pebblewriter

Tag: fibonacci

  • Update on DJIA: Mar 18, 2020

    In our last dedicated update on the Dow [see: July 2019 Update], we noted the intersection of a number of overhead resistance features in its chart and offered some thoughts on its downside potential if it managed to reverse.

    Note that our 18974 target represents a backtest of the red channel from which DJIA broke out and backtested between 2014-2016 as well as the white 1.618. A May 2020 bottom at 18974ish would align nicely with the SPX 2138 target indicated by our analog.

    I posted my charts on July 29 (the yellow arrow) and was roundly cheered when he Dow cratered 7% over the next two weeks, even closing below its 200-DMA……and was loudly jeered when it made that up and went on to new all-time highs. I’ve seen this sort of thing so often from the Dow that I was pretty hot under the collar. I’m pretty sure an older (yes, there are a few) wiser colleague took me aside and muttered “Forget it, Pebble, it’s the Dow.”

    So, I did. You see, when it comes to manipulation the Dow is the all-time champ: share price weighted, with the ability to kick out losers and slide in winners whenever you like? How is this even an index?

    When the market reversed on cue in mid-February [see: A New Day, Same Old Nonsense]  I don’t think I even checked to see where the Dow was (the blue arrow below.) I’ll admit I got curious when it closed below its 200-DMA on Feb 25. But, I didn’t inhale. I stayed focused on real indices, cratering oil prices and the bond market.Well…guess where it landed today?  Go ahead.  I’ll wait.

    You guessed it. Right where our July 2019 forecast said: the bottom of the falling red channel where it intersected with the top of the rising red channel and the 1.618 Fib extension at 18974. It’s a 33% drop from stem to stern. You can’t make this stuff up.

    Knowing we have a global pandemic on our hands and a minimum of a quarter of negative GDP ahead of us, surely it’ll keep going, right?  I mean, did you hear Bill Ackman today?  Hell is coming!  So, the Dow is positioned for a bounce.  That’s right.  IF oil and gas can continue bouncing, and IF USDJPY can pop up through its SMA200 and IF VIX breaks down and IF the 2s10s craters back below 48 bps, then DJIA will definitely probably bounce.  At least a little.

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  • The Storm Finally Arrives

    After weeks of gathering clouds, the storm we’ve been watching has finally arrived. S&P futures are lock limit down just a few points above our next downside target.

    Not surprisingly, all of our other targets across currencies, commodities and fixed income have either tagged or exceeded our next downside targets, with more to go once the cash market opens.

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  • When Will News Begin to Matter Again?

    Apparently AAPL slashing guidance is inconsequential and Bill Gates, who is predicting 10 million deaths, is some sort of conspiracy theorist – because the market continues to ignore the coronavirus story. Perhaps somewhere down the line the investing world will come to realize what we’ve known for years: stocks have become increasingly easy to manipulate.

    Lately, it has been VIX’s constant smackdowns below various measures of support and the perennial games played with currencies which have directed algos to buy every dip.  With oil and EURUSD having reached important downside targets, the formula might change somewhat. But, at what point will the game be obvious to all?

    Futures are off about 15 points, not even 1/2% after a slew of dreadful headlines over the weekend.

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  • Fifth Time a Charm?

    Today is the 5th session since ES tagged our 3076 target.  Four times it has bounced off the bottom of a very orderly, sharply rising channel — which is just what the doctor ordered.  Will today be the fifth?

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  • Because Appearances Matter

    It’s not too surprising that there’s been a firm floor under oil and gas prices, given the upcoming Aramco IPO.  But, isn’t it funny how CL has popped above its SMA200 every single day this week, even in the wake of dismal inventory data?

    Just like it’s funny that ES, which pretty obviously should have given up all its overnight trade data related gains should have given up at least most of them after the Reuters laid a little trade truthiness on us.If it had done so before the close, ES would have put in another bearish-looking daily candle.  But, it waited until later in the evening, which allowed ES to leave a bullish candle in its wake.  Funny how that happened.VIX is well-known for timely “breakdowns” that last anywhere from a few seconds to a few minutes which remind the algos of the glory which awaits them if they’ll simply buy-buy-buy.  Today, like yesterday, it hit at exactly 9:00 AM – about the time futures were trying to decide whether the market should open in the green or the red.  Watch for it to happen again if stocks should have the nerve to slip lower.But, the champion of bullish appearances has to be the USDJPY, which has reminded us of its incredible upside potential over the past month, repeatedly pushing above its SMA200 and pumping the Nikkei 12% in the process.Combined with timely soundbites from the White House on the incredible successes being achieved on the trade front, the market can’t be blamed for ramping higher most every day.  But, what happens if the narrative changes?  What happens if one or more of the factors fueling the machine runs dry?

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  • Put Up or Shut Up

    It’s now been almost a month since we posted our analog-based forecast [see: Analog Watch July 15.]  If it’s valid, we should see a sharp selloff over the next few days which ushers in 9-12 months of increased volatility and losses. From that post:

    Ideally, an analog provides exceptionally accurate forecasts of a very significant move. I think this could be one of those and that stocks are on the cusp of the biggest drop since the Great Financial Crisis.

    With currencies and VIX on board, all we need is for oil’s bounce to fizzle in order for the bears’ party to get started.Next up…lower lows?If it’s not valid, we’ll know very soon.

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  • Can Boeing Take Off?

    A reminder: our current membership promotion — which slashes the price of a quarterly subscription from $399 to only $299 — is slated to expire tomorrow, July 23.  For details and to sign up now, CLICK HERE.

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    BA has just about reached our channel top target from Jul 3.  From Algos to VIX:

    BA’s [chart] indicates another interim bottom.

    It has now bounced over 12% since our Jun 3 bottom call signaled by ES’s 2.24 tag and has nearly reached the top of the new, gentler falling purple channel, now at about 380.  It’s an important test for the stock — boosted by a monumental PR and its on-again off-again stock repurchase plan.

    Note that the current forecast page has been updated for all major charts including

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  • Deutsche Bank: Kann Dieses Schwein Pfeifen?

    There’s a lovely English figure of speech which suggests the ridiculousness of something happening: “when pigs fly.”  In German, the same sentiment can be expressed by the expression “ich glaub mein Schwein pfeift” which means “I believe my pig whistles.”  DB is surely trying, but it’s having a hell of a time whistling a happy tune.

    We last visited the stock on March 13 [see: When Push Comes to Shove] when it was threatening to break out of a small consolidating triangle after breaking down below our previous short signal at 11.  From the Mar 13 post:

    A breakdown from a falling channel is incredibly bearish, but a move back above the bottom of the falling channel (around 9.50) would be net positive. To get there, it will need to break above the red TL and will then face its SMA200, now at 10.32.

    A long position with very tight stops would make sense for those willing to roll the dice. However, if it can’t retake the channel bottom, then it remains a dead bank walking and a good short.Obviously, shorting it in the hopes that the ECB lets it fail would entail some risk. No doubt the ECB is trying to figure out a way to restructure it in such a way that it’ll survive and, ideally, not take the rest of the world down with it. Until then, I think it’ll remain on life support.

    As it turned out, the triangle broke down and not up.  The stock spent 6 weeks being propped up around $8/share before finally breaking down again and shedding 28% in a nifty little falling channel.

     * * *
    Deutsche Bank has been a terrific source of trading ideas which have paid off nicely
    over the years.  While the stock has lost 32% since our initial forecast in Sep 2016, our
    long and short trade ideas have totaled 237%. CLICK HERE for forecasts and results.

     * * *

    It finally bottomed at 6.49 in June and bounced back up above 8 where it collided with overhead resistance and is currently backing off in the wake of the latest restructuring news.

    Make no mistake about it, DB is in a world of hurt.  Given that it’s the 15th largest bank in the world with over $40 trillion in derivatives, its demise could devastate the financial system.  Can this pig whistle?  If so, is it just whistling past the graveyard?

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  • Stocks on Track for More Losses

    Things are playing out as expected, with ES coming within 5 points of our next downside target (the SMA200) overnight.

    The chart receiving the most attention is the 10Y, which broke below 22.94 and is on its way to our 21.72 target.The one which should be receiving the most attention is SPX, which closed below its H&S Pattern neckline — adding credence to our lower targets.Though it seems like more, 2776 will represent a 5.5% drop since our short signal at 2940 on Apr 30 [see: FOMC – Endgame.] Things will get really exciting if/when SPX fails to bounce.

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  • The Waiting Game

    It’s now been five days since futures bounced out of the falling white channel.  It still seems fairly likely it was just a delaying tactic, as various currency pairs, commodities and indices are sliding toward our next targets.

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