I'm struggling with calling for more upside here given the daily indicator's positions and the requirement of a whipsaw to get them going back positive again. SPX sitting on 61.8% retrace from the 866 low to top right now. The 100ma and 888 support are just below. Just filled a small gap at 889 on the 5m chart. Lot's of crap right here. Nothing to stop it between here and gap support at 878 which takes us to 875. At those points the count is toast IMO, but I'm NOT a counter and did not stay at a Holiday Inn last night. I'll mess with anything, but not counting. That is for Dan and K Meister.
At the time of that post (Toot, Toot on 5/7) I was drunk on the 200ma theory and deep in the manipulation theme (not that I have left it). Looking at the FAILURE (finally) of the 60m indicators to pull this one back up again I'm thinking we're headed south here in a larger way than most think. Breadth and other items don't look good. Looks like we're leveling out for lunch here.
Not willing to call a TOTAL breakdown from this point given my EUREKA post yesterday. Unless the banks need a slightly lower price to get their additional shares out the door they will support it here (or at whatever agreed upon price they want the shares at). $DJUSFN is breaking down, no doubt about that IMO. GS and bank movement may signal some discourse in among the ranks! Is someone going to get left out to dry? In the EUREKA post the first article was about the FDIC planning for a big failure. So maybe we need to figure out who the last one to the share dilution window was and that is our great short opportunity. Why not eliminate the competition? They are a bunch of greedy back stabbers.
Bottom line is I'm leaning on a pretty sizable pullback here based on the SPXA50, the Weekly STO bear cross, the Daily RSI trend breakdown, trend lines giving away left and right and several other indicators. Gotta call what I see here. I have not bought (or should I say sold) this yet and am not willing to rule out a whipsaw of great magnitude. It is just a tough damn call. 6 months ago I'd be pot committed on these signals, but I am ZERO in at this point (not for long though). Unbelievable.
GL everybody.
Up, down and sideways into the fall with something around 720 for an intermediate low and then south from October to 500 +/- 100 range by Jan 1; trade between there and 950 through 2012. I hope for this best case. The potential downside is so much worse and so much more likely.
ReplyDeletedon't like your new format. Please write shorter sentences and don't go off topic
ReplyDeleteGlad to see you looking at TA and not EWT which is so easy to be fixated on. Look at all the K/DA-followers expecting that 5th of A to 950 with a dream of putting on the big short when the 5th appears to have ended at 930, a full 50 points ago and likley never to be seen again for years.
ReplyDeleteNo one knows the timing all that well, but the ultimate direction is clear. Bear market bottoms are made when the PE and Dividend yield are close to each other and generally in the range of 6-10.
The SP500 PE is now 62 and the Dividend yield is 2.9%.
Looking at GAAP earnings estimates, provided by SP500 companies and not the notoriously-wrong analyst crowd, the 2Q09 and 3Q09 earnings total will be $6.64 and $7.46, equal to a $SPX price of 66 and 75 at a PE of 10. 4Q09 and beyond might actually be no better, so a plunge well below 500 on the SPX is clearly being justified and historically has never been able to be avoided.
The FED keeps saying growth will return in the second half but they have been consistently wrong forecasting the GDP because they want to believe what they are doing will work, when in fact it isn't and can't.
The FED and BANKS can't make people borrow or spend, and without this, the economy will continue down until prices are so low that we are compelled to buy and invest. That is not soon.
Since I don't see earnings improving over the next year, the market will drop to match. It always has.
Look at Spring 2001, which I believe is where we are at in our Bear. People then expected a mid summer rally after the May peak and pullback, but it keep falling, seaking value. I think that is what will happen this summer and not the P2 A-B-C idea telegraphed by so many.
Trust the charts and not the count!
Amon post 1 - potential for downside is much greater, agreed. I think the recovery will take longer.
ReplyDeleteAnon post 2 - sometimes i get long winded. sorry. I had a lot to cover and don't think I was redundant. I try to cover the "short but sweet" blog rule #1.
S135 - TA is the best and number one in my heart and always will be. I just try to use both to my advantage. EWT has been less than optimal these past few weeks given the market, BUT it has been an unfair manipulated piece of crap in EWT's defense.
Thanks to all for the comments and the visits.