First rock of the avalanche?

http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=6&dy=0&id=p97142210271&a=214966864

Two views of the S&P.  The nearby view in the first chart prompted us to put on some hedges to our positions in the SPX and the Qs.  This is strictly a trading move.  The second chart shows what we really expect from the market — 1550 calculated by the PnF method.  Longer term readers may remember that we calculated a target of 1565 months ago — a letter that was quoted by Barron’s.  Our trade here is based on the low VIX, the length of this waveup, and not least the suspicious volume two days ago.  Our readers who are generally not as antsy as we are will sit patiently through what comes next while we run around in circles.

In the COMPQ the PnF method looks for a target of 4410.  We would be not at all surprised if this target should be reached.

Of political interest Victoria Bassetti (firstborn daughter) has published Electoral Dysfunction a book about the electoral mess in this country.  Kirkus Reviews called it “delightfully provocative”.  It is the subject of a PBS documentary and is excerpted in the October Harpers Magazine.

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This Post Has 2 Comments

  1. alain

    Is there any consensus between you and your daughter about the stock market till election: i.e. I think Obama cannot afford a substantial decline. Although a 5% decline would be in the logic of the nature, Obama may not be able to convince everyone that ‘all is under control’.
    This year, L. Williams did a study to the present election and the stock market.
    Any thoughts?

    Flavian

  2. WHC Bassetti

    Victoria usually defers to me on the market. I defer to her on everything else. It looks to me like the market didn’t give a damn about the election, which is funny considering that Obama’s election meant a rise in taxes– and nobody knew what a Romney election would really mean, except for likely lower taxes, but the market knew that would never happen either.

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