Oops.  It’s a word you never want to hear from your pilot, your surgeon, or your fellow EOD tech.  But, I could swear I heard a collective “oops” — and maybe even a few choice expletives — from TPTB when markets sold off during yesterday’s FOMC announcement of cheap money till the end of time.   If more QE won’t kick start even a little rally, what’s left?  Indeed.

Yesterday’s SPX high came near three important Fib levels, not to mention a key channel line I’ve been watching for months (yellow, dotted.)  In addition, many key indices, currencies and individual securities reached critical channel or Fib tops intra-day.

We remain all-in on the short side from SPX 1438 [1:30 post], though any rise through 1440 likely means we need to bag the .786 @ 1446.44 before heading down.

As to the downside, watch closely for a break of the white acceleration channel line shown above.  There are numerous H&S setups waiting to come into play once a break and back-test occur.  The EURUSD is about to take a big dump as well.

UPDATE:  12:45 PM

First big hurdle is at 1419 — the neckline of the Inverted Head & Shoulders pattern completed on Tuesday.  We usually get a back-test of a neckline, so bulls typically see a neckline tag as an opportunity to buy.

It’s not.

Next stop, 1413.65 — the .618 of the latest move up and the target of the little H&S pattern completed this morning.

UPDATE:  3:45 PM

Still dancing around the neckline mentioned above.  There are many more H&S patterns waiting in the wings if we can push below 1415 or so.  The next one up (purple neckline) signals 1393-1395.

Note, however, that the back-test of the white neckline hasn’t completed.  So, we could still go up and tag 1426-1428 first.


Oops — 13 Comments

  1. Just discovered your new site, Pebble Writer.  Nice work.  If the market crashes, won’t it be because of the fiscal cliff?

    • I get this a lot lately.  Some “important event” does always seem to be held responsible for each major bottom or top I’ve called:  May 2011 top, July 2011 top, Oct  2011 bottom, Apr 2012 top, June 2012 bottom, Sep 2012 top, etc. 

      IMO, it’s a combination of:

      (1)   The mainstream financial press doesn’t understand TA, much less the specialized version of it I do, combining chart patterns and harmonics.  So, when markets move they grab the most convenient headline and slap it on.

      (2)   Harmonics and chart patterns in particular both have wiggle room.  They alert me to and position the market for a turn.  So, when anything of any consequence happens in the vicinity of that time/price, it can serve as a catalyst. 

      The fiscal cliff will most certainly be credited for the downturn, just like the credit downgrade was in July 2011.  You’ll notice, however, that I detailed that downturn to the very day — well in advance of S&P’s announcement. ( https://pebblewriter.com/learn/analogs/)

      Ditto for 1422 in April (https://pebblewriter.com/all-the-pretty-butterflies/) and 1474 in September (https://pebblewriter.com/according-to-ben/).

      Market timing is considered impossible (sacrilege!) all across Wall Street, academia, etc.  My training, like everyone else, was all about balance sheets, cash flow, capital asset pricing, dividend discount models, efficient frontiers, etc.  Not saying none of that matters; but, if it’s so effective, why can’t most managers beat the S&P?

      After being away from the markets (professionally) for many years, I came back and took a fresh look.   What works, and why?  My techniques don’t work 100% of the time, but that’s okay.  “Most of the time” is good enough to get very good results.

      Glad you found us.  Hope you decide to stick around.

      • and let me add to the wise words of pebble to tackle it from a psychology point of view – most people need rationionalisation

      • fair enough.  but – and I mean no offense – why are you writing a blog insted of earning millions running a hedge fund?

        • Is that you, again, Mom?  Seriously, though, no offense taken.  I’ve been getting that a lot lately, too — mostly from friends from the old days who make 10-50X what I do from this blog with half the amount of work.

          Though most on Wall St would laugh to hear me say it,  it’s not always about money.  About 70 of my friends/co-workers didn’t come home on 9/11/2001 because they were busy chasing money.  We all gotta go…but I’d like it to be in pursuit of something meaningful and enjoyable. I really enjoy this blog, and hopefully most of its members find it meaningful.

          My hope in starting pebblewriter.com was that it would grow enough through word of mouth that I could make some reasonable coin while putting in only 40-50 hours/wk and still have the flexibility to hang with the family, travel, etc.

          Between my early years as a stockbroker and later in institutional asset management sales, I’m burned out on sales/marketing.  So, I just can’t bring myself to promote the blog — which hasn’t exactly helped membership growth.  It would make much more financial sense at 3-5X its current size.

          Some trusted friends recently offered to help me set up and seed a hedge fund, which is something I’ve been seriously considering.  My concern lies in being sucked back into Wall Street, which I regard a toxic environment in many ways. 

          One compromise might be a smallish (< $100M) fund I could run from a small local office, with operations/legal/compliance (about 40% of my workload) handled by a capable organization, preferably offsite.  No suits.  No marketing.  No bureaucracy.  Current members could participate, or not. 

          I gave myself through Christmas to make some decisions.


  2. White channel broken to the downside.  Let the skid into the EOY begin…maybe?  possibly?  Oh, who knows…  🙂