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Last Friday morning, my heart sank when I read Gartman had flip-flopped to bearish in “catholic terms” (whatever that means), and his actionable suggestion was to short the S&P futures.
As required by federal statute, the market immediately exploded higher, and I was worried just how long it would keep going (well, more specifically, I was wondering when Gartman would flip-flop again, allowing us bears a chance at making money once more).
By Biiwii
Excerpted from the September 13 edition of Notes From the Rabbit Hole, NFTRH 360…
I am personally not yet convinced an ultimate bull market top is in despite the obvious similarities of the recent interim top to 2007 [the first sign in this regard would be a loss of the October 2014 and August 2015 lows]. It could also be a 1998 clone, as we have noted by chart similarities and by global financial similarities (China/Asia). However, in 2007 the stock market did a good job of forecasting the coming “Great Recession” (a sanitized way of saying ‘impulsive unwinding of leverage’). Here is what economists think today (ref. Bloomberg article): http://www.bloomberg.com/news/articles/2015-09-11/here-s-when-economists-expect-to-see-the-next-u-s-recession. 2018 it is, according to a majority of buttoned down dart throwers.
What were they saying in December 2007? Let’s take a look, also from Bloomberg…
(Dec. 17, 2007): No Recession, But… http://www.bloomberg.com/bw/stories/2007-12-19/no-recession-but. (more…)
I have no great love for triangles, as I’ve mentioned a few times before, and this year has produced a bumper crop across the equity indices, which is tiresome. We’ve been kicking around in the current one for three weeks now, and as ever, it has been an annoying bore.
So where do we start this week? Well everyone seems convinced that SPX is going to break up to a retest in the 2020-40 area, and I’m still very doubtful about that for two main reasons:
1. My 5DMA stat requires a retest of the 1911 low before a break of the last 1988 low. Could the stat fail to deliver here? Yes, any historical stat can fail, but having seen dozens of these 5DMA Three Day Rule setups since the start of 2007 I have yet to see one fail, and I’m not seeing any compelling reason to think as yet that the first fail will be here. From an odds perspective, if fifty solo lemmings leap off a cliff and drown, then the working assumption for the fifty first lemming leaping off the cliff should be that it will drown too. That isn’t destiny, that’s just math. As ever there is a possibility that it could go the other way, but most likely it won’t.
And now, here I am at the Tejon Pass Supercharger, making my way back up to my beloved Palo Alto. My young daughter is going to have trouble sneaking up on people due to the medals dangling from her neck; she had a great tournament, and she’s certainly an inspiration to me because of her amazing mental toughness. Would that I had such spirit in my trading!
My trading spirit, though, it chagrined to see that, once again, the ES is marching higher, since it seems bad news (more dreadful economic data from China this weekend) is seen as good news (since it means central bank propping-up of equities until the end of all time). The crash of August 24th is a distant, fuzzy memory.
The pattern to watch is the triangle shown above on the intraday ES. If we push above the red line, it’ll embolden the bulls (as if nearly seven years of artificially-supported markets weren’t emboldening enough). It puts the good guys at risk of the ES zooming to 2020 or even, God forbid, 2075 (before failing once more).
The triangle failure, of course, would be a delight for the bears. I have no freakin’ clue how this will go, but I certainly am sure that by Thursday afternoon, it’ll be crystal clear.
OK, back to driving. See you Monday morning.
