Happy Friday the 13th

Market schedules for the Martin Luther King Jr. Holiday.

UPDATE:  5:40 PM

We clearly broke a trend line or two today.  I’ll write more this weekend, but while I’m thinking about it…  today’s retrace is not a big deal.  When the July decline got started, the first few days were quite modest.  No idea if it’s analogous or not, but consider the similarities between Jul 25 and today.

Of course, in July there weren’t as many people aware of what the next few days held in store.  And, the PPT was likely not as well prepared.  More later.

UPDATE:  3:20 PM

Fresh look at AUDUSD.  It completed a perfect little Butterfly pattern on the 15-min chart (below in purple).  Note the Point B at the .786 Fib which reverses twice out to a Point D at the 1.272.  We expect a reversal there — usually about .618 of the total pattern (distance of A-D), which is what we’re seeing now.

It’s clear, however, that a larger pattern is in play (seen in yellow.)  The move to the 1.272 extension constitutes a move to the .618 on this larger pattern.  And, a Point B at the .618 makes it either a Gartley, Bat or Crab — meaning it should reverse and return to somewhere between 1.0194 to 1.000.

There are also much bigger patterns to watch, such as the Butterfly that completes at .9014 (shown on the daily chart in red.)

UPDATE:  2:10 PM

Watching the VIX inverse H&S; play out.  The current pattern targets 24, and that starts the ball rolling on a larger pattern that targets 29.

UPDATE:  10:28

France downgraded, waiting for the official announcement.  Hasn’t been this much uncertainty in the air since (sarcasm alert) the LeBron James trade. 

And, while we’re waiting for the end of the world, here’s another one.  I believe that’s French Finance Minister Francois Baroin addressing the S&P; Credit Committee.


Following news of an imminent downgrade of EZ countries and abysmal JPM earnings, we’ve seen a moderate sell off so far.  Even an increase in consumer sentiment hasn’t been enough to stave off the long overdue correction.  This could be the real deal.

More later.


Happy Friday the 13th — 8 Comments

  1. Despite closing red, I think many in the bear camp were disappointed, even fearful the drop was only mild given the bad macro news out today, the bulls just seemed all powerful even on days like today. PW, it does look like it cold roll over slowly and accelerate downwards like it did in July. Next week should be interesting. Looking forward to further insight over the long weekend.

  2. Marked: I laughed out loud when I saw your comment. What an elegant way of saying Shxx your pants. haha Let's hope the ball will keep rolling like PW predicted. I can take it if today's not down as much as I want. Hopefully next week we will be 30,30,60,80 down days. 4 days like that will make my year!!
    P.S. AUD is still hanging strong though, but it did reverse sharply after touching and exceeding by a little when it hit the upper trendline. Need to see this break to the downside too.

  3. Masked: You're very welcome. I'll consider COMP out of the "higher move" woods once it starts making some lower lows (taking out 2518, 2441, etc.) This move had best get going strong in the next trading session or two.

    Infiniti: I agree re the sentiment. In addition to AAII (highest bullish and lowest bearish sentiment since before Feb 2011 plunge) we have NYA200R at 50 (same as summer of '08) BPSPX at 73 (higher than July highs), and CBOE put/call at .55 (July's highs were .52 and .54.) In addition, the now obvious IHS on a rising VIX should get it to at least 29 in the next week. Should be an interesting week.

  4. Thank you again for the comp charts… When I read your post of extending to 2838 I almost deployed fresh stains in my under garments haha… My Jan puts are getting squeezed to dear life… Holding strong thus far… Again thanks much!
    Have a great weekend!!!

  5. No doubt the plunge protection team is working overtime trying to prop it up. You could see their hand in the way the news was dribbled out there, "breaking it to us gently." But, between downgrades (still not officially announced), Greece stalemate and JPM, selling pressure should increase throughout the day. I certainly wouldn't want to be long going into this weekend.

    I still think we see some kind of replay of July. Back then, it took a few days for the downside to get going. The 25th was only off 7, after being down 14 intraday. The 26th was off 6 after 8 intraday. It was really just 4 sessions (30, 30, 60, 80 pts) that did nearly all of the damage.

    When I was a freshly minted stockbroker years ago, they told us to remind our clients to stay fully invested — as most of the gains came from a relative handful of days. Lately, it's worked that way on the downside as well. Flash crash, anyone?

  6. It seems that no bad news is going to drop the market. As I type the index has recouped over half of its losses. The dominant theme on the street still seems to be buy the dips. Maybe it will slide at close due to the long weekend. But the animal spirit is certainly out there. The bears are not fierce enough. But I have a feeling something big will happen this weekend, probably Greece , maybe more like I wish….