July Low Cracked
As we contemplate the S&P 500 cracking the July low, a rather large index, the NYSE, has already done so. Here is the chart that I posted in “Crack Number 1” on August 16th (click to enlarge):
Here is what it looks like after Thursday’s trading:
Also, here is my “Vix Falling-Wedge Pattern” that I posted on August 20th:
And here is what it looks like now. Notice that the breakout of the pattern signaled the end of this bear-market rally:
Pretty snazzy analysis, huh?
September 4th, 2008 at 11:22 pm
Matt,
your charts, loves it!!!
September 4th, 2008 at 11:58 pm
http://stockcharts.com/h-sc/ui?s=SPX&p=W&yr=3&mn=0&dy=0&id=p55572292115
http://stockcharts.com/def/servlet/SC.pnf?c=SPX,P&listNum=
http://stockcharts.com/h-sc/ui?s=CPC&p=D&yr=0&mn=6&dy=0&id=p94253726891
http://stockcharts.com/h-sc/ui?s=CPCE&p=D&yr=0&mn=6&dy=0&id=p94253726891
http://stockcharts.com/h-sc/ui?s=CPCI&p=D&yr=0&mn=6&dy=0&id=p94253726891
The emerging EW structure implies a cyclical wave 3 of a C has begun via the weekly SPX chart from the ~50% retracement at SPX 1313; a bounce from the low to upper 1100s is likely before a low in the 900s in 9-10 weeks (Nov.).
A seasonal low and rally to the next low would be typical, followed by a plunge in late summer to fall ‘09 or early ‘10 to the ‘02-’03 lows.
C waves in a bear market are breathtaking and highly destructive; however, short-covering rallies are equally stunning in their tendency to take back bears’ gains, as shorts are the only ones with money/gains buying under the market in such episodes.
Moreover, volatility rises in a bear market, and even more so in a secular bear market, thus the VIX should make new highs for the cycle, i.e., above 44-45, in the next 2-12 to 18 months.
Don’t try to be a hero shorting from here; wait for a bounce from below SPX 1200 to scale in shorts to cover below 1000 this fall (around the “selection”).
The global economy is tipping into, or already has entered, a recession; the point of recognition has arrived or will very shortly.
We face the worst debt- and asset-deflationary global financial crisis since the 1930s and 1890s; prepare yourself and your loved ones accordingly.
Good luck.
September 5th, 2008 at 12:34 am
Matt,
Well done.
A number of us have been along for this ride.
September 5th, 2008 at 2:42 am
Matt,
great stuff - and you didn’t mention your call “kiss-spy-goodbye”.
OK, my entry was a bit early but +30% in trading account in one day is quite nice and more than covers the losses taken in anticipation.
THX and ride on