Teflon Market Hits Reality
The explanation of the long term RST sell trigger in June 2015 following the May 2135 cycle high was explained in detail in the previous commentary of 11/13/15, as were the details of the significant Pi cycle timing elements, so please review that commentary.
The SPX made a double bottom at 1867 [8/24] and 1871.91 [9/29] after the RST sell trigger into the 8.6 year Pi cycle time zone, and was the most O/S on a monthly basis since 2011 as per the monthly 5 RSI. It was subsequently marked up +13.1% to the 2116.48 high [11/3], with a high O/S mark up rally high close of 2109.79
Prior to that close, the high cycle close was 2107, and 2105 is the 1.618 fib extension of the SPX 2007 1556 bull market top to the -57% 667 2009 bear market carnage that was the “Panic of 2008”. The Fib elements of price have remained consistent based on the closing prices which does not surprise.
My bearish opinion of the market remains the same following the RST sell trigger and subsequent rally to 2116.48, and now the resumption of the negative trend where the SPX has declined -5.8% to the 1993.30 low [12/20/15]
The SPX is -2.6% YTD as of the 12/20/15 close, Europe is negative and in significant decline, as are the emerging markets while China just keeps lying about its declining economy, and probably more so than the US Govt does. Earnings in the US continue to decline despite all the accounting gimmicks and corporate share buybacks on ridiculous low interest rates, while the SPX was still marked up higher with off the wall rational about higher multiples warranted-Seriously?
Politicians keep adding regulations that strangle business while they also call for more taxes, yet the real economy declines in addition to a lower GDP no matter how they “fix” the calculation. The net result is higher unemployment where less investment means lower job growth and lower disposable income. Business closures are higher than business startups-“Come on Man”. The debt has increased $9 trillion to $18 trillion under Obama, yet our Republicans/Democrats just keep playing the same “big brother game” and could care less what the people/tax payers think.
The year end trading and portfolio games have begun as 2015 winds down, especially following the long anticipated and BS token rate hike by the FOMC. The low volume/ poor liquidity will prevail into year end and volatility will increase because of it. However, if you are a day trader and familiar with my Volatility Band strategies there will continue to be many opportunities as the year winds down.
Kevin Haggerty