Wednesday, 27 November 2013

The next big down wave

US equities look set for broad upside into spring 2014, but what then? The current multi-month rally is now 25 months in duration..and by next spring, we will be more than overdue a major correction - probably on the order of 17/22%

sp'weekly9 - fib levels

sp'weekly8 - mid-term bullish outlook


First...I should clarify my upside target zone for spring 2014.

Dow 17000/500, which should equate to sp'500, somewhere in the 1950/2050 zone.

For weekly'9 chart above...assuming we max out around 2000. Taking the starting point of Oct'2011..first major fib...0.38%..would take us down to the mid 1600s. That would be a VERY strong and significant wave lower.

Summer/autumn summer/autumn 2014 ?

More than anything, I would be looking for the next major wave lower to be somewhat in style to what we saw in 2011. It will probably take a few months to form a clear top, and then only 1-2 months for the major downside to play out.

As many of the chart-cyclists are mentioning, Aug/September 2014 would be a key time zone to look for the market to see a major low put in.

From there...a hyper-ramp into late 2015/early 2016. For me, the only issue is whether the indexes then battle to sp'2500...or much...much higher.

Looking ahead

Wednesday has an array of econ-data...there is certainly something for Mr Market to use as an excuse for further weakness..with easy downside to the sp'1795/90 zone. Of course, since Thursday is closed, volume will likely be even less than today.

*there is no sig' QE-pomo due until at least Friday. The new QE schedule is due Wed' 2pm.

The closing hour of today was certainly fun to watch and be part of. Hopefully, equity bears can see a little follow through for the rest of the week.

Goodnight from London