ORIGINAL POST:  10:30 AM

Back on June 1, I drew the following forecast, but was so uncertain about it I didn’t post it until June 11 [see: Mixed Signals.]

On the 11th, I adjusted the timing a bit, but then basically set it aside.  Other than helping me forecast a dip to 1303-1308 (which occurred a few hours later) I expected it was just a little too “cute.”  In other words, it seemed a bit too obvious for it to play out.

Well, here we are — just a couple of points away.  Despite my best efforts to disown it, the forecast is proving correct…and, right on schedule.

I don’t recall making any deals with an otherworldly spirit or otherwise pledging my soul in exchange for eerily accurate forecasts.  No, I think there’s something much more sinister  at work here.

continued…

I think the folks whose job it is to keep this whole card game afloat are simply mapping out the most positive path to higher prices they can and then doing their part to make it happen.

Remember when we completed the initial H&S targeting more downside back on April 23?  TPTB built another shoulder — delaying the inevitable another 10 days.  When it finally played out amid a parade of bad news, they built an inverse H&S pattern out of it (now complete.)

Our “Bad News is Good News for QE” mantra is even being repeated on CNBS, of all places.  And the path is cleared for more massive injections of central bank go-juice beginning Monday — after the Greek election results might otherwise decimate the markets.

More in a few.

UPDATE:  3:45 PM

Lots of discussion today — very cool.   There are some very smart people on this site, and there’s no corner on the market for market savvy.

Everyone’s wondering about the IHS completion, which looks like it’ll close to the good.  And, lots of speculation about this weekend and the Greek situation.

FWIW, here’s my take.  Please feel free to disagree, but I think the conventional wisdom is right this time.  I think the election will go either EU positive or neutral (which is positive for equities) or EU negative — which will result in the already “announced” stabilization efforts on the part of central planners — including the Fed if need be.

As has been much discussed elsewhere, each iteration of QE, LTRO, etc. has boosted stocks.  IMHO, it has nothing to do with fixing things or a fundamental improvement in the outlook, but simply the impact of additional liquidity being pumped into the system.

When liquidity floods the system, big investors have to figure out a place to put it.  Some of it goes into t-bills and the like, but a portion of it finds its way into stocks.  Most days, there is a fairly even balance between bulls and bears.  So, all it takes is for a few of the undecided’s in the middle to throw a percentage or two into equities for it to tip the balance and send prices up.

The point of this morning’s post is that everything’s happened pretty much as you might script it.  I’m not that good an analyst that I could nail the highs and lows as consistently as I have the past 3 months.  It’s pretty much unheard of.  So, either I’ve become much, much smarter in the past 3 months (my wife assures me this is not the case) or the central planners have laid out a very simple and easy to understand plan and are sticking to it.

Will it last forever?  Of course not.  I doubt the July-August 2011 plunge, for instance, was part of the plan.  But, for now, I think the old adage “don’t fight the Fed” makes sense.  The trick is knowing where it might end, or at least make a significant turn.

Here’s what the IH&S patterns indicate in the near-term for SPX, NYA and RUT.  There’s a good possibility we’ll get a reaction/pullback off the current necklines, but I think we’ll make at least a significant lower high on all the major indices in the next month or so — if nothing else, a solid point C for the eventual downturn.

SPX:

 

RUT:

NYSE: