Next, I will calculate the decline and target for Bottom #3:
I have a very specific cycle that strongly correlates with the current pattern of trading. Calculations based on that cycle indicate that C = 1.382A.
A = 1344.07 Feb, 2011 high - 1249.05 March, 2011 low = 95.02 SPX points
C = 95.02 points x 1.382 = 131.32 points
Therefore Bottom #3 is calculated to be:
1370.58 - 131.32 points = 1239.26 SPX
The following chart shows that the Financials have been leading down since February with lower lows. The glaring difference between Rifin and SPX (Yellow) clearly shows a bubble - about to pop. It is not a matter of "if" SPX will breakdown. SPX will soon catch up via a freefall with the weakness that Financials have already experienced for months. I will show the timing of the freefall next.
4hour Chart
Are you gonna play the bounce on the long side or do you expect it to be rather shallow and hence not worth the risk? I suppose you see bottom #2 not much lower than Friday's lows, right? Basically a simple retest of low 1290s...
ReplyDeleteAs for silver, I still see a couple dollars downside from Friday's close, before a possibly decent bounce from down there; after that, a new low by Jun 20-21. Any thoughts?
Thanks. Any thoughts on the timing band for the top after Bottom 2?
ReplyDeleteI may play the bounce, but have to be nimble. Another more conservative option is just to cover shorts and wait for the bounce to short again. Yes, that's right GL - doubt we see much lower than 1290, then bounce.
ReplyDeleteThinking along similar lines for Silver as well. Let's see how it acts the next few days.
Hook, looks like mid June. There is something I am waiting to see in next 2-3 days to pin that down.
Well given EM's, VIX,and some other stuff it seems the bounce should start very soon.
ReplyDeleteI have a thought GL, what happened to $27 silver by tomorrow?
ReplyDeleteQuote: "I have had time now to look at Silver in depth, and my estimate is for a bottom June 6 or 7 at $27."
A bold but completely wrong call.
PF; can you share your predictions?
ReplyDeleteI'm relatively pleased with my Silver calls.
ReplyDeleteI was bullish at the bottom, we saw a nice run-up from there, and nailed the top almost perfectly. My short entry was great (pennies from the top). Last week I saw a plunge coming in S&P and Silver, and we got it.
It's not June 7 yet, and while unlikely to make it to $27 by then, I mentioned that date because that was coming up in my work as a potential bottom date for Silver (and S&P). It still could be a bottom on the way down even though not the final bottom. No problem.
A profitable trade is never "wrong" in my books.
Hey PF, are you asking me or SC? You bring me up, but you're quoting SC's words. If I may offer my viewpoint, I think his call for a down move was spot on. As for its size, i.e. $27 target, I believe he's simply saying that it'll eventually come at a later date this month, perhaps after a bit of a retracement higher. Calls are not made in a vacuum, hence the need to see market action and adjust accordingly - SC's got very good analysis, no crystal ball just yet. Bottom line, I think it's crucial to get direction right, while I think picking tops/bottoms and exact timing is almost impossible and, in my mind, dangerous/useless.
ReplyDeleteSC, I agree with you on SPX, and that's why I covered post NFP. As for silver, it looks somewhat perky along with gold in Asian trading; might be worth waiting a bit and see how it acts, however not much downside from here in my opinion - would be nice to at least get a retest of Friday's lows. Very strong gold only thing holding silver up.
SC, keep up the great work! I love that you always say it like you see it, and adjust on the go if necessary. As you said before, getting direction right and that magical 80% of move is what is all about.Well done!
SC and others: what is your target for the S&P short term rally before we drop to 1240ish?
ReplyDeleteForgot to add that Clive Maund forecasts a nice rally for silver into the middle of June and the sell-off not actually bottoming until the middle of July.
ReplyDeletehttp://www.marketoracle.co.uk/Article28393.html
Not sure on that just yet Tom. I want to see how things shape up early this week first. Will let you know. Thanks.
ReplyDeleteSC. is your original 1206 Target now 1239??
ReplyDeleteYes Thai that's right. I had to make an adjustment in the calculations, but the methods are the same. From what I see, the pattern has been playing out.
ReplyDeleteI took a picture of 1300 ES as we past it on Friday, because I think it will be a while before we see it again.
ReplyDeleteThis might be the end of the silver bounce here.
ReplyDeleteGold in the driving seat, silver simply following. Daily close above 1550 for gold not boding well for silver shorts. Interesting to see how gold now traded as safety play, with silver conflicted between risk-play and indirect link to gold.
ReplyDeleteGL- I beleive the upside for gold is very limited here. Maybe 1580 tops. Either way, I beleive the short side is the right one to be on right now for most commodities. I give gold a 50-50 chance of making a new all time high before it rolls over hard. I think silver might be able to make it up to 39 as a max, but I am going to sit tight with what I have.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI think Silver might suprise us here....
ReplyDeleteBlake, agreed. However, my plan is to get out of silver ideally by tomorrow. I as well see a possible gold top at around 1590, then down from there until summer end. Anyways, most correlations are out of whack, so I'm just gonna take it one day at a time and play it pretty tight - I've got no trust whatsoever in this type of markets.
ReplyDeleteGL- Are you long or short silver?
ReplyDeleteshort at $38,52.4 on the cash (not trading SLV). Stop at BE, but hope to get out over the next couple days at a profit.
ReplyDeleteI am short futures from 37.85. Not using a a stop right now, but I will be out if we close convincingly above 37.5 and will look to re-short around 39 if it happens
ReplyDeleteWell we did test near 1290 SPX, and we have financials firming up now.
ReplyDeleteHi SC great analysis again, the target projection of 1239 for the 3rd bottom is that a short term bottom followed by a major rally then a resumption of the bear market for the next several years. Will you be putting out more details of your bigger picture? I look forward to seeing your analysis. Thanks again, keep up the great work.
ReplyDeleteYes, that is the plan Muzz, Thanks. I figure it's best to show each step at a time rather than get too far ahead of where the mkt is trading.
ReplyDeleteSC do you see silver starting a decline at this point? Was wondering if you have a short term target for today or this week.
ReplyDeleteI am bearish on Silver overall and continue to see it heading into the high $20's. I have been focusing more on that than the specific day to day movements. I'll see if I can show some charts on it soon with levels to watch.
ReplyDeleteThank you for taking the time to post your analysis. Its been a learning experience following you.
ReplyDeleteLikewise SC, would like to know ur thoughts on SILVER this week, thanks for ur Analysis :-)
ReplyDeleteSC, are you still looking at a possible light SPX long soon? My view is that there's a short-term trade form te high 80s - 10pts downside, 30pts upside. Given trend is bearish and I don't like counter-trend trades, I'm not sure it's worth the hassle.
ReplyDeleteAs for silver, while I concur on your final target prediction (even though we differ on timing - I see it happening at a later stage), I'm wondering if you don't see any room here for trading in and out on both sides, as opposed to holding to the short indefinitely (that is until $27 is reached, however having to withstand possible gyrations all the way to the low 40s). I'm planning to offload shorts at around $34.60 (SLV) if we get there in the next couple days.
I'm thinking about a long, but haven't dipped my toes in yet - waiting for the dust to settle. Financials are trading firmer so it should be getting close to bottom.
ReplyDeleteHere is an interesting comparison for Silver:
http://pragcap.com/silver-is-tracing-out-1980-post-bubble-pattern
I'm going to look at this closer and see how it relates to our current situation. There may some room for trading GL.
Hi SC
ReplyDeleteBeen short SPX markets and long TZA from 34.5 now near 40.
Currently looking for a possible bounce soon in markets , however we may not get it and I wont play it...
I see us moving down into 1249-1250 MA(200) which is my target by mid June - then after this a very nice rally up again , but for now dont think this down leg is over - I think we have 30-40 more points do drop before.
Best
Chris
I'm also currently short silver via ZSL - but if silver breaks out tomorrow I will get out break even - but if not silver could do a nice plunge tomorrow
ReplyDeleteThanks Chris, these mkts are getting more interesting...!
ReplyDeleteyup - actually I think we wont see higher than 1370 - not right now at least - looks to me like 1250 , then a rally from there up to 1300ish or so, then another monster move down after.
ReplyDeleteBut lets take the shorter timeframes first - for now more downside over next 1 week imo.
Are you shorting silver ? Can you please make some more updates with charts SC.
Thanks a lot
SC,
ReplyDeleteare you looking for a small bounce now with a #3 bottom target of 1240 by the first week of july as your chart implies?
how long do you expect the bounce to last and do u have a price projection for that bounce?
Cheers
SC- What do you think this morning? I think the dollar is about to reverse to the upside right here, and I just opened up a long in dollar futures as well. Hoping that pushes silver back down, but gold looks strong and capable of ignoring a move up in the dollar for now, hope I am wrong on that. The S&P is anyone's guess. It is clearly oversold, but no good sign of anyone ready to bid on it as of yet.
ReplyDeleteAR,
ReplyDeleteDon't read too much into the timing as shown in the chart above for bottom #3. I'll use my timing cycles to show that more accurately.
I was looking for a bottom #2 June 6-7 as mentioned last week. It looks probable that we saw bottom #2 yesterday. We should be able to confirm that today.
This bounce could take us back to 1320 SPX area roughly. I'll show some charts on what this bounce may look like.
much appreciated!
ReplyDeleteSC,
ReplyDeleteDo you see your short silver in any way conflicting with the possible soon-to-come SPX rebound? If so, would you consider closing your silver short?
Silver seems to be following it's own rules lately. Last week it did selloff hard, but didn't follow through much with the continued SPX selloff. So it may not bounce much with an SPX rebound either.
ReplyDeleteI'm going to look at the Silver picture further today.
SC,
ReplyDeleteagreed, as correlations have been all over the map as of late. I'm gonna keep a close eye on gold's action and take it from there. I think a daily close above 1550 would be a relevant development.
One quick question: there's a good chance you nailed the exact date for bottom #2, however yesterday you seemed quite hesitant to jump in. May I ask you the reasoning behind it? Financials very soft towards the close or perhaps the need for confirmation and test of lows today?
I've been looking at June 6 or 7. So while I liked the price level for a bottom yesterday, I figured there may be more time required today to firm things up. Generally I am approaching this particular bounce very carefully.
ReplyDeleteSC
ReplyDeleteJust bought some short term TNA for a trade 74.3 - will sell if SPX moves to 1300 , not sure how much we rally/bounce here , but 1300 and if that taken out then 1310-1320.
What is your target for the bounce SC ?
Im still holding my major position in TZA 34.5$ and looking for higher levels - but I think markets will make a very short term bounce before next leg down to 1250 and possible below
ReplyDeleteFYI: if I may post a link, here's a pretty comprehensive perspective on silver.
ReplyDeletehttp://allstarcharts.com/top-down-look-at-silver/
Looking at the 1320-5 area. Best not to push it too far though because the ending looks treacherous.
ReplyDeleteSC - SPX could backtet broken trendline at around 1310-1320 or so , not sure - MA(50) also at 1320 , so I think you are right about the bounce to there.
ReplyDeleteNext leg should be heavy and down to 1240 your target or 1250 imho
SC can you write to me on happysmile18@gmail.com thanks
ReplyDeleteChris
Silver slipping. For SLV $35.25 is important support, and a good start would be a test of that level.
ReplyDeleteSC- you think SLV bounces from $35.25?
ReplyDeleteThere is an important fib fan (I'll show the chart on this) that has been acting as support for Silver. It was tested hard last week but held, and I think also explains the bounce.
ReplyDeleteI doubt it holds the next time it is tested.
Quick Vote on QE3!
ReplyDeleteNay