Saturday, 12 July 2014

Moon madness - revisited

US equities saw net weekly declines, sp -17pts (-0.9%) @ 1967. The broader trend remains to the upside though, and there is a rather clear Fibonacci upside target in the 2130s. That seems viable within 3-9 months.

Full moon for World cup final weekend

The following chart is a slightly revised version of what I first published last autumn, a few months after I had waved the white flag on the sp'500 breaking back below 1500. The main issue is that there seems further upside to the sp'2100s, which is a particularly attractive fib' level for the market to achieve.


sp'monthly5, fib levels


I'm well aware of what some might say of the first chart.

'ohh look, the permabear is capitulating with a crazy chart.... clearly a top is really near now!'.

Yet those same people were probably shorting at 1500, 1600, 1700.... and just last Friday, we were a mere 15pts shy of the giant 2000 threshold.

I could elaborate a great deal on the above scenario... but a fair summary...

1. 2100s.. late 2014/early 2015...
2. A very sig' retrace in 2015, but no lower than the old double top of 2000/2007, aka... the sp'500 will NOT go below 1500.

3. A renewed multi-month rally, which will have hyper-bullish potential to climb into the 3000s, perhaps even the 4000s. Its possible we might see a grand top in late 2015/early 2016.. forming a final fifth wave.

The primary cause of such a blow off top would likely be increased capital flows from Asia and the EU into the US. Further, if the sovereign bond market starts to unravel (as seems a mathematical certainty) even more money is going to end up fleeing to stocks - on (ironically) a 'flight to safety'. Whether that means equities can keep on pushing higher into the early 2020s....difficult to fathom.

For now, I'll leave it at that.

Goodnight from London
*the weekend post will be on the US monthly indexes