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A very good read hatman.
Debts are a burden to economic activity and there
is a lot of debt, both personal and corporate.The sun is shining in South West England so it’s
time to relax and enjoy the weekend.Never give up, never surrender.
GBPUSD: I’ve done a detailed analysis of the Pound against the Dollar which (if correct) causes an important question, and the Pound charts might be suggesting more than they say on the tin.
First the daily chart which clearly shows the Pound heading for important support at 1.19/20. It isn’t there yet and might need a bit of a wiggle small 4th wave before it eventually touches the target.
However, after it hits that 1.19/20 area, the analysis suggest a sharp rally back to overlap activity in the 1.25/6 area. That’s mighty strange given BREXIT on the horizon. And Mark Carney has said the Bank will likely reduce interest rates if BREXIT continues to cause the economy to stall and decline.
The chart itself is very negative with two dead cross formations.
So why on earth would it rally all the way back to 1.25/6?
GBPUSD: here’s a more detailed count chart. I’m pretty confident the analysis is correct in the context of a larger falling wedge – a drop to 1.19/20 followed by a sharp rally back to 1.25/6.
So what’s happening?
I suppose one option is that Boris changes tack and negotiates a soft BREXIT – that would certainly cause the Pound to rise. But the charts are very negative on a one year view, so that might not be the answer.
The answer *might* be given by that note from Nomura above. The Nomura team have warned of the possibility of a ‘market panic’ in September/October which could be sufficiently severe to cause the Fed to intervene by cutting interest rates by 25bp and possibly as much as 50bp if market conditions enter crash dimensions. They liken the outlook to the Lehman crisis.
Clearly if the Fed has to cut rates by 50bp because of market conditions, that would likely cause the Pound to rise against the Dollar due to interest rate differentials, only to start collapsing again when BREXIT date approaches.
In other words, this projected sharp rise in the Pound *might* be telling us a story about equity market conditions in September/October.
Naturally these are just rambling thoughts and might be nonsense. Or not…
Cheers hatman
You have mentioned 1987 and I have mentioned 2007
in regards to a comparison to 2019. In both those
years the market ‘h’ was later than here. Both
hit a ‘h’ in the autumn, although I think that
in 1987 it was at the end of August.With so much central bank intervention we can
expect a few tricks and flicks before we do
get that large drop in stock markets.Current world leaders are clueless as to how
the world economies work.Never give up, never surrender.
Late on friday I opened this trade …
Small short Dow at 26500 … stop 30000 … limit 18000
I am not convinced the ‘h’ is in but this trade gives me
the ratio of Reward 2 vs 1 Risk that I always seek.Closed at 26450
50pts in the bag
Still unsure about the Dow ‘h’
Never give up, never surrender.
It’s long been my thought that this long term bull market that started in 1906 or 1932 should finish in a rising ending diagonal. A very high percentage of bullish moves finish with a diagonal. And because we’re ending a near 100 year bull market we can’t expect the final move to be over in a just a few years.
This is why I got so excited when Dow hit 27350, because that’s an exact ABC upwards move, which is what is needed for the first part of a rising wedge.
And if this is correct, Dow now needs to drop to overlap the action at 13,000 in a clean ABC decline (see chart).
So this year we might get a 1987 thing into October, but that will be only the first part of the move (wave A). We then need a multi month B wave sufficiently long and large to create divergence in the final C wave down.
I’ve shown the plan on the attached chart.
Of course, as usual, this might all be pie in the sky baloney.
A problem with this theory is that SPX hasn’t completed the same pattern – it doesn’t reach C=A until 3240. Of course it doesn’t have to get exactly to the top target, and the Dow doing so might be enough.
Or it might suggest that the Dow has finished, and SPX might make another try.
Of course the Dow has Boeing as one of its largest constituents. The BA chart shows a blow-off top 5th wave pattern, now forming into some sort of head and shoulders. It looks very negative. There’s a gap target way down at 220!
KOREA: Korea’s KOSPI is accelerating downwards in what appears to be a five wave C.
Wave A was the large drop of 600 points down to 2,000. Then we got a B wave.
Now it’s dropping fast in wave C which looks like a five wave structure.
Target is 1650. That will be a 36% drop from the top, and will likely only represent wave ‘A’ of a bigger pattern.
The trade tensions are having a major impact on Korea, together with topped-out cellphone and semiconductor markets.
The Dow model I am using has a ‘l’ late today
or early tuesday. Then a dead cat bounce ‘h’
and then a larger drop into mid August ‘l’.I doubt we see Dow 25000 in this phase.
Timing still under review but a strong rally
in the 2nd half of August.The above does not seem logical but is the
work of humans where emotions rule.Never give up, never surrender.
Good morning guys,hope all is well etc,
We have one sick looking futures market today,trying a small tentative long here at 2888.we shall see.Good evening from Korea Houdini. Hope everything’s well with you.
For the Dow I have possible scrappy targets at 26124 and 26069. Calculations not strong enough to justify action.
For the SPX I have 2900 and 2892. Again I can see the calculation but don’t have sufficient confidence to risk money.
“The bad news for the dip buyers who are hopeful that the ES slide below 2,900 will form a floor to risk: as McElligott cautions, from the key risk-sentiment bellwether that is US Equities, not only did Dealer options positions in S&P- and Nasdaq- both shift “Short Gamma” by midweek (each now EXTREME with Negative $Gamma percentile rank for SPX @ just 12th %ile and QQQ @ 8th %ile), but the feedback loop on the gap lower has now triggered CTA Trend model deleveraging in each as well.
In short, that massively overbought position that we – and BofA over the weekend – warned about, is now being massively sold, which in turn is causing even more selling in a feedback loop as margined positions are force-stopped out, or as those deeply versed in trading vernacular call it, we are having a breakout of “negative gamma”:
- The CTA model’s S&P position below 2946 (spot currently WELL-through at 2900) sees a signal cut from +100% to +66%, triggering deleveraging; the next “sell” level is at 2830, where the model would flip “Short” at a -59% position, and “Max Short” under 2714
- The Nasdaq position already reduced on Friday below 7732 to see the signal decline from +100% to +66%; the next “sell” level is7375 where we would flip to outright “Short”
- Russell is already -59.4% Short, more selling under 1515 to get to get to “Max Short”
- Internationally, HSI CH and Nikkei are both back “Short” already, while Eurostoxx will deleverage & “flip Short” under 3308″
SPX: I know this sounds crazy, but I see the possibility of SPX wanting 2860 and perhaps 2830 quite quickly. Not a prediction, just possible targets. Of course anything can happen…..
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