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Thursday, October 8, 2015

XIV - Echo of 1997 Hang Seng Crash

XIV is echoing price action of the Hong Kong Hang Seng crash of 1997.  Notice that XIV is trading above the midfork support.  White trendline resistance is about to be tested, therefore price should dip to test midfork support short term.

Overall XIV should rise to test the September high.  A November high for XIV is anticipated.   

2hour Chart

















1997 Hong Kong Hang Seng Crash:

165 comments:

  1. I completed a study of all major historic crashes. This year I used a model based on the 2010 flashcrash to predict the initial crash in XIV.

    Subsequently, I've observed that the price action is remarkably similar to the crash in the Hang Seng. Price action is following that style of crash.

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  2. While SPX does have some room to rally later in October, traders have become accustomed to expecting a year-end rally, however, this year it appears we are heading for a year-end selloff instead!

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  3. SC, are you still seeing SPX 1900 next? Because looking at this model, it may not drop that far.

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  4. There should be a decent drop short term, probably about 40 points. I do think October will frustrate and tease the bears with short lived dips, but looking forward from November the market conditions deteriorate with deep declines ahead.

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  5. 2040 to at worst 1950-1970. And then 2070 year end. We had the drama, it's over.

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  6. SC, are you looking to exit UVXY on this drop?

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    1. Next week I may exit, and look for a better entry. XIV is trading above the midfork support, so October dips for the market are likely to be short lived.

      Obviously though at these levels of low VIX and high market, shorting is mainly the focus. A weak market ahead for many months is anticipated.

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    2. What's the short term resistance do you see on XIV?

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    3. XIV is near the white trendline resistance.

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  7. Actually 200dma first 2060s. This is too powerful. Very little pullback to try and get in. 1994 maybe at some point but that's about it for this year on downside. And if earnings are good right back up to 2100 quickly. You have to understand, no more bear nonsense after 1871 to 2020 in ....almost minutes...breathtaking strength.

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    Replies
    1. Seasonality for October is bullish, 2100 is GS call also...

      1980-1990 will now act as support.

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  8. Now the timing looks right for a dip.

    SCOctober 7, 2015 at 7:35 AM

    "Cycles are still positive for the market going into Friday."

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  9. http://www.cnbc.com/2015/10/08/this-statistic-suggests-a-90-chance-stocks-will-fall-bofa.html

    "Bullish fourth-quarter seasonals do not work this year," said Suttmeier. "When the market has been lower through the third quarter, the fourth quarter tends to follow on that weakness," added Bank of America Merrill Lynch's technical research analyst. In the 30 instances where the market was negative at the start of the fourth quarter, Suttmeier noted that the average return was down nearly 1 percent.

    "The other thing that is interesting is when you take those 30 observations, where you are down through the third quarter, you only end up on the year about 10 percent of the time." The S&P 500 is down more than 2 percent year to date."

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  10. SC $48 still possible next week?

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  11. Something to consider: http://www.theclosingprint.com/CV_Blog/friday-overbought/

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  12. SC,
    so $45 - $48 , is less than what you bought at $51.55 , are you thinking UVXY will drop much lower for a better pickup...

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    Replies
    1. While I expect UVXY to pop next week, I do see it lower in late Oct/early Nov (which is looking to be the optimal entry).

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  13. Any guess on SPX target next week? Thanks!

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  14. VIX

    http://mymarketgeometry.com/

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  15. There we go! UVXY tested $37, and the strong reaction spiking up!!

    SCOctober 7, 2015 at 9:16 AM

    "The turquoise line is around $37 to $38. If that is tested I would expect a strong reaction and spike up to $48 or so."

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    Replies
    1. There is some resistance around $41 or $42 though. Cool off from that level and then run higher next week.

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  16. SC, cycles turning to negative next Monday?

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  17. SC, what's your SPX target for the Nov high?

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  18. I'll be doing an update of the VIX Cycle soon. According to the Cycle, a spike over 30 will occur soon. I suspect in November.

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  19. SC, what do you think the XIV high and low range is for this month?

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    Replies
    1. The target for XIV is around $32 or $33 as drawn on the chart. An overshoot could see $35.

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  20. SC, bulls are just relentless, do you still see a drop to 1970 this week?

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  21. It might only be a shallow 20 point dip. I just don't think this market will be ready to drop much until November.

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    1. I do expect a severe drop starting early November.

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    2. Interesting that this government shutdown crisis likely to erupt in November....

      http://www.cnbc.com/2015/10/12/markets-should-not-fear-shutdown-rep-mulvaney.html

      "Congress needs to strike a deal to keep the government funded before a stopgap measure expires in December. Uncertainty surrounds the negotiations as House Republicans scramble to replace outgoing Speaker John Boehner."

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  22. Something is wrong with XIV today, market barely moved. SC, if we hit upside target $32 or $33, does that mean the drop is coming sooner (like last time, crash coming earlier than model predicted), instead of early November?

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    1. The fear is melting away which is bullish in the short term for October. XIV broke up out of the triangle, and now is challenging the upper pink fork resistance, and XIV is probably going to break above that level.

      I like the timing for an early November high.

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  23. SC, do you see the SPX going to 2040 or 1980 first, to me the internals are not good, maybe a spike up then sell off????

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    1. 2040. Just shallow dips this month. Small dip this week, and up into Oct 20-22. The best spot in the SPX Cycles for a dip this month is around October 20-22 lasting about a week, but I don't expect anything major there either. It looks positive after that again around end of Oct so early Nov looks to be the spot for a deeper drop.

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  24. Replies
    1. I don't expect much upside for Silver short term, likely to dip back to $14.

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  25. Doubt this dip will go far, will look to reenter later in the month.

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  26. SC I think we are down to friday/monday. This reminds me of a double or triple top reversal. SPX 1960, 2040 maybe pushed off a week,any thoughts?????

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    1. Basically what I stated in the chart analysis has happened. XIV popped just over the white line hit the orange arrow high, and dipped now near to the midfork support.

      Therefore dip finishing and market likely to resume rising into early November.

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  27. SC
    you bought @ $ 51.55 only to sell @ $ 36.35 , kindly explain this move ? thanks

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    1. As stated previously $35 was an important level for UVXY, and I stated I would look to exit if that level was breached. That was broken earlier this week. Since that level has been breached UVXY is likely to test the all time low at $25 in my view.

      I will look to reenter UVXY in mid $20's for a large move.

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  28. Replies
    1. Targets $33 next week, $35-36 early November.

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  29. SC, I see the red arrow target $33, but I don't see the resistance for $35 on the chart?

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    1. Whereas in Sept it was not, now I expect that XIV is strong enough to break up out of the upper fork line around $32.

      There is a lot of resistance above that, and will show that with an update later.

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  30. Suspect quite a positive day tomorrow for the markets, then Friday looks a little soft. I think the low is today.

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  31. Sc- this could be a sign of a top or Tom Demark reversal pattern if spx 1980 does not hold tomorrow, Any Ideas?????

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  32. In my view the market, for the last several weeks, was on an upward trajectory that was unsustainable. A dip was due this week.

    Now the market can resume rising. It'll be choppier from this point as it rises. Rise into November. This year setting to see the year-end selloff. Later November and December look weak.

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  33. SC, are you seeing another drop next week? XIV cool down from $33 to what level do you see, maybe just hold on until $35???

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    1. Next week should form another high, and then there's another weak spot starting around Oct 20-22 for a week, but likely just a minor dip. Still, I'll be looking to exit next week.

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    2. Ideally $32 or $33 then $30 and up to around $35 or $36.

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    3. With XIV target raised to 35 $36, what is the max SPX target you see for the big Top before the drop?

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    4. Targeting around 2070 SPX.

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  34. SC There is still lower lows with lower highs, I am expecting spx 1980, if there is a bounce there. I will go long if not it will go to SPX 1950. The numbers companies are given are not good. Quantative easing has stopped last october, zirp is the only thing holding us up. People are moving into bonds for safety. Please tell me if you are seeing something different?????

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    1. In my opinion, SPX has about 3 weeks upside to an important peak. There are many negatives, I agree. Starting in November and continuing in December, the market is likely to see a large decline.

      So really it's just an issue of timing.

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  35. Looking good.

    SCOctober 14, 2015 at 12:08 PM

    "Suspect quite a positive day tomorrow for the markets, then Friday looks a little soft. I think the low is today."

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  36. Great entry on XIV, SC!!! Are you looking to reenter XIV after taking profits $33?

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  37. SC do you see back to spx 2000 for tomorrow or off to spx 2040?????

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    1. Tomorrow looks weak, can see about a 15 point dip.

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  38. SC, where do you see VIX bottoming? In the 15s?
    Thanks

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    Replies
    1. Probably 14-15. Little downside for VIX. It often bottoms before SPX tops. It could bottom as soon as next week.

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  39. SC, if we continue going up today and XIV hit the targets, do you see the drop maybe starting Monday for about a week as you said, then rally back up just right before the Fed meeting?

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  40. SC are u still seeing a 15 point pullback today???

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  41. Most likely today/Monday weak and choppy then more positive Tues/Wed with a breakout.

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    1. Do you still see weakness for about a week after that?

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  42. SC, any guess for the high on SPX this week?

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    1. xiv do you still have a target of 18 and by when

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    2. Are you still seeing quiet positive Tue/Wed for breakout?

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    3. SC, if SPX expected near 2050 (Tues/Wed), where do you see XIV, considering it has already met your target today ($32-33) with SPX flat around 2031?
      Thanks

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    4. Yes, the model does place the target for XIV around $18 give or take, and timing around the end of the year, December low - possibly into January.

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  43. SC, what's your exit target for XIV this week?

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    1. Doubt $33 will be surpassed on this run, so looking to exit today.

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  44. SC this is having a hard time going higher, alot of people going long. still think spx needs to touch 2000 on more time. Janet Yellin speaks today, whats your opinion spx 2000 or spx 2050????

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  45. SC, market looks a bit tired, still 2070 next week?

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    1. The model projects a high currently, small pullback and run to the next high first week of November.

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  46. Sc are you still looking for spx 2050 or Spx 2000. The earnings are weak and the big boys are selling off. Do you see a pullback or straight to spx 2050???

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    1. SPX has been sluggish. Pullback to 2000 SPX or so and runup first week of November to the final high.

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  47. Looking to take profit today in XIV. Not expecting much to happen today/tomorrow but XIV should dip to $30's or possibly $29's later this week.

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    1. $33 XIV target was reached yesterday.

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    2. So what is the expected exit price today?

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  48. SC, do you still see 2050 SPX this week?

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    1. SPX has been sluggish, might not see much over 2040 until November.

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  49. SC when are we going to top????, Gartman just became bullish on this market.
    I would like to see spx 2000 oncw more.

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    1. Forming a high here today for SPX imo, down until late next week. Top first week of November.

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  50. SC, still 32s target on XIV or with yesterday's drop to 29s, you see XIV on its way to 35s?

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    1. Retest $29's first, and up to $34 November 5th projected target.

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  51. Hi SC,
    Good morning, your thoughts now that SPX over 2040 ?
    Will you be looking to sell XIV and are you still pointing at a $32 ext ?
    Thanks again

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  52. Is this a good place to buy UVXY? Where do you see it going?

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    1. Not particularly, small pop possible here for UVXY. November 5th is when the model projects optimal timing.

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  53. The model shows a soft market for the next week, but minimal downside.

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  54. This should be a high for SPX with a low late next week. Downside is minimal though.

    SCOctober 15, 2015 at 6:15 AM

    "Next week should form another high, and then there's another weak spot starting around Oct 20-22 for a week, but likely just a minor dip. Still, I'll be looking to exit next week."

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  55. The model projects the peak for XIV at $34 November 5th.

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  56. Sc small pull back to spx 2030

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  57. Notice that XIV is lower than $33 today with SPX making the higher high 2050. Bearish tell short term...excellent confirmation of the model.

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  58. If UVXY sees $26's this week I'll exit XIV and enter UVXY for a short term pop, otherwise I'll simply wait for November 5th.

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    1. What would be the target for UVXY pop from $26's?

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    2. $30ish. I'm being picky with an entry for UVXY because the upside isn't great short term.

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  59. what is ur price target for spy on the downside in nov?

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    1. The model is bullish for SPX into the first week of November though it shows a dip here for a week next. Best to take it one step at a time. Targets will be coming soon...

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  60. SC, with SPX at 2070, do you see a higher SPX target now for Nov?

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    1. Yes, my numbers are conservative. SPX likely to cool off into Nov 27th, and then higher into Nov 5th or so. SPX 2100 attainable.

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    2. Rate cut from China, next week BOJ and FOMC. What's your SPX target for next week?

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    3. 30 or 40 point dip next week.

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  61. Well here's the breakout, but now the model is negative again, therefore expect SPX to cool off into November 27th.

    SCOctober 16, 2015 at 8:14 AM

    "Most likely today/Monday weak and choppy then more positive Tues/Wed with a breakout."

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    1. Monday/Tues look quite negative in the SPX daily Cycle.

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  62. I'll be taking profit today, and entering short.

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    1. SC, what UVXY entry price you looking for?

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  63. $25 is the August low for UVXY and short term support, and the model is turning negative for XIV going into Nov 27th.

    So I'll enter around $25 and look for a $4 or $5 pop, nothing major. The optimal entry for a longer term trade in UVXY should be around Nov 5th closer to $20.

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  64. Took profit and sold XIV at $32.55.

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    Replies
    1. Great call SC!! Are you still waiting for UVXY?

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    2. Thank you! Yes, I'll wait and would ideally like to enter UVXY closer to $25.

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  65. UVXY firmed up off the open, formed a descending triangle, popped up and met the triangle's measured target.

    I would expect it to fall back to $25's.

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  66. SC, do you see the SPX topped this morning?

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  67. Likely the high for SPX is in place for now, dip next week, and higher high first week of November.

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  68. SC, thank you for the great work. Everyone at this point is looking for a pullback. This week, Draghi re-announces QE for Euroland; last night, China announced a rate cut: markets have gone crazy. Sunday night I fear a Bank of Japan announcement of more QE; then next week Yellen says no rate hikes this year. In other words, I think the Central Banks are in cahoots to drive this thing north to the end of the year. After all, they read cycles too. A classic short squeeze may be setting up.

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  69. SC, if UVXY gets to $25s today somehow, are you still looking to enter?

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    Replies
    1. Yes, otherwise will probably just wait until Monday.

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  70. Huge bull market. Under no cicumstances should you short. Do not short. Please. Market is telling you back to 2130 soon. Quite a pathetic correction it was this summer.

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  71. Well it is an interesting time, with many issues coming up next month including the debt ceiling. Yes the bears do need to be nimble in October, but come November things are likely to become much more interesting...

    Notice how XIV just can't seem to move much over $33. This behavior is at odds with the rise in SPX. It's short term bearish for next week!

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    Replies
    1. SC, regardless of all the obstacles in November, markets now seem to have better probability of melting up into the year end. Dips should be shallow and present buying opportunities. Consequently, volatility should get crushed.

      Is that also your assessment or do you have slightly different prognosis? Thank you and hope you enjoy your weekend.

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    2. The model shows shallow dips in October, but a peak in November. The model shows year-end selling pressure this year.

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  72. VIX is up today with SPX also up. Almost always near term bearish.

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  73. I'll wait for UVXY Monday close to $25.

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  74. how do you expect the UVXY to go to 25 on monday if its suppose to be a red day based on vix and spx closing green today?

    Thanks

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  75. I do think a green VIX and green SPX is bearish for next week. However, not necessarily for Monday. $25 is an important level for UVXY. I suspect it to be tested Monday, but we'll see...

    Generally I am being picky about a short entry because the model, while showing a dip next week into Nov 29th, is positive rising into Nov 5th.

    Late week I'll be looking to reenter XIV after taking profits today.

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  76. What levels of entry and exit would you look at for XIV? thanks

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  77. SC whats your view on the spx this week spx 2100 or is 2080 the top. The low should be near spx 2000-2030, just want to know your thinking??????

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  78. Yes sure would like about this week spx where is going and how low or high you been calling good market and thanks for posting your opinion appreciate .Thanks

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  79. The model shows a small dip during this week, and continued rise into November. I do expect to see 2100 SPX in November.

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  80. Possible dip to 2030 to 2040 SPX this week.

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  81. Currently waiting for short entry.

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  82. SC, you still see UVXY back to $25?

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  83. SC spx 2060 so far is support then spx 2040. which one comes first the spx 2100 or spx 2040?????

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  84. The market is relatively quiet here, so I'm waiting. Probably rally somewhat today, dip Wed/Thurs.

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  85. SC are you still expecting uvxy at 25 for enrty point this week? or has that changed

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  86. SC, are you looking to enter XIV or UVXY at this point, XIV getting more interesting?

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  87. There's not much time left for the bears to maneuver this week. May still short, but time is running out for this dip. We'll see. I'm expecting next week to be more positive so will consider XIV late this week or early next week.

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  88. SC, do you see the market spike up then drop like last Fed's meeting?

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    1. I'm not anticipating anything nearly as dramatic as the action around the Sept meeting, but it is possible that SPX pops a little to 2085 to 2090. If that occurs I'll enter short.

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    2. Would you short at that SPX area even UVXY not down to $25?

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    3. Let's see where it settles to, I'm interested in shorting soon.

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  89. XIV
    http://mymarketgeometry.com/

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  90. VIX looks like it should see 19 tested short term.

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  91. SC, what UVXY entry price are you eyeing?

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  92. It can see $25's retesting Friday's low.

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  93. Do. Not. Short. This. Market. Simply put. Do. Not.

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  94. SC, is that the top, big VIX spike from 12.80?

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  95. SC, SPX at your target area 2085, are you still planning to short?

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    Replies
    1. Yes, SPX did reach that level, and looking wobbly. I'll wait for tomorrow.

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  96. Finally UVXY coming down to my price....

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