Thursday, August 23, 2012

S&P 2007 TOP PATTERN ALMOST CONFIRMED

On August 7th I posted three different years of potential top patterns for the S&P: 1983, 2011, and 2007. At the time I indicated the 2007 top pattern to be the highest probability and posted this chart comparison; marking the current location between 2012 and 2007 with the number three.

The S&P had completed three lower highs and we were watching for a marginal new high into Fib resistance.

Just like the pattern in 2007, the S&P index exhausted into a new marginal high at Fib resistance.

Here is the new combination chart of 2012 over top of 2007. We can now match up four distinct completed waves.

Notice the next expected move is below the 200 day moving average to form a double panic bottom with the previous low. This then sets up FED QE3 action that will rocket the market higher to a new marginal high, probably 1500 S&P.

This last move will bring in all players and extreme bullishness on Wall St. However, gas to $5 a gallon along with all other commodities to record highs-the real world economy collapses.

Finally Wall St will realize the FED has used their last bullet. With the market at record p/e valuations, stocks begin crashing down to a 1 to 1 ratio with GOLD. (One ounce of Gold equal to one share of the Dow)


The last two charts confirm our 2007/2012 four data points comparison.

The S&P has moved 270 points in 270 days from the November 2011 low; squaring of PRICE AND TIME into the Fib resistance.

Ninety days from the June/2012 low is September 2nd; another strong time multiple for ending the up move.

The last chart shows a struggling trend that turned Parabolic; ending in a false break high into Fib resistance. Another strong indicator of a completed trend.


Conclusion:

Our 2007/2012 top comparison thesis seems to be the strongest possibility with four similar data points confirmed.

The index has also squared price and time: 270 points up from the low at 270 days. This squaring was on a parabolic exhaustion style move, into calculated Fib resistance.

Should this pattern hold, we can then forecast a move below the current 200 day average on daily at 1333, down to a double bottom either at 1280 to match the June low, or down to 1150, November 2011 low.

We forecast at that time, probably in December 2012, in order to try and salvage Christmas, the FED will panic into QE3, sending the S&P back up a few hundred points to a new and final high. At this time, I believe that top target to be around 1500.

Tim Kathlina

Tuesday, August 7, 2012

S&P TOPPING PATTERNS TO WATCH FOR

On July 6th I posted this chart with a secondary count S&P price target of 1400. At the time I thought the index could reach that level by the FIB ending date of July 20th.

The market breached the 1400 level today; pushed by the Federal Reserve 600 million repo. The current market environment which sees all news as favorable for stocks, is typical of all topping markets in history.

The question:
Can the FED and ECB reshape financial markets so to never lose, always win, no matter how overvalued, and without short shares, volume, and fundamental support?

Seventy percent of the US economy is consumer spending. The US consumer is now 50 million on food stamps, 100 million no longer in the labor force and the biggest tax paying base, the aging baby boomers, looking to withdraw from the system.

The baby boomers children are still paying their student loans and their kids, the grandchildren of baby boomers have over 1 Trillion in student debt-with NO FULL TIME JOBS AVAILABLE.

What about Fundamentals? Amazon is the number one retailer and should be the measure stick since 70% of the economy is retail.

Amazon currently trades between 90 and 250 times earnings, current and forward looking. Amazon projected earnings growth rate is MINUS 6% and on paper, considering all factors, the stock has an actual value of $20 per share.

The next chart is a big picture S&P view-3.5 years of bull market. The chart has a clear 5 wave higher pattern into calculated Fib price resistance zones.

My point is this: The FED based on money printing alone will have to push stocks higher-to the most expensive in history levels-in order to get another 3.5 year Bull market-5 wave pattern.

Stocks are too expensive, the general public is broke, the % of shorts are at all time lows, there is no trading volume, and the world financial system is imploding; despite QE1, 2, 3, TWIST 1, TWIST 2, REPO 1 REPO 2, etc, etc.

I do not believe the math adds up and there is no way to get around LIQUIDATION-despite the best efforts of central planners around the world. The black debt hole is just too large; insolvent banks like Bank of America, RBS, and Citi, will simply have to be liquidated and their debt holders will have to write off the debts.

The next few charts are comparisons of topping patterns. The top of each chart is current 2012, the bottom half is topping charts for the years 1983, 2007 and 2011.

These previous tops are road maps to what the 2012 top will look like. The second option is- I am dead wrong and the FED will be able to send the stock market to 100xs earnings, with a financial collapse in the real economy, $10 gas at the pump and no jobs.

This first 2012 chart is marked with the time from the June low. Currently 60 days and September will be 90 days. We are looking for the market to exhaust into a final high into one of these time frames.

The 1st chart compares the top pattern to 1983 top. Our current location is marked at number 2.



Second chart compares 2012 with last year, 2011, also marked at the number 2 spot.  Both 1983 and 2011 made lower highs. The difference in the two is the speed of the decline after the final distribution top was completed.

The next comparison is 2012 to the 2007 top. This top pattern is the highest probability because of the similar circumstances. Presidential election cycle, along with collapsing fundamentals that are ignored by the markets.

Our current location I have marked with the number 3.  In this scenario, we will make a marginal new high into the 90 day time period, a fast collapse, a fast recover into the November election time frame, then the first wave lower of a 2 year bear market begins.


Conclusion:

Does buy low and sell high matter anymore? Is this time truly different? Can the stock market for the first time in history, never lose, and have infinite upward valuations?

I got some Tulip Bulbs and a bridge in Brooklyn to sell to anyone who thinks so.

Tim Kathlina

Saturday, July 21, 2012

S&P Current roadmap location July 22nd

On July 7th I indicated the next possible date for SPY top, based on our secondary count, would be July 19th or 45 days from the ending 1st wave low.

The SPY index exhausted higher into Fib 13th date July 19th, 45 days from Wave one low, followed by a distribution on July 20th.

Traders should use my updates to look for price and time dates before entering trading positions. These time frames offer the highest probability of winning trades.

For example, after reading my update on July 7th, you would know to wait for the next Fib sequence date, July 19th, and 45 days from Wave one low, to take a short position with a protective stop above $140, our price target for July 19th.

The next few charts continue to build a case for a probable top using the same 45 day pattern from the EW1 low.

We have five clear sub-waves higher:

The 45 day from the low pattern is also showing three thrust higher:

The 45 day pattern once again has formed a Bearish Kicking Pattern:


Conclusion:

SPY has moved 45 days from the June low, ending on Fib 13th date of July 19th.

SPY has 5 countable sub waves up from the June low, three exhaustion thrust into highs, and a Bearish Kicking pattern.

We do not have a squaring of price and time and the index has been able to ignore all bad news to date.

The FED meets August 1st, they will not do QE3 as I have been saying for months now. I will update direction, price and time after the Fed meeting.

Tim Kathlina

Saturday, July 7, 2012

S&P JULY COUNT PROBABILITIES JULY 7TH

In early June I indicated June 19th to be FIB day 21, a day of potential significance for a high or low.

Reviewing price action into this date on June 25th: based on heavy selling, over bought RSI<2>, over bought Stochastic and 61% retrace of the low, a higher probability was favored for this being a ending sub wave; expecting the next significant date or time to bring in Wave 1 completion. (Remember, I do not favor a count with WAVE1 already completed.)

I indicated a secondary probability of the index exhausting into a high on the next significant date or time. The next significant date or time was noted as July 1st thru 10th, or 90 days from the yearly high.
Turns out, Fib 21 day was a bear trap. Despite no reason for the market to push higher and every other tradeable asset class reacting as expected to the bearish reality, the stock market pulled another rabbit out of the hat. With this in mind, we need to explore the secondary count probabilities.

The secondary count assumes EW1 completed at the 200 day moving average.

Starting a FIB count at the 200 day low point, FIB day 5 brought in selling; FIB day 8-just hit, again bringing in selling.

EW theory does not allow for sub wave 3 to be the shortest wave. If FIB day 5 was the completion of sub wave 1, then it is likely that sub wave 3 will complete on July 19-20th, FIB day 13; 1.61xs sub wave one, or 1400 S&P.

Because major wave 2 can not retrace all of major wave 1, sub wave 5 would then need to be truncated or not exceed sub wave 3. The large retracements that we have seen is another reason I favor the primary count.

Notice in the secondary count, sub wave ii of major EW1, retraces almost all the way back to the April high and sub wave iv does not overlap any of sub wave ii. These are strong indications that this count is wrong.

The next chart is my preferred EW count. This one is easy to read and understand. SPY has a megaphone downtrend pattern for EW1. SPY exhausted higher into FIB day 8 to complete sub wave iv. Now we expect a pull back to our previously defined target of 1220 range to complete EW1.


The next two charts give us some technical indicators to watch that will clarify which count, primary or secondary the market is in. The third option is a massive bull market and both counts are wrong.

Two common candlestick patterns are bullish and bearish kickers. A bullish kicker will have three red lower low candle patterns in a row and the fourth day kicking higher-a bear trap. The bearish kicker is the opposite, three white candle patterns with a break lower on the 4th day and follow thru-bull trap.

The important thing to note is all patterns in technical analysis are only as valid as the trend they are in. In other words, if the trend is higher, and the market shows a head n shoulders, the pattern will fail. If the market trend is lower, the head n shoulders pattern will work. (This is an omission that many miss in technical writing attempts)

The SPY chart shows both bullish and bearish kickers in the uptrend leading up to the April high. Note that the Bearish Kicker was denied by the market moving higher, again a bear trap. The Bullish Kicker was very profitable to longs as the weak hands got shaken out, given bulls a lower, thus more profitable entry point.

The Bullish Kicker worked, because the larger trend was higher.

The point of all this is the SPY has a bear kicker into the 90 day from the high window on FIB day 8. If we are in major wave 2, then this Bear Kicker will be a Bear trap and we can expect the market to move higher into the July 19-20th, FIB day 13, price target of 1400 S&P.

If my preferred count is correct, then the Bear Kicker will be valid-moving the index lower to complete EW1.

The next chart reveals longs are profitable at SPY 132. Secondary count Wave 2 would allow the market to test this area, then bounce up to complete sub wave iii at 1400 around July 19th-20th.

If my primary count is correct, SPY will break below 132 after a small bounce test, sending bulls into panic selling mode; bringing in the completion of major wave one about 80-100 S&P points lower.

The third option is while ROME burns, we all play fiddle and watch the S&P soar to all time highs, 100xs earnings p/e, along with $100 per gallon of gas, $1000 oil and $50,000 per share Apple.


Tim Kathlina

Tuesday, June 26, 2012

USING THE US DOLLAR FOR STOCK DIRECTION

Central Banks around the world continue to fight natural market forces. They continue on the one hand to print funny money and junk bonds to float the insolvent banks while on the other hand stealing from their countries citizens life savings and pensions to pay for it.

The problem the Central Banks have is the world has a system of natural performing markets that price in risk and reward according to the reality of today or tomorrow.

Foreign Bond yields for insolvent countries like Spain and Italy and commodities have overcome manipulatation by Central Banks.

Central Banks have thus far been able to hold currencies at bay and keep stocks a float. As will see with the US dollar charts, this leg of deception is also quickly ending.

The 1st US dollar chart represented by the ETF UUP is a daily, volume by price chart. Volume by Price charting gives us an indication of where the largest amount of purchases/sells are; in other words resistance or support. The chart indicates strong support and potential short covering above the $22.75 price point.

The dollar found resistance at the 50% retrace of the June hi-low range-normal for all tradable assets. Expect this to be resolved higher after a one to seven day consolidation of the no QE3 bounce.

Next we look at a weekly, multi year time frame. Note the Inverted Head n Shoulders formation that has taken over a year to establish. This lends credibility to the market winning out over the Central Banks.

Duration of time is the key technical; true trend changes take months, in some cases a year or more. If this pattern were of a fast nature, then it would be void. The validity of a pattern depends on the larger trend.

Trends take time to change and the US dollar trend is now up; despite the best efforts of the FED.



Here we are looking at a daily one year time frame. The key technical take away here is higher lows and higher highs.


Conclusion:

The US Dollar trend is up. Only QE3 will put a stop to this, but stocks are too expensive and Presidential election too close to allow the FED to begin a massive printing campaign.

A rising US dollar will sink the US market and corporate earnings when S&P 500 companies have to repatriate foreign earnings back into a value increasing US dollar.

Tim Kathlina

Monday, June 25, 2012

S&P JUNE 25TH TIMING UPDATE

On June 5th I posted this chart, indicating we had completed FIB day 13, and to expect a significant change of trend on FIB day 21, or June 19th. At the time, the current best EW count led me to lend strong weighting to the probability of FIB 21 day, June 19th, bringing in a significant low and completion of EW wave one.

The next chart shows on June 19th, the exact FIB 21 day, did not bring in a low, but a significant HIGH.

The market found support at the 200 day moving average, and then retraced 61% of the April to June high to low range-ending exactly on June 19th, with a significant distribution day.


I have indicated that I do not believe the EW count is correct and will need to be adjusted. I am still of this opinion. I do not believe EW1 has completed-thus I have not listed those counts up on the current charts.

The significant low came at 60 days from the April high and squared with price at the 200 day moving average. The next significant point in time is at the 90-99 day from the April high, or the first week of July 1st thru the 10th.

My expectation is for the index to complete EW1 within this July 1st thru 10th time frame. There is a lower probability of the index completing a significant lower high within this time frame; but as of this writing, the odds favor a final exhaustion into a low-somewhere between 1220 and 1180 for S&P.


Conclusion:

The FIB 21 day of June 19th, brought in a significant high-61% retrace from the 60 day low.

Based on Slow Stochastic overbought condition, FIB 21 day, and RSI(2), the index now sets up to complete EW1 at the 90 day time frame from the April 1st high, or July 1st thru the 10th.

Expected low range is between 1180 to 1220-extensions of varying degrees from the 60 day low.

Tim Kathlina

Monday, June 11, 2012

GOLD 1ST WAVE BEAR COMPLETED

On March 19th I indicated the GOLD bull run was over for now.

The following chart showing a bearish reversal, with a bear wedge and downside EW1 target of $1500 was posted.

We technically chart GOLD on year over year, week over week. Doing it this way will pull out some recurring patterns.

A 21 week Fib sequence chart, June/July 2011 to June/July 2012 shows significant highs at Fib weeks 5, 8, 13. Expect Fib week 21, the next Fib week in the sequence, to also bring in a significant HIGH, not a low; consistent with the previous week cycles. (Notice I have marked the EW counts in Roman numerals, showing the completion of EW1)

Slow stochastic at the 50% and 80% levels marked previous FIB week highs. We will watch for this to line up with FIB week 21; along with calculated retrace prices between $1590 and $1680.

Once these targets are hit, EW wave 2 will be completed and impulse EW3 down will begin. I will provide downside targets at that time.


The put/call ratio backs up our bear market in GOLD thesis. As the price has moved lower, the put to call ratio has gotten more BULLISH; which is the opposite of what brings about bottoms.

This extreme bullishness in GOLD will help end EW2 and usher in a EW3 sell off.



Conclusion:
Put/Call ratio suggest GOLD has much more room to fall.

Our EW1 low projections from March came in near the exact price. Now we are awaiting EW2 to work off some oversold conditions before a major EW3 impulse down move takes GOLD substantially lower.

Tim Kathlina

Thursday, June 7, 2012

SPY TECHNICAL VIEW JUNE 7TH

This 1st SPY chart considers the possibility of a 1st wave EW1 completion.

Noted in my last post, the overlap and sub wave numbers do line up for this probability. My concern for this is the FAST move back towards the 50% retrace level. This is day 3 and markets have already retraced 38% of the 5 sub waves.

Any trend allows for one to four day counter trends; even up to seven days. Therefore, the market is still within this allowable range, yet has already retraced a distance that a normal second wave would take at least two weeks to a month to complete.

In other words, what I am saying is the time and distance doesn't sit well with me to validate this count.

Short term traders use RSI<2>, overbought above 90, oversold below 5, for potential early warning of turns.

This fast move, within the 4 day counter trend allowable time frame, already overbought at 90 on RSI<2>, and reaching close to 50% retrace; feels more like a fast counter trend and not a completion of EW1, moving into EW2.

Next SPY chart I have noted a trend channel, with RSI<2> +90 tops and <5 lows. Since EW is conflicting at this point, lets stick with this trend channel until proven otherwise-leaving off any EW counts.

If this market can get past 7 days and take out 61% of the decline, this is not a bear market.


Tim Kathlina

Wednesday, June 6, 2012

S&P TIMING UPDATE JUNE 6TH

Yesterday the markets got CNBS to call for complete bail out of Europe and a leading FED official to call for massive stimulus accommodations.

No surprise this morning, despite back tracking from other FED officials and the ECB doing nothing, futures risk-on is still in play.

The question: Have we reached EW1 bottom?

EW suggest that sub wave five can or will equal sub wave one-as one clue. Looking at SPY we can see wave i was 7 points, and wave five has moved down 7 points to the 200 day moving average.

We have to assume it is possible that WAVE 1 has been completed.
In May, I posted this KAGI chart of the 2008 SPY bear move; suggesting that this is the road map that we should consider.

In 2008, a Presidential election year and the last bear market, the markets topped in May, and moved lower into ending WAVE 1-end of June, first of July. 

Fibonacci sequence noted on the next SPY chart, suggest the 2008 scenario is still in play.

Starting at the top, day zero, the 8th day completed sub 2, the 13th day completed sub three.

The next FIB sequence is 21 days, which counts out to June 19th. Per FIB theory, SPY trend change wont be until the next FIB ending date of June 19th; 21 days past the last FIB ending time, 13 days.



Conclusion:

EW theory allows for completion of EW1 when sub one equaled to sub five.

The 2008 bear road map and FIB number sequence suggest EW1 completion sometime around June 19th or early July; this is still our preferred scenario.

Tim Kathlina

Tuesday, June 5, 2012

THE FED VERSES THE MARKETS-CHART REVEWS JUNE 5TH

The question: Will there be QE3?

The answer to this, maybe can be determined by looking at Mitt- New World Order - Romney's, top campaign donors list. Shocking I know-but we can see EVERY BIG NWO Bank that the FED ANSWERS TO is backing Romney.

Did the FED pump up asset prices long enough for their BANK buddies to get out of their long positions and get short the world markets for the coming implosion?

I believe the answer is yes. I also believe in order for Romney to win; they don't want the DOW up 200 points everyday.
Now lets quickly run thru some charts. What will be obviously clear-MARKETS downward slope pressure on assets-verses FED induced rising true trend lines.

The MARKETS will win this game-not the BANKS.

DIG-Note the downward slope of the 200 day weekly, verses the higher lows induced by the FED. These two forces are quickly getting close to a major battle-THE MARKETS WILL WIN.


MDY-S&P mid caps, more American revenue based companies. Here I have a FIB retrace fan that spans the QE, QE Lite, and Twist programs.

Despite the Trillions of DEBT created by the FED-slowly one by one, the FAN lines of support are being removed.


SCO-Most my focus is on ENERGY related ETF's because ENERGY is the one true WORLD product that despite race, color, religion-we all use, rich or poor. (Sorry Apple)

SCO is the short energy product. The FED pulls their tricks, this ETF rolls over and goes down. Notice how this year is a much different technical picture from last year.

Last year, SCO was stopped cold by the 50 day, struggled to get above it, then rolled over; because of anticipated FED action.

This year, the MARKET FORCES blew SCO right past the 50d just as if it wasn't even there. WHY? Could the MARKET anticipate no QE3?


Part of the FED un-stated mandate is to suppport S&P multinationals earnings power by crushing the US Dollar.

This serves a few purposes: allows the continued export of JOB's to cheap labor Foreign lands-which then artificially supports Company profits thru repatriation of Foreign dollars to US dollars.
Gone are the Henry Ford ideas of putting Americans to work making the companies products; paying workers a living wage so they can afford to buy the companies products.

The US Dollar, or the UUP shows two patterns: A FED induced Head N Shoulders pattern, which has played out, and a MARKET induced Inverted Head N Shoulders Pattern, which is now in play.

As the dollar rises-WALL ST screams for more QE. Why? 

A rising dollar means lower profits as all these hit and quit it Company CEOs have staked their fortunes on Free Trade Agreements, SLAVE CHEAP LABOR, and REPATRIATION of money.

UYM-Another Energy play, same story. Downward 200 day slope, Head N Shoulder pattern--all despite FED action over last 3 years.


Conclusion:

Wall St. power elite and the FED are in direct opposition to MARKET natural forces.

Every week, money flows out of the stock market and into other investments that are not worthless paper. Currently their are 23 million people on Food Stamps, 100 million people NOT IN THE LABOR force and the biggest tax base is the baby boomers; putting their money under a mattress.

Extend and Pretend has an end and it is coming soon.  

Tim Kathlina

Tuesday, May 29, 2012

S&P IV RETRACE LEVELS

After completing Wave 5 of the bull run; SPY has now worked out 3 minor waves of WAVE 1 in the new bear trend.

This chart shows the true trend line of the bull wave; and calculated FIB pivots.

One of these areas should be the end of minor IV bear, before we move to minor 5 low to complete this first bear wave; sometime late June or early July.

Tim Kathlina



Sunday, May 27, 2012

CHARTING THE RUSELL 2000 IWM

Here is stats on Google trends for search words: "Bank Run". The words are being searched at an all time pace; this might be insight into actual investor concerns not yet reflected in risk investments such as stocks.

IWM is ETF for Russell 2000.

The chart is showing an EVE-EVE double top; this is two rounded top patterns. The previous year, June was a good month, beginning at the Bullish DOJI marked June 2011.

Today the weekly chart has a Bullish Harami pattern. The question is will June repeat 2011? In my previous post, I indicated we might do better to compare now with the last bear year-presidential election year 2008 and not the previous bull year 2011.


Drilling down further using volume by price-clearly most investors over the last 30 days are in the Russell at $79, thus UNDERWATER. Depending on how the news cycle goes the next few days; this VWAP could prove to be too much resistance for bulls to overcome. Or, with a few carefully placed news releases, this could fire up the algos to push stocks up to a lower high, sames as June 2011.


The put/call ratio shows no nervous bulls as of yet, even though the VWAP shows they are mostly underwater.

The blue line represents the p/c ratio, the red line is the price of IWM. IWM doesn't bottom, until the blue line, p/c ratio, gets above 4.0. As you can see, even though bulls are under water and May was a bad month for them, the put call ratio barely budged-showing complete complacency.


Conclusion:

The p/c ratio and $79 VWAP seem to suggest IWM has further down to go before EW1 can be reached.

If we are using 2008 as a road map, then we can expect to reach the 1st leg bottom sometime late June or early July.

Coordinated Central Bank news would change the technical dynamics in the short run.

Tim Kathlina

Saturday, May 19, 2012

SPY TIMING UPDATE MAY 19TH

Often in times past, market tops can be marked and remembered by events that pointed to good times as "far as the eye can see". Was FaceBook IPO one of those times?




On May 1st I posted this SPY chart and indicated that we were in Wave 4, and that conditions have been met to complete the wave. The chart had FIB upside targets for Wave 5.


Finally, after what seems a life time, we can now count a solid 5 wave completion of the bull run. Typically bull runs last 2-3 years, bear runs last 1.5 years.


All the talk now is when is the bounce, where is the tradable bottom? The answer is: nobody knows for sure.

What I want to focus on is a different question: where is WAVE 1 likely to complete? Lets not look at tradable sub-wave bottoms within WAVE 1.

The point is, if we bounce anytime soon-should we cover our short or add to that short; sell short the bounce? We have to keep the concept in context. It's not important at what price the SPY bounces; IF THE BOUNCE IS A SUB WAVE, WITH FURTHER DOWNSIDE TO GO TO COMPLETE THE MAIN WAVE 1.

To look at this properly, the next chart is a Kagi 2% chart of the last bear market year, the 2008 Presidential election year.

 Lets use apples to apples comparison years; 2008 bear-2012 bear, for a road map of dates and/or probable weeks of tops and bottoms of the MAIN WAVES, in order to maximize our profits.

In 2008, Wave 1 down started in May, and completed in July around option expire week. This is based on 2% moves in the index that trigger the black buy Kagi or the red sell Kagi. All the noise/sub waves in between are removed from the chart.

Our strategy-is to pile on to shorts, with every bounce in the market, all the way into July. In July, we apply a % trail stop that moves with the stock, raising our stop price as the short moves further into profit, until we finally get stopped out.

Just follow the blueprint from here; begin shorting option expire week of August, all the way into the Presidential election; cover for Santa Rally, short Jan 2013 for the final 5th wave.


Could a coordinated FED action put a wrench in this plan; sure. But we can deal with that if and when it happens. I believe the FED will not embark on QE3-4 months prior to a Presidential election; just as they took no action in 2008.

Tim Kathlina

Friday, May 18, 2012

WHY I LOVE THE VOLATILITY INDEXS

Here is a chart of the XIV, which is the inverse of the VIX.

Stock markets take the long way around to a final destination, always. We can see in the XIV chart, despite countless Europe interventions, Fed speak, and trillions of dollars spent-XIV has managed to simply make a lower high, confirming the overall larger picture, which is a confirmed bear downtrend.

I have marked the change of direction DOJI candle, confirmed by the long reversal candle the following week.

Continue to build positions in VIX trading products such as TVIX; take advantage of what will be a long slow bleed of Americans 401k retirements, and the ensuing panic that is sure to set in.

Tim Kathlina

Tuesday, May 15, 2012

ENERGY REACHING LONG TERM TREND LINE MAY 15TH

Here is a chart of ETF-ERX-Energy 3X Bull:

We can see this is a multi year chart with a defined true uptrend line. Along the way, the energy sector has moved substantially above its mean trend, but in the end, always reverts back to trend.

With only a few dollars more to reach the trend, and an RSI reading that is NOT OVERSOLD as of yet; I question if this long term trend can be sustained.

Is this a large Head N Shoulder pattern that will put the energy complex into the poor house, the middle east looking to go to war, and a major sell signal for all risk assets??

I don't have the answer yet, but believe we are about to find out real soon.

Tim Kathlina

Tuesday, May 1, 2012

S&P TIMINING UPDATE MAY 1ST

On March 22nd I posted this chart indicating that April 1st or 180 days from a significant previous low could begin the 4th wave pullback that we have been looking for.

 On April 1st, finally a target date held, and we did indeed get the 4th wave pull back.
The next chart is a current SPY with calculated topping pivot prices over layed. The Roman numbers count the 5-sub waves that complete the 3rd wave marked 3V.

To confirm the 4th wave, we look for two things:

1. The index to pull back in an equal or similar number amount to previous pull backs in this sub wave and/or

2. The pull back to overlap the sub 4 wave pull back, either equal to, within the range of, or exceeding.

Both conditions have been achieved; a match in total points, noted with a circled B, 7 points, and the pullback was large enough to overlap the sub IV pull back within 3rd wave.

This now puts us squarely in a 5th and final wave to completion before the markets begin to price in the real world.


5th and final waves tend to be 30-45 days in length. You can make your date calculations based on the low dates of the 4th wave, which showed a double bottom; begin to make shorting plans.

We will use the current calculated FIB pivots for top targets. Those are subject to change depending on how bullish this 5th wave gets. (Remember, per Wall St, stocks never go down and are never expensive)

I'm looking for buy indication on the Three Line charts of multiple bear ETF's as the ultimate trend has changed signal.

Tim Kathlina