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Sunday, May 29, 2011

SPY - Backtest

A top is due in this timing cycle.  The top may have been in already on Friday, or no higher than approx. 1335 SPX early on Tues, May 31.  Another decline to commence next.

Daily Chart

96 comments:

  1. can't wait to see another decline

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  2. Yes, thanks Tegra. The bubble is slowly starting to deflate.

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  3. SC, Does the silver analysis still work? Thanks.

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  4. Yes Roger, Silver had the moderate bounce as expected last week, now a large decline comes next.

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  5. The way gold has been behaving of late puts the silver short into question - I wonder if we could see $40 before a meaningful correction does take place. I suppose SC still doesn't see higher than $39.30 on the silver future (or around $38.40 for SLV). However, if SC is correct and we get an SPX dump, then silver might quickly follow and turn lower.

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  6. Nice site SC. From the look of the chart above it shows clear EW pattern, this could be an ABC reset, I get next down to begin between 1334-38 ES. Anything above 1340 means a new high possible.

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  7. Is SC good? First time here..But I also think that the market soon will fall apart.

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  8. Thanks, I see plenty of confirmation that we are going down here. I am well aware of when the bear trap will be set (later in June).

    It's a trader's dream come true.

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  9. So we will go down here to test 1308..Probably bounce there to 1325-1332 and then fall back again?

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  10. I'll probably do some fine tuning to that last chart in a day or 2, but that's the basic plan.

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  12. SC. The "bear trap (later in June)" as you mentioned. Does that mean the dip would not last too long (before June), thus a short covering need to be watch out carefully? Nevertheless, I enjoy your analysis. Thanks.

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  13. I'll soon explain in detail what the cycles show happening with Gold and Silver over the next few years and longer term. The cycles are predictable.

    Precious metal bulls understand perfectly the fundamental problems with fiat, and they are right in the long term, but as with everything turning profits is all about the price AND timing. I'll show clearly why the timing is wrong for precious metals.

    Anyone who shorted the mkt in March 2009 was right about the bleak fundamental picture, BUT they lost because the timing was dreadfully wrong. Exactly the same situation now with precious metals.

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  14. Roger, there are 2 major dips coming first, then the bear trap will spring open. We saw the first dip last week, 2 more to go now. I'll show where and the timing when this happens well in advance.

    For now can stick with shorting.

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  15. SPX just broke 1,340 on Globex, however silver is not following much ($38.20ish on silver futures). Obviously all risk trades are up on the WSJ story about another bailout package being readied for Greece. I suppose you want to check out the open tomorrow morning to see if this move is worth fading or if better to reevaluate and stand aside.Correct?

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  16. Thanks GL, let's see how the open looks. I suspect that the open is up, but then the rally just fizzles out into a selloff. So likely I will top up and max out my shorts first thing.

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  17. I have some SPY June 130 puts that look like they're going to take a little beating in the morning, but hopefully by the end of week will be ITM. May average down depending on how it looks.

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  18. SC, did the overnight rally change your view in any way? SPX got to 1345+, while silver future reached $38.70s ($37.80ish SLV equivalent) - u adding to shorts or perhaps reconsider?

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  19. I'm only 50% short Silver so I'll take advantage and add this morning. Maybe I'll put another 25% on and take it from there.

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  20. Glad to hear you're sticking to your view. I still have your previous inverse silver call in the back of my mind, and wonder if it can still play out here. I just got short SPX, and I'm also short gold, so we're pretty much on the same page.

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  21. The inverse pattern worked and just indicated a moderate bounce. The larger cycle is much stronger and negative for Silver.

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  22. A break below $38 for silver futures should be lights out.

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  23. Yes, Blake agree. One of my patterns suggests that once the high is in for Silver, it should settle back and then trade almost completely flat.

    That is the quiet before the storm.

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  24. I'll point out when I think that is ocurring.

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  25. I thought you were expecting a hard move down here SC. Now you think we have some sideways trading for a couple of days?

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  26. I am expecting a hard move down for Silver. Right before the bottom falls out it should just trade flat for a short period of time.

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  27. Interesting, so when you say short period of time, that is likely to be an intraday period? Never seen someone predict such things, would like to know more about hwo you come up with some of these expectations.

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  28. Much appreciated silver analysis SC, thanks.

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  29. Yes, intraday. I'll show some more Silver charts and timing soon to explain what I'm seeing.

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  30. SPX did briefly overshoot the green channel line, but fizzled out as I mentioned last night.

    Time cycle looking good.

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  31. silver testing 38 here. You think it will get ugly this afternoon SC?

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  32. It probably is a little early yet. There is a rising wedge on Silver that started to form since May 24th.

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  33. SC, sometimes you're a tad early, other times a bit late but, all in all, pretty amazing SPX calls over the past few months - congrats! If you do half as well on silver, well, you're gonna make a truck load!

    BTW, I agree on the silver wedge - could be good opportunity to add further shorts, provided we put in a medium term top. Do you think the ST cycle top is in?

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  34. Will the rising wedge change the short cycle in short term?

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  35. Thanks GL, sometimes I get the tops and bottoms just right, other times not, but mainly I want to make the other 80% in between.

    Same with Silver. I'm more than satisfied that we're close to a top, and I see substantial downside. Regardless of where the top tick is, the significant trade is down imo. I'll just keep shorting any bounces as it is getting late in the game.

    Roger, it is a bearish wedge, but these can fake break and fool around a while too. Let's watch and see.

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  36. Financials are signalling weakness is coming imo. I think a slower slide to start, with a plunge at the end.

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  37. so you think we could see silver grind it out here for a couple more days? In my opinion, if it does not start the decline by tonight, I think it will end up moving closer to $40 while gold gains strength and makes a new high.

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  38. I'm expecting a selloff for SPX soon at least down to 1325-1329 (to start with as a first leg), probably first thing tomorrow, and that should bring down silver. It will be interesting to see just how Silver reacts and that should determine whether it is ready or needs to grind along some more. Let me look at the micro patterns further, and might be able to get the near term timing on it.

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  39. SC, trying to catch the 80% in between is the sensible and smart strategy.

    As for your expected SPX move, it might as well start overnight. Have you noticed how frequently of late big moves happen overnight, while the US session is too often a real snoozer with low vol and even less volatility? I assume the above is courtesy of the "central planners" doing their thing...

    I hate to say this again, but I think silver's cause would greatly helped by a break-down in gold. If USD doesn't stabilize or, possibly, turn, it'll be difficult to have meaningful moves in either gold or silver.

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  40. Yes, good point GL and especially with a shortened week.

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  41. Wow, took a beating on my SPY puts today, but still holding. If it opens higher, may average down, but all signs are pointing that it's going up. Might have been a bad trade.

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  42. I'd not make much of today's last minutes ramp as it is month's end flow, i.e. plenty of index related buying is done at EOD. Crucial is too see what kind of follow through / action we get by tomorrow's open (or by the time ADP comes out). Also, let's not forget NFP Friday is coming up this week.

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  43. SC, do you see any (short-term) cycle scope to get out here on both silver and SPX shorts, only to get short again at higher levels? I'm inclined to hold on to my shorts as they are pretty much from current levels, but figured to ask if you see any new patterns developing for the very short-term, i.e. next couple of days, that indicate rally has more room to run.

    P.S PMs so far not following huge equity ramp (SPX hit 1349 on Globex).

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  44. The markets are very frustrating at the moment

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  45. Full short SPX and mostly short Silver with some room to add short.

    My price patterns and time cycles are all bearish here. Today the financials were weaker than SPX into the close, and VIX put in a higher low intraday as well. So tomorrow looks conclusively bearish to me.

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  46. Silver looks ready to being moving down now, but this is not what I expected. I thought it would start with a violent suprise $2 free fall. It is moving very slow right now giving plenty of time to exit, which makes me nervous on the short side.

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  47. Let's see how Silver acts today with some time Blake. There is plenty of downside for SPX over the next day from what I see.

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  48. SC it looks like you may be right the market is selling off, what is the level on the SP that this drop will finish? Around 1307 or lower before a bounce?

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  49. SC, POSX is heading down, will this hold silver around 37.50?

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  50. Well that was certainly interesting

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  51. Financials really getting hammered and leading the way down. I want to look at the levels further, June 6-7 looks like the next bottom to me, and there is a very specific bottom pattern I am watching to mark the bottom.

    Silver still hanging in there.

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  52. I said this yesterday:

    "I'm expecting a selloff for SPX soon at least down to 1325-1329 (to start with as a first leg), probably first thing tomorrow, and that should bring down silver. It will be interesting to see just how Silver reacts and that should determine whether it is ready or needs to grind along some more. Let me look at the micro patterns further, and might be able to get the near term timing on it."

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  53. lots of buying pressure for gold and silver here...not looking very promising in the short term

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  54. Really excellent call, SC. This selloff was not at all obvious when futures were spiking last night.

    That said, we are still above the main trendline connecting the prior peaks since 5/2. (It had served as resistance until we broke upwards through it yesterday). From a technical perspective, this could still just be a retest of support before heading higher. The line is now around 1326. If we fall through that it will really look bearish...

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  55. Interestingly there is an equal time cycle for SPX with the flash crash last May 2010, the Nov 2010 low, and today.

    The SPX selloff has plenty more to go soon.

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  56. Thanks Spudthorpe, I see that trendline and I agree it is support for now, we could take a breather here, bounce around somewhat. Definitely we are on the way down though. Financials are showing that clearly.

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  57. I suppose silver and gold will finally join in the fun once the dollar finds some footing

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  58. Pretty amazing in the options market. Came back from being down 50% at close yesterday to up 25% when I sold this morning, and that wasn't the top.

    SC, you're still seeing a significant drop for SPX?

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  59. Lol, nicely done Rowley, yes more to go but not that much more. Starting to suspect bottom tomorrow morning. Financials don't have much more to drop, SPX need to catch up a little.

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  60. SC- if you think there will be a bottom tomorrow morning, do we need to get out of the silver short, or is it unrelated at this point? Thanks!

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  61. Will the silver still test 27 as predicted before? Or it will also bottom soon.

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  62. It should be clear on the Silver timing tomorrow morning. I think Silver can drop more (lower than today's low) at least so I want to see how it acts tomorrow and determine whether the timing is right or not quite ready. I'm sure that large move is coming - just a timing issue.

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  63. Looks like the silver is heading south more or less.

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  64. Sold my puts way too early lol. There was still a 50% upside. Timing and patience...

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  65. I can't beleive silver is holding up so well through this

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  66. I know, it just doesn't want to selloff. I'm curious to see what Silver does overnight, so far it just is holding.

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  67. it is kind of scary to be shorting something that is so strong with all the selling pressure. I do beleive it needs to drop, but what can make it drop? If the market bounces, is silver now inversely correlated with it, or will it just move up with the wind at its back?

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  68. I don't have real time data, I usually watch the kitco chart, http://www.kitco.com/charts/livesilver.html

    Is this also intact for the information?

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  69. This huge fall on the markets today has clearly been engineered by the bankers so they can get their hands on more free money in the form of QE3. That's why silver and gold are holding steady, and gold is actually rising today.

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  70. Roger, use this.

    http://www.futurespros.com/metals/silver-advanced-chart

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  71. Thanks, Rowley. It looks like silver will not reach lower than today's low so far in intraday.

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  72. That is what has been tricky for the Silver timing. Lately the correlation with the mkt has not been that close.

    There is little upside for Silver, and it'll come down so it's just a matter of timing now.

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  73. SC- so do you think the high is in for silver in this current rally? If so, I am just going to hold on to my shorts (literally) and wait.

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  74. Well, hard to say for sure at this point. I might just wait until tomorrow and decide then.

    Whoa Silver just got crunched there, let's see if this goes anywhere...

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  75. well done SC! Are you staying short or is this all of the move down for now?

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  76. I'm not entirely sure we are on the way yet or not, but at least we are well into the profits here with a nice cushion now!

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  77. so you think it bounces back up from here rather than continue the slide? I would hate to give back this chunk of change i just acquired

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  78. You can never go wrong taking profits guys if wanting to play it safe. The gap might not be forgiving overnight, hard to say for sure what happens next with this close today. Could always do both - could take some profits and keep a core position as well.

    The silver snake slithers....

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  79. I just made my cleverest trade ever.

    I was closing out a short position in silver futures, miskeyed the number of contracts, and ended up actually going long instead of going flat. Happened to be right before a modest bounce, and I didn't notice my mistake until the top of the bounce, so I "cleverly" made money on both sides.

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  80. Lol, I love when that happens!

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  81. Wow, great call. Unbelievable, really.

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  82. I thought the close looked quite bearish and kind of figured we would gap down from here in silver if there was a gap

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  83. We did hit a major support for Silver and closed there, so as usual the magic will happen overnight.

    Financials are near support that I expect to hold. Silver took forever to drop today, but could it be finally catching up now with a severe drop underway...or is this just a false start.

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  84. hey SC

    congratz on your calls, after I came across your blog this weekend I was waiting how this will play out

    guess I will stay for a while

    did you consider updating the blog more often?

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  85. Thanks, I have a lot on my desk and haven't been able to update as much as I'd like. I'll see what I can do. There is something to be said for keeping it simple too. It makes sense to filter out the noise and focus on the best opportunities.

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  86. SC, as said before, great analysis and super calls!

    While the analysis for SPX is more clear cut, as I said many times before, it'll be almost impossible to get to the high 20s (or even the low 30s) in silver unless gold breaks significantly. And this is where I'm having troubles calling the next moves. In fact, correlations are all over the place, and gold is exhibiting massive relative strength. However, I also know that with commodities it takes a lot more patience as things can unravel quite abruptly (not to mention all the fake starts and such).

    Bottom line: I'm having a tough time adding to shorts on silver down here, and I'm simply inclined to hold previous shorts for a while longer.That being said, if you still see a serious ST bottom by June 6-7, I suppose you're quite comfortable holding/adding (on bounces) to both your silver/SPX positions. However, having seeing you in action previously, I guess you're just going to hold to your current positions and wait for a clearer picture to develop.

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  87. SC, great call...thnx to u,I woke up to a decent profit (I live in oz)

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  88. Hi SC-Hope all is well..good stuff on the top call. We were on the same page as we had a turn date on June 1st and were fully loaded on the short side overnight. TXN puts almost doubled :)

    Watch June 3rd and June 12th. They are important dates in the coming weeks. G-

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