Mini S&P Continuous Futures: Trendlines Tagged

On the first chart posted below, the long-term upper parallel channel line was hit yesterday/today. The same channel line drawn on the cash index has been exceeded a bit, but I prefer the continuous futures contract for accuracy of trendlines. The second chart shows the upper trendline of the rising wedge was also hit with precision. So far these trendlines have acted as resistance just as the important 1/30/13 timing was hit. I don't know if today's high in the market will hold, but I think there's a pretty good chance it might.

Kim Rice 1/30/13

Stocks: Major Confluence 1/30/13 to 2/5/13

As posted here a weeks back, there is a major timing confluence in stocks due late Jan to early Feb 2013. After a few more weeks of market action and conducting more analysis, it appears the most likely timing for an important turn is 1/30/13 (+/- a couple trading days). Earlier guess was that early Feb would mark a low, but as we approach that window it is most likely heading into a top. I think the top is very similar to the 2007 double top per annotations on some of the charts posted below.

As shown on the charts, there are multiple methods of timing on daily and weekly charts that point to this 1/30/13 area time window. One that looks particularly interesting is the 334 trading day up-leg from 10/04/11 matches the duration of the last up-leg leading to the 2007 top. After redrawing the upper trend line of the rising wedge (to line up with 9/14/12 peak instead of 4/2/12 peak), the apex now lines up with the end of January as well. Lastly, the Fibonacci time series from the 3/6/09 low has the next point in the series lining up in this confluence window as well.

Sentiment is at extremes and VIX is at lows not seen since the 2007 top. There are numerous divergences showing up as the SP and Dow Indices moved above the 9/14/12 highs last week, while the NDX is still quite short of the September high. The RSI divergence on the weekly chart is almost an identical set-up as occurred at the 2007 top.

Price-wise, the last projections nearby are 1485 to 1488 area basis the nearby E-mini S&P continuous futures contract (see analysis annotated on charts below). If the E-mini SP closes above 1490, it may move as high as 1550 which is the next confluence of price projections. Wherever it's going to peak, I think it needs to get there no later than the week of February 8th, and most likely the week of February 1st.

I would highly recommend reviewing some very comprehensive long-term technical analysis prepared by Garrett Jones and some cycle work by Peter Iliades. Both of them have analysis that is looking for a major top in Jan/Feb window. You can find a Garrett Jones audio interview and his charts here. Peter's analysis is on line here.

Kim Rice 1/20/13

The first chart shows the divergence in the NDX not making new highs above September top.

The rest of the charts are annotated with analysis and comments.

SP: Apex Convergence Point

The timing for the secondary peak has been elusive (assuming the market is in a topping process). Posted below is the E-mini continuous nearby futures with possible geometric resistance/reversal pattern. The apex and back-kiss convergence is the same on the SPX cash chart (log scale).

Kim Rice 1/6/13

Commitment of Traders - E-mini S&P and Silver

The latest COT data shows the commercial traders (presumed to be smart money) have the largest short position in over a year on the E-mini S&P. If you are bullish on stocks, you must know something the commercials don't.

Similarly on silver, the COT chart below shows the commercials are quite heavily short, while the small speculators are on the long side of the trade. Sometimes the commercials get it wrong, but that isn't normally the way to bet.

Kim Rice 12/16/12

US Dollar Fractal

Posted below are a few charts showing a fractal pattern in the dollar. If it continues to track with the base fractal, the dollar may be getting close to starting an intermediate leg to the upside. The first chart is the longer term big picture. The other two charts are close-ups of the areas circled on the long-term chart. IF this pattern plays out, it would likely put downward pressure on the stocks and metals which correlates with analysis posted earlier on those markets.

Typical pattern analysis shows a H&S pattern forming for the last few months, which would normally imply a breakdown. However, the fractal implies it may not work out that way. We'll see I guess.

Kim Rice 12/16/12

Stock Indices: 1912 and 2007 Tops

The current DJIA has been tracking fairly closely with the market from 100 years ago. In 1912 the DJIA peaked on Oct 8th, had a minor leg down, and then made a secondary peak on Nov 29th before a more substantial sell-off began. I don't know if it will continue to track with 1912, but it's worth keeping an eye on this possible analog.

The chart below shows the Oct 2007 top. The secondary peak in December of 2007 retraced .707 of the initial down leg. Our current market could easily do a .707 or .786 retracement of the initial leg down without invalidating the idea that Sep/Oct 2012 was a major top. If the retracement goes much beyond .786, it would call into question whether the market has topped.

Kim Rice 11/29/12

DJIA Analog to 1929 and 1987 Tops; Puetz Crash Window

At the moment there is quite a lot of similarity between the recent top in 2012 and the tops followed by crashes in 1929 and 1987. The first legs down in 1929 and 1987 were both about 30 calendar days, with the secondary peak about 38 to 41 calendar days from the top. The first leg down from the 10/18/12 top was 29 cal days, and 38 to 41 cal days line up with 11/26 to 11/29/12. So far the market has rallied into that window for a potential peak. In 1929 and 1987 the secondary peaks retraced 60% to 70% of the initial leg down. So far we have retraced 50% of the initial leg down from 10/18/12.

Astrologically, we are entering another Puetz crash window. There was a solar eclipse on 11/13/12 which will be followed by a lunar eclipse on 11/28/12. This eclipse pattern happens twice each year and most of the time there is no major crash event. However, historically almost all major crashes have occurred during one of these Puetz crash windows. Crashes typically happen if the market is otherwise overextended and set up for a sell-off. I don't know what the probability is for a crash event this year, but it's certainly uncanny the way the market is tracking time and pattern-wise with the 87 and 29 tops. And I think one could reasonably assess the market is overextended after 3 years of quantitative counterfeiting by the Fed.

If the market starts to meltdown anytime in the next week or two, the ideal time for a low would be 12/12/12 or 12/13/12. This is based on the possibility that the timing would match 1929 and 1987 where the crashes ended exactly 56 cal days from the peak. I would note that in both prior periods the secondary peak occurred a few days prior to the full moon and began to accelerate down after the full moon. Our next full moon is due 11/28/12. Based on some other timing methods I'm looking at, I would like to see the market peak on the 28th or 29th of November. It may decide to peak earlier if the symmetry with 1929 and 1987 continues as far as the lunar phasing goes. If the market rallies above a .786 retracement or continues to rally after 12/2/12, I would think the pattern for a meltdown in this window would likely be invalidated

Below are charts from 1929, 1987 and 2012 with annotations showing cal days, lunar phases and solar/lunar eclipses. The setup is there, it's up to the market decide if wants to panic.

Kim Rice 11/26/12