• 4 hours Airlines Could Recover, But Crew Remain Elusive
  • 4 hours Meet The Man Behind The World's Most Exciting Oil Play
  • 1 day Crypto-Mining Immigration Could Be The Start Of A New Trend
  • 3 days Hawkish Fed Sends Gold Prices Crashing
  • 4 days Bezos Is Heading To Space This Sunday
  • 8 days El Salvador’s Surprise Bitcoin Move
  • 11 days Markets Unfazed As Inflation Hits 13-Year High
  • 11 days How the Token Economy is Disrupting Financial Markets
  • 13 days FBI Investigating 100 Types Of Ransomware Attacks
  • 15 days Fed Ends Corporate Credit Emergency Lending Program
  • 17 days AMC Becomes the Latest Winning Meme Stock After GameStop
  • 19 days The Real Reason Your 401k Has Been Lagging
  • 19 days China Lifts Cap On Births, Allows Three Children Per Couple
  • 21 days The Market Is Ripe For Another GameStop Saga
  • 24 days Senate Grills Big Banks Over Pandemic Opportunism
  • 26 days Cannabis Has A Major Cash Problem
  • 26 days Ransomware Netted Criminals $350M In 2020 Alone
  • 27 days Russia Is Taking On Google
  • 28 days Chinese Regulators Deal Another Big Blow To Bitcoin
  • 29 days Ohio Residents Brave Vaccine for Chance To Win $1M
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Clive Maund

Clive Maund

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports.

Contact Author

  1. Home
  2. Markets
  3. Other

SP500 Index update - End Run Smash Looks Imminent...

Originally published September 19th, 2015.

The market didn't waste any time "getting on with it" yesterday after the bearish action on the day of the Fed announcement. It fell, and hard. We are going to look at this carefully because what appears to be starting is a devastating "end run around the line" smash - if so a brutal plunge is just around the corner.

A few days back we were a little too accommodating in adjusting the upper boundary of the Pennant shown on the 3-month chart below when the index pushed out of the top of it. We shouldn't have and on this chart we are going back to our original Pennant boundaries, which is important as it enables us to define where the support is at the apex of the Pennant. As you will recall the upside breakout from the Pennant, on the basis of its original boundaries, was regarded with deep suspicion, and it appears to have been the product of manipulation - Fed buying to "paint the tape", especially as there was no such breakout in other markets like the London FTSE and Tokyo Nikkei, where a parallel Pennant had formed. If so then they may soon end up with egg on their faces.

S&P500 3-Month Chart

Other world market indices such as the Europe STOXX600 shown here, and the London FTSE and the Tokio Nikkei, which have similar bear Flags or Pennants completing, did not confirm the false upside breakout from the Pennant on the US S&P500 index before the Fed announcement...

STOXX600 6-Month Chart

Meanwhile, the Transports, which had a surprisingly big recovery rally after the August plunge, are perfectly positioned to drop away hard after failing at downtrend line resistance with a bearish "Shooting Star" and then breaking down from their recovery uptrend...

Dow Transports 6-Month Chart

The market is at a critical juncture because yesterday it dropped to the support at the apex of the Pennant. If this fails - and it is expected to perhaps after a minor bounce - then we will quickly find ourselves in an "end run" smash situation, which is what happens when a Pennant or Triangle breakout fails in this manner. The market should drop away fast, perhaps like a rock, and the downside target for this move is 1730, which it could easily exceed. However, if it doesn't slice through the support at the August lows in the 1870 area and sticks there we may ditch half of our Puts there for a good profit, and let the rest ride. We'll see how it looks when it gets there. With respect to nailing the get out point for Puts, the Transports chart shown above is helpful as it gives us a potential downside target at the lower boundary of its expanding downtrend channel.

 

Back to homepage

Leave a comment

Leave a comment