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Wednesday, May 25, 2011

$SPX - Anticipating Lower Lows

We are into choppy trading and I expect the lower lows to continue for SPX.  There is a cycle that I am currently using to forecast the day to day trading in the Financials Indexes with particularly good accuracy. 

I have completed Intermediate and long term charts for SPX with target levels.  Frankly speaking the markets are trading at levels which represent a bubble of unprecedented proportions.  I do believe I have the patterns in place that show clearly how, and when, the bubble pops - it's a shocker!      

30min Chart

39 comments:

  1. awesome, we are going lower

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  2. Are you going to share your findings?

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  3. Do you expect commodities to tank before the S&P drops?

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  4. Wow, silver doing its thing overnight, as spot prices hit $38.84(SLV equivalent of roughly $38) before retracing big ($36.29 low). Pretty amazing how a $10 dump in gold produced a $2.50 sell-off in silver.
    SC, are you waiting for a further bounce to go short at this point? Also, I wonder if you think your former bullish inverse pattern still has any chance to play out over the next week or so?

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  5. This bounce in silver here after the drop is either a mid point consolidation of the drop before a bounce, or it is going to recover and trade around the highs for another day. I guess that statement is no help at all to trade off of, but it is hard to see anything concrete from it right now. As SC said yesterday, silver is being very tricky!

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  6. I will show the big picture soon. I want to show this in detail with many charts - everyone has a right to know, with time to prepare. Both bulls and bears will be surprised by the ending.

    Commodities are about to see a sharp capitulation move down.

    Silver is in the final squiggles now. Likely, it will struggle today, but then recover and test yesterday's high. A slight higher high than yesterday regular trading might be possible - that is it. The high overnight is unlikely to be seen again. A near 30% drop for Silver is coming next week imo.

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  7. you still think this recovers SC?

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  8. SC, when you mentioned about the commodities are about to see a sharp move down. Do you just mean about the silver, and gold or you also mean the other metals likely copper,aluminum etc?

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  9. Sorry Blake was tied up there, we went and tested the orange fork as support, and now we are into the 1320's as expected for today. Likely flat trading now today and tomorrow at this level. Minimal upside from here, and Tuesday looks ugly. Mkt could start to selloff later in the day tomorrow.

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  10. I think generally all precious metals, and commodities should selloff next week. Silver looks like the largest % move to me. I have not looked as closely at the industrial metals, but is likely that the selloff hits them hard as well.

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  11. question is SC, are you still hoping/waiting for $37 SLV to get in on the short side? I'm holding a core gold short, and might add on further bounces.

    From a macro/policy perspective the above trade could be killed by any hint (from the Fed) to a possible QE3 of sort, some time in the near future if economy keeps stuttering...

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  12. I'm still waiting mainly because I see Silver needs just a touch more time optimally. Tomorrow might be the sweet spot from what I see. There is nothing wrong with shorting Silver right here, plenty of downside, but then would have to wait through some of this chop as it finishes topping.

    No, Silver is toast in the short term as the cycle has already started - it is very negative.

    Don't forget I see a major low coming for Silver $26-7 area. After that, then yes, Silver sees a very large bounce up. That will be the time to go long and in tune with the macro view etc..

    It's all in the timing.

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  13. thanks SC- I was actually referring to silver and if you were confident it would recover. It looks like it wants to push a bit higher and I was going to trade out of my position to get short from a better level.

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  14. That still may make sense Blake if Silver dips again here today. BUT any hesistation to reshort on a pop, and can easily miss the boat.

    SPX looking attractive as a short now. Only a few points of upside left.

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  15. My prediction:

    The FED will make the announcement - there will be no QE3.

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  16. SC, I think it'd be foolish on their part to make such an announcement, because if things turned ugly afterwards, they would have put themselves into a corner. In general, I think they tend not to pre-commit.
    IMO, it's not a matter of if, rather of when to implement QE3. My guess is that we need to see some blood in the markets first.
    The more time goes by and the more the US mimics post bubble Japan.Also, with Washington tightening the belt, only the FED can provide support over the next few years.

    As for the SPX, we're still in the 1300-30 range. It'll be very interesting to see if tomorrow we start to sell ahead of the long week (as we did last week), or if instead we break higher. I tend to agree with you and favor the downside.

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  17. Well ok, I agree GL, and you are correct regarding timing. My prediction: The FED will announce in June that they have decided not to implement QE3 "at this time".

    At best, mkt may be able to rally to 1330-2 area, hold up and just go flat tomorrow, but early next week is going to be another story from what I see.

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  18. Hey SC, agreed, and did not mean to split hair on this one.
    As for SPX, the short trade looks great, even from a risk/reward perspective, i.e. 5 points (at most) stop-loss, with a 20 points possible profit target.

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  19. Leaving aside your always nice and timely cycle analysis for a moment, what makes me a tad uncomfortable about this short SPX trade is that, even from a technical analysis standpoint, it does look very promising and almost too obvious, i.e. perfect descending channel, long week-end ahead, bunch of bearish indicators, end of the month, blah, blah, blah. I wonder if the big guys are gonna try to spike the index to tap all those stops just above, and perhaps take it 10-15 points higher.

    On the silver front, nice to see silver getting back up. Matter of fact, it's almost about to test what you indicated as yesterday daytime high (on the SLV, just around the $37 mark).

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  20. I am short silver futures from 37.8..I suppose that is about 36.9 on SLV. Will hold through next week and see if SC's prediction becomes reality.

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  21. Just shorted S&P, shorted Silver 50%.

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  22. I shorted Silver because it hit the green fork line as shown in the chart. Now any good trendline will be tested, and an overshoot is probably a reality. Trying to get the top tick on Silver will be difficult I suspect. I'll short the rest when it screams at me.

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  23. I guess I don't know which chart you are referring to for SLV, so don't see a green fork, or the trendline you are speaking of.

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  24. It's the green trendline on the previous "Silver Snake" post. I marked "top at $37".

    SLV did stop right at the line and dropped.

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  25. SPX also hit the green trendline above and dropped.

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  26. silver getting interesting here if it can drop another .50...just may be the start

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  27. Silver rejected hard at the trendline. I managed to short within pennies of that top. I suspect a double top. Either today or perhaps Tues morning.

    Likely that Silver just topped!

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  28. Either way, today or tuesday, it will be nice to see some downside next week. I was kind of hoping for a big gap down Tuesday morning to get us started

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  29. Also interesting/puzzling to see how silver is massively under-performing gold today. Hopefully it's simply leading on the way down.

    As for SPX and eur/usd, I suppose the former is faking a break-out, while the latter is simply chasing stops on the upside before reversing lower at the start of next week.

    Tuesday should be a very interesting start to the shortened week, which will end with the usually volatile NFP Friday. Looking forward to some serious action.

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  30. Always hard to spot a top tick for sure (especially Silver)of course. In any case minimal upside and plenty of downside.

    I will look at timing further but I would say SLV should at least hit a first bottom $28.50 around June 6-7.

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  31. For today I think 1326 SPX could be tested, but holds. Monday we saw the big gap down, and the mkt "likes" to switch things up.

    Tues/Wed look like down days to me. I suspect a softish close today, maybe small gap up Tues which tests the 1332-4 then sells off after. No matter about these little things, should see 1310-15 SPX by Wed imo.

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  32. Would love to see your analysis on the big picture for the bear market with time and price targets!

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  33. It's going to be a wild year. A real minefield for bulls and bears.

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  34. Jim Sinclair guarantees QE3.. I will listen to him, like I have for the past 25 yrs. He is in the know.

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  35. Yes, governments, regulators, and FED will continue their futile acts of desperation as always. The direction of the mkt cannot be changed by such things. Remember, these people saw nothing wrong in the summer of 2008. QE is a pointless failure.

    Just as in seasonal cycles, summer turns to fall, and then winter, the current bull cycle is just about over. Nothing can change this fact.

    My opinion is that we will not see QE3 in June. I will soon explain how I see the mkts trade just after that news. There are major bull and bear traps coming.

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  36. sc, what do you make of Jim Rickards thoughts that the FED doesn't need QE3 because of the repayments to the assets that the FED has on it's balance sheets? (In other words the FED can monetize the payments it gets from it's balance sheet and avoid QE3)?

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  37. That could be, they will come up with all sorts of useless schemes behind the scenes. Probably they will say that things while slow have stabilized, therefore, no need for QE3 at this time etc... The typical nonsense.

    I'll continue with the analogy above. The FED's egotistical attitude is: winter be damned I'm going to warm up the planet and keep everyone warm. I'll burn every tree on the planet to warm it up.

    Maybe the temperature would rise a few degrees for the day.

    Winter will return the next day.

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  38. Last week Financials (rifin) took out the March 2011 lows. In fact, Financials tested the level of the first week of Nov 2010 when QE2 was announced.

    The fact is QE2 has done nothing to stop the bleeding in the Financial sector. In Feb 2011 the financials just double topped with April 2010. The tape tells the tale.

    Despite QE etc, S&P remains in a downtrend from 2007.

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