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Monday, December 19, 2011

SPY - Rate of Descent - According to Plan

SPY has continued down in a steady decline.  The yellow line was drawn on Dec 5th.  Notice how SPY has declined at the same angle of descent as the line was drawn in advance.  I chose that angle, or rate of descent, because it is half the rate as the two-week decline this summer into the August 9th low.

I suspect that the market may see a bounce soon into Dec 21st.  From that date into Dec 23rd looks weak again.  Dec 27th looks more positive and then Dec 28th, 29th, and 30th all look very negative in the cycle analysis system.        

I suspect that the market flattens off somewhat and manages a few bounces around Christmas.  The expectation is for an acceleration down Dec 28th to Dec 30th to maintain the same rate of descent overall.

Daily Chart















NDX has continued to lead down, and is currently trading at approximately 1160 SPX on a performance comparison basis since October.

Once the yellow line breaks, look for an acceleration down.

60min Chart
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27 comments:

  1. stevesteve121December 19, 2011 at 9:58 PM

    thanks for the analysis SC

    what does your cycle analysis predict to be the bottom date?

    first week of January? or Mid-late? i know these are the 2 predicted by most systems out there

    ReplyDelete
  2. SCDecember 19, 2011 at 10:12 PM

    January 6th at the earliest. That is 4 weeks from the Dec 7th top. The decline into Aug 9th was 2 weeks. So this rate of descent is half the pace with a similar size of move in both cases off the high.

    ReplyDelete
  3. SCDecember 20, 2011 at 5:45 AM

    Gold/Silver rallying sharply up from the lows. There is good upside in coming days into Dec 27th.

    The next charts will show the short term picture for Gold and Silver, and the rate of ascent up to the $2020 Gold and $37 Silver targets. Gold is a steady rise and Silver goes parabolic up.

    ReplyDelete
  4. ABQDecember 20, 2011 at 6:28 AM

    Thanks SC for your continued analysis!
    Here is my current take: http://screencast.com/t/qdfZGG67Y

    Swapped out ERY/FAZ for ERX/TNA yesterday. Still holding AGQ....good to see /SI perky this morning.

    Weather is sweet in ABQ this morning, here is a shot out of my office window:
    http://screencast.com/t/FeYFqVzYfNN

    ReplyDelete
  5. UNBDecember 20, 2011 at 6:55 AM

    SC waiting for your silver chart and thanks a lot for your great analysis!

    ReplyDelete
  6. SCDecember 20, 2011 at 6:59 AM

    Very nice ABQ!

    ReplyDelete
  7. MuzzDecember 20, 2011 at 7:27 AM

    Hi SC, where do you see this rally ending on the SPX before resuming the downtrend. 1230 to to be around about the top or are you looking at more upside?

    Thanks SC

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  8. SCDecember 20, 2011 at 7:37 AM

    From tomorrow until Dec 23rd looks weak again, Dec 27th looks quite positive. I'll be watching around 1241 which is where that horizontal pink line rests.

    ReplyDelete
  9. TimerDecember 20, 2011 at 7:39 AM

    SC,

    nice works.

    The 1973 analog points to a rebound from 16/19 Dec to 22 Dec, pull back to 27 Dec, another advance to 29 Dec, then drop off to 6 Jan.

    ReplyDelete
  10. SCDecember 20, 2011 at 7:45 AM

    Thanks Timer, those dates are quite similar as well.

    ReplyDelete
  11. ABQDecember 20, 2011 at 7:55 AM

    took 1/2 off here....
    Filled Sell ERX Market 43.3101 -- -- 10:48:15 12/20/11 Order No. 8287164254
    Filled Buy ERX Market 39.069 -- -- 15:56:34 12/19/11

    ReplyDelete
  12. SCDecember 20, 2011 at 7:59 AM

    Nicely done ABQ!

    ReplyDelete
  13. ABQDecember 20, 2011 at 8:50 AM

    Thanks SC, what a squeeze! Hoping to get another pop here to get short:
    http://screencast.com/t/2CbXL8XdA

    ReplyDelete
  14. ABQDecember 20, 2011 at 9:27 AM

    Interesting confluence @ blue backtest line on SI. Should be interesting to see what develops.

    http://screencast.com/t/NOAmvKQ5P

    ReplyDelete
  15. phantomDecember 20, 2011 at 10:54 AM

    abq,
    you have made quite a few great calls in the recent past., do you think you could be kind enough to post some real time trades for benefit of others who may chose to get some ideas( at their own risk)
    thank you

    ReplyDelete
  16. ABQDecember 20, 2011 at 12:36 PM

    phantom, sure...will post when I can. We hit the 261 fib & TL, but not expecting much of a selloff...today's volume has held the bullish line all day. Regardless, took a small FAZ position for short term trade, cycle appears to be bottoming on the 27th. http://screencast.com/t/ur0ie97Rv1z

    Our cycle is looking for a top in the 1251-1255 area to reposition intermediate short, ~23rd-27th. So, patiently waiting & will day trade some ETFs at various levels.

    I put this TF fractal study together and will see how small caps react around the 735 area, the MACD is very bullish.
    http://screencast.com/t/geqNuwyyzu4

    ReplyDelete
  17. TomDecember 20, 2011 at 1:01 PM

    ABQ - do you have your own blog? Love your charts! Cheers.

    ReplyDelete
  18. stevesteve121December 20, 2011 at 1:31 PM

    ABQ, you seem to agree with SC Re: market top Dec 23/27. What is your pull back target/cycle low date?

    tia

    ReplyDelete
  19. RobDecember 20, 2011 at 2:48 PM

    SC, very interesting stuff, what kind of selloff are you thinking from 12/28-12/30? A large 5-10% selloff? Just curious as to how you think the year will end. Thanks.

    ReplyDelete
  20. SCDecember 20, 2011 at 3:00 PM

    rs, I have something very important to say about this actually. Stay tuned.

    ReplyDelete
  21. RobDecember 20, 2011 at 3:25 PM

    Looking forward to it after today's ramp job.

    ReplyDelete
  22. SS76December 20, 2011 at 8:16 PM

    I'm now wondering if HVU is the way to play the drop. In looking at the one year chart, and looking at the VIX 3 year chart, there comes a point in time when the VIX is desensitized to negativity in the market and doesn't react well. Anyone else have thoughts on this? I'm wondering if HSD is the better way to play this...of course, the potential attractive returns if the VIX does go off is what I'm toying with...........again though, if the market trades sideways the next 3 days, HVU could drop another 6-12%.....

    ReplyDelete
  23. ABQDecember 21, 2011 at 11:06 AM

    Tom - No, I don't have a blog....thanks for the chart comment.

    Sold FAZ in premarket @ the 161.8. Bought FAS at E of the diagonal. http://screencast.com/t/e25gnRRtXup2
    The potential H&S just got invalidated - broke the neckline. 1251-1255 is what where we are looking to position short.

    ReplyDelete
  24. ABQDecember 21, 2011 at 11:53 AM

    Steve121 - Have 3 downside senario's that we are eyeing. The highest probability, in comparison to the 2008 analog, is topping tomorrow @ 1251-1255, final bottom 1/20/12. Remains to be seen how the fractals set up. Targets are: 1181/1041/983. 1041 associates w/Jan 6th, 983 associates with Jan 20th.

    ReplyDelete
  25. ABQDecember 21, 2011 at 12:55 PM

    SS76 - I am also looking to leverage volatility via TVIX. Do you have an opionion vs. HVU?
    Thanks.

    ReplyDelete
  26. SS76December 21, 2011 at 8:26 PM

    Hi ABQ. I do not have an opinion on TVIX, other than my concerns with HVU are doubled with TVIX, lol. Was looking at the VXX 3 year chart, and what it taught me, is the fees and contago effects on the VIX futures is insane, so never buy and hold this stuff or you will guaranteed lose money, despite the wild price swings. That said, if you can buy in close to the time when it spikes, then you should be in good shape. I'm wondering if that time is coming for HVU but my recent research has made me much less sure. I think I'll split my short position on Tuesday between HSD and HVU.

    ReplyDelete
  27. ABQDecember 22, 2011 at 7:35 AM

    Steve121 - per our cycle, we tagged the projected short zone, although could make a nominal new high today/tomorrow. cycle bottom re: 01/20'is:
    http://screencast.com/t/Be9j4R3p

    ReplyDelete

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