ZIRP vs Solar

US economic surprises are now at their worst level since 2009:

15marc8Source: Bloomberg / Jessie Felder

A trio of such bad data releases are charted here: retail sales, wholesale sales and rail traffic:

15marc3
14marc4Source: Not_Jim_Cramer

15marc11

Source: Callum Roche

They are all recessionary. But Charlie Bilello hypothesises that the pattern in economic surprises over recent years could be inspiring stock market participants to hold through:

15marc1

Source: Charlie Bilello

That pattern is a bit of a mystery and could suggest problems with the Citigroup calculation. Regardless, our positioning post-solar maximum should spell recession, no recovery this time:

Screen Shot 2015-03-15 at 06.44.11

(my chart)

The picture is similar for earnings. Forecasts for the near future are negative, yet further out participants expect earnings to recover dramatically again:

15marc30

Source: Charlie Bilello

As things stand, the estimated earnings decline for Q1 is -4.9% which is the largest drop since 2009, and the bigger picture for declining EPS is shown here:

15marc2Again this would be consistent with a bear market and recession, unless that dramatic recovery later in the year is to take place.

Solar theory argues that we see a speculative bubble into the sunspot maximum, which then pops post solar peak. People unwittingly buy and speculate both in the economy and financial markets into the smoothed solar maximum, and then do the opposite once the sun’s activity starts to wane.

There is some argument that government bonds are in a bubble, given their long bull market and ultra low yields. However, a look at household and fund manager allocations reveals the bubble to be in equities not bonds:

15marc21 15marc9 15marc61marc4Source: Fat-Pitch

And the bubble in stocks becomes clear when we consider valuations, sentiment, dumb money flows, leverage, and more.

Commodities may have undergone recent falls but they were not in a bubble leading into the solar peak.   Real estate has recovered some in the last several years, but does not show bubble characteristics. Sentiment and allocation to bonds has remain depressed throughout. Cash allocations are at low levels.

A common argument is that ZIRP encourages money into equities. Bonds and cash are returning nothing. At least some yield can be found in stocks.

Perhaps this explains why sentiment, allocations, valuations and leverage have remained at ‘saturation’ levels. Money has flowed in to maximum levels, producing common bubble characteristics, but money hasn’t flowed out the other way whilst ZIRP persists. The shallow corrections in equities have swiftly seen those measures topped back up to full.

Which brings us to this week’s FOMC. As things stand, analysts expect rate rises to start in several months time. Yet economic data of late has been fairly dire, which means the Fed may play safe and delay. If the Fed now resets expectations for rate rises (to start later) then will the correction of the last 2 weeks in equities be swiftly brought to an end and stocks rally to new highs on all-in measures again? I consider it a key test of whether ZIRP is the main driver.

It’s a test I expect to fail as I don’t believe it. I maintain the driver is the solar maximum, and that we see a range of evidence that speculation and the economy did indeed peak around the mid-year 2014 smoothed solar max. Even central bank balance sheet expansions topped out around then, as they too are subjects of the sun:

15marc15Source: Chris Carolan

Stocks:dollar continues to show a clear peak at that time:

15marc32

Source: Stockcharts

The negative divergences in volatility, junk bonds and breadth remain in place since then:

15marc40

Source: Stockcharts

All this should mean we are at the end of a topping process.

But how do we square this with action in the Dax and Eurozone indices? I suggest as a function of the sharply declining Euro:

15marc20

Remember the Euro was traditionally seen as risk-on? Hence the Dax and Euro largely moving in the same direction pre-mid-2014. But then, post solar max, things changed and remain changed.

Flipping back to the US, insider selling has leapt to a major warning level:

15marc10

Source: Bloomberg / Nautilus 

If we combine that with the commercial positioning, maybe the market can finally roll over here.

8marc5

 

Source: Timing Charts

The Euro-dollar remains set for a significant reversal (positioning, sentiment, oversold/bought). Maybe then we can see a sell-off in US stocks and out of the US dollar occurring together: a contra-US move reflective of the current relative economic and valuation divergences. Just a guess.

By geomagnetic seasonality I still have my eyes on a March/April bottom, but this would be a significant low. This would imply a sharp sell-off erupts out of the initial falls of the last two weeks. Should that not occur then the case would build for the markets not properly rolling over until mid-year, and that would still not be inconsistent with the insider/commercials charts above (markets peaked but then took some time to roll over).

Select indicators hit washout levels by the end of last week, but the majority not. However, that keeps options open into the FOMC.

In the bigger picture, this is what I see: valuations, sentiment, leverage and allocations have been flagging a top for some time. Insider selling and commercial positions now join them. Various measures and indicators show peaks mid-year 2014 at the solar max and remain in divergences since. Earnings and economic data (concurrent and leading) have turned negative and Fed balance sheet expansion drawn to a close. If the solar theory is correct then earnings and economic data won’t come back here, and the realisation of this will finally see the scramble for the exits. Based on history a crash is already written in the leverage and highly skewed exposure and sentiment. Set against all this, central banks largely still continue to ease and keep conditions favourable for speculation. The outcome will be extremely telling.

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441 thoughts on “ZIRP vs Solar

  1. John, thanks again for your – as always – great analysis. Maybe I can add a thing or two.

    Last week I said markets would be up. And most European markets – and the Nikkei – made the high on Friday 13th, as per my forecast. I also said we are in an inversion period. US markets showed the inversion; basically moving sideways with increased volatility.

    This reflects the alignment process I said would happen this week. Basically, the US markets wait for the European markets to roll over. They need to align before they can make big moves.

    Next week should be down; no need to change my forecast.

    My analysis supports John’s expectation. So the only remaining question for me is : when will this inversion end?

    I like to believe this weekend is the most significant this year. I have multiple indications to confirm this. European markets just follow the gravity cycles. And this will be down (markets) with gravity up into the Supermoon on Friday. Next Tuesday we’ll enter the moon wobble period and are already in the Supermoon shock window. Tuesday will witness the famous Uranus/Pluto square. As of yesterday both Jupiter and Saturn are retrograde. This only happens once in so many years (slow movers!). And will stay this way until April 8.

    Last weekend I gave the lines in the sand and my expectation for a retrace into the important march 26/27 timezone. This week I learned this coincides with a Puetz window. I can assure you my analysis for this date is completely different. Weird.

    I hate changing my forecast, so I won’t. Now 3 legs down to start with. Last week I said an ABC down but that was foolish. We are in a primary cycle down for the next few years, we expect five down waves- at least.

    For those not paying attention last week :

    March 20 low
    March 26/27 high (start of mini crash and the latest possibility for markets to align.
    April 4 low.

    I think.

    Cheers,

    André

    1. For completeness:

      This cycle will have 7 legs down due to an extension; probably in w3.

      Other dates:

      April 10/13 high
      April 20 low
      April 27 high
      May 4 low
      May 10 – first major low.

      I’ll change my posting frequency to once every 2 weeks; will be enough to update and reflect.

    2. Andre’, thanks for your analysis on this excellent website. My system (new moon, perigee, seasonals, rising declination) all say we end week 4% higher. And give back 6% week after. Our systems are exactly opposite in their projections. So I will be sure to maintain a tight stop on my long position.

      1. valley,

        I am certain that the inversion period has closed. So there won’t be different trends in Europe/US. This should make forecasting easy again ;-). Monday may see a high, but after that I believe the long term trend has finally and definitely turned. So a tight stop seems wise.

        André

  2. John H thx again for a great post. The insider sales graph is particularly telling.

    There is a blog by Alhambra Partners

    http://www.alhambrapartners.com/commentaryanalysis/

    One of their writers approaches analysis from an entirely banking reserves perspective. Although I don’t profess to understand the details it is becoming very clear that this bloke is worried about dollar liquidity. In fact both the Oct’14 and Jan’15 drops he attributes to illiquid dollar conditions.

    The reason I mention this is to suggest an additional avenue of research for yourself if you would like.

    The big benefit that I see with that avenue is it is near real time once one understands the data points to monitor. I haven’t quite grasped that yet. Perhaps you may be able to better.

      1. Yes heavy going but I’m hoping one day to understand the detail of what is being discussed.

        Mention of yield curves makes my eyes fog up or is that the brain? Lol.

        1. purvez great site. I have said it many times.It’s all about liquidity. Therein lies the problem, paydown debt whilst maintaining liquidity and increase consumption.
          Velocity of money just has not increased fast enough post GFC to maintain global growth and service debt at all levels, thus that leaves only one option.
          And it is why we are now mired in the early stages of deflationary collapse.

  3. With DXY and macro and precious little sign of any
    inflationary pressure, it makes it increasingly difficult
    for the FED to begin raising rates late this year.

    If the patient phrase remains we have a catalyst
    for a final mild parabolic phase.

    It would appear the FED would prefer to begin
    the very long process of rate normalisation,
    however with the $ index their hands appear to
    be increasing tied imv.

    No rate rises this year is now beginning to
    look likely.

  4. Back in the day, long before I was trading, I had a cursory interest in financial astrology. I had wanted to share some information from my notes on a consultation I did with Bill Meridian back in the 80’s.

    http://www.billmeridian.com/

    At the time he shared with me some research he had done with natal charts of traders; along with what determined big wins and losses. Now, to be completely honest, I don’t really believe in the intimate connection between the two factors
    nor that success is determined by such causality.

    So, as a disclaimer; I am posting this information here because the vast majority of folks who post here are traders. And if nothing more just for entertainment interest; or perhaps for the superstitious among us. (:-)

    We are all aware of the coming eclipse; this Friday, March 20, According to
    Bill, one of the times where his sampling of traders made the most money in the market were during a solar or lunar eclipse. The findings are as follows.

    Is the eclipse taking place in your natal 5th house?
    Is the eclipse taking place conjunct your natal Venus or Jupiter?
    Is the eclipse taking place conjunct the ruler of your natal 5th house?

    I normally wouldn’t put much stock in this sort of this except that I made a trade
    in August, 1970; near the bottom of the bear market; during an eclipse that was conjunct my natal Jupiter.

    Probably a coincidence, no? Maybe this will help the astro minded traders with
    their positions; or with initiating new positions on Friday, March 20.

  5. Thanks for the post John, I’m still in agreement that stocks are overdue a bear market, and I expect it to start imminently.

    I’m going to share some insights later today into why America is boxed into a corner now, and they have no way out, something will give (either the currency, the gold market, or the bond market).

    I saw this tweet however:

    It highlights why the bubble in govt bonds exists, as banks are hoarding them, and of course central banks too. The market is essentially broken, collateral shortages abound, a point often made by Jeff Snyder at Alhambra.

    One has to ponder why banks are hoarding them, and also why big corporations are pumping up their shares via bond-funded buybacks, and then offloading them at record speed? At the same time Greenspan identifies the problem America has faced for decades: companies not investing in replacement capital goods for the future. http://www.investingforprosperity.com/stock-market-is-great.html

    It’s obvious isn’t it? Companies and banks know the game is nearly over, and are squeezing the last drops of debt-fueled blood from the corpse of America before the collapse sets in. Who can blame them, it’s rational self-interested behaviour.

    One just has to connect the dots to see we’re entering an end-game (that will take still a few years to play out). At the conclusion of that end-game, paper trading profits in the dollar may need wheelbarrows to transport them to the local shop for necessities.

  6. GM, one of your points can be easily answered,
    buy backs reducing share counts boost EPS
    which many stock options are at least partially based on.

    In terms of the insider selling, directors are benefiting
    from signifiant amounts of yearly options so the case
    for holding stock becomes weaker imv.

  7. A great pianist said of the hardest pieces” They are either impossible or they are easy.Practice is the road to easy.Even then, most will not make it because they give up.”
    My young student ”When I got frustrated with a game I would read blogs on the internet about how other people play the game and then get angry when I could not do or see what they did… I would think they must just be bad teachers.But I just kept playing and one day I could see what they saw.It was by playing I saw.”

    I think my friend the trader Joed is one of the great trading minds of our time.He tried mightily to show how to see in his specific way IN REAL TIME.I could not.
    Yet EVERY single trade I take is driven by his way of thinking about trading though driven by a different set of tools.

    I am a painfully slow learner. To master what I do took countless thousands of hours.. I was driven by something Joed said”Before you add a setup to your trading, know that setup so well that you would be willing to risk your family’s well being on that setup alone.Short of that , don’t trade it”

    I have described in detail more than once the traders dream, the 886 algo, the red line green set, the 382/447 abcd..my path was to study for countless hours and to archive thousands of example of each one.

    It was suggested that my charts were too complicated that they looked like the crayon work of a 5 year old… when you are in the midst of trading that is what your charts look like you are constantly notating your charts looking for your trade setups. HERE is a cleaned up chart of recent trades entries. Because for the 886 algo and the red line green set the medianline sets are part of the trade I left the lines f or those on.

    good trading

    http://stockcharts.com/h-sc/ui?s=UVXY&p=5&yr=0&mn=0&dy=10&id=p64306618604&a=338712604&r=1426424868765&cmd=print

    1. slater9: I am sorry.. I know you have explained your trading system before, your 886 and trader dream indicators. If you don’t mind, may you please give me your quick interpretation of the UVXY chart/strategy? I want to learn your trading system.

      I am fascinating with volatility trading, where I think the serious money can be made.

  8. is it possible that we are already in a recession/depression but the financial instruments we would normally use to judge this now have no more meaning than something else we could bet on such as the results of a horse race or who would win a game of monopoly?

  9. I’m unsure if insider sales function as
    such a reliable indicator any longer,
    as renumeration packages are so stuffed
    full of stock options.

    They are worth some consideration, at best.

  10. If you are looking for an imminent severe sell off
    the FOMC has to remove the patient phase.

    I think on that most of us can agree.

  11. Since the Great Depression, the US economy has spent 15% of the time in recession. Two-thirds of those depressions started within two years of solar maximum. During this period, solar cycles were strong (high sunspot/ short duration).

    From 1850 until the Great Depression, the US economy spent 46% of the time in recession. There is no apparent link between the onset of recessions and solar max timing during that period. During that period, solar cycles were weak (low sunspot/ long duration).

    Given that the sun is now almost certainly entering a lengthy period of weak solar cycles, we might expect:

    1- to spend much more time in recession,
    2- to see a breakdown in the timing relationship between solar max and recession.

    1. CB Leading Economic Index for the US was still steaming upwards during January (February figures out later this week): http://www.conference-board.org/pdf_free/press/PressPDF_5393_1424340004.pdf

      The average of US CLI during solar cycles 19-23 shows a distinct peak exactly one year before each solar maximum. That would indicate that we have still not seen the effective solar max yet – no doubt because SC24 is different this time.

      Looking at the history of the US CB LEI (in the above link) since 1998, a recession would not be due for a year or two after it turns down – ie 2016 or 2017 (if it turns down very soon).

      2017 chimes closely with the likely speculation peak under previous weak solar cycles (excluding SC16), with a volatile shake-out occuring soon. Alternatively, following SC16 would indicate a more major sell-off during 2015 (depending on ISN figures over the coming weeks).

    2. Your analysis displays just how overly valued the markets are at this point. If the strength of the cycle is a factor then at this point we should be at a peak, but at a much lower level, at least closer to, but logically lower than the mean. The S&P needs to catch down to the Nikkei.

  12. John, the odd manipulated strength of dollar impacting everything. Not really discussed other then quick quip about Euro comparison… ZIRP vs Solar is a bit a misnomer in my opinion because as you said central banks are human managed and ergo impacted such. We need an update on demographic headwinds along with unemployment by demographic age around the world where available. Dropping population for producing population in terms in monetary velocity versus population living off the government and thus harming monetary velocity is key. We know unemployment in US is still fabricated as is inflation data. More accurate data explains the deflation on big items whilst inflation on smaller ticket items.

    Euro even with QE not going to bounce Euro higher. I still maintain we will see DOW 19,000 soon with maybe a crash later in the year. The one last year was supposed to be worse, but there was an intervention of some kind.

    There are a bunch of folks who stand to make money and have positioned themselves clumsily on rate increase in FOMC policy this year but the data doesn’t support an increase this year. If we assume ZIRP is here to stay through the next 10 years, is the way people need to be talking, but ignorant of demographics, they look to explain it differently.

  13. 10 years?, possible but highly unlikely.

    No demographic decline in the UK, we are in the
    early stages of a population boom.

  14. A-hem. This is the final V sell off, and recovery, before the parabolic blow off top. I expect –The Top– to be in October, 2015. I also expect the bottom of the V sell off to be in April. I posted this before when I took profit on the day of what is the all time high in the DOW. (I got stopped out of my short USD trade but so what after taking nice profits. I am not a perfect trader.)

    1. Good trading Richard. Nice location for the V sell off would be 4/2 to 4/15? A period of seasonal weakness, especially if prices meander higher until 4/2. A-hem. I have been accurate last few weeks and look for higher prices until next Friday. Though I am starting to doubt this based upon Slater9’s traders dream imminent sell off indicator.

  15. John,

    I posted here on March 2 at the most recent top with some charts using tech analysis from Elliott Wave Theory. We keeled over the next day.

    I’m at it again because the waves are getting really clear and when you marry them with your work, cycle theory (Steve Puetz), and I see comments from André and Alphahorn, who are pretty much on the same page, I had to put together a few charts and I’ll perhaps follow up with a video in the next couple of days.

    I’m looking at March 20 for a possible top and I’ve posted the reasons why online: http://www.worldcyclesinstitute.com/spendingdiagonal/

    Would appreciate your thoughts. I think we’re very close.

  16. To GM regarding imminent decline and boxed into corner. Same was being said in 1982 at end of oil crunch and Charlie Daniels sang the country and western song: “America is going to do it again”. I think that is an appropriate anthem for the new economy that will be brought forward during the next 30 years. Except this time is will be a global message. Cheaper, faster, smaller, lighter. In 30 years when all packages are delivered by drones, energy is much lower in cost, AI optimizes much medical care, and trees grow ever higher until they touch the clouds (well maybe not that) todays box will seem quaint. The SM will probably have another bear market or two during the 30 years but milder and of less duration than previously. And to the gold bugs: watch the Kitco youtube video with Daniella Cambona about the Canadian company getting PMs from melting glass in microwaves. The PM exudes in tiny amounts but still a lot cheaper than mining for it.

    1. valley, in the early 80s the world had nothing to move to if the dollar collapsed.
      Now it does, so the dollar has been cut adrift.
      I don’t share any of your optimism for the next 30 years I’m afraid, the world is going to go through hell first, thanks to the bursting of a 93 year old debt bubble.

      1. Imagine there is no debt, only equity in companies. Imagine a debt jubilee in which national debts are forgiven. Imagine slow hyperinflation in which govt. pays for expenses by currency creation, offset by dramatic improvements in energy, transportation, electronics; eat less, consume same amount or more of energy with better electronics, faster lighter cars, more convenient shopping (1 hour drone delivered shoes). You may be correct just seems to me like this is 1982 redux, and not 1929.

        1. You’re dreaming valley.
          If there was debt jubilee, you do realise that every debt is held as an asset by some entity? Bang goes everyone’s pension for a start.
          There will be hell to pay over the next 10 years, then the US civil war.

  17. I will try very hard to keep this brief. It may not help with day to day trading, it’s very big picture stuff.

    I firmly believe to be ahead of the crowd, one has to be prepared to look at the big picture, and connect some dots.

    We’ll start with a question: what caused the dollar to start to rise last summer?
    I believe it was this:

    http://www.ecb.europa.eu/press/pr/date/2014/html/pr140605_3.en.html

    The ECB introduced negative rates. They are not stupid at the ECB, they knew this would cause capital to flow across the Atlantic. One of the main reasons (confirmed to me by several bankers) is that the banking systems cannot cope with negative rates on a practical level, the infrastructure isn’t there..yet.

    That kicked of the rise of the dollar, which is slowly but surely causing a myriad of problems the world over.

    Why do the ECB want to cause a dollar problem? Why do the Saudis want a much lower oil price? Why are major nations moving away from supporting the US Treasury markets? Why is the Euro already tracking the oil price? Why is the Euro able to withstand the bankruptcy of ANY of its member states? (An entirely new style of currency, separate from any nation, that’s why. The gulf states are looking at currency union, so too in Africa, eventually in the far east too).

    http://www.bloomberg.com/news/articles/2015-03-13/central-banks-sell-treasuries-as-everyone-else-buys-u-s-debt

    The very simple answer is that the current global monetary (non) system doesn’t work, and everyone else is fed up with US global hegemony. So, as quietly as possible, trying not to cause any major upsets, actions are being taken to replace the current non-system with a better system (yet to be agreed in its finality).

    When looking at markets in the US (and actions the Fed or the US Treasury may take), there are only 3 items that need to be considered: the dollar, gold, and the US deficit/UST market.

    In simple terms, the US authorities, like the UK, the Europeans, the Chinese, the BIS, they all know we’re heading into deep trouble, a bursting of a massive bubble, and deep recessions.

    The US is in a league of its own though. It cannot allow the coming panic out of stocks to take T-bills or USTs into negative territory, whereas other countries can. The reason for this is that it would be game over for the dollar, as its mortal enemy (gold) would become the victor in a game that has been running since the 1930s.

    How so you may ask? Well, Allan has mentioned many times how liquidity is a big issue, and because of QE, and Basel rules, liquidity is very tight these days. But the asset that keeps providing billions of liquidity every day is the London gold market (you may know it as XAU, or unallocated electronic gold trades). Over 2,500 tonnes of gold are traded every day via XAU, on the understanding that there is some real gold behind it in the LBMA system.

    Trouble is that (physical) gold is being depleted, by entities taking allocated gold out of the system, heading East mostly. See these 2 links, and note the changes in vault inventory, a sharp decline in just a year (ignore the BoE holdings):

    http://www.lbma.org.uk/vaulting

    http://web.archive.org/web/20140727155710/http://www.lbma.org.uk/vaulting

    The intricacies of gold trading versus dollar liquidity preference are very complex, but here are some links that go into some detail if you are curious:

    (The links are within the tweets, and you’ll need to allow the blog to load, and it will arrive at the relevant comments from Victor).

    Simply put, once gold liquidity disappears, the XAU market disappears too. Given the volume of liquidity this supplies (2,500 tonnes = tens of billions per day), and it becomes clear that without XAU, the gold price would shoot to the moon, and instantly kill the dollar en route. As physical gold levels deplete, year after year, we are likely to see a ‘crunch’ hit that market, at just the wrong time. What is one of the ECB’s largest assets, even at current prices? See here, and note where it is sits, on line one:

    https://www.ecb.europa.eu/press/pr/wfs/2015/html/fs150310.en.html

    So, despite the Fed not being blind (and seeing the US economy is in no state for a rate increase), I would expect to see some very odd moves in the next couple of years that will confuse many. They need to avoid negative rates, buy up a load of bad debts (again, but this time possibly to include foreign dollar debts), and keep the US govt in funds (when official support is waning). They also will need to cope with a rapidly rising trade deficit. It could add up to lots more QE at the same time as rates are increased, and they introduce unlimited ‘positive rate’ reverse repos.

    That’s about it, as brief as I can make it, hope this provides some useful into the impossible position the US are now in. One thing that won’t be top of their agenda, but rather at the bottom, is the S&P or the economy, this is all about preserving their hegemony. (A final thought, if you were a country that owed $18 trillion, what’s the easiest way to wipe the slate clean for good? When will the speculative pool of capital sniff that out? When they do, it’s all over for the dollar, and hello to the Euro).

    Get yourself some physical gold, hopefully from your trading profits!

    Good luck.

      1. Also basket of currencies versus Euro will precipitate a global currency, I never see a Euro overtaking hegemony.

  18. “There is no point in using the word ‘impossible’ to describe something that has clearly happened.”
    ― Douglas Adams, Dirk Gently’s Holistic Detective Agency

  19. Random Observations

    Haven’t posted in a few weeks since mid-Feb when I predicted the Naz would hit 5100 in Apr-May (did make 5k). Still looks possible after Euro crash subsides. Armstrongs cycles point to a panic low in Euro next week which looks negative for stocks. Maybe Andre’s crash was in the Euro..

    Possible downside for SPX by end of month is 2020 (equals Dow at 17450 for EW diagonal and 125 dma) or if that breaks then 1950 from megaphone with Dec highs and Jan lows and 1960 H&S (from McHugh). Could bottom this week Megaphone top is 2150 by May.

    Oddly enough this is consistent with my big picture 1921-1929 analog to 2009-2017 where we are in 1927. Dec ’26 and Jan ’27 DJIA fell 5% then rallied back to new high in Feb. Next, March was down then up Apr-May.

    Bottom indicators
    CBOE skew approaching 1-yr bottom level, excl Oct
    http://www.barchart.com/chart.php?sym=$SKEW&t=LINE&size=M&v=0&g=1&p=D&d=X&qb=1&style=technical
    Spike in equity p/c (CPCE) >=.80 usually precedes bottom by 1-3 days
    COT for gold approaching buy levels of last Nov-Dec (large spec vs commercials)
    w/ possible dbl bottom artound 1120

  20. Crude looks to be continuing to sell off atm.

    US futures not look that perky either,
    may all change over the next few hrs.

  21. Completed a study showing the power of lunar effects on price. If you had exited the market during the last 18 years during the following days:
    Apogee, trading day before at close, buy back on close 3 trade days after.
    Perigee, trading day before at close, buy back on close 4 trade days after.
    Your return since 1998 would have averaged 12% higher per year as these two had average annual losses of 7.5% and 4.5% respectively.
    This implies that the days outside of these two should be much more likely to be bullish most buy not all of the time.

  22. GM

    A very interesting theory, one which seems plausible somehow because of the fairly evident desperate thinking that has gone onto this, and which in reality changes nothing longer term – which of course is the point. The old competition, labour, scarcity, debt systems cannot be allowed to die because they are so lucrative for the few.

    If accurate, this scenario just proves how limited humankind has become. In the alleged words of Thomas Gore:

    “If there was any other race than the human race, I would join it.”

    One can hope not to be quite so disappointed in the future perhaps, but I am not holding my breath…:)

    J

    1. I’d certainly be with Mr Gore jegersmart, we’re a hopeless species in so many regards. (Although, upon reflection, we’re not, we’re just manipulated by the 5% of the species that are sociopaths).

      Time is very big though. The past c.100 years since the Genoa mis-step in 1922 will be rectified, and then the world will be a more settled place, in terms of monetary imbalances, and in terms of no US bully causing wars everywhere. Still, far from perfect, there is no perfect of course. But back to reality again. Smaller governments too, hurrah.

      But the masses will need to adjust to being very poor again, once the debts are gone, and possibly the world lurches to communism at the end of this phase, blaming the evil capitalists for all of the trouble.

  23. I think money may flow out of the U.S. into Europe. Best add scenario I think will be DAX hitting 14,000 by July/August. We may get a drop I the US stocks but Europe is now in a raging bull market until end of 2016 at least. The following crash will potentially erase all post 2009 gains though unless central banks find a way to perpetually manipulate stocks higher. If we learn from the effect of US QE on US stocks there is lots of money to be made going long Europe this year and next.

  24. This is likely to be a volatile week,
    if in profit on an open position,
    it may be worth locking that in, unless
    you remain convinced of further upside.

    Valley, best of luck for this week
    on a very gutsy call and positioning.

    1. I’ve just increased my dax long exposure on the break of 12,000. I think it’s going to fly this week. Maybe a 12,500 finish is on the cards by Friday. I hope others on this site have followed me with the DAX and have been rewarded with fantastic gains. All markets up today so there must be tons of money flowing into stocks! I believe the FED will push back expectations for a rate hike this week which will send the markets rocketing even further. Moved stops to 11750 on dax in the unlikely event we see that again this year.

  25. Mae, there are some significant pre arranged meetings
    today apparently, so if he does not make an
    appearance some degree of panic may begin
    to set in.

    I find it very difficult to see anything dramatic having
    taken place, perhaps minor surgery, soon see.

  26. Looking for a break of 17830ish on the Dow at the close in which case I will keep my current long…probably….

    Just entered a short on the Nikkei at 19381 but have a stop around 19500 on that one.

  27. I thought if I posted this traders would get a firmer grasp
    Remember you can not do what I do unless you scan the index etf’s for the BEST
    SIGNAL.On the close on Thursday, the traders dream was in place in SPY….
    BUT THERE WAS NO SIGNAL YET IN UVXY…it came the next day in the first hour as the 886 algo triggered
    LATER IN THE DAY
    as previously shown, at the exact 240 pm bar, the inverse setup triggered
    the traders dream triggered SHORT UVXY and long DIA basis the 886 algo…

    With this approach to the market I am not trying to forecast price moves.Instead I
    am trying to trade WITH the most powerful traders , the volatilty traders
    by using a few simple triggers understandable to a ten year old… THE BIGGEST MYTH in the current market is that what the volatillty computers are doing is highly complex and beyond the reach of the average trader.The emperor has no clothes
    What they are doing to capture the short term swings in volatility is simple.. but only if you have the tools to see… I hope you have gained some insight into the simplicity from my posts.
    http://stockcharts.com/h-sc/ui?s=SPY&p=15&yr=0&mn=0&dy=6&id=p87386751040&a=338702695&r=1426507323170&cmd=print

    1. This might help too.
      I have archived and study thousands of examples of each trade trigger
      It is from that archive I get my probabilities of how often each setup
      reaches its MINIMUM target.. THE RISK set on each trade by using a stop
      is never more than 1/5th the distance to that target. This is technically AND
      psychologically important. I know IN ADVANCE that by risking the same amount on
      each trade I could be wrong 4 out of 5 times and still break even.

      The number one way a trade setup fails is if the very first thing that happens is an abcd sets up against it…
      The second way is if another trade signal sets up against it.
      so once in a trade it is simple a matter of working the charts to see if that happens

    2. Im going to put this as politely as i can. If you cant forecast price or time accurately then you are a gambler and no amount of pitchforks will ever change that.

  28. Fantastic days for the bulls yet again especially on the dax. I believe the parabolic phase has now truly got underway in europe.

  29. Hi all ! DAX at new record highs. I told you so. This is perfectly rational with the strong ECB buying since last week. Everything is going as planned. IBB at new highs also. Congrats to those who followed my recommendation a while back on biotechs.
    So, stay focused on the big picture and you will make money. It’s very easy to make money in this market.

    1. Shame I didn’t listen to your earlier as I would have been in an even better position. I do agree now that the bull market is fully intact and further rises are ahead. The crash scenario in the short term is complete rubbish. For those who are bearish it’s fine to have those views but looking at the market action of late it would be completely disastrous to hold short positions. It is just so easy making money being long I struggle to understand why someone would want to be short.

      1. Hehehe does Nicolas have the ability to subsume other peoples personalities? Perhaps we should re-christen you Krisholas. 🙂

      2. A student asked the Zen Master why he was having a relationship problem with people in general and the Master answered…” it is because you expect too much; demand too much; and criticize too much “.

        For example, if you are critical of your wife, she will never stand naked in front of you. Lol.

        This wisdom applies to the market participants. If you bash Mrs. Market and have a contempt for her, she will make sure you lose money. Why? is it your emotion that cause you to become self-destructive in the game of speculation but you don’t know it.

  30. Krish, I am very cautious on a medium term view,
    but don’t go short this market, too dangerous.

    It’s been my best day for awhile, nice bottle of malbec
    this evening.

    valley, looks like a great call by you, many congrats,
    enjoy your gains – I do not have the nerve to go 100% long
    even on a short term basis.

    1. Digital bow, and virtual thank you. Gap up today portends Mother of All intraweek up trend in place. Watch out above!

  31. Nicholas is correct again!!! Long stocks; short gold is a wonderful winning combination to employ and go to the beach. It’s so easy.

    1. German translation: Witwenmacher. Will this Farfegnugen up move lead to an air cooled engine light? My guess is no. QE = Price Appreciation. The more they print the higher their markets will go.

  32. good stuff as always. Looks like the 200 dma near 2000 on the s and p would come into play soon. people are quick to write off deflation these days but dollar strength and commodity weakness seem to indicate otherwise.

  33. Yes, it’s really easy to make money in this new era. You just have to understand what’s driving the stock market and forget all the old fundamentals like PE ratios, earnings, margin and so on. I’m glad to be living in this era, it’s a lot easier to analyse and you don’t need to waste time analyzing companies and earnings reports.

    1. It’s not a ‘new era’ Nicholas, surely this perpetual increase in stocks will be everlasting? Everyone on earth can become so wealthy, thanks to the central banks.
      Gosh, I also am so glad to be around as we enter the ‘Star Trek’ years.
      Money for nothing….?

  34. purvez, Albert Edwards remarked recently that this is
    the stage in the cycle where he begins to doubt his own sanity.
    I think that nicely sums up the DAX.

  35. DOW target at 17970 reached, closed some of my positions here. I have a target of 18070 next, but don’t want to push it right now. Stop moved to 770.

    J

  36. I’m really not sure why Nicholas’s views
    appear to be regarded as somehow unusual or exotic
    in someway, this is the current consensus
    view on the majority stock sites.

    His views are now mentioned more than JH’s,
    on John’s blog, it’s utterly ridiculous folks.

    1. His negative way of saying things pushes buttons which elicits responces. He seems to be a bull in a bull mkt which is a good thing. So let’s just ignore the abrasive defensive way he says things.

  37. Trader like Valley having a fine day because of his prowess. He gets a long with Mrs. Market and she gives him love and some money.

  38. Thank you John for another excellent post. You touched breifly at the end on the U.S. Dollar. 2014 was the year for universal bearishness on long term U.S. Treasuries. It turned out to be a great year for treasuries. 2015 looks like the year for universal bullishness on the U.S. Dollar. I’m betting that it will turn out to be a terrible year for the dollar.

    the hedgers position on the dollar looks like manufacturing process going out of control. the equipment operators would be forced to emergency stop such a process before the factory explodes.

    The IMF implementing a change to reduce the dollar component of the SDR while adding the Remnimbi and a few other currencies might take a few myopic traders off guard.

  39. It is frustrating with all the detailed work I have shown some of the comments that follow….
    ONCE AGAIN!!!! UVXY IS A 3X LONG VOLATILITY ETF!
    IF A TRADERS DREAM TRIGGERS SHORT IN UVXY
    THEN THE EXPECTATION IS THAT THE STOCK INDEX INDEXES WILL EXPLODE UPWARD!

  40. Hi slater9

    Which comments are these?

    I had and still have a bit of a problem understanding what you write. The stories about 10 year olds and so on just makes it hard for me to understand. Also, posting historical charts and making annotations just make for confusion because anyone can do that. I can just call it “jegersmart algo” for example.

    MY advice is to give the calls when you see them and why with a graph in realtime – then we can better understand why a 10 year old can understand this…:)

    Thanks for sharing
    J

    1. And what if his 10 year old protege happens to be some phenom who turns out to be a future Bill Gates?!! I mean it is one thing to keep mentioning some elementary school kid is apparently smarter than 95% of us which makes us all feel like we are downright crap stupid. And then it could be something else if this kid is merely some young brainiac …

  41. JH, I just noticed you changed your stance a little. Are you looking to buy an April bottom? Would that be after a waterfall decline, or are you looking at buying before a second chance rally?

  42. As mentioned yesterday this is a week for locking
    in gains when available imv.

    WTI closed at a 6 year low yesterday and crude continues to
    sell off today.

    It does appear that global deflationary forces are growing.
    The Eurozone macro outlook has not been transformed
    by ECB QE, a weaker Euro will help what still appears to be
    near recession conditions.

    This does not mean equities need to sell off hard just now
    and the FOMC may provide a platform for further immediate upside.
    However fundamentals will ultimately come back in to focus
    and the renewed sell off in crude may be an early indicator
    of this.

    If US macro data begins to trend back upwards
    it would significantly weaken a more more cautious stance.
    With the current $ strength that looks unlikely to me.

      1. I don’t know how high it can go, but I think there’s no theoretical limit. The strength of a geomagnetic storm is directly proportional to the speed of the CME, and this one looks like it left the sun in the early hours of 15 March. The Carrington Event CME in 1859 took only 17.5 hours to reach us, so it was around 3-4 times as powerful as what we are seeing today.

        https://bookofresearch.wordpress.com/2014/12/15/the-largest-magnetic-storm-on-record-the-carrington-event-of-august-27-to-september-7-1859/

      2. Just trying to put today’s Kp8/G4 “severe” storm into perspective, I see that Wikipedia quotes a Dst estimate for the Carrington Event (the most severe recorded storm) at -1750 nano Tesla. Dst (disturbance – storm time) is a purer measurement of geomagnetic disturbance than the Kp/G/Ap indices, because the latter are heavily influenced by latitude which has to be averaged out.

        Today’s storm currently reads -170nT. The more negative the Dst, the larger the geomagnetic disturbance. That’s barely one-tenth of the largest recorded. Dst below -300nT is rare. Dst below -450nT is extremely rare. Between 1957 and 2008 there were only 40 storms stronger than -250nT (“superstorms”). Of these, 95% occured in the solar max year or the three following years, so we will witness more large storms over the next 3/4 years.

        As for the time of year: 75% of superstorms occured in Mar/Apr/Sept/Oct/Nov. Interestingly, 10% occured in July (outside the usual geomagnetism season) but none in June or August.

        1. Interesting Mark. Is the scale a log scale like earthquakes?

          Why is there a seasonal distribution? The sun should be shooting CME without concern of the seasons on earth or any other planet.

        2. Dst is a physical measurement with no log scale, wheras Kp is quasi-logarithmic. You can check the current Dst here: http://wdc.kugi.kyoto-u.ac.jp/dst_realtime/201503/index.html

          By the way, it is now -224nT and threatening to become a biggie…

          Geomagnetic seasonal distribution – I’ve seen several reasons put forward for this, but none are totally convincing. Obviously the geomagnetic disturbance peaks coincide with the equinoxes, so it seems that the southerly component of the Interplanetary Magnetic Field (Bz component) finds it easier to direct the solar wind onto earth while our magnetic axis is neither inclined towards nor away from the sun.

          Some studies have found that simultaneous high speed solar wind and strong Bz are both required to induce strong geomagnetic disturbances (ie. when they act together their effects are multiplied).

  43. RE Nicolas, his comments are way too obvious, ie “new era”, forget fundamentals”. He is trying to press buttons and seems to be achieving his aim.

    His posts are humorous 🙂

  44. Weakness at open. Reduced longs to 100 percent from 200 percent. DAX off 1.5 percent today. Still expect 2 percent more upside from US SM by Friday.

    1. Good job. It is hard to sit tight during a period of indecision with such a concentration.

      The defensive staples have made a nice move yourself. In fact, WMT has been quietly outperforming the SPX since August last year. A 2011 style correction could be coming.

      1. It is statistical based trade. All of the indicators that I watch: moon phase, declination, distance, seasonals are + this week or very +. This happens only once every couple of months. That is why I am long til friday. Next week I will be entirely bearish cause all of the indicators move into – all week.

      2. Statistical in the sense that each indicator has 60% or more correlation to price move and when combined much higher than 60%.

  45. If FOMC is supportive that is likely imv.

    It will be interesting to watch guidance now as
    DXY is not fully factored in to guidance at this
    level.

  46. I sure wish there was a way to parse messages by poster so that if I just wanted to read one poster’s comments at a time, I could do so. Slogging through everyone’s messages (as incisive and clever as they may be :), is a real chore. John, if there’s a way to do this, it would be very welcomed.

  47. I took profit on my 200% long too as the bulls are lacking conviction. If $NYHL goes negative again, that the signal I need to sell short.

    1. decent drop in Dax today so worth being cautious for the rest of the week. If it recovers this drop in the next couple days it’s a bullish sign otherwise short term there may be a bit more to fall. Medium term still looking quite bullish. Opportunity to add long for those who missed the initial rise.

  48. I was just over 40% long yesterday and that gave me
    a headache, would not sleep at night running those
    type of %’s.

  49. I am 100% right now, in SPXL (3x SPY) with 1/3 of portfolio. Fed meeting pause, expect up move after statement released. If market sells off after statement is released I will exit.

  50. All this talk about X% long has my 2 brain cells a bit curdled. Please can anyone/everyone explain what they mean by X% long and ideally quote the instrument that they trade.

    My reason for asking is I want to know whether your positions, once taken, define the MAXIMUM loss (assuming you allow them to go to zero) or they fluctuate with price.

    I trade ‘spread bets’ which are not dissimilar to CFDs i.e. every price movement means that your loss/profits increase. That I know is a very hard game to play and that is why I would like to know if that is the kind of play that you guys have.

    The leverage can produce AMAZING LOSSES…..or gains!! LOL.

    1. When did you get your second brain cell? If your cells double every month, within 64 months you will be the most intelligent person in the universe.

    2. From my own experience purvez, I would suggest ditching spread betting, as the leverage can be a killer.
      Play it safe using ETFs with a broker (in an ISA maybe), they cover every asset class these days, and you can keep things under control much easier.

  51. For my account being 200% long is taking the total value of portfolio and investing all of it in a 2x leverage SPY instrument or today it is taking 2/3 of portfolio and investing in a 3x leverage (SPXL). 2/3 times 300% = 200%.

    To get 100% long, I typically invest in SPXL with 1/3 of portfolio. 1/3 times 300% = 100%.

  52. Any thoughts on oil? It looks like the bottom is forming, or at least temporarily in. Gold is totally unsettled before the FOMC.

    I am banking profits on BIB and IBB, I might be early as always, but decided to sit on cash before the dangerous FOMC. Things could go either way from here.

    1. Erick – I’m starting to see signs of the capitulation move I referred to last week. Numerous downgrades on oil and oil service companies, larger daily moves down, etc.

      I’ll probably wade into my first positions on Friday, after the USD drops oil a little further.

        1. My observations today from the EW perspective:

          I think the drop in oil today signified a move down to a lower low in oil. So wave 4 is pretty much over, and wave 5 has begun. I am anticipating a bounce from here.

          Gold is also ready for a bounce imminently, probably when the USD moves down to its cycle low.

          QQQ, SPX is still quite bullish, but it all depends on the FOMC and if the Fed allows the SM move down to its natural daily cycle, or if they want to bring the Nasdaq up to the 5100 level before allowing it to retrace.

    2. But gold has been within a $20 dollar range for a week now?
      That’s about as settled as it ever gets.
      Weird how we see the same thing so differently.

        1. Ah no, sorry gen, I was replying to erick, who thought gold was ‘unsettled’, whereas I thought it had been very settled.

          I personally think oil is due to reconnect to gold in due course, but not a firm conviction.

      1. Hi GM: What I meant by “unsettled” is that there is no clear direction whether gold/miners would go up or down from here. Today short squeeze was epic, but FOMC day could potentially be a fake out day. Both oil and gold need a follow through tomorrow to confirm a reversal. I myself started accumulated miners and oil yesterday.

        I am confident in my counts in oil, gold, and USD which I posted yesterday. At this point, I am still unsure about Nasdaq and whether it would hit 5132 first before the real 5%-7% correction, or the SM would completely reverse and head south from here. Judging from the VIX angle, my bet is slightly leaning towards Nasdaq racing towards 5100.

        My post yesterday 03/17/15: I think the drop in oil today signified a move down to a lower low in oil. So wave 4 is pretty much over, and wave 5 has begun. I am anticipating a bounce from here.

        Gold is also ready for a bounce imminently, probably when the USD moves down to its cycle low.

        QQQ, SPX is still quite bullish, but it all depends on the FOMC and if the Fed allows the SM move down to its natural daily cycle, or if they want to bring the Nasdaq up to the 5100 level before allowing it to retrace.

  53. Hi all ! So, IBB is green and making new highs, as expected. Biotechs are the leaders and are starting the next leg of the bull market.
    And yes we are in a new era where central banks are driving the markets. It’s not my fault. I’m just trying to analyse rationally the reality and act accordingly.

  54. I was kinda bored today so I decided to invent a new cycle:

    100 year cycle – 10 x 10 year solar cycle

    1720s – John Law, a Brit expat in France, invented the fiat paper currency system to sell shares in the Mississippi Company creating the South Seas bubble where share value soon exceeded 80 times all gold and silver in France

    1820s – the Panic of 1819 was the first major peacetime financial crisis in the United States followed by a general collapse of the American economy persisting through 1821. The primary cause was a land boom/bust following excess demand from Europe for agricultural goods.

    1920s – excess speculation in the stock market due to surplus stimulus from supply-side tax cuts after the 1921 depression and financial stimulus from the newly created Fed lead to market crash in 1929 and depression of 1930s

    2020s – ???, s&p 500 target 666 x 6 = 3996

  55. Kipper und Wipper financial mania 1618-1623, debasement of currency thru out europe which was the precursor to the Tulip Mania of 1637.

    1. Peter, I want you to be right, but your ed count seems different than the book example in that the live chart has 2 touches of the upper trend line in a row in late 2014 instead of alternating high to low, suggesting 1 more leg up.

      1. That’s what I originally thought, too. So far this morning, we have one motive wave down in SP futures, so I have to go with the count I see … and the way the market it acting (to a lesser extent).

        1. Let me also add that we’re in the final stages of software that has mirrored movements of the planets and gives us the turns. It told us the turn was last night and it shows the waves and turns going forward. If it keeps up over the next few weeks to this degree of accuracy, I’ll talk more about it.

        2. The ES (eminis) has actually come down but not far enough for a 5 and the NQ … not sure it’s five waves, either, so in fact, we could head up. You certainly could be right, stormchaser … I’m now on the fence.

  56. So FOMC day has arrived.

    Will “patient” be replaced with a similar phase
    that signifies.. patience )

    Be careful out there today folks.

  57. Once today’s fun and games are out of
    the way I would look for renewed focus
    on DXY in the context of earnings guidance.

    Given the significant $ strength over the last couple
    of weeks, I do not see this being fully factored
    in to current guidance – unless the $ index begins
    to weaken from here.

  58. Now THAT is a surge (geomagnetic disturbance as measured by Potsdam Ap): http://www.solen.info/solar/

    Almost a “superstorm”. A sign that the sun is in (or entering) the year of solar max.

    No apparent effect on the markets yet. There were comparable storms around September 1998, October 1999 and then April, May, July, August and October 2000 – so on that basis, stock markets could keep going higher for another 18-24 months before the risk aversion it induces really takes effect.

    1. I looked at the chart Mark. I could see one line spike up, but the others all see to be in a declining trend?
      Is the one-off spike that significant?

      1. It is very significant GM. The central thesis behind solar-induced speculation is that increasing sunspot numbers (ie during the rise into the solar max) cause increased risk-taking, aggression, excitement, speculation etc. Then, during the sunspot decline after solar max, increasing geomagnetic disturbance takes over – causing the opposite (risk aversion etc).

        And very recently we’ve seen sunspot numbers struggling (although I think they’ll keep tentatively recovering for longer than expected), and geomagnetism now starting to significantly increase.

        The practical problem so far has been in determining just when the solar max was. During all of our lifetimes we have only experienced strong and short solar maximums. This time its different – a weak and long maximum. The level of sunspot numbers doesn’t affect the level of speculation directly – its the length of the max that seems to increase speculation exponentially.

        So we have decreasing sunspots (but not suddenly disappearing); we have increasing geomagnetism (but it could take two years to take its toll, like 1998-2000); we have the moon repeatedly modulating all of this to the extreme (as witnessed by the tetrad etc) – all for many months to come. Yet just about everyone has abandoned all this, because the SSN (smoothed sunspot number) timing model didn’t work for SC24, just when it is starting to get interesting…

        1. Fascinating, thanks Mark.
          It’ll be interesting to see if so many items come together, monetary and solar.
          I can definitely envisage a US stock market bubble into 2016/17, even as the economy goes to ruin, due to money flowing their way (and tying in with the length of the maximum maybe).
          I wonder when the bottom of this solar cycle is due?Around 2019/20 maybe?
          All very helpful for medium-term planning!

        1. I admit I don’t quite know what I am doing. But this is what I did.

          From ftp://ftp.ngdc.noaa.gov/STP/GEOMAGNETIC_DATA/INDICES/KP_AP, I clicked on each year.
          For example,
          ftp://ftp.ngdc.noaa.gov/STP/GEOMAGNETIC_DATA/INDICES/KP_AP/1937

          I note that the format of the file is based on “fixed width” in Excel. Therefore, you cannot separate by a delimiter such as ” “. The column I am interested in is the 2nd or 3rd one from the last. For example,

          For the first line,
          37 1 11420 110 3 3 3 7 3 3 0 33 4 2 2 2 3 2 2 0 20.00144 0.03
          The columns I am most interested in are the first 4 characters:
          “37 1” which tells me Jan 1937.
          And close to the end “20.00”, which I believe is some measure of Ap.

          I then plotted a graph. From 1932, all the numbers were smaller than say 850. I noticed that the first time we got a big storm was

          37 4281424107080807367675053540132207207154111111 48 561281.98149 0.03

          which would be the end of April 1937. The Dow peaked in March 1937, which means the peak was before the first big storm.

          This is unusual. (Zero storms before market peak) If you look at other years, we frequently have storms from before the market peak.

          For example, [589]/1998, 2/1999 and 10/1999 are storm months. (5 storms before 3/2000 peak)

          As are 5/1985, 2/1986, 5/1988, 3/1989, 10/1989 and 11/1989 (6 storms BEFORE the 1/1990 Nikkei peak).

          After observing all morning, I don’t really have a conclusion, except this SC24, the storms are either milder on average OR that the major ones have yet to occur.

        2. Doing the same for 1964-1974…

          We had couple of notable storms in 1966, 1967, 1968 before the 1969 SOY Market Peak.

        3. If 3/2012 was a significant storm, then we had a long lull…3/2015 will likely be the second significant storm in this cycle. (Or perhaps our expectation of what is significant in units needs to be changed for SC24.)

        4. Excellent John. Your first wo graphs show the classic scenario of first geomagnetism peak basically coinciding with solar peak, but then continuing into another (often bigger) peak a few years later.

          Your third graph illustrates just how different SC24 is to what we had been used to. That March 2012 storm is close to the initial large sunspot peak of late 2011 (commodities benefitted up to then). So that classic timing scenario does not seem to hold for this weak cycle – do you have a graph for the late 1920s? That might help us to determine a likely path for solar/ geomagnetic timing over the next few years…

        5. 1929 crash using AA*
          10/1926 — Florida Real Estate Bubble? (2nd highest)
          7/1928 — highest peak
          3/1929 was the higest in 1929, but quite disappointing.

        6. Feel free to ask for other dates, but after reviewing, I am unable to find a pattern incremental to just using solar maximum.

          For me personally, I felt nothing during this storm. The X-flare on 3/11/15 hit me on 3/13/15. Perhaps it is not geomagnetism. Or perhaps it is a Poisson process that cannot be easily predicted.

        7. John – thanks for your graphs. There is something which immediately strikes me in them; something which I hadn’t noticed before. In the strong solar cycles, the general rule about first geomagnetic peak coinciding with sunspot peak (with second geo peak following a few years later) is obvious. But now I notice that in the weaker cycles, the two geomagnetic peaks are moved forward so that the first occurs well before sunspot peak – typically around two years before. Then geomagnetism persists, but without increasing, until around the sunspot peak. Sure enough, this has happened in SC24 (April 2012).

          There will be exceptions of course, like the two storms during April 1869 which are a bit early for a strongish cycle, but exceptions are to be expected in any natural process. Looking at the late 1920s, there was a geomagnetic surge during 1926 – ie two years before the SSN peak. Then the main geomagnetic surge coincided with SSN peak. After that, geomagnetic disturbance remained but at lower levels – quite unlike strong solar cycles where there is the subsequent (and often higher) geomagnetic peak.

          This raises the possibility that geomagnetic disturbance precedes sunspot activity in weak solar cycles, rather than the other way around in strong cycles. This would help to explain why speculation typically continued (albeit in a volatile way) after most previous weak solar cycles (SC16/ 1929 being the exception). My comments above about 95% of superstorms occuring within three years of solar max are based on studies looking only at the relatively strong recent cycles. http://ilwsonline.org/presentations/08-10/eecher.pdf We ought to check for evidence that weak cycles might be different.

          So I would like to see one of your graphs covering SC13 (1890 to 1900) – it would help to show whether this relationship is a tendancy or a coincidence. Perhaps the big storm we’ve just seen is just an isolated event, and not a sign of things to come.

    2. Mark, From Oct of 1999 through Oct 2000, even May of 2001 was a major topping process – sideways with a downward bias.

  59. How pathetic have global markets become when participants are fixated on the inclusion or exclusion of a single word?…… Unfortunately PATHETIC is the best way it can be described.

    1. The sooner this whole charade they call global financial markets falls apart and we begin again the better.
      At the moment it’s like watching a train wreck in slow motion.

      1. Agreed we need a huge reset and then non QE fuelled growth to make it sustainable. But the central banks will do everything in their power to prevent this reset hence short term I’m still bullish. Gone long on dax at 11860 today expecting fresh highs on dax soon.

  60. Patience! my earlier post should have read (not patient)
    posting before a morning coffee not a good idea
    in my case.

  61. Re the DAX, now it has broken through minor support at 11850 odd I will probably look to buy around the 11755-760 mark – if seen.

    J

  62. I doubt many trade the Chinese market, but I just noticed the SHCOMP is up 10% in a few weeks, and (perhaps) more importantly has broken above the high point from mid-2009.

    Also, it’s up by 74% since June 2014. Just a bubble, or are the markets sniffing an impending Chinese devaluation?

    Crazy times, in this new world.

  63. @stormchaser80
    Another look the SP500 sequence this morning: Drilling down, the sequence is in an overlapping 3, so the trend is down by EW standards. We may play around in here a bit this morning, but by the end of the Fed, I would expect us to head down.

    Unless the waves are in 5, it’s not a final 5th wave and can’t reach the top.

  64. I learned what I do by collecting and studying thousands examples.so I show examples of a few things happening over and over thinking even one trader might copy and save and study.

    On Monday’s close, the QQQ set up the traders dream..
    In stead of selliing sharply to the downside with the other indexes
    the QQQ completed an abcd retrace by 1130am yesterday pointing to a new high in the QQQ.. That is what happened.. As stated before the number one way a trade signal fails is if an abcd sets up against it.

    At the high at the 335pm bar yesterday, the QQQ completed the red line green set sell signal, simultaneous with the 886 algo triggering long in UVXY..
    I n addition Joed’s previously referenced volatility chart based on his work on time
    was posted yesterday showing the time window for a turn up in volatilty is present.

    Per Joed’s previously referenced thoughts about the tools working better and better on small time frames… the tools have had an extraordinary run these past
    weeks…I suspect a bigger move is coming… will just have to see.

  65. Chinese Depression of 2016. Fred Foldvary wrote a monograph in 1997 called the Depression of 2008. You can read the article, but basically per the 18 year cycle in real estate, an economic depression hits 2 years after the peak in real estate prices. He wrote a 2007 update noting RE had peak in the spring of 2006. Well, real estate prices peaked in Aug 2014 in China. In the US, stocks kept going up for almost 2 years. However, the the Depression of 2008 hit right on schedule. US real estate prices fell for six years. 2016, Chinese date with destiny The news about China, indicating they are slowly letting the air out of the bubble, reminds me of Bernanke and subprime contained and housing prices will not fall – I think they had already been falling when he said that.

      1. They don’t have a choice. It is all about filling up the rice bowl and keep the citizens happy. Unemployment would bring on instability most feared.

        China may go down but it will bring the short sellers with it.

        1. And the Chinese will kill their currency too, whilst dumping USTs to do it, no free money!
          So much in play in the next few years.

  66. Ref trying to catch the oil falling knife. The large speculators are caught extremely long. They have liquidated half but they are still 2.5 times normal peak. They are usually right during trends, but when the trend turns on them, watch out!

    1. Kent – My timing model has Friday as a buy point, so I’m going to trust it. I wrote last week to wait for the capitulation move, which I believe is playing out now. Last weeks build was 9.6 Million barrels. Price, downgrades, builds….all capitulation moves playing out. Now I expect them to pay out.

    1. I just covered my little short ahead of Mrs. Yellen’s statement. I have been riding the waves and correct every time lately so I fear my luck may run out.

      Lets wait for the reaction accordingly. I am flexible as the trading range continues.

  67. Geno0010, I love your insights and your contribution to this website. I see that your timing model has Friday as a buy point for oil. I was wondering if you have a timing model for SPX? I know you are bearish, do you still have any shorts left for SPX? Thx

  68. Mark, I admit I don’t quite know what I am doing. But this is what I did.

    From ftp://ftp.ngdc.noaa.gov/STP/GEOMAGNETIC_DATA/INDICES/KP_AP, I clicked on each year.
    For example,
    ftp://ftp.ngdc.noaa.gov/STP/GEOMAGNETIC_DATA/INDICES/KP_AP/1937

    I note that the format of the file is based on “fixed width” in Excel. Therefore, you cannot separate by a delimiter such as ” “. The column I am interested in is the 2nd or 3rd one from the last. For example,

    For the first line,
    37 1 11420 110 3 3 3 7 3 3 0 33 4 2 2 2 3 2 2 0 20.00144 0.03
    The columns I am most interested in are the first 4 characters:
    “37 1″ which tells me Jan 1937.
    And close to the end “20.00”, which I believe is some measure of Ap.

    I then plotted a graph. From 1932, all the numbers were smaller than say 850. I noticed that the first time we got a big storm was

    37 4281424107080807367675053540132207207154111111 48 561281.98149 0.03

    which would be the end of April 1937. The Dow peaked in March 1937, which means the peak was before the first big storm.

    This is unusual. (Zero storms before market peak) If you look at other years, we frequently have storms from before the market peak.

    For example, [589]/1998, 2/1999 and 10/1999 are storm months. (5 storms before 3/2000 peak)

    As are 5/1985, 2/1986, 5/1988, 3/1989, 10/1989 and 11/1989 (6 storms BEFORE the 1/1990 Nikkei peak).

    After observing all morning, I don’t really have a conclusion, except this SC24, the storms are either milder on average OR that the major ones have yet to occur.

    1. John, I’ve just been looking through your explanation and the new chart above of annual days with aa above 60. There is a lot of valuable information in these, because up until now the only geomagnetic-financial studies I’ve seen cover very recent geomagnetic data (ie. Ap and Kp) – so they therefore only cover the more recent, relatively strong solar cycles which show the first geomagnetic peak coinciding with SSN peak and a second geomagnetic peak a few years after that.

      But your charts reveal a definate tendancy in the earlier weaker cycles for the first geomagnetic peak to occur around two years before SSN peak, and the second to roughly coincide with SSN peak. This, I would submit, is not because geomagnetic disturbances are pushed forward by a couple of years, but rather because sunspot peaks are pushed back in time during weak solar cycles. This means that after solar sunspot max in a weak cycle, there is no subsequent significant peak in geomagnetic disturbances (see the SC12 and 13 maximums of 1884 and 1894 in that annual days with aa above 60 chart above).

      So why have we just seen that big storm recently, especially since SSN max was nearly a year ago and the dipole reversal exactly two years ago? Well, sunspot numbers as measured by ISN are only dropping out of their plateau now (and still to be confirmed over the next two weeks or longer); and cosmic rays indicate a tentative solar max between September 2014 and now.

      It is my view that this lack of a post-solar max geomagnetic surge in weak cycles was the cause of continued very volatile speculation (rather than an immediate crash) after sunspots had started to decline. SC16 was the weak-cycle exception to all this, with geomagnetism surging into 1930 according to that same “aa above 60” chart, but that was because of persistent medium-high levels rather than any big storms.

      You mentioned SC20 as an in-between cycle, and its not surprising then to see a fairly mixed geomagnetic storm picture in your own chart above. Geomagnetic activity was reasonably similar then to what we have been seeing recently. During SC20 (late 1960s) and SC13 (late 1890s) US stock prices had been volatile, before surging upwards (taking commodity prices with them) in both cases as ISN fell from its plateau. Then 2-4 years later, after very large gains, they lost around half their value while commodities accelerated upwards. That is what we are facing over the next few years, unless US stocks do during April 2015 what they did during September 1929.

  69. Well it was always going to be a volatile and potentially
    dangerous day if caught on the wrong side of this,
    250 point intra day swing on the DJI.

    Gold getting a nice pop, I thought the risk/reward
    looked reasonable, however I will not make a habit
    of that type of trade as commodities and metals
    are not my area.

    Stay safe folks.

    1. And BANG. The Fed blows up the shorts again. Who really expected a different outcome?? Marc Faber came out and said no rate rise this year. I think he has this one correct. The word patience is now history and the market will focus on some other word I guess. An interesting scenario would be if the Dow lost all its gains and finished down today. That would get many heads scratching.

    1. My indicators are saying the same. new ATH is DJI and the SPX into April.

      I hope this will become a set up for a real big fall…Like you said. Be patient.

      Am I glad that I covered my short!!

      1. Mine got stopped out, sad really. Caught the right side of the move with oil, gold and EUR/USD though, made a lot more money on those than I got stopped out on SPX!

  70. RUT at a new record, that’s about a 300 point
    intra-day DJI swing atm, oh my.
    Gold up over 2%, painful for those short.

  71. Wow ‘moon shot’ as a descriptor for the last 15 minutes since the FOMC minutes would be an apt one. However DJIA is approaching 18030 level where I’m going to go short once I see a small down trend developing.

    This play is all part of my expanding ending diagonal theory (‘theory’ being the operative word here). Why 18030 because according to my graphing package that’s where the w-1 which was an ‘abc’ ended. Of course it may go a bit higher hence my reason for waiting till the down trend starts.

    I then see this developing into the ‘crash’ scenario that others with an astro basis have suggested into early April. There after a 2nd chance high as per our host and then the ‘End of the World’ is nigh scenario.

    Does anyone here think I’m a broken record? Hehehe.

  72. Here’s a thought –

    Top tomorrow (maybe 20th) around 2,099 or lower.

    And first bottom around April 16th, maybe around 1,905. If it goes lower, we are taking out the 1,820 low set back in October.

      1. Thanks. I mostly do technical analysis, one of my friends does astrological analysis. But looks like technicals should start turning down in a day or two, but it could be another 5-6 days as you suggest.

    1. Feel so sorry for the Bears. A rate hike was meant to send markets down but Yellen openly admits one might happen in June and the markets are soaring. What has to happen for this crash to start? Answer – a bigger bubble! We are not just there yet in my opinion. Maybe Mr market will throw in a drop today/tomorrow to suck more bears in before new ATHs next week just to squeeze more cash out their accounts.

      1. i think my math is right. It should be 1637.

        who does this sound like?

        But on the whole, Mr Garber reckons that investors acted rationally. He suggests that the trend towards extremely high prices, followed by rapid declines, was typical for rare bulbs, due to their growing cycle. And according to Nicolaas Posthumus, a Dutch historian, serious tulip financiers generally did not participate in the speculative markets

        1. Yes, kind of ironic that the Nicolas that posts on this blog encourages speculation in QQQ and IBB. Tho’ with CB dovishness a long term bullish case is not unreasonable. Oracle founder Larry Ellison 2003 predicted biotech was going to be replace computers as the new long term growth industry. I just don’t have the appetite for that much risk.

  73. Valley, is your back starting to hurt from all this bowing that you are having to do? Congrats again!! Earlier in the day I (UK time) was thinking about your call and whether it would pan out or not. Certainly seemed dicey but this moon shot has proven the value of your system.

    I know you said you’ll wait till Friday before getting out but please as always let us know if you change your mind.

    Congrats again!!

      1. Back to 100% long until Friday. Today’s extra leverage was based upon bet that market would rise after fed meeting 11AM statement.

        1. Good Job my man. I am having an excellent day too.

          I am a Lindsay fan and a new high in the US indices would look like pt 23 in a 3PDM….where a mama fall can be dreamed.

  74. There are some amazing solid traders on this blog. Cheers Valley, great calls on SPX. You are crazy good, 200% long. I know geno0010 says if SPX is “Over 2090 implies 92% odds of a new high over 2119.”

    I know you said you will be short soon but I was wondering if we don’t get to SPX 2119 by this week, do you think we will see below spx 2040? Thanks

    1. I think we will stay up until Friday and then down next week. Could be 1/2% down next week or 6% down. I trade direction and will take whatever comes.

  75. The big moves are in the UST markets, the 2-year yield is down by over 16%, and the 10-year down by over 5%. That’s yields down. 16%!!

    If I were a trader I’d be selling this pop in the shares markets.

    1. Yellen needs a solar flare up her ar$e during her press conferences, so many words, delivered in monotone, ultimately all meaning virtually nothing at all. Poor woman.

  76. One of the things that trading using a Spread Betting account allows is the ability to place ‘guaranteed stop loss’ bets. i.e. Even if the price ‘jumps’ past your stop loss you’re loss is only limited to the ‘guaranteed’ amount.

    Now if my 2 brain cells had been working in harmony what I should have done is take both a long and a short with ‘guaranteed stop losses’ on both positions. That way I lose 30 points on the losing position and make whatever the winning position gives me….in this case over 250+ points!!

    I have only managed this once by the way…..largely because I keep forgetting this strategy. 2 brain cells to be blamed again.

    1. Don’t you dare to touch the Sell button! haha… $NYADV (advance issues) at 2,598 right now signaling some serious/meaningful buy appetite.

      1. Bullish week seasonally and lunarily, bullish week cause of dovish fed; this could be epic rise. Tho’ the higher the rise, the more the potential energy to the downside. (SPXU (3x short) is looking to exit the barn and enter the track on Friday). Reminds me of the Kenny Roger’s song: “Know when to hold them, know when to fold them”. I plan on folding on Friday.

        1. Valley, if we get a new ATH, I hope $NYAD (cumulative) would diverge with price to set up the next fall.

  77. Just took a ‘scout short’ at 18064 on DJIA…..so am underwater with DJIA at 18074.

    Let’s see how ‘that’ pans out.

      1. Newt I have to trade what I see. If it doesn’t work out then ‘ah well’, live to fight another day.

        You have to remember I’m a MICRO (can’t find a way of doing it small) count guy so every 5 minute wave counts with me. I do step back and look at the bigger picture hence my call for 18030 etc but once the ‘target’ is hit them I’m like the sparrow hawk, focused on the ‘one bird on the flock’!! Does any of this make sense to anyone?

        I’m happy to stop jibbering.

  78. There is something seriously wrong with John H analysis, History does not repeat it rhymes, so is it making a bigger bubble. He seems so intelligent but I have never seen him acknowledge CB power.

    Bill

    1. As a long term price trend changer solar cycles are very predictive. If (I repeat if) a bear market is going to materialize post solar max is where most recent bear markets have developed. And, knowing the next 6 years are waning means that you can look for more volatility as market may just mark time until the next solar up cycle. The reason I read this blog and appreciate JHs analysis is the pithy economic summary and a further understanding of how knowing SCs and their probable effects on market performance. I personally am very bullish next 6 years but it is based on the New Economy idea that this time tech will be a game changer.

    2. Really? We need to question somebody’s intelligence if the don’t bow down and worship a few select banksters?

      Jesse has some great comments today

      http://jessescrossroadscafe.blogspot.com/2015/03/the-feds-dr-doofenshmirtz-moment.html

      “After all, the Fed has been blowing up the US economy, and taking the world to the brink of economic and political disaster, about every eight years since 2000. And less regularly going back 1987 at least.

      And they have been getting plenty of help from the government and the media.

      They all put the banking system and the financial elite first, and the devil take the hindmost.

      When the powerful are single-mindedly determined to have their way, even if it is horribly wrong, it is difficult and often dangerous to be right, or to even admit to knowing the difference.

      Their policy errors will be a new chapter in the backward predicting textbooks of the dismal science. And I would probably enjoy this if I were reading about it in the more distant future.

      What were they thinking?

      And they appear to be about right on schedule for their next Doofenshmirtz Moment.

      They are not evil. Or even dangerously incompetent and frightened. They are equal measures servile, bureaucratic, arrogant, and banal.

      And they and their courtiers are caught in a credibility trap.”

    3. Yeah, Bill, that’d be the same central banks that cut cut cut all the way down from 2000 to 03, and from 2007 to 2009? (To no avail).

      They’re so damned powerful they haven’t been able to raise rates a pip since 2009, and have had to create trillions of new currency units to try so desperately to inflate yet another bubble, and avoid deflation, an attempt that once again will be shown to be futile over the next few years?

      Is that the CB power to which you refer?

      They are utterly irrelevant, but this moment we are at near peak belief in central bank power, hence your comment, so (almost certainly) we are also at peak for the markets (for this cycle). Hope so, perhaps you won’t comment so impolitely again.

      Have a nice day.

        1. Reloaded based on the website. I was using beta for volatility. Maybe short timeframe of IBB (14 years) has effect, or the little movement from 2001-2012

    1. DUG..a 2X ETF short fund of the energy sector that I used from time to time to hedge my oil stocks flashes a sell signal today!

        1. short fund flashes sell signal = go long on the long fund.

          It is the equivalent of a Buy signal for the energy sector.

    1. It is good enough. You have my permission (blessing , rather) to accumulate. Lol.

      It is a good feeling there are good trader herein.

  79. So expectations for a US rate rise being pushed towards
    October, any 2015 increase is now looking remote.
    Expect the consensus to gradually shift to no ’15 increase
    over the next few weeks.

    It’s now over to the US business cycle and earnings
    guidance to see whether we roll over later this year.

        1. Been watching daily for years

          December 2014 was the last significant one

          Adjectives vary as much as fiat does

    1. What did you trade last 2 days? I am getting better tho’ am up only 4% for the month so far. Had -4.5% Feb, 1% Jan, 7% Dec, -3% Nov. I guess my system is getting better with time so will probably look to make 3% per month (or more) for rest of year. Any details on your trades is appreciated.

  80. $NYHL at 283. Many internal indicators have pierced their respective Bollinger roof, signaling a strong move today. A crash tomorrow is unlikely.

    No rush to fade the market or you risk losing your money. Enjoy the ride on the long side until internals weaken again. They will. Be patient.

  81. Mark, as requested…

    February 13, 1892 – This was described as the ‘most wonderful exposition ever seen on American soil’, and stretched from Iowa to the Atlantic coast. Was seen in Cleveland, Louisville, Detroit and Milwaukee, but not in St. Louis, Kansas City or Memphis. It was thought to be a fire by citizens of Plainfield NY. Students and townspeople in Princeton NJ watched it and regarded as a ‘calamity’ by some citizens. [New York Times, February 14, 1892].
    — this was the first big one on the graph, hitting 180

    ….
    strangely, nothing is noted as exceptional via NYT, despite 18940720 peak of 221.

    September 10, 1898 – The telegraph lines in Chicago were disabled by a ‘daytime aurora borealis’. The effects were seen on telegraphs in Omaha, Tennessee, Washington. The shocks produced 280 volts on the lines. [New York Times, September 10, 1898, p. 1]
    — this was only 132 on the AA* scale, which is one of the smaller peaks.

    Why would a 132 geostorm cause telegraph fires, but not the 220 on 7/1894?

    1. Mark, some of this must be literally playing roulette, since the sun is spinning and firing in all directions. We had some powerful CMEs this cycle, but they missed the Earth.

      1. Yes, we’ve dodged many of the large flares and CMEs over the past year or two, but over the duration of a solar max it should all balance out to some degree (although not completely, as we’re looking at some relatively isolated storms). We are looking at natural processes which are dominated by a continuous fierce battle for limited resources – in nature the resources are light, moisture, energy, nutrients etc; in the modern markets it is money, but the driving forces are the same. So we should not expect to see regular, infinitessimally accurate, consistently predictable cycles – there is too much creative competition for that to happen.

        Your aa chart of the 1890s above shows something as consistent as I would expect to see in any natural process – ie. the tendancy for geomagnetic disturbance peaks to precede sunspot maximums in weak solar cycles (as opposed to following sunspot peaks in strong cycles). A surge in 1892 and again in 1894 coinciding within a few months of SSN max. We are now in the SC24 equivalent of June 1896 (calculated by number of months since preceding minimum), and interestingly that period saw a surge in geomagnetic storms as we are (probably) seeing now. Look at what happened from 1896: http://www.chartsrus.com/charts.php?image=http://www.sharelynx.com/chartsfixed/USDJIND1800-1900.gif

        So what does that indicate for the near future? In previous weak cycles SC1, 12,13,7 and 10 (SC16 was an exception) speculation continued to push prices significantly upwards (but with high volatility) until the equivalent of mid to late 2017.

        1. Thank you for the interesting discussion.

          My question about the telegraph wires, or of the “fireworks” proclaimed by the NYT is a serious one. For all we know, the geomagnetic storm levels predicted by our instruments is only loosely correlated to the impact on humans. For example, we could be measuring the length of skirts, which is correlated to human euphoria, when the alternative is to poll women directly.

          This current storm is on the CNN front page. Would it have a larger psychological impact even though the Ap is lower? Likewise, if there are telegraph (or modern day communication disruption), could it indicate a higher psychological impact that the raw Ap measure? For those who just follow headlines, the big storms were 1892 and 1898, with the largest one in 1894 forgotten.

          I see your point regarding the weak cycles, but my rebuttal as a bear would involve timing the final crash when the ISN drops 62% from the highest value, rather than a fixed interval after the solar maximum. I am still collecting the data to make this point. Why 62%? I have no idea. It is the Fibonacci number. I read somewhere that the duration of the ramp and fall of the solar cycle divides the cycle by this ratio. I will post again when I get the data.

        2. Mark, regarding

          “So what does that indicate for the near future? In previous weak cycles SC1, 12,13,7 and 10 (SC16 was an exception) speculation continued to push prices significantly upwards (but with high volatility) until the equivalent of mid to late 2017.”

          Let me propose an alternative.
          The weak cycles are 1,5,6,7,10,12,13,14,16,24. In addition, let’s say 20 straddles the boundary between weak and strong.

          Case 1: If the market is already significantly off highs at the solar maximum, or if there was no bubble like returns, then there can be no crash. We saw this in the strong cycles of 1945 and 1960. This eliminates SC 6, and SC 10 (more than -50% drop from highs at solar max).

          Case 2: For strong cycles, we expect the market to crash inline with solar max. Not so for weak cycles. But if it crashes and deflates the bubble, no crash later.
          SC12 (Note 1884 panic, where 10,000 small firms failed. I understand the dow chart doesn’t show this, so we can call this a small cap bubble.), and SC14.

          Remaining are weak cycles SC 1,5,7,13,16, and medium cycle 20.

          Case 3: For remaining weak cycles, we need to see sunspot protection from geostorms wane below -62% off highs. Once this shield is gone, the markets will crash shortly.

          SC16, 9/1929 was 34.4, which is off the 98 maximum this far. That month was the peak.
          SC5, 1804 was solar max, 1806 we drop to -62%, and we had the 1806-1807 crash.
          This rule does fit all of the cycles to some degree.
          A bad fit is SC1 where you could argue it hit -62% in 1762 and the Amsterdam Loan and Banking Crisis came in 1761.
          You could also argue that we briefly dropped below -62% on 2/2012, and should have crashed then, but the sun fired up again. (2nd time the charm then?)

          What about the medium cycle 20? It is interesting. It exhibits dual characteristics. We had the 1969 market/solar max peak, but the market reflated. And then a brief one month drop below -62% on 6/1971 — that marked the 7/1971 Brazil Market Crash. And then a more convincing -62% drop on 11/1972, which marked the 1973 Dow Crash.

          Where do we stand? We are not in case 1 or 2, and so we are in case 3.
          3/2015 might just be a -62% off high month. We are looking at 0.38*102.3=38.9. If sunspots continue at this path, ISN is likely to be lower than that for 3/2015. If so, the peak is near.

        3. John – I don’t have any definative answers as to the inconsistent effect of these storms and people, but I would suggest that if human personalities form a normal bell-curve distribution, then the average person will still behave in a relatively average way during and after the storm. It is the extreme personalities who will change the most, and these are the very people who will have worked their way into the most influential positions too.

          That 62% you’ve noticed for ISN falls – is it reasonably consistent accross many solar cycles? I’ve just had a look at some of the weaker ones and it does keep coming up. For SC24, a 62% fall would take ISN down to 35-39 (as you have already noted). Today, with 11 days of March 2015 to go, ISN is at 34. In terms of 1929/SC16 we are within days of September 1929, with ISN falling by the same amount and same proportion. The only difference is that we are now (arguably) six months earlier in the solar max than then, when measured by months since the preceding minimum. Others like Jigs and Joseph Teofilo, have also been commenting on this. So that is in line with your Case 3 scenario.

          However, the other major scenario is also possible (my own opinion is that it is becoming the more likely one) – that we will follow the typical pattern of the other weak cycles (excluding SC16) and also the lunar declination cycle, with the current speculation continuing higher into 2017. Also, the percentage gains for IBB etc have so far barely exceeded half of the gains in previous manias; and there have been no parabolic price increases yet either(ie. where the price increase each day, or week, or month is consistently bigger than the previous one).

          Either way we are now, this month, entering a critically important period. And the asset most likely to benefit from huge volatility, nervousness, street battles with government forces, unlimited money creation etc., also happens to be the best value asset at the moment.

        4. “It is the extreme personalities who will change the most, and these are the very people who will have worked their way into the most influential positions too.”

          Much agreed.

          I believe that 62% are left brained and 38% are right brained.
          But 38% x 38% = 14% are left handed (extreme right brained?)
          But consider that 38% of presidents are left handed…that is inline with your statement above. So if storms only affect left handed people, most people won’t notice, but those in influence will.

          “That 62% you’ve noticed for ISN falls – is it reasonably consistent accross many solar cycles?”

          BTW, this was also idea, regarding dropping off from the plateau. I read it and started testing the idea.

          Yes, it worked reasonably for all the weak cycles I notes, except for a few failures that were first time unlucky.
          In particular, SC24, 2/2012 was a failure, where we touched -62% and then the sun fired up.
          Also, SC1, 1762 first -62% dip was another “failure”, but the second -62% dip in 1763 worked. I say “failure” because the Amsterdam Loan and Banking crisis was in 1763, but I lack charts to show me where the actual peak was.

          Other weak cycle examples:
          SC5: 2/1906, 11/1906, 6/1907.
          – Bloomberg shows 1/1906 market peak, but waterfall in the Panic of 1907.
          SC13: 1/1896 — Panic of 1896

          It worked for strong cycles too. The -62% cutoff picked out:
          SC11: 5/1873
          According to the Vienna exchange, 9th May 1873 was “De Krach”. Perhaps you know — does that mean market peak, or waterfall decline?

        5. Regarding being on alert for a drop of in sunspots from plateau. I mean to say

          “Mark, this was also your idea,..”

        6. “Today, with 11 days of March 2015 to go, ISN is at 34.”

          How do you see this?
          1) I use solen.info
          2) Taking the average this month and multiplying by my own adjustment formula of 0.637, I get 30.80.
          3) If I fill forward the next 11 days with a value of 71, I get 56.38*0.637=35.92.

          Not far from yours, but I was wondering how to get to 34.

        1. GARY-
          in an abcd retrace
          if the bc leg retraces .786 of ab leg
          then the cd leg is 1.27 of the bc leg
          then the medianline set is drawn to give line to show
          most likely time for retrace to complete
          thus 127 at line
          not a forecast… but a good reason to be looking for a trade signal here
          Would prefer the indexes to keep moving higher here.
          My work outside the day to day trade signals suggests that if that happens the whole bull market will soon be over/

  82. HI Valley

    In this case it was really a bit of luck with the timing around support levels. In my view the 17670 area on the DOW was minor support worth of taking a risk and the 23690 area on the Hang Seng. I got in at around 17732 on the DOW and around 23861 on the Hang. By 1800hrs London time last night I was out meeting some ex-colleagues but I was up a few tend of points here and there. When I saw the FOMC news I initially thought I would have been stopped out for a few points profit here and there but clearly the market went the other way. So later on I closed out 65% of these positions for a 9% gain on account (in this case). As advised the other day, I am also short the Nikkei for some balance, but the Nikkei didn’t jump like the other 2 so that worked out fine. Basically the Nikkei position currently is negative around half of what the remaining Hang Seng long is worth right now.
    As you can see, nothing very clever or sophisticated at all here in terms of method or instruments. I constantly try to identify support and resistance levels on daily charts and usually trade around them as best I can. I switch to 4, 1 hour or 30 mins charts to see how the price behaves as it reaches (if it does) support or resistance. Unfortunately I have no magic wand so I get it wrong quite often, but more in terms of where to place the stop rather than overall direction.

    p.s. – I always use guaranteed stops where available. They cost money yes, but even though I only risk up to 3% of pot on each trade – the amounts are quite large in “real terms”.

    I don’t want to take up too much time on this because I don’t recommend anyone trading like I do. The “Traders Dream” seems much more effective.

    I have rules that I follow. Strange ones like yesterday relating the DAX. Someone here took a long position around 11860 from memory? I identified some support around the 11850 mark, and the price had already gone through it (Iwas waiting to go long). Once that happens, my rules say that I cannot go long this price until it has made a new short term high that preceded the recent low. In the case of DOW yesterday on IG (the account I am currently using) that was 12029. In fact, I am a bit hungover this morning, so have not gone short the DAX, as I probably would have done as close to 12000 as possible with a stop above 12029……if you see what I mean?

    There are a few other rules that I won’t bore you with but I follow some very simple rules that are non-negotiable around size of positions, tranche distance and that sort of thing. My “process” also tries to pamper to my personality. Sounds alarming right? Well, when I trade with others’ money I found/find that when I started trading my own that I somehow viewed this differently. Over the years, I found it “comforting” (Not sure it’s the right word) to not be naked short or long. So I scan the universe of instruments for support and resistance levels and usually take some opposing positions to create – I hesitate to use the word “hedge” because it is not really that at all – but it creates some feeling of risk management for me. I hedge my pension in the more correct use of the word through options and other instruments at time but I don’t do this on my trading as it is a shorter term activity.

    This sort of process whether it relates to very vanilla positions like the above or more exotic instruments is the same but I am pretty sure it is not repeatable for anyone else. It has evolved over time and I make what many would call a very good living out of it here in London, but let me stress again – I always use guaranteed stops. In the flash crash of a few years ago, I was very lucky to be a) light on exposure and b) using guaranteed stops. A close friend lost £384,000 that day, my loss was less than £5000. I don’t tend to dwell on things like that, but I seem to remember that if I had been at typical exposure and not using guaranteed stops I would have lost more than he did…..

    I am happy to try to answer any questions, but the process is very simple. What is much more complicated is how I got to it, but that involves every emotion under the sun over many years and how I put those emotions to work, Just one last rule to share before you fall asleep – I never trade when I feel tired or “not up for a fight”. Sometimes and quite often that can mean a I just forget the markets for a day. If I have open positions they always have limits and stops so they can just play out as they will. The style of trading I do is very active, so it is key to be “up for it” or just don’t do it. It is quite exhausting sometimes if you imagine the DAX long scenario yesterday, when the buy level fails I cannot buy until it has made a new high (since the last high) but I will then monitor to see if I will go short if it fails at the last high. If you can imagine identifying, monitoring many different types of instruments in this way and be prepared to go long or short the same instruments even within the same hour or day…..BUT, there is no rule that says I HAVE to take the trade….that is one of the few elements that are at my sole discretion.

    Sorry for long post, inspired by massive headache this morning – will probably not be active trading at all today. Need some fresh air, but maybe will stay up tonight to see what is happening in Asia.:)

    Good luck and use guaranteed stops:)

    J

    1. Jegersmart,

      Great post.
      1-The beauty of stops….as in cutting losses while winners get to run!
      2-Bet small, not thy whole wad
      3-Don’t trade when you are not totally concentrating on it.

      Sounds like a great plan to me.

    2. I wonder if guarantee stops work if the firm providing that guarantee becomes insolvent?
      Worth bearing in mind, very little is truly guaranteed.

    3. Last night’s (UK time) DJIA short trade at 18064 sure gave me some angst overnight but I’ve just closed it out at 17957. I’m probably leaving another 30+ on the table but being greedy with the market is a losing tactic.

      I’ll go long once the micro waves fall in place. Lol that sounds like I’m cooking something. Hehehe

    4. Thanks Jegersmart definitely food for thought. Learned about guaranteed stops, and trading rules like buying when short term high is passed and more than anything it is encouraging to hear from someone who is in the game and is willing to share. I am new to trading so any advice is valued. Watched some ytube videos yesterday about some super traders like “Tim Grittani” a protege of Tim Sykes the penny stock king. Tim turned a college account into several million using shorts on pumped up penny stocks. Trading as a lifestyle/business/full time occupation really appeals to me. I guess the key is years of study and practice, passion, and unwavering self esteem. One thing I lack is non retirement money to trade with so I will be restricted to swing trading the SPY or QQQ or IBB. Will continue trading lunar tidal seasonal with technicals and hope to earn 3% per month in all market direction. I am learning a lot from this site and the interesting posts.

  83. I am looking at a DAX long again, would like to buy in the 30’s with a stop just above 11800-10. I will set an order to open on that basis as I need to go back and get a couple of hours kip after last night^^

    Phil, I agree – could be some opportunity there if and when the dust settles. Havn’t had time to have a look yet.

    Good luck all.

    J

  84. Hi all ! Sorry for the delay, I was away yesterday. Good job by the FED yesterday to drive the markets higher. IBB is at new record highs this morning, so everything’s going well and according to plan. So, keep increasing your exposure to stocks in general and to biotechs in particular.

  85. No problem NIcolas, there is no harm done in any “delay” because your message is always the same. Whether you pump stocks today or tomorrow or last year or next year, it is entirely irrelevant because you give no details or rationale.

    Good luck.

    J

    1. Hi ! Well, I beg to differ. I’ve explained my rationale many many times now, in a clear, concise and detailed way. I can only hope you followed my recommendations.

  86. With regards to Dax, order hit at 11831 and out again at 11808 within a very short period of time. The breach of 850 yesterday I took as a warning, now it plays out. I will look to buy closer to 740 if seen.

    J

  87. Nicolas, until you come out with some details about positions, actual price levels and timelines it is not relevant to any here beyond the fact that you are bullish. Come on, don’t act dumb:D

    J

  88. Jegersmart, everybody knows that my main positions are AAPL, QQQ, and IBB. I have a few individual stocks but in very small amounts (maybe big amounts for you). Look, I don’t want to brag but I’ve made a lot of money over the past few years.
    Thank you

    1. I tend to agree with you Nicolas that AAPL QQQ and IBB will do well over next decade however would you consider a more short term swing trading approach that could capitalize on volatile months like October and December of 2014, January of 2015 and also this month which has had volatility.

  89. Interesting… This is JH site, and we are here because we admire his work. Somehow it has turned to be “Nicolas” recently.

    No doubt that Nicolas has been the best trader on this board. Go with market direction, not against it. The only thing I question is your exit plan, because we all know that this thing can and will crash anytime.

    Great job with IBB. IBB and BIB surely look like they are on a parabolic rise. If this is the start of the bubble phase, i would think IBB still has lots more room to rise. Instead of joining the bubble phase, I’ve chosen to sit on the sidelines for the corrections. Simply waiting for the cycles to play out in order to go long or short.

    Good luck to all on the board.

  90. Today and tomorrow thanks to Perigee, New Moon combo (today is Perigee tomorrow New Moon) tides are highest for whole year. Add in the equatorial crossing tomorrow (s to n), tides can’t get any higher than now cause all three together are tide elevators. Volatility in markets could be abnormal, esp. with quad witching tomorrow. Still long in my swing trade and for lack of more info. will probably stay long until mid day tomorrow to see how this plays out.

    1. Uhmmm about what exactly Specie? I couldn’t work out this comment of yours. You are one of the contributors that I read avidly.

      1. Hi purvez,

        I’m sorry. I was wrong thinking that some posters are posting facetiously. After 2000 and 2008 I really thought everyone had learned a lesson. But I’m getting old and am not exposed to a lot of young people in my work. After almost 30 years in the business and managing nearly 200mm of client assets I like to visit sites like this to get a feel for investors thoughts. Since it’s fairly anonymous I feel people can be genuine in their postings. But I didn’t think some people could seriously be so willing to throw away their hard earned money. It’s so hard today to earn enough money to meet the high cost of living. People should be careful to protect it.

        PT Barnum wasn’t the one who said the quote attributed to him.

        1. Glad to provide you with something amusing. 200 mm is a lot of OPM. Lots of responsibility. Thanks for sharing your experiences.

  91. Erick:
    “No doubt Nicolas has been the best trader on this board”……

    Ha ha – what is this based on? Which positions and price levels have been quoted? What details have been given?

    If the statement “CB’s will keep buying so just keep buying whatever happens” qualifies him as the best trader on this board, I guess there are no traders on this board? 😀

    Come on, surely we don’t need more than one troll on this board?:)

    No harm in bragging once in a while, I just don’t understand how one can make money without taking profits?

    J

    1. jegersmart: I think you took my post completely the wrong way. I’ve been JH follower for quite a while. John has consistently called the crash since early 2014. I love and admire Johns’ analysis and his unique approach, but that doesn’t change the fact that he has been wrong with his calls.

      I personally believe that this is the best free trading board out there, and I myself have learned a lot from each of the contributors. This is a public board, however, that Nicolas doesn’t have to disclose all of his trading exposures in order to prove anything. What I see is that he is stating the obvious, that the stock market is backed by the omnipotence of the Fed, so why fight against it? While I disagree with his reasoning for keeping buying this market, there is no doubt that staying long and BTFD has been the winning strategy in this environment.

      I myself believe and predominantly trade cycles, unlike a lot of folks on this board who day trade. I’ve made probably less than 3 trades a week, waiting for the cycle top or bottom to enter/exit trades. I’ve made over 30% this year trading options, shorting gold, long/short oil, and shorting VIX. There is no need for me to disclose, or brag my success. It is pointless doing that. On the other hand, we both know that it is so easy to blow up one’s account, or turn a winning year to a losing year by being careless, complacent, or stubborn. My simple belief is to trade whatever the markets give me.

  92. Just a brief post:
    My trading system is still 100% short, from an average of 2077.50 SPX, and as long as the HY market continues to weaken, I can’t imagine that’ll change any time soon…
    Thought yesterday’s move would get me close to a reversal “buy” signal, but after updating the components of my system, not even close…
    Much less happened yesterday than meets the eye, in my opinion…

    Personally, I’m a bit “shorter” at 138% net short…
    Not adding or subtracting positions, but just holding open losses at the moment…

    Just need to remember “patience”… Such an important word… lol

    1. Barry. I always love reading your posts because there is always a ‘sting’ in the tail.

      This time its ‘patience’. Lurve it!!

      1. I Purvez…
        I’d rather you love reading my posts because they make us all a lot of money – hahaha – but alas…. :-/

        Spent a number of months going sideways now….. *shaking head slowly here*

        On the other hand, that always leads to a big trending move at some point, so yes, trying to be patient… 🙂

        But thanks!, and always enjoy reading your posts as well…

        1. Barry, making money is the ‘job’. Reading enjoyable posts is the ‘water cooler’ gathering.

    2. I am 100% long until open tomorrow. Let the games begin. I will probably join you on the short side tomorrow or Monday. Tomorrow is high tide and opening of high tide days tend to mark tops for swing trades.

  93. Jegersmart and Erick – I believe JH has something, but it’s not enough information to trade off. I believe we’ll see the ultimate high of this move around 2400, which I’ve said here before.

    JH provides the forest. He is the proverbial “you can’t see the forest for the trees” where he gathers the intel and lays out the big picture. I don’t take this as tradeable information, it’s up to us to navigate the trees within the forest.

    When you introduce different time scales and indicators they’ll keep you on the correct path.

    Never look for a TOP of all TOPS because they don’t happen very often. The last was 6 years ago. But when we use lets say daily indicators, they can keep us with the trend. Even if you don’t pick the top/bottom and ride it all the way down/up, you’ll still be on the correct side for the majority of the move.

    1. Great comments geno. I agree that the top has not been in place yet. The question is whether the current wave 5 could take the Nasdaq to 5132 or higher 5200 before a hard correction, or just a marginal high, correct 5%, then continues the bubble phase.

      Using Vix as an indicator, I think the new high in Nasdaq next week is more likely. Vix is not moving at all regardless a triple digit point loss by the Dow today.

      If wave 5 continues up, I think the deep correction shall be late April or May, and the current cycle since March 2nd is stretching ridiculously long. Just my two cents.

  94. I also read some comments on risk above, so I’ll give my two cents:
    Max risk on FX is 7% of Total Account
    Max risk on Equities is 15% of Total Account

    Swing Trend Indicator is 100% risk, not really a trading account for me. It’s my retirement account basically.

  95. Well the solar eclipse was a total non-event in NW London. At its maximum (9:31am BST) it was no more duller or darker than any other cloudy day. Most disappointing.

    Apparently the 2 best places on earth to have watched it were a Norwegian Island or the Faroe Islands. There is a partial one happening later in the year. Won’t bother waiting up for that then.

  96. Please may I further the discussion on trading strategies that is currently going on, in particular strategies for taking profits.

    Currently I tend to take profits after a certain number of points gain or certain percentage gain on my original stake. i.e. almost no thought to using TA or anything else market data related.

    Yet when it comes to opening a position or placing stop losses I am very clear about the point on the chart because of my EW method of trading.

    I can’t help feeling that my profit taking strategy is less than optimal and I am really asking what profit taking strategies people here follow.

    Thanks in advance.

    1. Dax back above 12,000. Expecting a retest of previous highs next week. Still holding longs from 11860 with stop at break even now. Not expecting the Dax to retest 11860 for a long time now but you never know what the manipulators will do.

      1. I just took a look at the Dax chart. I don’t know whether you are in EW follower or not but on an hourly chart there are clear 5 waves down from the all time high and the current ‘up’ wave is a W2 which is also clearly in 3 waves and has retraced 61.8% of the down wave.

        Those factors in EW terms mean that W2 is over or nearly so and the next wave will be down. It will be a W3 which is the strongest and longest.

        Of course if you don’t follow EW then this is all just jibberish on my part.

        Best of Luck and congrats on your trade.

        1. I don’t use that but it’s good to know. I have taken partial profits and moved my stop to 11950 for now. If it does pan out like you say I’ll look to buy back in nearer 11500. Another indicator is that on my spread bet platform it’s a 50/50 spilt between long and short trades on Dow and Dax which are almost at ATH. This indicates maybe a correction is on the way to catch these small investors out. Usually I expect to see majority bears at ATH’s.

  97. I appreciate some have flagged up crash windows and
    the possibility of equities selling off to a mid April low,
    however that looks a remote possibility now unless
    something changes dramatically next week.

    So that leaves us with the likely alternative of new
    higher highs in to an Autumn final top.

    If US macro surprise to the surprises to the upside,
    (unlikely in my view) then the bull market marches on
    to 2016.

    My own take is that US macro will increasingly disappoint
    driven mainly by the DXY strength and a slowing China.

    I expect the consensus for no FED move on rates in 2015
    to build over the next few weeks.

    Again as with the wider macro view, that will be invalidated
    if US data comes in stronger than expectations.

    Watch carefully the movement in corporate guidance over
    the next couple of months.

  98. I went long again yesterday an hour before the close when I saw that price was going through normal retracement and the internals confirmed. For example, $NYHL actually went up by 14 on a down-day.

    For now, I see an ATH on weaken breadth. A setup for a correction.

    When P/S is at a record high of 1.81, I have to watch if slowing corporate revenue/profit will be used as a reason to bring down the market.

    1. Newt, right now (Mar 20 – 15:44 BST) I can see 2 double zig zags completing on the S&P and the DJIA.

      I don’t know if there is anyway that you could perhaps look at your ‘internals’ (of the market of course) and tell me if they are stretched to the up side?

      If this is correct then we’ll retrace everything back to the start on Mar 12 at least and hopefully a whole lot more.

      Thx.

        1. geno so are you saying that you are in agreement with me? I thought you were expecting a new ATH based on previous charts or have I misunderstood?

  99. Largest Geomagnetic Disturbances during Solar Cycle 24
    HERE & HERE & HERE
    Yesterday 28 solar storm warnings were reported from satellites watching the sun – a very rare event in just one day (HERE). The most powerful solar storm of the current solar cycle is currently reverberating around the globe. Initially triggered by the impact of a coronal mass ejection (CME) hitting our planet’s magnetosphere, a relatively mild geomagnetic storm erupted at around 04:30 UT, but it has since ramped-up to an impressive G4-class geomagnetic storm, priming high latitudes for some bright auroral displays. Further significant flare activity from Region 2297 is to be expected until it rotates off the visible disk on March 19th. This already caused the largest geomagnetic disturbances during the current solar cycle.

    Playing the Field: Geomagnetic Storms and the Stock Market, a 2003 study of the Federal Reserve Bank of Atlanta, notes the following: Unusually high levels of geomagnetic activity have a negative, statistically and economically significant effect on the following week’s stock returns for all US stock market indices.

    When a solar flare or CME happens, it can take up to 2 days to impact the earth. Therefore, two days after a large solar flare we should see a drop in the stock market values for that day. More on the impact of such events on the financial markets and trading see also HERE.
    Posted by Time-Price-Research at 2:22 AM For all…n

  100. Phil RE guidance. Divergence has now steadfastly asserted itself as global market are now ALL diverging from the real macro outlook.
    It is now all about momentum and nothing at all about earnings or organic growth.
    Many will have us believe that the old principals no longer matter because the real drivers of markets now are different to what thet once were.

    Every single time in history, bar none, this has resulted in a massively rude awakening for investors that comes when they least expect it.

    I have to laugh to myself when I see the media and investors stewing over the possibilty of US Fed rate hikes.
    We all know that US Fed rate hikes are an impossibility and the Fed knows it too, but they continue to dance around the subject and string along the markets to create the impression that they have a handle on things.

    One day a shock is coming from left field that will show up the whole farce for what it is and that is when we will see a reaction that unfolds so quickly that all but a very small number of participants will have zero time to protect themselves from.

    The SNB currency decision was just a forerunner of the type of reaction to which I refer. The big one will many many times greater and the fallout will destroy trillions overnight and wipe out most.

    1. Hi Allan ! Again, the real macro outlook, as you say, is totally useless now to predict stock prices. And yes, this is a new era. This time we are in a truly new era where central banks buy trillions of dollars of assets and drive the markets higher. I think it should be clear by now. It’s not my fault. If earnings, margins, valuations were important I would focus on them.
      So my advice to you, in all due respect, is to stop complaining and to embrace this bull market.

      1. Thankyou Nic. Funny I was told exactly the same thing in 99/00. The dot com revolution had changed the world forever :).

        BTW I don’t embrace ANYTHING when I invest because you never know how quickly you may have to let go.

        Cheers

        1. I own SPX 1,450 and I don’t embrace the markets. My finger is waiting for the right moment to push the sell button. I don’t see it yet.

          Keep on telling us the Armageddon will come is unproductive.

        2. Newt, it’s not unproductive to warn of what lies ahead if a reader at this blog takes some action to prepare, or at least is aware of the risks and can protect against them.

          Otherwise, the many voices who have been echoing the ‘onwards & upwards’ bias will become the only voices here, and some readers may lose money due to over-confidence.

          I’m with Allan, this is no time to be gung-ho at all, rather the opposite, and if the bubble expands, I’ll still stand aside and continue to accumulate cheap unwanted assets in the meantime.

  101. Today is ‘quadruple witching’ day. Does anyone have any data on Put/Call option positions to get a feel for how the MMs will want this day to end? Thx.

  102. Newt, anything over about SPX 1750 was not easy money.

    I hope you do get to push the button. Rationality however has a violent way of reasserting itself at times.

    1. Yes. Market internals saying upside potential is very limited for now. I dare to say 20 SPX point max.

      A close below 320 SMA and no prompt rebound will cause me to sell my SPX 1,450.

      I am looking for a nice pause to refresh, say a 10% correction..that would nicely re-set the balance.

    1. Fantastic news for the UK economy! Oops i meant well done BOE, ECB and FED. Looks like the market makers want an up day today for quadruple witching. Another catastrophic day for the shorters. Maybe US earnings will be their saviour.

      1. Krish, I know for a fact that CBer’s have no idea how to exit this and that there is a growing lobby of opposition within their ranks as many are scared s%#%less of the eventual outcome.

        1. Allan, they know how to exit, it’s called the ‘red button’, and as usual it involves revaluing gold upwards to recapitalise the world.

  103. Entire countries are now legalizing and promoting drug use, while the industrialization era comes to an end. These are interesting times. Monumental change in philosophy. Why work? It stopped paying in the 1980’s?

  104. Record numbers in employment
    in the UK.

    Has criminalising drugs worked?.

    Get as much information out there as possible
    and let people make their own choices.

    Not an area that ever attracted me,
    I know plenty who use drugs mainly recreationally
    and hold down good jobs, some very well paid
    and highly successful people.

    1. Full employment. I’m sorry to hear that. Maybe things will get better. Here in the US, all labor is done by immigrants, China, and India.

    2. The profit margin gains by only hiring starving people are enough to offset higher taxes for our local welfare programs. It’s a sweet system when you stop and think about it.

  105. One area that needs more attention is the
    potential psychiatric issues in longer
    term cannabis usage, particularly in
    the stronger variants.

    With tobacco smoking and excessive alcohol
    consumption most are hopefully very aware of
    the risks.

  106. New 52 week Highs at 373 highest since Oct. 2013. while $SPXA50 and 200R are fading…so advancing price is supported by fewer and fewer issues above the respective moving averages. Not a healthy market. Eventually it will correct

    I see a similar set-up in mid 2011 for a nice size correction.

  107. Agreed with several members on this board. The upside is limited from here. Nasdaq is so close to the 5100 target that staying long could be still profitable, but quite risky imho. My EW count confirms a spike upwards before a deep retrace. However, I am abandoning my count. Sold all of my BIB and ready to go short again. On another note, I am more interested in miners and oil now, as I think commodities are sending the signal that the SM peak is near, and there has been a reallocation of funds to commodities.

    If my EW count is validated (BIG IF as I am not that confident in this count, wave 5, b wave up), this is the nice bounce of oil, before it starts heading to the $30s, one of the triggers of the stock market’s correction.

  108. Ok folks, that’s it for me. I will be away this weekend, I will be back next week. Congrats to all longs for another incredible week.

      1. RSI at 78.78. and a black candle (may be a topping candle??). You have my permission to buy puts. Lol.

        RUT, an exhaustion gap?

        1. Perhaps! A little stock called CNIT also broke from a descending triangle, or falling wedge. Whatever you want to call it. I’m in @ 3.47

      2. Looks like the parabolic uptrend in the dollar died last friday

        perhaps the biowreck parabolic ends this friday

        given the absolutely universal and vocal bullishness on both the resolutions will probably be very destructive

    1. I have many pockets to store my treasures.

      I had GE in my deep pocket at $14 (split adjusted) in the early 90s and sold at $59.66 near the top.

  109. Congrats to all those who were trading long today (Newt., Geno100). I see today and possibly Monday as a bottle rocket that will burn out on the upside and then fall back to 2030 by next Thursday. Today is New Moon and high tide, both which mark tops). I have just sold my long position and will be in cash until Monday at open. Will trade short next week Monday to Thursday.

    To Nicolas, I would recommend sticking to his knitting thru the next few months of possibly downward prices because I think the next few years will have a parabolic rally based upon new tech yet to be rolled out (esp. new energy and materials), CB support of equity, and low rates.

    1. Thanks Valley, congrats to you as well! None of the markets were as oversold as they usually get before a new bull leg higher, therefore I’m suspect of this move up. The Q’s looked like they needed 1 more high, right into the IHS projected target range. We should be dealing with a higher degree wave 4 to the downside I think.

    2. You deserve the loudest applaud. As internals are hitting the top quadrant, the top traders like you must think accumulation of shorts/puts…but no rush.

      Go enjoy the weekend.

  110. The faster the parabolic rise next week, the faster the correction would arrive. I do believe that the real correction, or crash in Sep 2015, Oct 2015 will be epic, one for the ages. The US will be exposed along with its real debt and real unemployment.

      1. You are probably right Allan. Too many calls for the fall in Sep. 🙂 Hopefully the epic fall will be sooner than

      2. okay, I’ll bite. So when are you expecting the crash to happen? Or do you not have a date in mind?

        Me, I’m still leaning on Caldaro who seems to be tracking this uptrend well. He’s expecting the move up that began at the 2011 low to continue into 2016. After that, a correction of perhaps 20 percent, then one more leg up lasting a year or two to new all time highs. But for the nearer term looking at the current leg up lasting for nearly another year is far enough into the future to plan for.

        Oscar Carboni came out with his year end projection for 2015: SPX 2300 to 2350.

  111. GM…with due respect, there is absolute no need to warm people of your expectation of a crash to come. Why?

    1. You ain’t got a crystal ball; sorry to disappoint you. This is the truth;

    2. Why can’t the market go higher? since it is the nature for human to blow “bubble”;

    3. People deserves what they get. If they can’t navigate through the market, they deserve to lose.

    1. Having said that, 1st tiny scout short “SDS” bought at $20.46.

      The market is owned by the nimble traders who are never opinionated.

    2. Well Newt, your first comment applies just as well to both sides, so I agree with you.
      (BUT ..we do have history and cycles to guide us). You appear to argue for the abolition of this blog in fact, most ironic!

      Your second comment, I agree it can go higher, in fact I am expecting severe parabola (along with a crashing dollar) at some point before a reset, but it can and will burst at any time. It is not a new era, just another plain vanilla bubble.

      As for comment three, why are any of us commenting at this blog? For me it’s both give and take, maybe for others it’s a one way street. It’s a cool blog, commenters are very polite and helpful, hence the warnings from Allan and myself. I hope it helps some poor novice trader out there.

      I’ll repeat my usual guidance to the ultimate hedge…physical gold in your possession, or a non-bank vault.

        1. My best hedge will be gold.
          No counter party, no counter party, no counter party.
          (Real estate just a bubble of course 😉 )

      1. GM, two facts reduce the value of pre 2000 history and cycles:
        1. New tech will eliminate many of previous constraints on economic production.
        (Very low cost energy and getting cheaper each decade)
        2. True international trade without the friction of previous times made possible by
        rapid transport, integration of supply chains, and cross national equity swaps.

        If a widget produced in Xian can be designed by lab in Germany and shipped in one day to buyer in Vancouver, doesn’t that alter the pre 2000 economic cycle. Economic cycles will still exist but will probably be faster and faster as innovation adaptation and change accelerates. Down turns will probably be more planned and sustained in the interest of policy than organic results of retooling cycles of the pre 2000 model. And if artificial difficult to predict or model because they don’t result from any metric previously relied on for forecasting.

        1. ‘Down turns will probably be more planned’

          Yeah, we don’t anywhere near enough *planning* at the moment do we?
          Your comment is indicative of how far off course the world has gone.
          It’ll be forced back by Mother Nature in due course, plus a few wars, revolutions, civil wars etc.

          Nothing new…..under the sun.

      2. People will always require shelter and preferably fine shelter with a yard. Every year permits and fees associated with building increase as does the dependence on local govt. on the property taxes. Highest inflation rates are on construction related materials, finished wiring, fixtures, fabricated steel, paints, etc.. Also construction labor is pricey especially if union. IF there is to be inflation real estate will be at the top of the inflationary scale.

        People will always require money. Gold is money. I get that. But bitcoin is also. The apple pay is as well. Most young people (read: future economic actors) prefer electronic payments such as bitcoin to barbarous relics such as Gold. Gold may vary from $1000 to $5000 in the next decade but the median price will be much closer to $1000.

        1. Gold isn’t money Valley, it’s just a unique asset.
          It doesn’t really matter what the youth of today prefer, gold’s price will be determined by those with thousands of tonnes of it: oil, CBs, China.
          One day, those who don’t grasp gold’s fundamentals will be somewhat surprised at what happens.

          Real estate, meh, just a bubble, wait til interest rates go back up, that alone will kill prices (not to mention a global depression).

          It is odd that people expect ‘peak debt’ to just trundle along via slow growth. There’s c. $50 trillion of worthless paper out there, it’ll burn.

  112. I have another ‘serious’ question please. What are people doing to safeguard against counter party risk. You may have the best trading account but if your broker goes bust then what do you do?

    Is there anyone here who is consistently bringing back cash from their brokers?

    Like jegersmart I also deal through IG who is by far the biggest and most financially sound looking but I’m starting to have thoughts that perhaps every so often I should bring back any surplus cash and stash it under the mattress.

      1. Good thing too. They nearly had it with the Swiss ‘surprise’. But that begs the question even more because they are one of the ‘bigger’ players and if they aren’t safe then who the hell is?

        1. Scrolling, scrolling, scrolling, found it! Who says you can’t have new all-time highs with a corrective count? The only thing I know for a fact is we have a 92% chance of making a new all-time high before we take out SPX 2039 or whatever the low was.

        2. True geno, nothing to stop a ‘b’ wave from meandering anywhere it likes. UGH!! Still with the reversal today I’m hoping that we’ve started the ‘c’ wave down now.

          Do you have a target for it yet?

          I don’t do this wave extrapolation thing. Too much pressure on my 2 brain cells but am in awe with those that do. I just count to 3 or 5 and then take the opposite side. It’s kept me in clover.

  113. Wealth is built on time and concentration. Real estate owned long time ago. Many baggers plus monthly rent income.

    Forget about gold.

    1. Newt your argument may be true over a couple of generations. However currently real estate has got to be seen to be in a bubble pretty much everywhere.

      Give you my personal example in NW London. The property that I live in has tripled in value since I bought it in 2000. I’m trying desperately, and failing, to get my better half to ditch it and go to cash as I’m certain it ain’t going much higher from here before coming down below it’s 2000 value. Now if I was leaving this for my 3rd generation then I’d think differently but heck I want to retire and ‘PARTY’!! This property would help me up that PARTYING a notch or TWO.

      So to paraphrase you, it’s not location, location, location but timing, timing, timing.

      1. Gold is over. Just like bell bottoms and lamb chop sideburns.

        IBB and QQQ are just coming into their own. Sure bearish countertrends but long term sustainable rally is what Mr. and Mrs. Market have planned. This will allow an orderly positioning of all of the currency units into play in a way that encourages innovation and productivity.

        1. I am heartened that many are still bearish on gold, it’s what forms bottoms.
          Valley, wow, you’re in for some nasty surprises in the next 20 years, but good luck to you.

  114. Real estate has been very lucrative, however I do believe that future credit creation will not be like it has in the past which is what has fuelled property prices in my view. Income yes, assets to leverage yes, but I don’t necessarily believe that a property purchased now will appreciate in the same way as over the last 3-4 decades. Mind you, I guess it depends how much cash they print (amongst other things).

    I am not really a gold guy, but could see gold at $5k plus within 5-7 years potentially.

    It has been a very good week indeed and I wish you an even better weekend.

    J

  115. People, I’m going to call it a day too soon. My wife (totally deserved) and me (totally undeserved) are going for a 1 week break to Madeira. Now I’ve looked at that place a number of times for a holiday but I always had the impression that it was full of gardens where old doddery folk pottered around oohing and aahing.

    Wow was I WRONG!! For a tiny island this thing packs a HUGE punch of ‘stuff to do’ for all ages. I’m going to use this as an exploratory trip and then spend a bit more time next time around.

    Despite my earlier call for a double zig zag being out by about 40 points on the DJIA it is already trading under my call point of 18150ish. I’ll stick with my call.

    BTW I also have a short position which will get stopped out if we go above 18176 on the DJIA.

    Good Luck to all with the Markets.

      1. Winning in trading is fun. Let’s have more and more fun this year! Dom Plonkingnon is still the best beverage for the thirsty.

  116. Purvez – You asked about taking profits before. I look at wave counts, the indicators then set up Fib clusters, Fib Support Zones/Fib Resistance Zones. The more Fibs that line up in an area show the likely target. Here’s a chart from March 11th showing the Fib support zone and the wave count lining up for a nice reversal area.

    It chopped around that area then went higher.

    1. That’s on a 10m chart – I like the stochastic setting on it. Gave me an intraday buy signal late yesterday (over the white line at 40)

    2. I also use a stop move up (SMU) stop move down (SMD) method. From the chart above, when the 209 low was broken, the stop was moved down to the high before the break or the X wave on the chart. Then, when the 207.30ish low was broken, the stop was again moved down to the 208ish high. Hence that’s why I was stopped on Wednesday and long positions kicked in.

      The long position stop is placed at the low, so 203xx or whatever it was. Once a high is broken the stop is moved up just like the way down.

      1. This is late for me, but thx geno for your explanation on taking profits. Very good method indeed. I’ll have a ‘play’ with it next time. Much better than my arbitrary ‘get out’ clause.

        Have a Good Week all.

  117. Madeira is beautiful, the plane landing in itself is
    an event.
    Restaurants tend to close quite early, climate perfect
    along the coast.
    Cooler and wetter climate as you go inland and to higher
    ground where it’s lush and green.

    I spent a week in Funchal and that was only a fraction
    of time needed to experience the Island.

    Hills and more hills, so if you are fit and like walking
    you will love it.

  118. Madeira is typically the first stop for trans Atlantic cruises from Florida to the Mediterranean. Stops for only 6 hours. Too short..

    You can checkout Madeira on utube. A beautiful place.

    1. When I brought my team and traveled aboard to conducted business negotiations, I often told them, especially the Japanese, and the German, …”look at my side, 50% of us are minority immigrants from all over the world who came to the US and became experts in their fields and we can work together and excel as a team….look at your side, you all look alike and think alike.”.

      America, despite its short-coming, allows diversity, creativity, and individual freedom. The American Dream never rest.

      1. Is that why aprroximately 97,000,000 American have left the work force, either can’t find a job or just given up on looking for work? Yeah that American Dream
        just never rests.

  119. I have and I am hiring and trying to add more and more jobs for the poor and disadvantaged.

    Creating opportunities to others is my mission. ..and yours?

    1. By all mean Newt- throw them a few crumbs to make your conscious feel better.

      My point is that, although the economy looks good to you, for the average American it’s very difficult to find a decent job and about 46 Million of them are on food stamps and 97 Million have left the work force pretty much forever.

      That American dream crap is just that – crapola.

  120. Well, the monetary system is crapola for most people. Whether its American or something else is pretty irrelevant:)

    imho
    J

  121. According to Investors Intelligence, the bull/bear ratio touched 4.2 twice in the last 1-1/2 years. The previous time the ratio hit 4.2 was before the 1987 market crash.

    60% of US Households are bullish stocks. The last time this level was achieved was in July 2007.

  122. It is good to hear that there are still some of you on the board who are still a believer in gold and commodities. imho gold is the only commodity worth holding in the next 3 years. And as crazy as it sounds, I believe that we will see $5000 gold in our lifetime, within the next 7 years more likely.

    I am sure I sound like a broken record that the top in the stock market is around the corner. Several smart members on this board and JH are also saying that.

    It is only 2% to the targeted 5100 level that Nasdaq is currently away from. From my perspective, it is not worth the risk for me to risk my life savings on staying long a little longer just to catch that 2%.

    I have been looking at several commodities charts. Almost all of them point to a weekly reversal as of 03/20, a signal that the stock market is topping, and a reallocation of funds to the commodities sector.

    Alan, laugh as much as you can know, but time will be my judge, that we will experience an epic collapse by Oct 2015. I based my analysis not only on cycle count, but also by talking to several of sound and successful investors in my circle. There is another school of thought, that the collapse will arrive in 2016, a 7 year cycle correction. I personally believe that the crash will be sooner, in 2015.

    I believe that next week will be a down week again, starting with Nasdaq falling back below 5000. Look forward to andre’s view of next week, and will appreciate any counter thought from this very smart board. Thanks,

  123. On another note, I have been apologizing repeatedly to my young kids, that I am part of the scheme of this US regime, who are robbing their future. Borrowing and paying it forward will eventually result in the economic collapse. In this case, it will be a global collapse, a global crisis. The US real unemployment ratio imv is over 20%, while its debt maybe be in the 150 trillions. My kids’ future is being robbed. Sadly, no matter what we do, the end of this madness is just around the corner.

  124. Louis Navellier who is a well known commentator and mutual fund Navellier Funds said yesterday on Goldseekradio.com on youtube the following:
    1. Large cap US firms are all going to report lower earnings in April.
    2. Expects lower earnings throughout 2015 due to strong dollar export effect.
    3. Now his funds are searching within consumer staples area for last remaining
    profitable companies.
    4. Expects a declining market this year and gold to rise moderately.

    This is in direct contrast to his 2014 commentaries which were bullish. This guy is one of the cleverest and most prescient analysts around and it worries me that he has flipped to bearish sentiments. Guess it is the dollar strength that is weakening large cap profits. Maybe the Nicolas inspired bullish shift among some of the posters on this blog is misguided; how can equity prices continue to rise if large caps are going to have quarters of negative earnings. Maybe this year will be the unlucky 7 year, 2008, 2001, 1994, 1987, etc..

  125. 1987 plus 7 is 1994 plus 7 is 2001 plus 7 is 2008 plus 7 is 2015.
    Each of these years in chain of 7 has 20% plus sell offs.

  126. Great posts Valley. That 7 year cycle makes sense. The Fed has stretched the stock market cycles to a ridiculously long cycle. However, they are only capable of stretching the cycles. The markets then still correct themselves.

    I recall the correction cycle used to be shorter, like every 4 years or so in the 80s. Now it is around 7 years. It is just amazing that the omnipotence of the Fed can contort the markets that much. Could they stretch the cycle to 8 years, until 2016? I would seriously doubt that.

  127. See a high for US indices as early as Friday 20 – Monday 23rd with a drop into the 26th. Downward price expectation 2075.

  128. Andre’s cycle has clearly inverted. He was expecting a low on the 20th and we got a high.

    In my work i think that high could already be in on Friday 20th – Monday 23rd. Next low is around the 26th with a price expectation of 2075.

    Daniel

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