I hope everyone had a lovely Christmas. Intra-day posts will be open to the public this week, my little gift to those considering a pebblewriter membership. Sorry, but our forecast will still be available to members only.
As announced on Monday, subscription prices will increase on January 1. In keeping with our practice of paying for performance, the annual rate will be about $10 for each percentage point of return since the new site’s inception on Mar 22, 2012.
We’re up about 95% over those first nine months [SEE DETAILS HERE] so the new rates will be as follows:
- Annual: $950
- Semi-Annual: $550
- Quarterly: $375
The first fifteen to sign up for an annual membership at the current rate of $800, however, will be granted Charter Member status. Charter Member rates are locked in for the life of the site, so you’ll never pay more — no matter where annual rates end up.
If we are fortunate enough to continue averaging a little over 10% per month, annual memberships would be $1,200+ in March. So, locking in current prices is a no-brainer.
Sign up HERE.
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We remain short from 1447 on Dec 18. Per the 1:10 post in the members section:
SPX just tagged the .786 mentioned above, pushing just beyond 1446.44. I’m closing my intra-day longs (again) here at 1447 and will see what kind of reaction we get here. Charts in a few.
But, I’ll repeat my warning from Monday: bulls will be looking for opportunities to shift momentum, and it could be especially easy with low volume and the inattention that comes with a holiday week like this.
Keep an eye on the dollar index and the little H&S patterns on SPX this morning. Some strength is to be expected early in the session, but there is the risk of a small breakout.
As we discussed Monday, the key SPX level to watch is 1432, which would take prices out of the proposed falling channel as well as complete the lopsided little IH&S that targets a Bat Pattern completion at 1441. I’d put the odds at 50:50.
SPX’s bearish H&S pattern has picked up a new neckiline — the bottom of the purple channel above. The neckline is rising, but it currently completes around 1425.
The EURUSD is coming up on its .618 at 1.3250 — also the top of a well-formed channel. The rally should fail at that point, with the key level to watch afterwards being the recent bottom at 1.3157. Charts later.
UPDATE: 10:50 AM
SPX just broke below the neckline of the bearish H&S pattern (in purple below.) If the pattern plays out, it targets about 1416 — which intersects with a little Crab Pattern at the purple 1.618 at 1416.28. The key level for bulls to hold is 1422.58.
The slightly less likely target is the 1.272/.786 intersection at 1419.61-1419.81. Either level marks an important channel midline, which — combined with the harmonic pattern completions — could elicit a strong bounce.
A drop through 1411 means much more immediate downside.
UPDATE: 12:00 PM
Any breakout from the channel has upside potential to 1436.
UPDATE: 12:30 PM
DX tested the bottom of the little white channel I posted earlier, then zipped right back to its midline with the equities sell-off to 1416.43.
It has now tested the upper bound of the yellow channel twice in the past two sessions, and must either commit to the rapidly rising white channel — breaking out of the yellow — or consolidating further.
A break out of the SPX white channel would likely equate to a breakdown of DX’s white channel. If stocks get a rebound to 1436 as discussed above, look for the dollar to flesh out the proposed purple channel to around the .618 at 79.319.
UPDATE: 3:10 PM
SPX just pushed through 1422.58, raising the odds that this is more than just a bounce in the current primary wave down. I never use Elliott Wave to forecast (it either doesn’t work or I’m just lousy at it) but the move down from 1448 to 1416 looks like 5 waves to me.
If so, the bottom of the 3rd wave down was that 1422.58 level, and breaking that level means we’re probably going to work on retracing the overall move now.
The first big wave down, of course, was 1474 to 1343 from Sep 14 to Nov 16. Wave 2 was back up to 1448 — a Fib 78.6% retrace. SPX has dropped 32 points since, back to just beyond the .618 retrace of 1474-1343 and only about 30% of the 1343-1448 rally.
So, technically, we might have just established a Point C for a Butterfly Pattern pointing to 1510 or 1555 (the 1.272 and 1.618, respectively.) But, that doesn’t fit with our primary forecast, which is that 1474 was an important top which will stand for many, many months (at least.)
The more likely scenario is that 1488 was the end of the 2nd wave, with 1448-1416 serving as the 1st of the 3rd wave down. If so, and if SPX holds 1416.43, we should expect a 2nd wave up to retrace anywhere from .382-.886 of the drop from 1448.
The potential Fib targets (the white grid) are:
- .382: 1428.49
- .500: 1432.22
- .618: 1435.94
- .786: 1441.24
A 2nd wave up could stay within the small white falling channel only up to about the .382 at 1428.49. But, even that is pushing it. In other words, any move higher means a break-out of the channel.
On the other hand, a reversal at the (red) .618 at 1426.53 means the current wave down isn’t quite done. This also intersects with the small purple .786 (1426.64) and the small pink .382 at 1426.84.)
That’s probably about as clear as mud, but suffice it to say there are many harmonic scenarios in play in the small, intra-day scale — even though the larger scale still points down.
I see absolutely no reason to get bullish at this point, and look at this as nothing more than a bounce. Those of you playing the bounce at 1416 should keep stops where you’re comfortable, with the understanding that the risk is still to the downside.
As discussed in the performance update a few days ago, I will occasionally keep a core position in place (in this case, short) while playing a contrary wave for a bounce. This is one of those situations. More later.