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Saturday, February 11, 2017

$SPX - 2017 Cycle - Bull Market is Over

The Bull Market from 2009 is terminating at red resistance. 

A Bear Market is defined as a decline of greater than 20% from the high.  According to the Cycle a decline of greater than 20% is forecast to occur next. 

The 2017 Bear Market is initiating.    

2-day Chart

















2017 Bear Market Cycle:



















45 comments:

  1. why call a bear market when we are at all time highs? shouldnt we trade level by level and have stops rather than start loading the boat on shorts on these charts that may not happen, PRICE IS TRUTH!

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  2. The advantage to cycle analysis is to identify turning points in the market. Vix is at 10. It's a very complacent market currently.

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  3. The above formation looks like head and shoulder. If neck is broken. Do u expect 500 spx in 2020 as manybare saying

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    1. No just a regular bear market. An undershoot of the red neckline does look likely given the Cycle, but it will not break.

      Thank you, great observation.

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  4. Is this going to be like the collapse in Ag' which BTW is destined to give a "golden cross" on its weekly within a month?

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  5. SC, are you still waiting until the 22nd to buy UVXY?

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    1. Currently I'm looking to increase my half position to a full position. I probably will add before that. As well I'm going to continue to increase the position to overweight.

      This is a perfect situation for UVXY. Yes it can come a little lower, but it looks extremely attractive.

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  6. Didn't the cycle analysis also call for a feb 6th high?

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  7. SC,

    Not quite sure how above is supposed to translate UVXY $50 (down from $150 8 weeks ago).

    This is a 2 yr chart and XIV could reach easily reach $100 first.

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    Replies
    1. There's 2 targets for UVXY. The first target of $50 corresponds with the initial SPX dip to the pink line. Ultimately a $150 target corresponds with the brown/blue arrow lows for SPX.

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  8. The Cycle shows SPX dropping in a normal, average bear market. Also just a test of the 2016 lows and support.

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  9. I wouldn't add UVXY until the vix pops, waiting will not hurt if we have a down move. They will hold this up until the IPO's and earnings are done....Sell in May is making a comeback this year, shorting before then will hurt, just like the last 3 months

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  10. i also believe a collapse is coming but when march or april
    thats the question

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  11. Hey SC
    so we still looking for UVXy to get to $15 before the first leg upto $50 ...

    thanks again for your time and hard work
    always greatly appreciated...

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    Replies
    1. It could still see the $15 target area.

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  12. SC - just for the record, can you tell the parameters of you trade on UVXY.
    When did you enter and at which price?
    What is the PNL of your current trade?

    Thanks for the info, it may be helpful

    Bobo Mik

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    Replies
    1. Doubled the size of my position today to a full, normal size position. I do plan to increase the positon to overweight soon.

      Cost $28.50 average to date.

      I decided to pyramid on the entry which was a good decision.

      It's not for a short term trade. Price may well see lower short term. I am looking at a about a 3 month timeframe.

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    2. SC,

      Thanks for your intellectual honesty/transparency.

      But to be honest, I'm confused with you risk approach.

      Your position is down about 32% at current price levels. What is your maximum drawdown? 100%

      It seems to me crazy as I am futures trader and I risk maximum 2-5% of the capital my portfolio when I implement a trade.

      So I think it would be good if you could explain to readers what is your trading philosophy, your approachch toward risk, and what represents the entire risk of your current position (let say UVXY goes to 0) in your global portfolio?

      It would clarify things and help traders understand the conviction of your bullish UVXY thesis.

      Well done for your work.

      I'd like to emphasize that I respect you as a trader and I've been probably wrong many more times than you in my trading life.

      Best of luck

      Bobo Mik

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    3. No, no 100% just means 100% of a regular position size, not a portfolio. So for average situations the strategy is to establish a regular position size. For more favorable low risk and high reward major move situations then an overweight position can be established.

      There is ample evidence to conclude that the market will roll over into a bear this year. However, the model shows a clear double top formation that will take months. So we will see whipsaws, and that is great for trading. It is too early to short and hold. It is inefficient to hold any position (short or long) through whipsaws so I will be trading. Once the topping process has matured then yes, short and hold with overweight position size becomes the optimal strategy.

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    4. Hope this helps clarify. Thank you very much for the kind words! All the best to you as well!

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  13. SC - when do you expect the first drop to the pink line to occur? 1/2 months from now?

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    1. This is one event to watch. Markets have moved around the event historically:

      "In a news release on Wednesday, Trump’s Treasury Department gently reminded Congress that the government will be unable to borrow to pay its bills after March 15 unless legislators vote to lift the debt limit."

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    2. The market is forming the blow off top currently, and this could take longer to finish. The low itself could take several months to form at the pink line as well.

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    3. Very interesting - so this could be a replay then of 2011 waterfall crash...

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    4. There is some similarity to the situation in 2011. Based on the cycle though the largest drops will be later in the year.

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  14. UVXY getting hammered
    SC may be correct on this call :-)
    thanks again
    the lower it goes the better returns for us shareholders...

    issue us when to buy :-)

    Happy Investing

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  15. Can you explain why the feb 6th top call was wrong?

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    Replies
    1. I didn't call for a top on Feb 6th. Just a potential turn date. I see this as a blow off top forming.

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    2. I figured the top would likely form around 2,350 SPX. Just an estimate.

      SCJanuary 31, 2017 at 9:59 AM

      "Potentially 2,350 area SPX."

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  16. Bought UVXY at $19.25. Increased to full position. It may still come lower, and I plan to increase to overweight.

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  17. VIX isn't coming down much today...

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    Replies
    1. sc do u still have 15 dollar target

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    2. Yes, I do, but it might pop first.

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    3. Small pop to low $20's.

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    4. when yo say low 20s what does that mean 21 22 23

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    5. In the same vein, if your position is based on 3 month horizon, why do you care about a small pop? Do you plan to close out the entire/half of the position if UVXY goes up to, let say, 25 ?

      Thanks

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    6. Yes, I may be interested in closing the position on a pop. If I see the opportunity to close on a pop and enter lower I will take advantage.

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    7. Louis, have a look at the XIV chart just posted, quite interesting.

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  18. I have charts coming to show the details of how and when the topping process unfolds. Obviously the chart above is big picture.

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  19. little confused,2350 target reached, why still see UVXY 15 ?

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    Replies
    1. Yes, the target has been reached, but chop is likely which could grind it lower.

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