The Big Picture: Dec 10, 2018

This has been one of the more satisfying years since I first began writing pebblewriter 7 1/2 years ago.  Yes, our forecasts have been accurate. But, it was even more gratifying that the themes we identified earlier in the year (oil’s collapse, interest rates topping out, CPI tumbling, etc.) played out as expected.  They were excellent guideposts to equities’ outcome.

In short, it’s been a trader’s market.  A buy-and-hold investor would have a 40-point loss (as of Friday’s close) to show for all her sleepless nights.  A trader who simply paid attention to the 200-DMA and the Fib extension, on the other hand, would have done much, much better.

By accurately anticipating the moves in currencies, oil and gas, interest rates and VIX, which are instrumental in driving the algos which determine so much of each session’s outcome, we have been on the right side of most of the moves – correctly identifying most of the major turning points.

Since futures reached our next downside target last night, we’re faced with another such opportunity.If SPX had simply held 2703 in October, or even tagged our 2579 target around the election as we forecast two months ago [see: All Good Things], it would have had a decent chance of continuing higher after a bounce to 2800.But it bounced prematurely, and in coming back to tag the right downside target is threatening to complete (ES already has) a large, bearish Head & Shoulders Pattern.  Here’s that same chart from Oct 11 with the interim price action filled in.

So, what’s it going to be?  The usual stick save, or a 380-pt plunge?

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