Sunday, February 22, 2009

2/22 - Looks like we're headed up.

At this time futures are up close to 1% for the SPX. What will this week have in store for us? RSI and STO look to have bottomed and broken some long term down trend lines. MACD and ROC have to confirm. I believe (although unwarranted nor deservedly) the market will make a corrective bounce here as either EWT wave 2.5 or 4.5. The corrective waves are ABC formations that can drag out. I think this one will be quick and short with SPX topping at 808 or 827.
The EWTers are digesting where we are. Me, I have learned not to get caught up in making the imprecise counts (I add them as I see them though) and simply focus on the changes in direction these gurus can offer. I prefer to use the patterns as directional indicators and then let the waves fall in. If this is 2 or 4 who cares, just so we know we are going up to a specific range and then down again. I'll have a lot more concern when we know if this is 4.5 going to 5.5. At this time I see the market falling thru April which leads me to believe we're most likely beginning wave 2.5. This buys us some more time for 5 to play out, but it also gives us tremendous downside potential.
There is nothing that should move this market other than greed and some seeing value where it does not yet exist. Gold is intriguing even at these levels. If currencies begin to truly break down there is no telling how high it can get Fear is alive and well for good reason. Things suck and are not going to get better. China is not as well off as Cramer would have you think. We're not spending any money and are a ways away from getting out credit issues fixed. Don't forget that commercial RE has not taken it on the chin yet.
I like to use client calls as a barometer for when to buy and sell. The more buy calls I get the worse it usually is. I'm getting a lot of calls to buy. Not yet. They still can't believe me when I say not yet, but they have not believed me to this point.
This bounce should be brief. March is a big month and should be a real bear. The automakers deadline and the banking report come out. This will give us two huge barometers not to mention earnings for the quarter that will be dismal.
Stay bearish folks and don't get caught in the value trap. Keep your powder dry and stops tight. Good luck!

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