The Deja Vu Cycle specifically predicted the surge up in January. The next major move in the Deja Vu Cycle in the coming months is a plunge to test the red trendline.
The Deja Vu Cycle clearly shows a bear market ahead with initial measured target at approximately 1025 SPX. As well, the Cycle suggests lower lows after that target is reached.
2hour Chart
A detailed view of the topping process in the Deja Vu Cycle is shown below. SPX is likely near point C in the Deja Vu Cycle.
The Cycle suggests that the topping process will be characterized by weeks of sideways and choppy trading with a scary dip in the middle as shown on the chart below.
Larger view of the Deja Vu Cycle:
Daily Chart
Current Deja Vu Cycle for SPY:
Weekly Chart
Exact Geometry suggested a low for UVXY which has held. UVXY has been climbing up along the yellow fork. Both UVXY and VIX have started to trend higher in recent weeks.
2hour Chart
I've been really busy over this last week.
ReplyDeleteObviously, due to the large scale Cycle, I am much more interested in the development of large trends than in daily fluctuations.
While SPX is struggling at resistance, UVXY is heating up, getting ready to spike up through the pink line imo.
ReplyDeleteSC interesting TA.
ReplyDeleteAre you familiar with Cowans work?
His 17 year bear market cycle which began in 2000 ends in 2017 with the GFC in 08/09 marking the mid-cycle panic.
If I am getting it correctly 2017 lows should take out the lows of 09 with the final sell-off commencing in May and lasting into 2017.
That would seem to mesh very well with your analysis.
Cheers
I'm not familiar with his work. I can tell you that according to my Cycle, this particular bear market should last a couple of years. Not as deep as the 2008 drop, but still a serious drop.
DeleteBeelejuice; Could you give us reference to Cowan's work?
DeleteSC, Is there a reason you prefer UVXY over TVIX and any others?
ReplyDeleteWith a bear market ahead in the Cycle, volatility becomes interesting.
DeleteVXX is the standard. It has less leverage than UVXY, but is also not as time sensitive. TVIX has a similar structure as UVXY, but last year had a problem with issuance, and still does not trade properly. So that is why I prefer UVXY.
Volatility etfs did not exist the last time a real bear market occurred in 2007. According to the Cycle this will be the first time to trade a volatility etf during a bear market. I think the return will be outstanding. During a moderate correction in 2011, TVIX trended 700% higher over several months.
The bear market ahead is much larger than that correction in my work.
At the end of a bear market $400 maximum.
DeleteMaybe it is better to look at it in terms of the VIX. 70-80 is the area I have outlined previously for VIX. If VIX breaches 100 though then 120 to 130 could be possible.
DeleteThis UP DOWN UP DOWN this week is certainly frustrating.... I would imagine if VIX broke 100 then it is certainly possible for UVXY to trade multiples of that when backwardation sets in. Remember last down cycle has VIX topping in 40's...yet TVIX moved to $110.
ReplyDeletePatiently waiting for VIX to break 30 though first....tick tock tick tock
uvxy heating up.......
ReplyDeleteUVXY only down 10% getting ready to spike !!!!
ReplyDeleteUVXY did find some resistance at the pink trendline, but next pop should be a real breakout and continue higher.
ReplyDeleteSC, Is the label P Midpoint 4075 in the white chart the scary dip in the middle you refer to?
ReplyDeleteIn the Cycle, SPX is likely at point C. There should be a dip in February that tests the white/orange trendline on the SPX chart, bounces back up, then collapses on the way down to point P.
DeleteYes, a drop to point P in the Cycle would be a drop to the red trendline around 1380 SPX. A reasonable estimate for point P is around 1380 SPX in my view.
Thanks for clarifying, SC. Plenty of action to come - eventually.
DeleteThe market is right at the tipping point in the Cycle. It is a large cycle so for sure it will take time to fully unfold.
DeleteSC, Typically the maximum bullish sentiment occurs a few months before the highs in the market averages. Would top around may-june be consistent with your model?
ReplyDeleteI do not see market tanking just yet, perhaps in the summer - late summer. No sell signals here, it feels like we are a few months away.
Thanks for the blog.
Generally agree, it will take time for this Cycle to play out.
DeleteAfter point P is reached, this model does show another lower high.
This should be the high here according to this Cycle, but a lower high does show up in this Cycle. As you can see the lower high after point P comes up relatively close again. Therefore, a higher high is not out of the question, but lower high may be more likely (or double top possibly).
Thank you.
Yes, higher high - something around 1600 on the SnP around may - june 2013 would put us up against long term resistance lines.
DeleteJust my opinion - your title may mislead some folks into premature short scenario. There is still money to be made on the buy side in the blow of top. I do have a weak spot in first part of the summer then another push higher.
Important to say that each phase I approach distinctly in this Cycle. Short is the place to focus next in the Cycle.
DeleteThe main emphasis at this point in the Cycle next is a drop down to the red trendline around 1380 SPX.
I would say after 1550 on S&P, we could potentially touch that red trendline for 1370 to 1385 on the S&P. I would think the S&P then can go for another run (major 5 in OEW terms) to 1600+; this could be in July. Then what I would say is a bullshit ride of a decline and rise again until beginning of October. I will look for declines going forward thereafter. I would also look for a spectacular rise in metals July onwards. Long until July and then ride PMs. This would be my roadmap for 2013. I wish you all lots of luck!
DeleteThank you Tushar, all the best!
DeleteI can't see 1515 that I called on Jan 27th as a cieling being taken out on this run. I've posted my downside targets. Timethetrade.blogspot.CA
ReplyDeleteI think you'll find that Sc's vision and mine align quite well.
SPX finally lost momentum at the turquoise line, and yes, should be down moderately for 2-3 weeks next in my model.
DeleteI have a detailed forecast coming soon with short term target areas for Feb through April.
Hi SC
ReplyDeleteThanks for the updates, glad you back.
Thanks!
Thank you. I think UVXY should pop next to $13.50 to $14 to start with next few days.
DeleteSCFebruary 5, 2013 at 10:35 AM
"UVXY did find some resistance at the pink trendline, but next pop should be a real breakout and continue higher."
SCFebruary 5, 2013 at 5:18 AM
"While SPX is struggling at resistance, UVXY is heating up, getting ready to spike up through the pink line imo."
Hi SC
Deleteyou plan to hold then if we reach those 13.5 to 14 price in the next few days and let it go in a later dates?
Thanks!
It could cool off from there back to $11's then up higher $16 to $17 later Feb.
DeleteThe ECB decision tomorrow morning should give us a short term direction. Depending if Draghi says he's willing to devalue the EURO or not
ReplyDeleteRUT close to hitting my target 918. Expecting to happen this week or early next week. Initial downside target would be 876.
ReplyDeleteIF RUT violates above 918.00 and retrace back to 876, look for another rally towards 930 area before the real sell off.
Mark this post...
Looks like UVXY breaking out. Confirmation will happen if we close above 11.52. Initial stop would be 16.00.. Lets see if it can close above 11.52
ReplyDeleteYes, I think this is a real breakout for UVXY. It probably will spend a couple days around the pink trendline around $12, then imo by Tues $13.50 to $14. Cool from there, then spike again.
ReplyDeleteMost of my charts lately have been big picture, which is more important, but I have short term charts coming to show a projection of what the Cycle suggests over the next 2 months.
ReplyDeleteSPX about 1480-1485 on this dip.
ReplyDeleteWe need to get a break below 1496 to get this dip.. cross fingers..
ReplyDeleteI think we are done with that yo-yoing up/down.
DeleteSteady grind up next for UVXY, and down for SPX.
I opened the position today @ 10.85 and have a stoploss below 10.40. If we do not close above 11.52, I'll close and reopen again tomorrow based on intraday chart.
DeleteUVXY another "breakout" this has had like 10 false breakout in past month alone. Must be hard holding losing positions for 5 weeks hoping to break even or cut your losses, if proper stops were utilized you could have been going short from much higher levels... no stops = NO GAINS
ReplyDeleteThe trend has been well defined and mildly up for UVXY for 2 weeks already. All trends start this way. Simple - higher highs and higher lows. For those with patience the profits will come this month imo.
ReplyDeleteFalse breakout #11
ReplyDeleteIf we close below 11.00, we might see 9.60 level..
ReplyDelete"For those with patience the profits will come this month"....being down 30-40% is just madness no matter what the stock or mkt!
ReplyDeleteLook for a new low in UVXY is my call....the mkt is going to 1550 over the next month. Even if it stayed here, UVXY would be down 10% due to decay anyway!!!
I could not agree more Phil. Wishful thinking does not move the stock market or VIX.
ReplyDeleteI think we are done with that yo-yoing up/down.
ReplyDeleteSteady grind up next for UVXY, and down for SPX
OR NOT
Operation "Bear annihilation" continues... until morale improves.
ReplyDeleteSC, this is not funny anymore... More than 1 month OFF and market moved 50 points in the opposite direction..
http://i1266.photobucket.com/albums/jj536/charts101/scsSPXpDyr2mn0dy0ip32370625066a2808_zpsd2865072.png
Looks like you answered your own issue. Hopefully you have your own risk parameters in place.
Deletei am not shorting this beast. Waiting to go long actually.
DeleteSC... what if your wrong, or should I say VERY wrong. You are short 50 spy handles lower yet sit and hold, as a trader I don't get your strategy.
ReplyDeleteEvery morning, I get up and look at my screen..the first words in my mind are "F U BERNAKE!" and all the other central bankers pumping up this phoney fiat market. 90%of all the ramp ups happen overnite. Whenever I see the SPX sitting at critical support deciding will it break up or down...of course it will ALWAYS be UP...they cant afford to let it go down.
ReplyDeleteIn the meantime, I keep waiting for my XIV stop at 20 to get triggered. So far no dice. If/when it does happen, will be a good time to roll nto UVXY
The Cycle specifically predicted a strong surge up in January, and that is what has occurred, as predicted. The Cycle has predicted all the major turning points for years. The Cycle shows a bear market with a crash and 500 point drop. It is straightforward.
ReplyDeleteI'll be trading the swings in tune with the large Cycle. On this particular trade, the target is around 1380 SPX.
VIX has been in an uptrend for 3 weeks already.
I have short term target areas and charts coming this weekend for the next several months projection of the Cycle.
DeleteLOL...Yet you made the same call a year ago.
ReplyDeleteThe Cycle specifically predicted a strong surge up in January, and that is what has occurred, as predicted
ReplyDeleteSO WHY DID YOU GET SHORT ON JANUARY 10 ???
Exactly!!! SO WHY DID YOU GET SHORT ON JANUARY 10 ???
DeleteI did short early. Yes the entry could have been better. Yet still in a good position to take profit this month as my weekend outlook will show.
ReplyDeleteTwo types of traders:
ReplyDelete"I was was early, it will come back"
or
"I am wrong I better get out now "
Guess whick one is successful
UVXY up steadily for a week next imo.
ReplyDeleteSPX back down to 1490 next week imo.
ReplyDeleteThe chart is coming on the weekend.
DeleteThird kind of trader:
ReplyDelete"Shit its down...I better sell....oh shit! Now its back up... Better buy....crap....down...sell...doh....back up....buying....down again....sellllllllll!"
Who can make money in this manipulated F up markets?
Actually the market has been up for about 40 straight days... so being LONG is the play, trade what you see
DeleteAgreed....mkt broke out on Friday, I'm long with a tight stop....my prediction is 1550 before this thing turns.
ReplyDeleteIf I'm wrong it will cost me 1%, if you're wrong it will cost you 50%+++....expect moves up in EURO, GBP...USD has got another leg down until this mkt is done draining the bears.
Don't buy UVXY until the turn is in, you might miss the first 20% but who cares.
TOO MANY BEARS OUT THERE
One more reason to be bullish....
ReplyDelete"Prechter told his clients to go MAX BEARISH with a stop at 1560".
He's always wrong!!!!
great, I guess I'm screwed, lol.
Deletetimethetrade.blogspot.ca
Certainly have to be open to the possibilities and as a bear, I am feeling crushed, which is precisely why I don't think I should sell.
1550 before SPX turns?...I can wait 30 more points...2% upside vs 40% downside...
ReplyDeleteAs for VIX... 12 pt downside (more like 2-4 pts max!) vs 80-100 pt upside
Maybe it will just be an orderly correction back to 1490...have you thought about that scenario?
DeleteThere's no guarantee this mkt will correct 40% & with the money printers at the helm, without a major geopolitical event, I just can't see that happening.
Meanwhile...back in the real world...mkt heading up, bears who are already locked in to UVXY 30% higher are getting screwed.
Have stops, don't follow blindly websites which have a poor track record.
The VIX spent around 6 months below 10 in 2007. Six months in UVXY would be ...
DeleteAlso, on the VIX itself... I have heard something to the effect that because of compounding and other factors a vix of 13 today is about the equivalent of a vix of 25 back in 2007 based on how it was then calculated... so it has huge downside potential here.
Not saying I know which way it could go from here ... just saying these VIX instruments are complicated and not as straighforward as they sound. [Other than if you look at a buy and hold profile for UVXY ... that is pretty straight forward]. :)
Perfectly content with my XIV and UVXY hedges...move into uvxy all in when XIV breaks 20.
DeleteThat was the funny thing about 2007. Anyone with half a brain could see the whole subprime mess was due to fall and the stock market had no business being near all time highs. It was all smoke and mirrors. It was built on liars loans and toxic Credit Default Swaps. Yet stocks defied sanity all year and it wasn't until October 2008 that things started to unravel. They burned the shorts for two years before it all fell into a heap.
ReplyDeleteI don't think we'll come out of it this time as well as we did in 2008 but when will reality descend on the markets? Tomorrow? 2015? 2018?
Another reason a low VIX reading today has no relationship to a low VIX reading in the past is because the VIX volatility involves trading volumes. Trading volumes since 2009 have collapsed.
ReplyDeleteHFT [High Frequency Trading][scalping]computers making up 80% of the stock market volume. HFT's don't buy stock options to hedge their positions.
A collapse in stock market volume also means a collapse in volatility. With actual stock market pariticipation so low a VIX reading of 13 may actually be high.
Also because when the VIX is low, the farther term month tends to be high so even if there is a huge drop in the stock market the contango roll can remove any chance of a meaning spike in the VIX.
To quote Lee from the page
http://vixandmore.blogspot.ie/2012/08/how-can-vix-be-14-and-lower-than-vin.html:
"...when the VIX is near its 4 month lows (within 5%), shorting VXX still makes money, if you can believe my backtests (the inevitable increases in fear, just like today (8/14) just can't seem to overcome contango, at least not in general since VX futures started trading)..."
Steve, Phil...if you are so confident in collapsing VIX...then buy XIV....should reach 50 by year end and dow up to 16,000....
ReplyDeleteYes, dow up 120% in 4 years and SPX up 7% for the year...no more 40% corrections...new paradigm...old rules dont apply...up up UP...until it doesnt.
I think you are missing the point Pay Day, these instruments are full of decay...I wouldn't hold either of them.
ReplyDeleteI trade stocks & currencies & always with tight stops.
I have never held anything that fell 30 or 40%!!
There are many types of traders and strategies. People complained about my long SPX entry at 1378 in November when the Cycle predicted a sharp rally phase was about to begin. I did not get the long entry perfect since SPX fell to 1343 first. Obviously "sharp rally phase" proved to be an appropriate name.
ReplyDeleteFor me it is simple, I am trading a large Cycle which correctly predicted the sharp rally into January, and predicts a fall to the red trendline for SPX next.
I'm not interested in chasing after a top, my goal is to be positioned for the next major turn in the Cycle to the downside.
Phil, XIV up 400% last 14 months...what kind of decay are you talking about?
ReplyDeletePayday,there is no decay in XIV. But XIV can lose 50% in a month.
DeleteThe very first rule of trading is, "Protect your principal." Why would you open yourself to the chance of a 50% loss in a month?
The very best traders are right about 60-70% of the time. I am talking about the best. Most of the good ones find a trend and get stopped out when the trend is violated.
If you are betting 1% of your portfolio on UVXY it may be kind of fun ... I think that is the sort of thing SC is doing here. If you bet 80% of your portfolio on UVXY and are right only 60% of the time ... well let's just say that is a good opportunity to connect with your anger, fear, and hurt side. That is a great opportunity too ... do it with your eyes wide open.
XIV up 400%, how is your UVXY position doing?
DeleteSteve if XIV dropped 50% in a month, then that would mean the SPX was dropping over 30% in a month...a scenario you claim is unlikely in this Vix compression environment.
ReplyDeleteA crashing XIV = crashing SPX = crashing stocks (including large cap, small cap, mid cap, commodities,...all these "safe" investments you mentioned)
There is no risk free anything in this market. I hedge with UVXY and ride XIV until its time to swap them out.
Nothing goes up forever, and that includes SPX and XIV.