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Tuesday, March 1, 2016

$SPX - Target Reached - Important Inflection Point - Next Targets!

SPX has reached the minimum target of 1975, and closed at fork resistance.  Although it is possible that SPX overshoots, this is an important inflection point.

The turn date for SPX was due February 26th, and so there is little time left for SPX to form a high.  The next turn date is March 14th. 

Oil and SPX remain highly correlated which raises the probability for Oil to capitulate, and bottom out in the next several months ahead.

60min Chart
















UVXY declined as expected from midfork resistance and is near lower fork support.  UVXY has formed a clearly rising trend, and may have several months of substantial upside ahead according to the model.

60min Chart
















The behaviour of XIV continues to be consistent with the Hang Seng Crash of 1997.  XIV may have several months of significant downside ahead according to the model.

2 hour Chart
















1997 Hang Seng Crash Model:


 

28 comments:

  1. im waiting for vxx to hit 20-21 ish, not ideal to use uvxy because of the decay and contango

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  2. What happened to 2080 in March?

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    Replies
    1. My price targets have been hitting, but they have been hitting slower than originally anticipated. At the pace the market is moving that larger rally is coming but rather than starting in March is due to start in a couple months.

      We're still just in the early stage of a bottoming process for SPX in my work. It's not a bear market, but it is a weak market.

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    2. So can you please describe what is your longer term outlook for the market? If it's not a bear market when do you expect this bull market to top and a real bear market to start?

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    3. This is a weak and choppy market but not a bear market by definition. We're going through a correction, an adjustment. A real bear starts in two years is probably several years away yet.

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  3. I would be a little cautious shorting oil if some may be thing of that. It may cool a bit for several weeks next, but may be higher around April 8th than currently.

    In later April or May I may be interested in a long position if the price is optimal. I'll wait and see.

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  4. SC, is there a possibility we don't dip to 1700s as you suggested in 14 days?

    Are there alternative scenarios?

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    Replies
    1. I have two downside targets for SPX. 1840 and 1780. So it is simply a matter of timing. Around 1840 is the target due to be tested in mid-March based on the pace of the market currently.

      The 1780 target is unlikely to be tested until after March based on the current pace.

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  5. By definition a bear market is a decline of more than 20% from the high. SPX just looks really choppy this year. Partly the drop in oil prices has had a negative impact on the market. The reason is simple. The oil companies shares have declined and since they are a part of the S&P 500, the index has declined.

    Over time though the lower gas prices stimulate the consumer.

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  6. You see the oil price drop had an instant negative effect on the index, but over time the economy is actually stimulated. Things will settle down with oil this year as the price stabilizes and adjustments are made to low oil prices.

    So it's a year of adjustment. There are some negative spots and some very positive spots this year. Rangebound in the 1700 to 2100 range is to be expected. We're not in bear market territory though it is a weak market.

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  7. The next several months do look weak.

    This summer looks very positive for the market, and there will be another large plunge later in the year.

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  8. UVXY hit the lower fork support this morning, and making a bounce.

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  9. The first target for UVXY is around $45. The second target is in the $70's to $80's!

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    Replies
    1. SC, what's your timeline for the second target? thx

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    2. May for the second target.

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  10. Sold XIV at $20.70 from $20.20 entry.

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  11. Well, the fact UVXY is lower today with SPX lower today also probably suggest a little more downside to come for UVXY.

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  12. XIV is getting overbought but not extremely so yet. A little more time....

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    Replies
    1. For example RSI(14) closer to 70 ideally on the daily chart of XIV would be extremely overbought.

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  13. Hi SC, good luck with you long UVXY trade. Could you tell us what is your stop loss? Thanks

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    Replies
    1. UVXY is a decent price, but can still drift lower before it turns up.

      For stops I would say if SPX breaks out above the 200 dma with conviction. In addition, time stop mid-March.

      The action should be in mid-March.

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  14. SPY will hit 200 before it turns.. XIV is extremely over bought.. SC, What's your thought on it?

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    Replies
    1. I agree, the market is grinding higher, attracted to near the 200dma for SPX. Things can get more extreme before it's ready to drop. Probably it can continue to grind up next week before it turns lower.

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  15. XIV is extremely over bought!! SC SOLD his yesterday. What does that mean to YOU?? Can it still go up a little - yes. Is it near a top - yes.

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  16. Urban Carmel ‏@ukarlewitz

    $RUT - RSI (5) = 88, the highest since July 2013

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