Tuesday, November 13, 2012

Update On The NYSE Composite Index


I have shown this graphic probably four or five times in the last six years.  First, when the market was peaking before the 2008 collapse to show how overbought equity markets were.  This at a time when there was record bullishness on Wall Street as I highlighted in the January 2008 survey.   Just as today.  And, then quite a few times since to show upward projections off of the 2008 collapse low and downward projections from the post 2008 collapse highs. 

The NYSE composite is the land of the institutional and professional investor.  It is “the” index encompassing the broadest array of institutional investment.  The S&P is the most liquid futures trading vehicle but the NYSE is “the’ index. 

To date, the NYSE price projection high I have been anticipating has held as noted by the blue line starting at the 2008 collapse low and rising to the 23% horizontal Fibonacci line.  We have been flirting with the 23% line for what is now the third year.   The more price is attracted to a particular level, the more it becomes support or resistance.  In this case, resistance.   This is the third clear attempt to break through this level.  Anecdotally, the third time is usually the last in my experience.  In 2011 we marginally pierced the 23% line and rose up to the red linear regression line that started with the 1982 bull market.  But that attempt was immediately repelled back below the 23% line.

Now, as I have noted on here before, ABC patterns are my favorite for their effectiveness.  There are always two sides to any storm; the front and rear.  And, the rear is always the most violent. 

The two blue lightning bolt patterns above are ABC patterns.  They have three waves of A, B and C.  Sides A and C are the primary waves with B being a corrective wave or the calm before the back end of the hurricane.    These patterns are everywhere and in all time dimensions.  ie, Yearly, monthly, weekly, daily, hourly, 15 minutes, 5 minutes, 1 minute, etc.    Some people would classify that as a fractal for what it’s worth.   Anyway, the two ABC patterns above are both of the same geometry.  In other words, if the 2000-2003 ABC pattern is followed again, we will see a downside correction of about 85% in the NYSE Composite.  And, as noted before, this is my downside projection for a multitude of reasons. (My long-time projection has and remains 200-450 on the S&P as noted on here throughout the years.) 

There is only price in the above projection analysis.  There is no time analysis.  ie, This graphic does not show when I expect this to happen.  It is only upward and downward price projections.  Honestly, I thought there was a reasonable probability it would have already happened.  But, every time there has been weakness, every central banking criminal in the world has squirted the largest amount of money ever, and I do mean ever, as a percentage of the global economy, into this global monstrosity of deregulated capitalism.   All they have done is make the mess even larger and the ultimate outcome even more devastating.  ie, As noted on here many times, financial markets as we know them could completely disappear.  Forever.  That would be a very good thing in the long run.  But not likely for those alive today.

So, let me pull three dates out of past posts.  1995 used to be discussed a lot on here.  What isn’t shown on here is another ABC pattern that starts in 1995 and ended in 2008.  It is again of the same geometry of the other two ABC patterns above.  That pattern is finished.  Now we are in the unresolved downward ABC pattern.  (That is, if one believes that pattern will ultimately resolve itself.)  I suppose there is some chance the NYSE could rise to the red linear regression line one more time before completing this B wave although fundamentals I have noted on here throughout the year would make that a lower odds scenario.  But, austerity coming to the U.S. could have strange consequences in the short term and could possibly give capitalism one final gasp before a massive collapse.  Unlikely given the macro factors.  The second date is 2016 and the third is 2022.  Those are the two plausible downside dates that I have noted before.   Dates when we hit rock bottom in the economy and likely float, likely violently, along that level for some time.   Failure is the best method of learning.   The belief systems of the manifested self simply won’t let go until we experience massive trauma or loss. 

If we do meet this downside target, and it does happen in 2016, that means the next four years of the Obama administration will most certainly be the worst economic collapse in American history.  We already have near 25% unemployment today.  What would it be then?  50%?   What better way to finally cleanse the system?  To awaken those supporting a massively corrupt two party political system and rationalizing votes for the lesser of two evils regardless of which party one supported?  Enlightenment is a violent and uncomfortable process. 

How many belief systems and deluded rationalizations will collapse were that to happen?  All of them.  Including the omniscience and megalomania held by Wall Street criminals and their dimwitted political marionettes.  By the way, a Romney win would not have changed any of this.  Zero.   Both Obama and Romney have proven to be the same dumbed-down corporate state clowns our corporate masters love.   And, if you can’t see that, I suspect you will soon enough. 

posted by TimingLogic at 10:07 AM