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Tuesday, August 2, 2011

$SPX - Massive Bear Trap

The SPX 1263 target from analysis on Wednesday, July 27th was hit today.  Because it was 1 day later than anticipated, the white line was lower, and the decline was greater.

A bounce to 1295-1305 is targeted for SPX next.  My cycles indicate weakness into August 10th +/- 1 day. That may be a higher low, or Aug 10th may test slightly lower than current levels near approximately 1239.

Most importantly, from my "2007 cycle" analysis, a rally of at least 200 SPX points is anticipated into September.

60min Chart















The following is the "2007 Cycle".  The interpretation is that we are currently at, or near, the green arrow with a massive rally to commence shortly.

6day Chart















The chart for Financials is extremely bullish near term.  The Financials have been outperforming SPX since July 20th, and are only slightly below the July 18th bottom (contrast with the top 60min SPX chart).  The triangle apex, time cycle, and major supports are all indicating a bottom is near for the Financials.  

A serious power rally is about to commence for Financials.

60min Chart

128 comments:

  1. The chart is from 2002, not 2007?

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  2. And gold will trade inversely to the market I presume?

    Thank you,

    A

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  3. I call it the "2007 Cycle" because the first top was the 2007 top, and now we are working towards the 2000 top. I have showed this cycle in the past, and wanted to keep it consistent with how I have described it previously.

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  4. Yes, the inverse correlation with Gold/Silver and the markets looks like it will continue.

    A strong rally in the mkts without QE, and with a trimmed down budget would be bearish for Gold. I'm going to look further at the currencies, but I expect the dollar may rally with the mkts as well.

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  5. Why it's called a bear trap?

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  6. The Bear trap is set because shorts are about to be squeezed.

    Keep in mind the mkts should still be under selling pressure into the Aug 10th time cycle. Although there may be a decent bounce first.

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  7. Do those ugly July PMI numbers matter going forward. My simple mind tells me that all is not well given the global deterioration trend of the PMI numbers. Thus the question is how to stage a 200 points SP rally amidst the poor PMI numbers.

    We are under Mercury retrograde period, direct opposite to Neptune. Both are tricksters, playing with our minds. I stay with the PMI numbers.

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  8. SC - you are expecting a 200 point rally after the low is put into this cycle? How low would that be? 200 points sounds like it will take out the 1370 high unless the bottom is somewhere <1170. Thanks.

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  9. I'd say a bounce back to 1300 now would be a pretty big deal. Thats about 500 DJIA points.- SPX 1250 is a big deal. A real line in the sand.-Also,the $TRAN index dropping below 5000 is a major indicator we may not bounce back rapidly any time soon.

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  10. AUD, platinum and palladium weak

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  11. There is potential for a bounce to as high as 1305 next. It may not bounce that well, and the cycle is negative imo until Aug 10th. 1239 or so could be tested at that time.

    The Financials are outperforming SPX. They have been signalling for a while.

    I don't see any plausible fix for the economy. Yet, the mkt will take it's time.

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  12. NDX holding well also. Nowhere even close to the June bottom.

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  13. SC - Any clue until what price is GOLD going to jump??

    Thanks
    Atul

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  14. Im starting to think that this time it could be different. Traders do not want to be in cash that is endlessly printed by the fed. So they move into gold and what it looks like silver, since its still under 50.. If silver drops it will be very short lived, asia will buy it all now that they have direct access to deliverable metals in HK.

    SC, realistically, when do you say that crash projection for metals is wrong? Is there a point after which you change your projection? Gold is already almost 200$ up in one month, silver is moving along as well..

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  15. Keep in mind Silver topped in April, and is still much lower.

    Gold should be out of gas right now. Silver is the one that could get the last push over the next week. So far it is playing out as per my weekend update.

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  16. Going long more S&P at 1240. Favoring a bottom right here with Aug 10th being a higher low.

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  17. Hi SC SPX has hit the 1239 level do you think we have seen a bottom?

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  18. That is why I am waiting for a confirmation of a trend reversal before I consider shorting PMs. I would like to silver a bit higher before starting a short position.

    Upset I covered SPX shorts early, but glad I didn't go long until a few minutes ago. Hoping for a small bounce also for SPX.

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  19. Hi SC

    Are you expecting S&P to rise sometime soon? cause it is below 1240 currently. Is there reason behind your long beside going against the market?

    Thanks!

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  20. Expecting SPX to rise sharply soon. Financials still outperforming today and that is why to go long.

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  21. This flush from 1340 really fooled a lot of people. Did not imagine the quick 100 point flush in a 1-2 weeks time. Really kicking myself for closing shorts way early.

    Now not sure how it pans out, so just sitting in cash.

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  22. All puts now closed. Haven't gone long yet. Sitting in 100% cash.

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  23. Now point 12 is officially higher than point 10 on that silver symmetry chart. pattern invalid? unless this is still points 8-9-10 we are working on..

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  24. The symmetry still looks good, point 12 just looks like it extends imo. The symmetry is most useful in the big picture, but for short term levels it has it's limitations. The symmetry is clear about what comes next in the big picture, but not a mirror image.

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  25. Hi SC

    curious when you expect silver to start to fall in August?


    Thanks!

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  26. I think most likely it is heading for $44 area by Aug 10th, and then collapses soon afterwards.

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  27. Hi SC I went long as well at 1238, do you still think we can get to 1300 on the next bounce up before declining again?

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  28. That is highly favored Muzz. The fact that today already hit the 1239 target increases the probability of a bounce next to near 1300, and also that the bottom is in already.

    Aug 10th still looks ugly though. I think retest near the bottom.

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  29. Today's low so far - 1234.56

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  30. SC - as you said, Silver can climb to $44 by 10 Aug. Do you have any price for GOLD how far it can go with Silver by 10 Aug?

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  31. I am favoring Gold to top right here, and now with maybe a double top around Aug 10th.

    Silver tops closer to Aug 10th. $44 area for SLV, and that would be higher for the future.

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  32. What kind of pullback here for gold?

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  33. If we do see a SPX bounce to 1300, I wonder if the SLV will also dive a little bit since they act inversely. The SPX bounce will be in just a short time, then a sell off again to until Aug10. Also SLV push up to 44 when SPX sell off. Is this hypothesis intact, SC?

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  34. I haven't looked at what a pullback for gold would look like closely. It should see a decent pullback though.

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  35. SLV can come down a little, but gold likely more here.

    Yes, Roger that's the plan.

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  36. SPX can trade in the same direction as metals (i.e. march - april-may this year)

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  37. 5% you mean for Gold? Maybe, not sure. I'll look into that.

    The metals can trade in the same direction as the mkts, but I think they switched into the fear trade in July, and expect that can continue. This is one reason that my short term timing was fouled up on the metals. Quite sure I have it right this time.

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  38. Im inclined to think that if gold tops here, silver is not going higher. In April silver led gold, now gold is leading silver as a fear trade. So if gold is retreating from here, so does silver.

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  39. Both should retreat here, but I just feel that Silver might see the last push this time around. We'll see.

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  40. I don't think anyone is interested in shorting them anymore.

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  41. generally, that's when one shorts.

    SC, just read that Dow sell signal came in after yesterday's close.

    Also with Financials - looking at the bigger picture, BKX toped out in February and have been sliding down ever since, now we are at the important support. Bounce would be healthy, but if buying doesn't continue and we turn south again and break the support could be '08 all over again!

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  42. The only thing I see crashing is Gold...

    Gold is a wonderful short here. Silver better to wait until near Aug 10th optimally. Silver is holding better than Gold late in the day today, and supporting my theory. Silver tops last.

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  43. So you implicitly have a dollar view?

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  44. Platinum sure looks like it made a third lower high

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  45. Very bullish the dollar. I suspect the dollar may have one last small dip short term, and then go on a long bull run.

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  46. Platinum, yen, swiss, everything gold correlated to is down big....gold up.

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  47. Looks like consolidation today. I still think we are on the way to near 1300 next few days.

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  48. Hi SC

    curious to know what may bring S&P back to 1300 that you may know of? that would be a 60 point up from current price. Almost 4.5 % gain.

    Thanks!

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  49. Mainly I go with the charts and cycles. I see weakness around Aug 10th, but the mkts are already at support levels. So this means to me that SPX is likely to bounce strongly, and then come down again around Aug 10th.

    The longer cycles are extremely bullish, but we have selling pressure on the mkts until the 10th. After that, power rally.

    We do have the nonfarm payrolls tomorrow.

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  50. Hi SC

    Curious how much percentage position are you long in S&P, short gold and short silver right now?


    Thanks!

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  51. Overweight long S&P.

    I like short Gold right here, but I am keeping dry powder for Silver to short it closer to Aug 10th optimally.

    My S&P trading has produced for me consistently, but the PM play is going to be huge. Very different plays, the PM's have required patience, but when the time is right it is going to be exciting.

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  52. You have to think there's going to be a bounce, but it seems everyday, there's something else going on to bring this down. In any case, going long for a pop, then starting my shorting position.

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  53. Seems like panic across the media and the markets this morning. Added some SPX longs this morning. Waiting for the experts to say get out of the markets or short the markets at these levels. However, I did short gold miners this morning as they go with the markets. Was tempted to start a silver short but still on sidelines.

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  54. Just started a silver short here...thought I was going to wait, but I am impatient today. Will add more if there is confirmation to the downside.

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  55. Long s&p and shorted gld earlier. Crossing my fingers

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  56. SC, silver looks really weak right here. Do you still see a target of $44?

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  57. Both Silver and Gold likely to come down next few days, but I think Gold comes down more than Silver. Silver I still think tops around Aug 10th. $44 area for SLV.

    Long and strong S&P. Nothing has changed, near 1300 Tues target.

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  58. I'm all in S&P long now. Screw it, if markets collapse, we're all screwed to some extent.

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  59. That's the spirit Nuggy lol! I hear a lot of crash talking but the S&P is currently less than 8 points below yesterday's low.

    Financials leading up right now intraday and since July 20th.

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  60. I was down 67% on SLV puts this morning, and as a hail mary, averaged down. Just sold them for a profit. Shaking my head in disbelief lol. Nice call SC.

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  61. wow, silver shorts unbelievable. too bad I'm not participating.

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  62. Fantastic call SC on GOLD!!!!
    How much % correction do you believe will come in GOLD?

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  63. SC, for the big picture , we are going to see point 9, then will see point 10 which silver hit higher. Which price you expect for point 9 on SLV now? if the target for point 9 the same:around 36 for slv , do you think it will be very hard for slv up to point 10 at 44 in such a short time?
    Thanks

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  64. A decent pullback likely for Gold short term, but the big downside should be around/after Aug 10th.

    Targeting near $1,320 with a bounce and bottom near $1,230.

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  65. what's your target for silver? still seeing $18 as intermediate term target after aug 10?

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  66. You see 70 pts on the SPX by tuesday?????

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  67. If gold and silver rebound enough I can see the CME raising margins on Sunday night because of "volatility". Another May massacre?

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  68. Yes still $15-18 Silver. TC, I doubt SLV reaches down to $36 here. Let me look at that closer.

    Yes, I think big rally coming for SPX. Mkt is moving big every day now.

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  69. Lunch is on me if we hit 1300 spx by tuesday lol!

    I do see a rally soon but only to 1250ish.

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  70. Ok ckorey lol. You're on! Steak and Lobster ok with you? lol. Just kidding.

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  71. jk: lunch is on me if Silver drop to 15$ to 18$ LOL! come on drop drop

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  72. I will buy both! Surf and turf!!!

    Now if we only rally to 1250ish.......what do I get?

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  73. I will probably start legging in small short if it gets to 1250 and then go big 1300-1310 if it ever gets there. i think somewhere in middle of that range seems more likely IMO.

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  74. Nuggy........unless we get a huge jobs number or big Ben says something positive i think 1245-1260 is max.

    My 2 cents

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  75. The left side of the menu sounds good to me ;-)

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  76. Congratulations SC. You sure as hell got the volatility right a while back.

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  77. Wow, never would have guessed a 40 point down day for S&P after yesterday's close. Market is crazy.

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  78. Getting kill with SPX, the drop just wont stop. carnage all week so far...

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  79. Man, I hate when I'm in the red lol. Arrgghh. This one looks really bad too, and I just got in this morning lol.

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  80. If SPX do bounce, will SLV further drop and induce margin hike? Add more short on silver?

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  81. bet a lot of amazing people hurt today from DOW. lol 400 points down

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  82. Me too - getting hungry! If it isn't done already watch 1206. One scenario bad job report tomorrow mkts trades to 1206, and then runs hard to the upside.

    Just a possibility - not a given.

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  83. SC, you still think 44 is possible for silver? Quiet a round trip to make in 5 trading sessions!

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  84. Still possible for Silver.

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  85. SC one of us will get our lunch eaten! lol!

    You are then talking about a 100 point move in 3 days?

    All due respect...............nah!

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  86. Wow SC I just got home, it has been an absolute slaughter today, I never expected this drop to be as savage and swift as it has been. I am still long and I am tempted to add more here, I think it has been a little overdone. Are you still confident of 1300 area shortly or have you lowered your target a little. I expected to see some buying up here but it looks to be getting sold down.

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  87. Yes still the same Muzz, rarely do I become this bullish.

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  88. If 1204 does not hold 1179 will be here quick

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  89. SC it is just about to hit 1206

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  90. Hi SC

    how does 1206 happen with a bad job report and the all of sudden a bounce to 1300? magic bounce? (wouldnt it drop more to toward 1100 ish.

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  91. Yes, I'm stepping in huge here long SPX.

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  92. SC this has been like a smaller version of the flash crash, just a little slower

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  93. Probably bottom today, mkt rallies on job report. Just didn't think we'd see it until tomorrow.

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  94. Hi SC do you expect silver to drop more tomorrow if mkt rallies on job report?

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  95. Silver dropped today, and because of that short term Silver could actually rally with the mkt.

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  96. Now looking for rally only to 1240ish

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  97. 1179 next stop.

    Looking forward to lunch

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  98. There's no support right now. Just a free fall. Only the market closing is going to stop this right now. Holding bloody calls.

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  99. Ditched my calls this morning at the open and went short. I think we see 1160 on S&P next. Wish I bought more SLV puts yesterday - they saved my day!!

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  100. Cut my losses on my all-in today. I got stung, but I will be ready another day. Just not feeling confident right now, maybe we will rally tomorrow :)

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  101. My silver and gold shorts saved my arse today also. My SPX longs have which I bought today and yesterday are down huge. I need more than a bounce at this point. The only thing which "might" point to a bounce soon is, everyone on business channels today are saying to sell and run for the hills. They are always wrong.

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  102. SPX at 1200 this is a massacre.

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  103. Held calls against my better judgement. Picked up puts in the final hour that saved half my call loss. I had been waiting for a day like this, but thought it was going to happen latter in the month, perhaps even Sept. I sold all my puts late last week/beginning of this week. Well, we live to tell the tale, and there's always another day. Just hope next it's green lol. See you guys tomorrow!

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  104. Good probability of bad numbers tomorrow. Looks like a couple Euro exchanges closed. Tomorrow could be a real bad day too with the possibility of a relief rally on Mon or Tuesday, then continued downpour. Don't see 1300 on the S&P SC.

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  105. I think flat to down tomorrow then rally to 1240 ish next week.

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  106. I actually think the job report maybe better than expected, and today’s sell off was a setup by big boys to buy low

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  107. i can tell you all right now, at my work place today, a ton of people saying this is a good opportunities to buy. i can foresee buying pressure soon.

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  108. i say that spx will bounce back to 1250ish soon. arent sure about 1300 though.

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  109. 1180-1190 should stop the decline and then rally to 1240-1250 max before another cascade down.

    You do great work SC but i see no chance of 1300 unless Big Ben Steps in.

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  110. I bet another big down day..

    http://www.zerohedge.com/news/eurchf-crashing-after-hours-italian-bank-run-concerns

    USD up, market down. Monday for a bounce, maybe! 1300 - don't see it.

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  111. SC, since the time cycle was off on equities why are you so confident in an up cycle into Aug 10 for silver/gold?

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  112. VIX up 35% to one year high. 1987 and 1989 only other two times. Down candle was not exceeded for the rest of the year

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  113. I really have liked your analysis SC. But can you address the "massive bear trap" vs the crash that actually occurred. Many thanks.

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  114. SC....Do you still think Silver wil bounce to $44 area by about Aug 10th? (Thats 6 Dollars aways from todays low). It doens't seem realistic to me.

    Here's what I think will happen. I think for Silver the trend is broken. Today's fall will be retraced about 61.8% (so about 41 dollars). Then its down hill from there for Silver. Using the Elliot way principles. Today's low (or near is wave 1, the bounce will be wave 2 (about$41) and then its wave 3 which will be a crash to about the mid 20's for silver or so then a little bounce from there for wave 4 then another drop to about $15-18 range for Silver to end the correction). What do you think?

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  115. I think for Silver its going to be a 5 step decline as was the case when Silver crash from $50 to $32 earlier in the year. In the Bigger picture that drop was WAVE 1, Yesterdays Hight was WAVE 2, I think we just entered WAVE 3 for ulimately Silver CRASH, with little bumps along the way.

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  116. SC,

    Still think we bottomed today? I think we get another hit tomorrow morning before bounce. There are 2 possibilities that delay this until Monday: one is the job report is actually negative. Second is a flood of sell orders sent to funds by the public at day's end will destroy the early bounce.

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  117. Have plenty to say, stay tuned.

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  118. All shorts covered on Gold and Silver, will reshort later.

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  119. I am still riding the down side pressure on stock indices using spxu. Up 30% at this moment. I see no signs of slow down of the momentum as yet.

    I remind myself that Mercury retrograde opposition to Neptune, can play great havoc with the people minds. PMI numbers don't lie though, especially if it is a world wide trend of PMIs' deteriorations. Fund managers will have to sell to re-balance their books.

    Astro cycle wise, next week is really bad. We have transiting Mars conjuncts (pressing on) USA Venus and Jupiter, forming an opposition aspect to Pluto and square aspect to Uranus. All this happening in the cardinal signs (action seeking and orientated). With this, I don't see a chance as to how the world and the people can get away from its influence.

    I enter shorts near 22 Jul, taking in consideration of SC's clue, but also it is the day Geo Jupiter crossed the 7 deg Taurus point. Merrimann has some words on this.

    Comet Elenin is coming near earth in the month of Sep and Oct. The world media will likely blow this up big time, selling some sort of dooms day scenario to the masses. It has already "triggered" 3 earthquakes, in Chile, NZ and Japan. The next one as forecast is around Sep 11.

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