Today went pretty much as I expected thought the bears had a little bit better day than I expected. The bulls didn't want to go out without having the Dow close above 8,000. It closed at 8,017, which will be good for the weekend talk shows and should bring money into the market that's currently sitting on the fence.
As the SPX (the S&P) price is touching the top of the red bear channel line D as shown in the graph, the bears have to get prices to fall decisively below the bottom bull channel line B during the morning of trading day on Monday. Unless this is accomplish by a much lower opening price on Monday, it is likely the bulls will toy with the bears in the morning and let prices drop along the top of line B as they did on Friday, then when it approaches red line D, the bulls will shoot prices rapidly up through Line D. Either that, or the bulls shoot prices up through red line D in the early morning. If prices go down to touch green line B in the morning, it could be looked at as a buying opportunity as I expect the market to rally on Monday since the Dow closed above 8,000. It is likely the Dow will go back down to 8,000 as a retest, then jump from there.
The monthly, weekly, daily , 60-min, and 30-min stochastics are all on buy signals. However, the daily, the 60-min and the 30-min are nearing or at the top of their range showing an over-bought market. The 15-min stochastics is indecisive. Keep in mind the market can continue to rally even though most indicators show we are extremely over-bought short-term. A correction will eventually be needed, but it may only last a couple of days. Eventually a longer term correction will take place, but I do not expect it to occur this coming week before the market goes up significantly.
This should be a significant market rally that should not be missed if you are interested in making some money. Like I said before, I have difficulty believing this market can rally given all the bad news and the truly dire state of our economy. We're monetizing massive amounts of debt, the Fed is having big trouble selling our debt, they say more bailouts are needed, our leaders are giving away our currency hegemony, and we are proposing a $1.7 trillion deficit this year with no end in sight. Nothing has changed from last month when we went to new lows, but the market wants to rally.
This is a bear market rally and if you are going long, it will have to be carefully watched. Pull backs can be violent, but excluding a black swan event, I think we have another week left in this rally. And some analysts I trust say several months; though there will be pull-backs.
I will post my main sentiment indicators graph some time this weekend. Though the new day-end data won't be available until 6:00 PM EDT, as of now, the only indicator with a bearish signature is the CPCE, which has spiked up. It is my understanding that rather than sell stocks, a lot of investors are buying puts to protect their positions after the market run-up over the past few weeks. If the market continues to rally, they will likely sell them; thus raising the overall put/call ratio.
No comments:
Post a Comment