Tuesday, 29 September 2015

Today was day 8

US equities were unable to hold the key sp'1900 threshold, and with the R2K breaking the Aug' low of 1100, the door is wide open to a mini crash wave later this week. Prime target is sp'1820, if that fails to hold, next support is not until the 1750/25 zone.




re: Chart daily5d

For those who have occasionally studied previous major down waves, they should be well aware that such waves generally last no longer than 11/12 trading days.

On FOMC day - where we saw a net daily decline (with a clear spike top @ sp'2020).. I began a crash wave count.

With the break <sp'1900, I'm now quite content to openly highlight that today was day'8.

Typically, in many collapse waves, days 8, 9, and 10 will see powerful net daily declines.

Here is an example... from Aug'2011...

It is notable that in the case of the 2011 decline, day'9 saw a rather bullish net daily gain. Certainly, there can be positive daily closes within a powerful down trend.

More importantly though, day 11 and/or 12 will be a viable crash day. So, this Thursday/Friday I'll be on standby for a mini-crash.

There are other 'issues' surrounding the current time frame.. but for today.. I'll leave it at that.

Looking ahead

Tuesday will see Case Shiller HPI and Consumer confidence.

Update from Oscar


Seeking to jump back aboard the short-train

Overnight Sunday futures certainly spooked me out of my two short-market positions at the Monday open. Regardless, a net gain is a net gain, so I shall refrain from whining. At least I'm not long, right?

Strategy/plan for Tuesday

If we open Tuesday lower... I will NOT chase lower. There will be high threat that buyers will flood in around sp'1867. This would be ironic of course because the R2K has already decisively broken the equiv' level earlier today. I would wait until the 2pm hour for a bounce.

If we open higher tomorrow, and see the 5/15min cycles get on the high side - sp'1900/1910 by 11am.. I will launch multiple market shorts. At the very least: SPY-short, VIX-long. I'll also consider a number of individual stock shorts, such as DIS, F.

My best guess is that we shall see a market capitulation this Thursday or Friday. Frankly, sp'1820 looks an easy target... it would not surprise me to see a brief washout to the sp'1750/25 zone.

Tomorrow is day'9, and I'm sure it will not be dull :)

Goodnight from London