Jump to content



Photo

SPX 1142


  • Please log in to reply
34 replies to this topic

#31 fib_1618

fib_1618

    Member

  • Traders-Talk User
  • 8,791 posts

Posted 07 January 2010 - 11:57 PM

but the February 2007 decline came very similarly, same for May 2006 decline

Although one could make a case based on the current MCSUM structure, the biggest difference between 2007 and now is that the bull market had already concluded as measured by the NYSE breadth MCSUM back in December 2006. Not so at the current time as we have yet moved below the zero line during this continuing initiation phase from the March divergent lows.

The May 2006 price top already had a series of tops beneath tops on the MCSUM, and the Summation Failure put a fork in it.

Fib

http://stockcharts.com/c-sc/sc?s=$NYSI&p=D&st=2006-01-01&en=2007-06-01&i=p02845420775&a=188066690&r=8796.png

Better to ignore me than abhor me.

Wise men don't need advice. Fools won't take it. - Benjamin Franklin

Technical Watch Subscriptions

Technical Watch Twitter Page

Technical Watch Facebook Page


#32 Echo

Echo

    Member

  • Traders-Talk User
  • 2,273 posts

Posted 08 January 2010 - 01:17 AM

I completely respect your opinion Fib, but the February 2007 decline came very similarly, same for May 2006 decline. The difference was the public was speculating, over speculating... Just like now.


Arb, I remember the Feb 2007 drop. I was short R2K via TWM and had been for a few day. Waiting and waiting as the market refused to drop. The inability to drop into the Hurst low got me psyched out enough that when the huge one day drop came, I covered my shorts about 1/3 of the way down and reversed long at the index uptrendlines. It was hard to stay short mentally at that point.

Let's all think about the psychology now of traders who have been short since Monday's breakout, waiting for the pullback, the WWW, the retest only to have the market grind higher or consolidate, only with brief 1-2 hour pullbacks. I think the short covering and early profit taking mentality will keep this market from dropping very much unless something big hits the news.

Doc

#33 goldswinger

goldswinger

    Member

  • Traders-Talk User
  • 2,612 posts

Posted 08 January 2010 - 02:39 AM

I think the short covering and early profit taking mentality will keep this market from dropping very much unless something big hits the news.
Doc


Here is a list of candidates copied here from the most recent Jim Willie story.

http://www.financial.../2010/0106.html


EXTREME WARNINGS FOR EXTREME TIMES
Saudi Royals fall: The Saudi Arabian royal family would lose government control to the Islamic Fundamentalists and is replaced. Scores of old royals escape loaded with hundreds of billion$ in assets, conjuring up memories of the Shah of Iran. Disruptions and instability spread across the entire Persian Gulf. A clampdown of fundamentalist groups in other Gulf nations invites backlash. Occupation forces in Iraq face renewed resistance. (chance: 20%)

China gains full naval military capability: The Chinese Military would attain aircraft carrier force with three carrier groups. In expert circles they call it blue water capability. With this potential, including long range strike potential, the balance of power in Asia is altered. Pressures are put as a result toward changed alliances in key nations considered loyal to the West. Certain strategic points gain attention, as focus is trained on the Mallacan Straits, the Panama Canal, the Suez Canal, the Bosporus Straits, the access routes to the Bering Sea, Australia, and South America. (chance: 30%)

Russian cuts off natural gas to Eastern Europe: Russia would enter a deep dispute with Eastern European nations, in particular Ukraine, and cuts off the flow of natural gas. Disputes center on return to the Russian fold from the independent factions encouraged by the Untied States motivated by the many Color Revolutions. Caught in the middle, at the end of the distribution lines, is Central Europe, whose ties forged by Germany to Russia remain healthy and strong. Russia later forges an alliance with Central Europe that results in some stability, as it becomes clear that Russia has come of age as a peacemaker with further ramifications in time. (chance: 50%)



Greece defaults on its debt: Great problems would result for the parent European Union, sure to fracture. Germany lets it go, does not cover the Greek debt, but employs plausible deniability on minimal offered assistance. A chain reaction begins, to reach the other vulnerable nations. Portugal, Italy, and Spain teeter upon the event, soon to suffer their own defaults, none aided. Even France suffers the ignominy of default, but is aided by Germany in the end, unlike the PIGS nations. The crux of the matter is refinance rollover of debt, which fails. The non-German EuroBonds then rise in yields, enough to force a split in the Euro currency to form the Nordic Core Euro. Default nations revert to their old former currencies and suffer massive devaluations. (chance: 80%)

Mexico fails as a state: The conditions in Mexico would become fully recognized and openly discussed. Two factors are front & center. The rise of the drug cartels in their control of the nation in numerous aspects is already global news. The unexpected net import of crude oil that ruins the nation's federal finances is not yet global news. The former has been understood, but the loss of oil exports takes the region by total surprise. Hyper-inflation then hits Mexico, which prints money to alleviate the federal budget shortfall. Chaos results on numerous levels. Supply disruption hits the US southern refineries. (chance: 70%)

Credit crisis relapse hits the US banks: The Untied States would suffer a relapse into a second round of bank failures, debt defaults, institutional liquidations, corporate deaths, and market disruptions. The proximal cause is the spread and continuation of the property decline, home foreclosures, and commercial defaults. Numerous bank analysts continue to harp on commercial mortgage loss risk after a 40% price decline, so far covered up by phony accounting rules. Impaired assets sit as bank assets. A trigger is the USFed removal from mortgage bond support, coupled with a powerful second downwave in housing prices from Option ARMortgages. A solution is put forth for wide USGovt purchase of housing inventory and the official advent of Fannie Mae as landlord. The supply chain is disrupted in extreme ways, as commercial paper grinds to a halt, and a deeper recession takes root. (chance: 40%)

The US supply chain suddenly suffers disruptions: The economic supply chain would be crippled by its two primary points of vulnerability. The finance credit lines are tied to wounded commercial paper markets. The actual tangible output supply comes from industries that struggle in credit flow, unstable prices, burdensome regulations, worker shortages, and constricted metal supply. Certain trucking firms have already shut down. Gasoline refineries are below their 1990 capacity. Mexican oil supply is soon to end. The lack of trained skilled experienced workers is chronic. (chance: 40%)

Fannie Mae is revealed as a slush fund, toxic bond haven, and object of grand criminal fraud coverup: Leaks would lead to calls for further Congressional investigations of mortgage bond fraud and past presidential pilferage. At the same time, various alerts would be given that the USGovt is harboring a black hole certain to cost over $2 trillion in additional bailouts, maybe up to $4 trillion. The prospect of wide USGovt home ownership from default sparks research reports and great scrunity, even clamor by younger members of Congress. The unlimited credit line to back USAgency debt securities has opened the door to a nasty effect on perception of USTreasury debt, as global perception of the actual USGovt debt ramps up 50%. Discussion of default rises. (chance: 40%)

The real 911 story comes out: The full seamy story would be revealed with many participants named. No further comment except that nation then would become deeply divided in reaction, and international isolation would result. The beneficiaries become the object of scrunity, criticism, and investigation. Attention turns to the swine flu vaccination and global Cap & Trade green taxes, each of which faces the harsh eye of investigation in Europe. (chance: 20%)

Iran is attacked: Great controversy would result from the direct attack of its nuclear facilities and other targets. Controversy would stir from scattered unconfirmed reports of involvement by various nations. Retaliation by Russia and China, long promised, then comes in hidden ways not fully understood. In the aftermath, the banks in the Mideast region are subjected to great scrutiny by several global players, especially one US ally nation. (chance: 10%)

Japan suffers a financial & economic crisis: A recession would take grip, spreading to its financial markets. Reduced export trade eliminated the trade surplus long ago. The Japanese Govt Bond then jumps higher by 2% or 3% in bond yield. The rising Yen currency consequently runs up 20% to 30% from the reverse of the Yen Carry Trade. Their export trade grinds to a near halt, and major conglomerate banks announce insolvency. Then China steps in. (chance: 40%)

UKGovt suffers a debt downgrade: The United Kingdom would be the first major industrialized nation to lose its high credit rating. The UKGilt bond yields then rise above 6% without pause. The threat of sovereign debt default is debated. The British Pound currency falls, which perversely aids the USDollar. Shock waves extend to the Wall Street financial center. Later, scrutiny comes to the USTreasury for its own downgrade and default risk. (chance: 50%)

Talk swirls for eliminating some central banks: Debate would focus on the central bank role as cause for asset bubbles, and extensions to the faulty nature of money itself. Analysts would cite money free from anchors of asset backing. However, awareness rises of the impracticality of central bank elimination, since debt liquidation and cleared decks cannot occur without global depression. In the background is rampant discussion of syndicate involvement and the risks of retaliation by the secretive banker organizations. (chance: 10%)

China faces a degree of chaos: Falling export trade, faltering bank reserves, empty commercial buildings, rising unemployment, idle factories, stalled construction projects, and restive population would contribute to a national crisis that struggles to be told amidst press controls. Armed with a $2500 billion war chest of reserves, China begins to convert assets into tangible rescues, aid, and welfare. The Chinese crisis then ignites a global sale of USTreasurys. As an offshoot to the chaos, the colonization of America then begins, as China cashes in on its USAgency Mortgage Bonds. It exploits it cut deal of Eminent Domain conversion of bonds into property. (chance: 20%)

Food prices soar in the US: The divergence between official crop forecasts would clash with the reality of crop failures and profound shortages this summer. Being the greatest food production source, the US crisis spreads globally. The deCarbonnel threat is realized, as foreign nations sell US$-based assets in order to finance food supply purchases. China enters the fray as a buyer of distressed farm property, amidst accusations of carpetbagger. (chance: 80%)

JPMorgan is object of persistent rumors of gigantic credit derivative losses: The slowly rising USTreasury Bond long-term yield would cause deep painful losses to JPMorgan. Their abuse of Interest Rate Swap contracts becomes a topic of debate. The monetization of USTreasurys becomes a topic of debate. The ability for the USGovt to control its deficits and auxiliary (hidden) losses becomes a topic of debate. Even bond fraud within JPM hallowed halls becomes a topic of debate. To cover the losses, monetary inflation grows out of control, and a USDollar decline ensues, taking the DX dollar index below the 70 level. (chance: 40%)

London metals exchange shuts down: The venerable London Bullion Market Assn would close, unable to fulfill gold orders. The varied stories continue regarding unorthodox practices from the London metals exchange in the month of December, like redemption of gold contracts in cash, like outsized demands for gold delivery mainly by Chinese entities but increasingly by the Swiss, like satisfaction of gold contracts with Street Tracks GLD shares, and much more. Scrutiny with assays upon high volume delivery have been standard since the tungsten gold story emerged, an indirect confirmation often ignored. The supply chain with intermediaries suddenly halts, as they too have no gold bullion to supply the LBMA. Companies shut down. Lawsuits result. Prosecutions begin. Midlevel officials are arrested. Some turn state's evidence. The gold price enters a state of extreme confusion, with vast discrepancies between paper gold price and physical gold price. (chance: 70%)


I would add " Water shortages increase Food prices exorbitantly across the planet". So all kinds of black and and purple swans are out there to make the McLellan Oscillator and the A/D lines take a hike down any time no matter how non divergent they are.

GS.

Edited by goldswinger, 08 January 2010 - 02:43 AM.


#34 arbman

arbman

    Quant

  • Traders-Talk User
  • 19,503 posts

Posted 08 January 2010 - 03:30 AM

Doc, what you described is the reason of the rapid decline... It could happen again, we still have the Hurst setup (only the last set of highs are a bit higher and more fragile!), we have big enough cycle low...

Notice how muted this rally was in terms of breadth thrust too compared to 2007, but we had quite a bit more new highs for a last high, so a pull back and one more high is most likely needed;

Posted Image

Posted Image


Fib, I am looking higher into summer too, but this cycle low will happen from here until March, perhaps it will happen at the last minute, but we now have the internal ingredients more or less. I think the new highs this week went too far compared to February 2007 decline though, so I think we may pull back here and make one more high before a plunge. The next high must have a much smaller new high count though...

Edited by arbman, 08 January 2010 - 03:40 AM.


#35 thespookyone

thespookyone

    Member

  • Traders-Talk User
  • 6,043 posts

Posted 08 January 2010 - 09:50 AM

Andiron-When the selling starts in earnest-I have a target of 960, as well.