravity cycle was up into dec 2014. The evidence for that must be somewhere on this site.

    So when I saw the markets keep grinding higher into January in all honesty I began to get some doubts. But yesterday I finally (I’m a bit slow;sorry) understood the inversions. And not just how to see them, but truly understand them.

    Within an hour or less I created the 2015 road-map; You can find it above in my yesterday post.

    This is a significant development:

    1) Now that I can explain the postponement of the high by the inversion, my doubts have vanished. Gravity is at work but we must take inversions into account.
    2) My theoretical gravity indicator suffered during this inversion, as inversions screw up everything. But now that I can see that the inversion window is about to close I am confident that my indicator will return to normal.
    3) I tested my new analysis on 2014 and it all was clear.

    So what does this mean?
    a) the gravitational force will be down into 2017 at least and the only thing to stop this – the inversion – will end this Tuesday. And this will be the point of no return; we are going over the edge.

    And this happens at the turn of a 19 year cycle. I explained before : perigee sets a century extreme in 2052. 38 years before we saw 2014. This is no coincidence.

    Long term the trend may be up, but as the saying goes : in the long run we are all dead. For the next few years the direction is south.

    So next week will be big. I have a very powerful solunar cit (proprietary) on Tuesday in combination with a ‘stealth moon’ (richard Nolle). One problem with this is that it is not exact; we have perigee at Wednesday. So from Tuesday into Wednesday distance becomes less into perigee, but the angle (after new moon headed for first quarter) grows. These are two compensating events. Lunar gravity increases but solar gravity diminishes. So my gravity indicator is basically flat for 3 days, but sets the actual turn on Thursday.

    So this is what I think will happen.

    – Europe is still in wave 5 with a wave 3 from the Thursday low into early morning Monday. Monday morning w4 of 5 and in the afternoon 5 of 5 into Tuesday around 10 am CET. The analysts will blame German ZEW.

    Then Tuesday the first effort down. But as gravity is flat there is room for a swift retrace on Wednesday. Then on Thursday a W3 down. So no matter what kind of rabbit super Mario pulls out of his hat; markets will be disappointed. And then it is basically down into early February as the first stop. My roadmap says early may for the first significant cit.

    This pattern is very similar to 2014 when Wallstreet set the top end of December and Europe mid January. And then it was basically consolidating into April before we saw some recovery.

    But in 2014 2 gravity cycles kept supporting the market; that has all changed now :
    nothing is supporting the market anymore. So the all time high in the Dax is not a sign of strength; it was simply something they still had to do and they were running out of time. So it had to be done this week. Check! Only indicates they are preparing for the decline.

    The analysts will blame deflation that is taking hold of Europe (and makes debt more expensive) and the rising interest rates that will push Japan into default and maybe some other countries as well. The ECB may panic and start a massive QE program to ignite inflation and push the Euro to parity with the dollar. This will hurt the US economy so the fed will retaliate with QE 5 (6?). This all may lead to system collapse in 2016. But now I am speculating.

    I am bearish for a reason. Read and weep. No investment advice; just entertainment 😉

    Cheers,

    André

    1. “– the inversion – will end this Tuesday. And this will be the point of no return; we are going over the edge”

      Andre, I believe the first salvo has been fired. The SNB action was that salvo that has set the markets of balance.
      I have believed for some time, which is hardly inconspicuous, that the markets were way over borrowed time. I just couldn’t explain when asked by people why they were continuing to go up.
      What you have proposed in relation to a inversion may just very well have explained why markets have ben able to extend beyond what some of us had expected, including John.
      I have said all along that I felt John had nailed the speculaive peak and I maintain that based on my view of global markets that hindsight will prove that he was indeed correct.

      It will also be fascinating to see if markets do indeed roll over here and that once again a human influenced actions ie Greek elections and SNB decision, lines up with a natural phenomena to produce an outcome.

      Intriguing work.

      Cheers

      1. Thanks. You are right; inversions are not the same thing as a real trend. Inversions only postpone the inevitable. So the cracks are visible. but the acceleration will only pick up when the inversion ends.

        My contributions are meant to support John’s analysis. I believe there are multiple forces at work at any given time. But predictability differs. John is right in solar activity but the key word is timing. And I believe gravity is superior in timing as the sun/moon/earth constellation is very predictable and make much shorter cycles than Saturn or Jupiter. And gravity works directly on humans while solar activity is an indirect result of big planets pulling at the sun.

        So in 2014 I was bullish when John was bearish. It gave us a volatile but mainly consolidating market. Now gravity turns in sync with solar activity. This means 2 major forces are now pushing markets down. Should be an interesting year!

    2. I have Elliottwave counts from 666 S&P Mar. 2009 – impulsive count and also an alternative one – diagonal count from 666. I’ve made calls in the interim for THE TOP and obviously wrong. Now my diagonal count says the high is in for the S&P cash 2093.55; whereas the impulsive count at the high was Wave 3 completion and overdue for a correction to as low as 1820. I would love to discuss markets with anyone including you in the day or two or even this afternoon (Sunday) 413-6370052 – located in western Massachusetts. Edward Baptiste .

    3. Are the inversions something that you can forecast in advance or are they something that you can determine only after the fact such as a cycle inversion.

      Thank you for your interesting posts. I look forward to reading them.

  18. I am by no means a fundamental analyst (too much fundamentals obcure the price) but after I have had some thoughts about the SNB move, I conclude that it was plainly predictable. SNB stepped in in 2011 when I was bullish on CHF, but after that ’11 intervention I walked away form trading CHF, I almost forgot that it existed. But honestly, how long one can expect Swizterland to be a dumping ground for excess euros? They had to depeg the currency in case of euro strength or weakness : at the moment of SNB annoucement last Thursday, the euro was weakest vs the dollar since 2011 decision. Will it hurt the Swiss economy? Or the market participants looking for currency safe heaven have been discouraged from CHF for a long time? (the intervention in 2011 caused a shocking move in CHF, too).
    So, contrary to the perma doomsayers looking at every falling tree in the forest to be a sign of the end of times, I believe that last week event was a NON EVENT!
    Everything is beautiful and nothing is crumbling down. One should expect the Swiss stock index to fall after CHF’s move up, as the individual stocks do on ex-dividend day. Dax is supposed to strenghten, as the German blue chips suddenly became 20% cheaper than Swiss blue chips for European investors.
    As to brokers, it’s shouldn’t shock or surprise either. Of course, brokers vary as to how they hedge their exposure. Some hedge only the winning clients, sometimes placing bets on their own, some hedge all, some don’t hedge at all, because they have only losing clients. But all brokers are vulnerable to such 5-10 minutes moves, for the simple reason that those clients who are long CHF and don’t have TP in the system, stay long and discover later they have made a lot of money. But those who are short are stopped by the system after their accounts have been wiped out : so even if a derivatives broker hedges properly it’s positions, it has to buy francs as soon as their losing clients are stopped, and surely there is not enough francs to be bought at the levels brokers want; it’s not liquidity issue, but speed of price event.
    Nothing has happened, the world still turns, sit back and relax.
    ps
    I will certainly not miss Alpari. I tried their demo a few years ago and had to wait for 20 seconds to be filled…in a liquid and quiet market! So I watched the price go up and down around my order which couldn’t find buyers/sellers.

    Here I found a fresh telling review of Alpari:

    “Trading stopped today 16.1.2015 around noon. In the news and on their hompage I can read they went bankruptcy due to missing liquidity when the SNB dismissed the 1.2 barrier for CHFEUR. Too bad. I hope not to loose all my money there since I made a big win on USDCHF short yesterday. This is mad!”

    This is not mad, dear trader! You made money but Alpari cannot now deliver those francs to you, beacuse you made too much money and too fast!

    1. “I conclude that it was plainly predictable”

      Mate no disrespect but quite clealy you are genius because nobody else saw it coming. Certainly there was opinion that it couldn’t be maintained indefinitely but and only two days before Thomas Jordan stated that the SNB remained committed to the peg and said that the peg would remain in place.

      Finally to conclude that last week was a non-event is to seriously throw caution to wind.
      Central Bankers have, since the GFC, been constantly soothing market participants in both FX,debt and equities that they would have their backs. This move signals they might not.

      I spoke to an FX trader mate two days ago whom works for a large institution and I can assure you that this has completely rocked confidence amongst many trading firms.
      They now longer can be certain that CB’ers will stay the course and have their backs covered.

      You have not seen the end of this by a long shot.

      Cheers

      1. You are certainly not hoping to convice me are you! Why this kind of aggresive move by SNB didn’t bring the armageddon in 2011? The same armageddon you were talking about in spring of 2014 for other minor reasons? Relax mate. Have a glass of wine, look at the beautiful world. If China depegs its currency, that will shake the world. But Switzerland? Give me a break.

  19. Allan, I am happy to disagree, as you are wrong most of the time, mate.
    It was predictable! CHF was pegged to preven’t too much appreciation, it had to be depegged in case of risk of too much appreciation or too much depreciation.
    Goal has been achieved, CHF cannot be trusted as safe haven currency, and with -0.75% carry trade will keep CHF subdued vs the dollar!

    I didn’t predict it, because I spend on fundamental analysis of the markets exactly 5 minutes per month. Unlike you, 6 hours per day.

    1. “Allan, I am happy to disagree, as you are wrong most of the time, mate”

      Lol, most investors always have thought I was usually wrong and I guess that goes with the territory when you are a true contrarian, so I am used to it.

      Investors thought I was wrong in 1999 when I began accumulating gold stocks, albeit a little early. Those same people thought me wrong in 2011 when I was selling all my gold stocks, actually I was driven off one stock forum because of it.

      Now most people think I am wrong for accumulating gold stocks and being long volitility via TVIX from $2.30.

      We’ll see how wrong I always am in 12 months time.

      Cheers

      1. If this is true, then stick to your guns. Unfortunately I know you more as a stubborn fearful bear in a bull market. There will be plenty of opportunities to join the bear after it has begun, or buy the gold stocks, when they start going up for real. You don’t have to ‘accumulate’ on the way down in a bear market. Accumulation in my undrstanding means building a large porftolio which cannot be done in one trade because of the size of a portfolio. You don’t accumulate, you just buy by increments 🙂

        1. Mate, you seem to be taking this very personally. You have no idea what my portfolio is I was merely pointing out what I am turning to in terms of investing.
          As for being fearful I have no reason whatsoever to be fearful because I am neither long or short equities.
          Volitility is not an equity and in case you haven’t noticed it is trending higher as are gold and gold stocks, whilst equitties are completely overbought, overhyped, overvalued to the point of being the most overvalued in history and the most overleveraged market in history.

          You buy if you want buddy that is your right.

          Cheers

        2. Personally? Allan, I like you mate. Thanks to you I know what the hype is about. I know what most retail investors are into. Shorting stocks, buying gold miners, preparing for armaggedon….

      2. Allan, you made a comment on John’s End of 2014 post that shows you clearly have no idea what is going on. You are a very active commenter on here and I generally keep my mouth shut. But, in this case, I want to go back to those remarks and clear the air. You keep talking gold yet your analysis is completely inaccurate.

        You show a clear subconscious bias and blind spot in your belief system. We understand you are proud of all of the gold you accumulated. But your analysis of what will happen to gold is completely wrong. The world is qualitative. It’s not based on belief systems, ego or quantitative analysis. In that post you noted that 1929 could not be used to predict the fate of gold today and that 2000 was a better comparative when gold rose. This is clearly wrong.

        The US has only had one true deflationary event pre 2008 and it was in 1929. You have a sample set size of one. But if you understand the fundamentals, you don’t need any sample set size to divine the future price of gold. Money was gold and gold was money in 1929. You could convert money to gold as an individual or a corporation or a state. The price of gold was FIXED in 1929. That you understand. This is what you do not. In a true deflationary environment the demand for money increases substantially. So, the demand for gold increased in 1929 substantially since gold was money. That said, the price of gold was fixed in 1929 so gold did NOT rise and gold stocks collapsed. Yet, they did recover because owning a gold mining stock was owning a company that produced money. Gold told you what it was going to do in 2008. It collapsed. That was a true deflationary event. And, just like in 1929, the demand more money increased substantially hence the dollar rose violently in 2008 while gold stocks, silver stocks, gold and silver all collapsed. 2000 was NOT a deflationary event. It was a disinflationary event. People keep wishing and hoping but 2008 was a precursor to the next event. And it told you what was going to happen. Everything will tank and the demand for money will rise. That is, until the system likely busts and money itself becomes useless. I suspect all money is going to be of no value. What happens when 90% of people have no money and 10% have all of it? Additionally, you can’t take a sample set size of one and infer anything if you don’t understand the underlying dynamics associated with it. Whether that is 1929 or 2000 is irrelevant. Respectfully, you don’t understand the fundamentals accurately to be able to anticipate what is going to happen next.

        Now I will place a caveat on this. If the world’s criminal class tries to pivot back to a gold trade settlement system, which is clearly possible, then gold may rise for some period of time before it collapses. I could explain this too but for now this will suffice. Moving back to a gold settlement system would lock in all of the criminal inflationary gains of the renter capitalists and then send us plummeting into a quantity of money disaster similar to 1929. But, the uber rich would be well positioned for this. It just depends on how much “control” pathological evil truly has on the world. I don’t know the answer to that. But this certainly is plausible.

        Maybe you should consider a lesson from the universe – listen more and talk less. No disrespect intended. Just sayin.

  20. Despe, what does “it had to be depegged in case of risk of too much appreciation or too much depreciation”? Huh? You have heads spinning with that one, I’m afraid. In fact your whole post is quite difficult to figure.

    1. I meant that if you peg your currency to another one, your currency deppreciates or appreciates as it moves along with the currency it is pegged to. If USD appreciates, CNY appreciates too. If the euro deppreciates, a pegged CHF depreciates, too.

      1. Of course, I think everyone understands that 🙂 But when you say “It was predictable!” I think in the big picture / longer view that might be true in the sense it’s not a sustainable policy, but two days after a Swiss authority stated it was still its policy to peg Francs to the Euro one should have known better than to believe them?? No, I think the events of the past week in FX markets fall in the category of known unknowables.

        1. This is what I mean – Switzerland had to depeg the CHF sooner than later. As to the way it happened, timing and those statements two days before : it’s another argument not to trust known fundamentals and official statements. The elites play their own games and often against each other. Decisions are made behind closed doors in Godfather-style meetings. I didn’t predict it would happen, but when was the last time I thought about the Swiss franc?
          Some brokers were smarter than Alpari and prepared for the event by reducing leverage and having adequate execution in place in case of ‘speed event’…

          “Due to the possibility of a break of the 1.2000 floor in EUR/CHF which may see significant price gaps and cause negative equity on client accounts, Dukascopy Bank is forced to implement a maximum leverage for EURCHF exposures of 1:10 as of 12 October 2014.”

          http://www.dukascopy.com/swiss/english/about/ournews/#b200210

  21. Many appear to be in the early week rise and
    then post ECB plunge camp, not saying that
    will not happen however it’s what many expect.

    1. Phil, all I can say is that it is all but unaminous that the ECB will unleash full blown QE.
      I am not saying the ECB won’t but I know one thing for certain and that is that the DAX began pricing in full blown QE the last few weeks and most markets have been holding relatively steady.
      If markets get anything less than they expect look the hell out!

  22. Being the true contrarian that I am I am always looking out for the most lopsided trades I can find amd the USD is without a doubt one of THE most lopsided trades I have ever witnessed.
    It will only take the slightest of hicups to cause this to unravel and wipeout far far more than the CHF has.
    The CHF was just a indication of what happens when nearly everyone is convinced of something and then something happens to shatter that conviction.
    It should be a huge lesson to us all, but alas the herd are committing exactly the same mistake in the USD

    http://stockcharts.com/h-sc/ui?s=$USD&p=W&b=5&g=0&id=p63864008556

  23. John, you have been saying for at least 6 months that the market has to collapse in the next week or so for your scenario to be correct and now you have just pushed it out to april 2015!!!

  24. despe, mate quite frankly that last post has me almost totally perplexed apart fom the assumption you make that I am preparing for armageddon.
    To wit I say what would be the point of preparing for an event financially where finance no longer exists?

    I think I may understand markets a whole lot better than you asume that I do.

    Cheers

    1. Oh stop it. Do I have to start dying today because one day I will die? Do I have to position myslef for a bear market now because one day it comes? Do I have to flush paper money down the toilet now because finance no longer exists? The world has seen worse times. relax.

      1. despe seriously mate calm down.

        My comment about armageddon was to state that I am NOT preparing for a armageddon event because that would be pointless. You were the one that mentioned it not me.

        I am going to close this by saying that I invest based upon my knowledge of history and historical extremes.
        We are at a historical extreme that is at almost unprecedented levels. Deny that as much as you like but that is fact!

        If you wish to take the risk that history will not prove to be correct this time around that is your perogative, but don’t belittle me because I choose to take what I consider to be the safer and contrarian option.

        1. Ok, sorry if I am too harsh at times, but I cannot be nice. I am just human so have human weaknesses. If I were a technically trained monkey…but I am not! When a trader is losing, it’s OK to be nice to everybody : he automatically adopts risk averse behaviour, agrees with what others say, assimilates other’s beliefs. But if a trader is winning, he has to be harsh and intransigent with others : his personality then ensures boldness and consistency in his trading. Many times in the morning I just want to stay in bed all day. There is no force or person that can pull me out of bed if I decide to stay in bed – for example till the end of January! I have made enough so far this year so the temptation is big. If I am nice to you, then my mind will start to reason like this : Allan is my friend and he means well and he may be right so I better adopt his point of view…
          No way Allan. I have to manage my personality because it’s part of my work.
          I have to disagree with you. I don’t believe in history. You may be in love four times in a row, each time for six months. Then you fall in love and it lasts for 10 years. Impossible…if the history is your guide.
          Your strategy is not safer to me than mine. Scaling into a falling market, is it worth the stress, pain and energy? To allow yourself to have drawdawn of 50% on some stocks? Hoping for 12 months that everything will turn around? It’s not safer and healthier to me than scaling into an already rising market with conservative stop loss order in place. As a trader, I must preserve my energy. If I am stressed, I walk, If I am nervous, I walk, if tired I walk from trading as it’s not the state to safely operate in.
          I don’t believe in brilliance/intelligence in trading. Too much information is out, fundamentals are out. Less indicators the better. The simpler the setups and strategy the better. It’s not about brilliance but consistency. It makes no sense to have the most brilliant system in the world which cannot be implemented in real trading for psychological or technical reasons.
          Maybe I am harsh, but also you insist too much upon others to agree with you and adopt your point of view. It’s pointless IMO. If you are wrong, you have misled the others, if you are right, you only helped your ego because the others have their own mind, reasoning, priorities and ways of doing things so the best for everybody is to achieve their optimal rules on their own by themselves.

    1. John, hedge funds have been forced to take greater and greater risks to eek out returns.
      Hedge funds considered the CHF short, because of the peg, a no brainer but to obtain decent returns they had to be super leveraged. You have not seen the end of the fallout.

      1. 1) They don’t have to be super levered to be wiped out given the magnitude of the move. This was much worse than 1987 for stocks.
        2) I still don’t get the trade. Is trading a peg a hedge fund strategy? Trend following would have been long CHF and short EUR. Any trend following model will be short EUR, and CHF has been rallying before the spike up.

        1. John, I’ve read that they were short CHFUSD, which still hurt them a lot last week. I agree, short CHFEUR makes no sense.

      2. Other currency strategies, such as currency carry, see ticker “ICL” seem to do OK as well.

        So the two hedge fund currency strategies — carry and momentum are fine. Where did this CHF short idea come from?

        1. John, Everest Capital whose $830MM fund blew up, is a global macro manager. And as you no doubt are aware, these managers are given the mandate to hunt globally for those trades (in whatever market) they deem to offer the most favorable risk-reward asymmetry. So this manager thought the Swiss central bank would continue taking whatever actions it needed to, in order to force the Franc down right along with the Euro, as they were effectively tethered to each other by policy. And it was clear (at least since the recent EU Court of Justice ruling permitting QE) QE was on its way and the Euro would depreciate. So the trade to short CHF makes sense, so far as this reasoning goes.

  25. John, it was effectively pegged to the Euro,
    the rational was Euro weakness would result
    in CHF weakness.
    With the prospect of the ECB initiating QE
    those bets on a lower CHF would have markedly increased.

  26. despe, I assume your view relates to timing.

    We are all aware that a bear market will ultimately
    follow this incredible bull cycle – there is 0 kudos
    in forecasting that.

    John has acknowledged that timing plays a role
    in the accuracy of any call, or at least that was my take
    away from his answer to a question raised recently.

    Price action did not develop as many here hoped in 2014,
    if a significant decline in the region of 20% is about to unfold
    I would still regard that as a really good call.

    However if markets now fail to fall in to sharp correction
    territory and we trade around current levels over the next
    few months, then for me that view has been invalidated.
    Just my take.

  27. John, mate i hear ya but from what I knew of the trade hedge funds had assumed that the CHF was going to depreciate much quicker against the EUR and further against USD and I probably even the GBP.
    It was seen as basically a no brainer carry trade with Swiss rates so low and from what I knew through a few friends it was working well. At least until Thursday that is.
    The old adage “nothing in life is certain except…………..”

  28. Bulls must hold December lows in SPX and in $/¥ until Thursday and ECB.

    Bullish arguments:

    Their main argument is ECB bazooka on Thursday . DAX is showing sign of major breakout and it looks it wants to travel to 11,000 or much higher.

    €/$ may have built large H&S pattern since 2001 and now after breaking neckline we may be only beginning travel to 0.80

    Bearish arguments:

    NDX significantly underperforming, in December it did not confirm tops in SPX and INDU. This last Friday it already spent some time trading below December lows.

    $/¥ also did not confirm December top in SPX. Fifth wave in $/¥ looks truncated and this spells rather quick move down after December low is eventually taken.
    Vertical move in Swiss franc means that $/¥ may now look similarly vulnerable for many traders as BoJ may consider signalling its exit policy quite soon. Traders are now very nervous with carry trades after SNB.

    €/$ oversold and now at major support at trendline connecting 1984 and 2001 lows so should bounce at least.

    If ¥ and € strengthen then $ weakness may accelerate downturn for U.S. stocks.

    Commodities in slow motion collapse, CRB lost almost third of value since April

    ECB may disappoint with their program as inadequate or too late

    Greece election may turn even more successful for the left.

    Ukraine may turn into major conflict anytime

  29. Making money in trading is my direction at the moment. Any poems that I offer on this site are not protected by copy write. I am too busy at the moment to try to monetize them. You may publish them if you wish and collect whatever royalties are available. I must say you have a very sophisticated taste in poetry and literature.

    1. Central bankers are historically the worst traders. See gold in 2000 or again Cbs buying gold towards the peak in prices last several years. Same in fx. The SNB likely rang the bell in $ strength and euro weakness.

  30. Market direction as expressed by the number one song of 1980, by Blondie:
    “The Tide is High
    And I am holding on (to my trade)
    I’m going to be the number one” (market timer).
    Tide is rising to Thursday, and with equatorial crossing Friday,
    market should rise until Friday. Week after falling tides, falling prices.
    4D Lunar Chord is up all this week, though seasonals should be week (second
    to last trading week). 4D Lunar Chord is down following week, though seasonals should be strong (last trading week).
    It is a battle of the Lunar Chord and seasonals. I am betting on the Chord, though have my finger on the sell button.

  31. Bunel right you are.

    Greek elections all but disappeared off the wires, Russia cutting gas supplies to Europe last Wednesday which could reduce supplies to Germany and France dramatically, yet hardly reported.
    War in Ukraine escalating to full scale conflict, no one seems to care anymore.
    SNB have just put a huge dent in the confidence of Central Bankers and yet all that markets are focused on is the ECB delivering a huge outright QE program.

    Boy oh boy had Draghi better deliver and the markets not be disappointed. I wouldn’t be long if you promsed me the keys to Heaven!

      1. Dax, biotech and Shanghai last bastions of the bull – one broke down today. Waiting for the other 2 this week to confirm all clear for short side.

  32. we might get a bounce this week, but we have bottomed like we did in February, april, august, October, and December. The only thing it did on Friday was bounce off the 100DMA for the SPX. Everything else indicator wise was not exhausted at all. We could just trade in range like we did april to mid july, but I highly doubt that.

  33. Allan because your old maybe your memory is not so good or maybe cos your a bear you just want to believe in a collapse. but john has been moving his goal posts for months now saying the collapse has to happen in next couple weeks or the scenario is void, and his latest post just pushed it out to april, its getting beyond a joke. we all know eventually the market will correct/collapse.

    1. I’m not reading it correctly either then, I guess…. Because what you’re claiming he said is not at all what I got out of it…

      From John – (see above)
      “Therefore, I expect a little more strength in the first half of this coming week and then a sell-the-news resumption of the equities downtrend, which ought to be the definitive breakdown in stocks, as we head into the geomagnetic low of March/April.”

      Nowhere do I see where he said the scenario is void, or that anything got pushed out to April… Sounds like he’s looking for the LOWS to be in March/April….

      I mean, it may or may not happen, but you and I are just getting something completely different out of what was said… :-/

    2. Robbie, perhaps what you mean is “Allan, because you’re mature” unlike, ahem, some other poster on this site. As we like to say in the business it’s all about process, not always about outcome, because we will all be wrong, temporarily or otherwise, at some point in time when divining the message of the markets.

      Posts like yours say more about the poster than the person(s) being referenced in the post.

    1. robbie, you are entitled to express your point to a degree. You have done that and obviously you consider John’s work wrong…… John has put everything he is seeing on the table to provide evidence that markets are topping. What do you expect a bullseye?!!
      You have have expressed your opinion now, so move along and find somewhere else more to your liking.
      Oh and the “old” comment doesn’t worry me because I am old, or at least feel it at times, but the comment most asuredly shows you are a bigot and I would much rather be remembered for being old and losing my memory than ever being remembered for having been a bigot.

      Cheers

      1. And robbie, your original question directed toward John was disrespecful in its tone and obvious underlying assertion.
        That is why I responded initially the way I did.

        I am growing increassingly less patient of those that display provocation or diserespect toward John. Nobody expects everyone to agree but at least do it with respect.
        John has devoted himself to this site and contributes his research without asking for monetary gain from any of us and God knows I will not sit back and let others disrespect him and his generosity!!!!!

  34. I believe John must have made quite a few accurate market calls in the past, in order to inspire his followers to join him. It is generally known that market is a dynamic beast with violent temperament capable deceiving the most experienced. It is okay to make a mistake, we are all humans. Don’t let your mistakes dictate your next move. The ultimate mistake will be not owning up to it.

  35. The reason I follow John is not the accuracy of his short term calls but the excellent charts and analysis. I make my short term trading decisions based upon the 4D Lunar Chord system combined with candlestick buy sell signals.
    4D: Depth of Tide, Diameter of Lunar Illumination (moon phases), Distance of Moon from Earth (apogee/perigee), and Declination of moon (north to south to north). All of these point to higher prices this week but must be confirmed by price tomorrow.

  36. 6D Lunar Chord:
    Depth of Tide: Tides crest Wednesday, down rest of month (bearish)
    Diameter of light(phase): Supportive till Friday
    Distance (perigee): Occurs Wednesday, top indicator.
    Declination: Supportive until end of month.
    Daily Seasonals: Down all week
    De Planets: Mercury retrograde has started, usually strong last 2/3 which
    may indicate strength going into end of month and into mid February.

    Summary: Really mixed picture. Most likely higher into Wednesday close. Lower end of week. Next week has falling tides, lunar phase is not positive, and perigee is over; but declination rising, mercury adding energy and seasonally up. Early February looking better. So I am going to try to be a nimble trader and avoid losses and take advantage of gains if they present themselves.

    1. I am out of my depth with this but someone has indicated Mercury has gone retrograde, and I thought that was normally a bearish signal. But here you say that Mercury is adding energy and seasonally up. That seems contradictory but perhaps there’s something I’m missing.

  37. I just completed a study of 2014 and tides. If you bought the SPY at the low tide and sold at the high tide each month and remained in cash until the next low tide, you would have been in the market 1/2 the time and had a return of 19% vs. 11% with buy and hold. Also the significant lows in October and December coincided to the day with the low tide. I will definitely be including tides in all future market timing.

    1. You’re going to take one year in time and base your trading on it?? Surely you plan to go back in time…way back in time, because I’d be interested in what you find out.

  38. 2009-2013 I got good at calling the tops and bottoms in the market but 2014 just wouldn’t conform. 30 indicators with different angles calling a top but it wouldn’t top out. Plus, the same criteria for a crash as history yet it wouldn’t crash. As I’ve said before I can’t regret my analysis: it was a very atypical year, a solar max mania that stretched beyond precedent in both levels and time. Most of what I drew together was fact (and cross-referenced fact), but the facts weren’t enough on this occasion. If you consider it a ‘joke’ that it wasn’t possible to accurately call the second biggest mania year of the last quarter century (or possibly of all time) then you must be pretty good.

    The topping indicators remain, and the criteria for a crash remain in place without having been neutralised. The picture is clearing with increasing hindsight, and it does look like we saw a real peak in mid-2014. The crash is the missing piece and once it occurs then the market peak and big picture will then be cemented. Until then I continue to do my best to calculate how things will unfold and recent developments look promising for delivery at last. The seasonal window is down from January to March/April, so I am looking for the steep drop to be complete by then (the first bear market low at that point, before the multi-month partial retrace). The case is good that the bear market kicked off in earnest mid-2014, and now the pillars have been dismantled to keep prices levitating near the highs.

    Today’s new moon, Thursday’s ECB, then will review market reaction and how things stand.

    1. “a solar max mania that stretched beyond precedent in both levels and time”

      Timing – current US stocks action is following the 1920s, not just in terms of SC24 v SC16 but also in chart pattern (both indicating that a manic peak probably lies ahead later this year).

      Price levels –
      – 1920s Dow: +484% over 8 years
      – gold: +733% over 3 years
      – Nikkei: +443% over 7 years
      – Nasdaq: +733% over 8 years
      – current SP500: +210% over 5 years

      And there were previous manias where prices increased by even more than these (eg. 5000% for tulip bulbs).

      What would really be unprecedented, would be SP500 failing to go manic from current levels!

      1. Mark, no doubt you or someone has alluded to this, but what were the fundamental underpinnings of the run up in the 1920s. Was valuation as stretched as it is today per John’s indicators? What’s “different” this time that could negate your forecast?

    2. I think your talent for logic and reason is rock solid. Making calls on the market that was is worthless, as many here seem so proud of. No need I can see to doubt your analysis just because a bubble becomes more bubbly.

    3. John, you work is much appreciated. 2014 is an outlier in historical sense. But each major top is a bit different. The mood is very bearish but traders are very hesitant in going short. The explosive rallies have burned many. IBB still making new highs. I have given up predicting timing of the top but I think we will have a meaningful pullback in 6 months.

  39. Crashes, IMHO don’t come every 5 years, they come about every 20. We had the crash in 2007-2009. The fall until March will be a correction. It may feel big at times, as is said the closer you are to the action the bigger and more real it all seems.
    You can argue fundamentals until you are blue in the face. Reporting season seems ok, as was the last one, most companies have healthy cash balances. Markets look ahead, they like what they see (mostly). Are they getting ahead of themselves, maybe a bit.
    It could be argued in many ways the recovery is only so-so, so we are unlikely to rocket away, just a steady up,like this stage of the cycle always is.
    Bears (and there are few rabid ones here) are always shrill, they always think the market is wrong and they are right and will conjurer up any bit of detail that proves their case. One down day and they are in your face saying I told you so.
    It’s no different now, they may well have their day in the sun for a few months and I will be with them, but our alliance wont last —this market is only 25% or so along its new ever upward journey. There is nothing new here it has always been thus (well for a 120 years or so)…95% of people lose for a good reason and they other 5% probably get lucky, but the more I look at the past and find cycles that consistently repeat, the luckier I get.

  40. Phil White :despe, I assume your view relates to timing.

    I don’t think I mean timing. I believe that ‘timing’ is an abused word in the world of trading and investing. Mainly it is used by fundamentally minded market participants who choose to ignore technical/price action aspects of the markets.
    While I believe that rules of speculation apply equally to both technical and fundamental speculators. Thus if the position goes against me, I am WRONG therefore I EXIT. If my size stop loss is 20 points, I exit right there. If my time stop loss is four full candles – I exit then, if the position is not in positive territory. Time stop loss is a vital tool in speculators’ toolkit : If the market doesn’t behave I have assumed it would by a given time, then the odds are greater that the entry has been invalidated – not a flag, but 2nd degree pause forming, not a breakout, but fakeout in place, not reversal but still a continuation pattern. Both technical and fundamental speculators should recognize early that the market proves them wrong: there is nothig wrong with a small loss taken in precaution.
    While many fundamentally minded players believe that being wrong can translate into ‘I am still right about the direction but wrong about timing’. This is not true.

    Investopedia claims that ‘trading is timing’ :

    http://www.investopedia.com/articles/trading/06/tradingistiming.asp

    because :
    a) giving it more time and less leverage, you may have better results
    b) using no stops may pay off
    c) using small stops stubbornly against the market may still pay off

    But the question is : do they have to buck the trend, refuse to exit, stand in front of a raging tide, using some dubious techniques (no stop loss, no leverage, many small losses in a row) just because of their fundamental bias?

    Then the author gives some ‘technical advice’ to filter entries – as if RSI was an indicator to pick a top or bottom….

    Boris Schlossberg is a writer and knows a lot. Kathy Lien, his partner, is a fundamental analyst in the forex market. They are not professional speculators.
    They work for brokers, attracting newbies to the market. Since FXCM got his ass kicked by SNB decision, they may be looking for work.

  41. thanks peter

    stockcharts.com/h-sc/ui?s=$$UNEMPCIN&p=D&st=1980-01-01&en=1949-01-01&id=p42467782610

    stockcharts.com/h-sc/ui?s=$$UNEMPCLC&p=D&st=1980-01-01&en=1949-01-01&id=p43876422394

  42. FWIW I believe John has the right timing at this stage to be bearish in US equities and in the short term this (Q1-2015) will be the most ideal time frame since autumn 2014. Back in early to mid Nov 2014, the markets “should” have started a retrace of the amazing V-rally that “should” have been much deeper than what it actually got to back in mid-Dec stalling at around 1970 in SPX.

    Some things of note which force me to become short term bearish:

    1. Technical price action is very negative. Uptrend lines are being violated and topping, rolling hill-like patterns have been forming for the past two months. The rallies after each break down are merely retesting the underside of the violated trendline and then failing

    2. Long term bond yields, despite reaching near 52-week lows in late Dec 2014, actually accelerated starting early Jan 2015 and broke down to much lower new 52-week low yields.

    3. Despite the “predictable” seasonal rally in gold and gold stocks the strength has surprised on the upside overcoming technical levels that were not anticipated (i.e. 1250 anticipated but not closer to 1300).

    4. SNB pulling its peg to Euro causing its currency to spike up +30% last week shortly before the Jan 22 ECB monetary meeting.

    5. Start of Mercury retrograde cycle middle of this week and also Q1-2015 is the final stage of the 7-year Cardinal Climax (i.e. Uranus and Pluto waxing square) that began in 2007/2008. Extreme volatility is anticipated upon its conclusion by Mar 16, 2015.

    I am in the camp expecting the markets to creep slightly sideways to upwards leading up to the Jan 22 ECB news. I have no idea if there is a big rally or big sell off on that day of news, but I lean towards it having a slightly positive reaction initially and then a sell-off commences. Big decline during the last week of Jan 2014 in my books. I think this might later explain why investors are flocking into US bonds en masse recently and also why the volatility index has been also creeping up to relatively high levels and also forming a potential upside breakout setup that reflects the mirror potential downside breakdown setup in equities.

  43. John
    I truly applaud your analysis. I check many sites beside yours and I found yours to be the best of all. Because of you, i did not sell gold miners. Even if crash does not materialize in near term. High probability of crash is good enough to stay away from the market. Since this market has fooled lot of people, crash will be spectacular. There is no such thing as free money in wall street.

    1. ECB just broadcast a preliminary number. Perhaps it’s just “let’s throw it out there and see what happens today then adjust as needed tomorrow” but regardless $600 trillion is now the number. It’s low and not open-ended. Too little too late, but will we even correct?

      1. Hee hee, 600 trillion euros!!!

        Billions maybe, unless they’re smoking something very strong at the board meeting.

        There will ( I expect) be all sorts of caveats attached, and this will be a likely ‘maximum number’, with the actual figure likely to be much lower. Typical ECB, words, rather than actions, just playing their part in the grand game unfolding.

        Also, if as rumoured, the national CBs are doing the buying (of their own national sovereign debts), and are charged with carrying the risk of default, when will the world realise that there is only one asset that these central banks hold and can use to make good the losses at the ECB (the currency issuer). Just one asset on the books, only one.

        Tradition!! Love it.

  44. daveg, I agree that 08′-2009 was generational
    event, however bear markets (20% plus declines)
    occur far more frequently than once every 20 years.

    I am unsure of exactly what people define as a crash,
    to me it’s a very rapid and compressed sell off
    over a number of weeks, in the region of 15-20% plus.

    A crash can still be a correction in a continuing bull market,
    it can be over within weeks.

    A bear market on many peoples definition tends to be 20% plus
    declines from an ATH, where price stays below that level for
    a minimum of 3 months.

    1. Phil, The first ‘crash’, as you define it, after the prior ‘generational’ low, was in late 1990, it lasted 3 or so months…the next one after that was 1998 some 8 years later. I would put us currently around the former in terms of timing..
      I would deem both that one (1990) and the coming one to be “corrections”, but that’s just me.

  45. Central Banks will NOT give anybody other than a few insiders the ability to avoid what is coming.
    The SNB was a prelude to what is coming. Decisions will be made in the dark of night and those that are exposed……bad luck!

    Believe me this is coming.

    I said last week just after the SNB decision that the fallout had not even begun and it hasn’t. God only knows what is next if the ECB disappoints?

    Check out Mike Maloney’s vid released yesterday where he discusses the similarities to the Thai Baht depegging that eventually lead to the Asian contasian and LTCM collapse.
    The THB at the time was the worlds 37th most important currency. The CHF is the worlds 5th.

    Ya ain’t seen nothin yet!

    1. If ECB disappoints, we get a crash. If ECB comes in with consensus, I think we get a “sell the news” event. We rally ONLY if ECB comes in substantially higher, and I mean substantially, like something in excess of 1 trillion. Given Draghi’s history of all talk and no action and given the Germans reluctance to do ANYTHING (Weimar!!), I think the odds of the ECB doing a trillion Euro (or more) QE is close to zero.

      Therefore, I think odds are very high that tomorrow the markets will begin a strong move lower. That move may actually start today. ES is down 5 points, 25 minutes prior to the New York open.

    2. “How Swiss Decision to Scrap EUR/CHF Peg Affects You
      Just as we have seen how the decline in oil led to deleveraging in the financial markets (sell-off in stocks, rise in Yen and rally in Treasuries), there has and should continue to be deleveraging after the SNB’s announcement. Investors will need to cover their losses by taking profits on profitable positions and which mean further declines in equities and another dip for USD/JPY.”
      Kathy Lien

      Yeah I ain’t seen nothing yet. Equities rose so did USD/JPY

      NEVER LISTEN TO “EXPERTS”!

  46. Some idea of what the consensus is expecting from Draghi:

    BofA-ML: We expect ECB sovereign QE of €500-700bn over 18 months. Key is whether Mario Draghi can create an open-ended feel.

  47. I can fully appreciate why NFLX has surged 17% today. It did beat estimates and increased subscibers and afterall it only trades on a current PE of 109.

  48. Gold hit significant trendline today. I mean one that is connecting May 2013 and March 2014 tops. Now it will need to correct all those quick gains from last 3 weeks. But I think that after this necessary correction it will start another upleg with final target around1500.

    1. Market has been probing that level for 2 months now. Looks to be holding. Markets focused on the wrong event. Sunday is the big day with greek election. ecb a side show come Monday.

  49. The reality is no one knows what is going to happen and when. We can try to look at things quantitatively but the reality is the world is qualitative. And we simply don’t have all of the variables. Scientific rationalism is a myth that is being exposed in this cycle on so many levels. Fundamentally, we can conclude this is a very dangerous time in human history. And that we are in a massive financial bubble created by decades of political and banking fraud. This will end badly but the universe has its own timeline. With the massive swell of fraudulent renter capitalism money flowing freely around the world, we could see massive spikes in assets that are yet to come. Or, this could be it. The universe will decide when its time.

  50. Usual caveat that I don’t trade, but the FTSE 100 is looking like that pretty firework again, gapping daily ever higher, today perhaps an exhaustion move?
    At the same level now where it failed last time round.
    Let’s see it collapse in a heap back below 6,000, where is belongs.

  51. Chop city for the week, off 1.5%. Lunar Chord has all the pizzaz. New moon, perigee, high tide, and rising declination.

    On the other hand, seasonals are typically weak this week and then take off next week. If a bounce occurs could be Friday which is close to the S to N equatorial crossing when 3-4% up moves happen close to half the time. Will keep my account in cash until candlestick confirms up trend. Trading is not easy.

  52. Not going to say ~I’d~ touch it here (and think we’re on the verge of a tradable correction), but I’ll give Nicolas this…

    Bio-tech (IBB) is one unrelenting beast…..

  53. Here we go:

    ECB seeks to inject up to 1.1 Trillion Euros into economy in Deflation fight

    “The ECB president Mario Draghi today proposed spending 50 billion euros a month through December 2016.

    Governors will decide on Thursday what assets to buy.

    While the program is likely to focus on government debt, other assets such as ‘corporate bonds’ are under discussion.”

  54. “God only knows what is next if the ECB disappoints?”
    Allan
    ‘Fear is an emotion induced by a threat perceived by living entities, which causes a change in brain and organ function and ultimately a change in behavior’
    (Wiki).

    Many believe that if ECB disappoints, then the equities will fall or crash. Traders, experts, beginners, causal analysts.
    That belief is an expression of fear and worry about the market and economies. Fear makes them look for potential threats anywhere. They feel danger, pain, traumatic events so they cannot experience peace, tranqullity, confidence, clear and open mind.
    Be greedy when others are fearful.
    The most probable outcome, ECB delivering or not, is that stocks will do nothing really or rise. Crash is very unlikely. Small pullback maybe.
    Of course I may be wrong, as I do sometimes. And this time everybody else is right….

  55. Take a step back, just for a moment and think.

    This ECB QE thing has dragged on and on, so many speculations from 600 billion to 1.3 trillion package.
    It will not start before March/April, and maybe just subjected to sovereign bonds, and last for 12 months.
    And it’s just a proposal which needs to be voted whilst the German are kicking off.

    Either way looks like you will have to wait for the facts from the Drag queen himself.

    This is a classic example of lose wether your long or short.
    Make no mistake, the market will have your money. They need it after the Swiss surprise, unless you are a cleaver HFTs with a fast system.

    Let the hedge funds and SBs companies bit nails today and speculate all they want, hoping to claw back last weeks totally unexpected Swiss move.
    I am out this week until I see the actual facts and direction.

  56. I am 100% cash as of yesterday afternoon
    as just cannot make an assessment on which direction
    markets may take post ECB.

    Many private investors on multiple sites appear to
    expect a sell the news event, unsure if it will be that
    easy, perhaps this time will be different.

    Be careful folks if you have significant market exposure,
    equity markets are known as the great humiliator for a
    reason.

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