Sunday, June 21, 2009

What I Think Happens This Week In The Market

IMVHO the bulls are losing the top of the first hill of the mountain. The insurgent bear force has been fighting back and as the volume and candles indicate the bulls are weakening. While slowly taking the foot hill one step at a time, they have taken the top.

In my opinion the manipulators are going to allow the bears to push back in order to promote the classic bait and switch move on the unsuspecting bears. Draw 'em in and slaughter them is the tactic I think we're gonna see. Set up the short squeeze for the easy money cover is the best and possibly only method "they" have do drive the market higher. This will be a calculated move.

The daily, weekly and even specific monthly indicators are showing the turn. No one denies the market is overbought. A proper pullback has not occurred. OpEx is behind us. The P/E is not sustainable. GOOG and AAPL and the whole COMP appear to be ready. The financials are struggling with a top. Any further rise in the 10yr treasury may just spook the market.

As previously stated, there are a lack of proper divergences on the weekly indicators for a sustained turn and this fall will provide the depth for these divergences to be set up (The final push up the mountain). This fall may be swift as most have been on this run up. Now I'm possibly seeing a completed 1 wave down and in the process of completing a 2 corrective which could run a little higher than drawn. Three happens this week (and possibly 4 and 5 waves as well).

I'm of the opinion that this will have to look like a real move south and it could be significant for them to suck in enough shorts for the desired effect. At this time I'm looking at the 38% retracement of the whole move up which gets us to the 845 level and the 100ma as a stopping point. A nice 5 wave move measures out nicely to this area.

Click here to view the DAILY and WEEKLY indicator charts.

I am more than likely dead nuts wrong on this theory, but I like it. I believe the indicators and sentiment are there for a pullback. Insiders are selling. The candles are screaming weakness. Only time will tell. The Market has been trying to roll over for some time now and maybe this is the week. If not, it is coming soon.

Thanks for your views and comments. GL trading this week.


  1. Dude. You have P2 on the brain and it's messing you up. P2 would require a break of the downtrend channel which history has shown is far more powerful than any count or fib.

    Consider this son. The top in 2000 was a III. We are in a C of an A-B-C forming the IV. The C leg, which began in 2007, will have 5 legs and should stay in a channel. We just finished the 4 when we hit the larger upper trend channel line to start the 5 where the new low will form and the panic selling will finally occur. It did not occur in March. I repeat - it did not occur in March. That should make you very skeptical about the 5 being "in."

    The bulls had a chance to break out of the channel 2 weeks ago and it was a massive failure. There are NO buyers, including shorts! That was clear that Thursday when 950 was broken and we went briefly above 950 to 956 (at the trendline). You'd think there would have been huge short covering. Nope. No new juice to go north anymore. It's done.

    Trust the channel:

    Another argument that the SPX won't be able to break 956 is that the INDU is capped by the decades-old 200 month MA, plus its channel. If the INDU is trapped, so will be the SPX.

    As usual, the market will fool the most people, and the mainstream EWTers likely will be in that group. Note that they called the "5" 4 times in 2000-2003, finally getting the last call right. That should tell you something son. With so many so-called experts in alignment, and their sheep in tow, the same thing is happening again.

    I appreciate your charts, and sometimes your rants. The sag and mini-lift back to the downtrend line over the next 1-3 months will allow the weekly divergence to kick in, then the rug gets yanked.

    I'm done harping on this. Trust the channel and trust the charts, and trust that the fundamentals (earnings and growth) ultimately determine sustainable prices.

  2. Shanky, World Bank countered Friday's "Expected Economic Upgrade CNBS News Story (if I recall it correctly!)" and stated "The World Bank, which has recently cut its forecast for the global economy to a contraction of 2.9 percent from a projection for a 1.7 percent decline set in March, released details on individual economies for the first time on Monday." This is almost a 100% INCREASE in the projected depth of this depression. I wonder how the green shooters will spin this one. "Disappointing but came in better than expected?" :) Regardless, Futures are looking UGLY this morning. Looks to be a good trading day. Good luck all...


  3. @ S135 - Channels are made to be broken. I do have P2 on the brain, but I am also willing to see it fall from here. It is just not ready yet. If it is I am prepared.

    @ Michael - Nice news to get my plan started.


Keep it civil and respectful to others.