In a bull market, we would expect this pattern to fail; not so in a bear market. I expect the action/reaction dynamics to kick once the Head-n-Shoulders IBM pattern breaks the neckline. This will bring in a short trap, and give us the final S&P push to new highs for 2012. -Tim Kathlina Jan 7th
Today's IBM chart shows the H&S pattern was successfully denied, as we anticipated. Once the neckline was broken, the Washington plunge protection team went into overdrive to ward off the beginning of a broad market P3 sell off.
I indicated in Jan that IBM was the uber bull stock and the one to watch for signs of market exhaustion as a leading indicator. I posted this chart that divides IBM:SPY and noted a change from years past.
It appears that the successive QE programs have inflated the balloon, unlike 2009 and 2010, by the end of 2011, forming a distribution Diamond pattern. This pattern points to a long term top of some sort.
Today, the same IBM:SPY sub division confirms the BEAR DIAMOND; the pattern resolved lower. RSI has moved into a clear downtrend and MACD has a bear cross.
This is a long term OMINOUS SIGN for the broader index's.
Jan 28th I posted this SPY chart and stated:
If we take the weekly chart from bottom of Wave 1, to the top of Wave 3, its 31points. 5th waves tend to equal .61 of other waves. If we take the bottom of the 5 wave, add in 18 points we come to a price target of 133.
Next lets look at length of time. Counting from October low, we are coming into the 180 time frame from the low. The divisible numbers by 3 are strong point and time areas to look for tops and bottoms. So anytime between now and Feb 8th is a strong place for market turn.-Tim Kathlina Jan 28
Tomorrow is Feb 8th and the SPY closed at 134. So, we are correct on PRICE, will we be correct on TIME?????
If we are not correct, then here is the alternate evidence view points.
I. There has been no pickup in volume, in fact just the opposite. What does this suggest?
A> The end of Wave 5s, volumes tend to rise sharply. This has not happened; suggesting that my above counts for a truncated wave 5 are incorrect. This is why I have said, DO NOT BUY leverage Bear ETFs until the count is clear, other then VIX because of defined lows. (People get nervous the higher the market goes)
2. If this isn't a Truncated Wave 5, then what is the option 1 count and projection?
A> The likely probability is we are in a Complex SUB DIVIDED Wave 3, with the top between 137.54 to 145. (I have noted the alternate count on the chart below)
B> This probability is high as RSI<14> has not gotten overbought, (strange as that seems), and volume continues to move lower.
C>When wave 3 is complete, expect a 38% Fib retract to symmetrical SPY 109.85 to complete Wave 4.
3. Option 2 count (Be prepared to be scared). This of course is low probability at this point, but here goes.
A>Assuming perfect SYMMETRY between the 5 waves of the 2009-2010 move,
then 2011-2012 math works out to be S&P 1700 for a top. OUCH!
Conclusion:
As I write this CHINA is down almost 2%, yet US futures are indicated slightly higher. Feb 8th is 180 time cycle, and our last top chance until end of the month. If tomorrow doesn't roll over, by Friday at most, then alternate counts noted above, which are SPY 137-145, have to be assumed.
The markets are no longer a function of price discovery based on historical measures, like debt/assets, price to earnings, etc, etc. T.V. pundits will justify any upside pricing the market provides using these measures; ie cook the books.
The fact is the markets are solely a function of liquidity; air in the balloon. The air is the velocity of money, printed out of thin air by Central Banks, backed by nothing, each representing additional debt slavery hoisted unto mankind for the sole purpose of servicing the Banking Oligarchy; of whom stated goals are of a New World Order and population reduction, otherwise known as Eugenics. (ala Hitler,Stalin,Obama)
Due to this money printing, and the belief by Keynesian traders that they have no systemic risk, STOCKS CAN GO MUCH HIGHER, BEFORE D-DAY.
The bubble will burst, just as Japan Nikki did, going from over 40,000, to under 9000, 20 years latter.
The best that we can do, is game the system as it is, NOT as we want it to be.
In other words, assuming S&P 1700, then you want to be long the most shorted, overvalued stocks you can find. (Thus our Brand Names that Got Killed Trade List) Because those are the shares that will get pushed to unreal highs by these banking elites.
Not because they believe the company story, because NOBODY else does and the Bankers have UNLIMITED CASH, at NO RISK TO THEM. They can squeeze the shorts until there is not one single one left.
Lets see what happens the rest of this week.
Tim Kathlina
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