JP Morgan looking toppy.

It's been a long, long time since I posted anything about any bank but I have been keeping an eye on the charts.  Today I finally decided that banks are likely to be very close to a top.  Thus it's time to post about them.  As usual, I'm trying to use my models to predict the turn.   This is much more difficult to get right on a consistent basis than talking about a turn as it has already occurred in the rear view mirror and after confirmations have been received.  Waiting until all the data in is much, much safer.  But in safety there is boredom and so I would rather try to predict the turn of the herd before the herd itself even knows it is coming.  Look at bank stocks right now and there is not a care in the world.  No bad headlines, all up, up and away according to about 99% of the people right now. 

I'm even hearing talk about "improving fundamentals" from the fed.  Again, fundamentals, schmundamentals.  They are a complete waste of time in a fed Ponzi Pumped world.  There are true fundamentals that matter but nobody who knows them is going to share them with you and I.  We are not part of the club as George Carlin was so fond of saying.  What we do know is that if they tell us something then it is likely to be misinformation somehow.  There might be a kernel of truth in it for the purposes of plausible deniability but important info will be left out that removes the ability to take intelligent action.  Or the information will be there if you have a staff of 200 people who can dig it out and aggregate it into something useful.  Just know in advance that the odds are stacked against the small gambler, just like any other casino in the world.  The one and only thing that does not, cannot lie is the price.

I'm not really sure what the larger chart model is for the banks right now but I do see 5 waves up where the 5th wave appears to be close to hitting the line that intersects 1 and 3.  This is usually the signal for chartists to go take a powder on the stock.  In other words, some level of reversal is likely imminent.  I expect some form of reversal within the blue circle.  If JPM pulls back then all of banking will too and perhaps the broader indices will pick up speed to the downside as well.  The inset chart shows two levels of pullback to look for.  The first, light line reverses back up at the small prior 4th.  This line is thin and light in accordance with the probability that I assign it happening.  The darker heavier line shows the more likely route according to my current model.

The arrival at the turning point in the blue circle could happen in a day or it could take up to a couple weeks to play out.  So for anyone owning these stocks the right play is to use tight trailing stops.  I'm talking 1-2% here.  And once you get stopped out, expect to stay out for several weeks at least.  It would not surprise me to see a decline to the $50 level followed by an a-b-c back up to form a declining double top before the big breakdown occurs.  That has been a very common topping formation of late.  In any case, the easy money has been made on the bankster stocks.  Punishment is likely not far off.  Again, this is more difficult to be sure of given that the stock is showing no signs of weakness.  I'm going by the wave count alone on this so it should be an interesting thing to watch.