The 61.8% Fib retracement of the move from the October 2007 high to the March 2009 low on the S&P. is 1228.74 On Friday, we reached 1227.08 before closing at 1225.85.
We are entering the second week of November. If we get a top this week as forecast, we should begin a topping process where we move sideways several days with 1229 serving as significant resistance before turning over. If we carve through 1229 with ease, then look for a blow off top that fails spectacularly.
A word of warning: the Dow and Nasdaq have already left this 61.8% level behind. In the case of the Dow, 61.8% was 11246 (retrace from Oct '07 to March '09). The Dow's April high was 11258, so 61.8% worked as resistance for the Dow in April. But the Dow was up to 11444 on Friday.
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We are off slightly here at 3:30 PM, but my assumption is that all three indexes "confirm" on the .618 FIB penetration.
ReplyDeleteIt just feels like a blow off is in the works, but who knows since this is a POMO day. The new POMO schedule should give us some clues.
I should have added that the IWM easily penetrated the .618 FIB line quite some time ago.
ReplyDeleteAnyone looking at global stock markets and how they will impact the US market?
ReplyDeleteOf note is the GM IPO scheduled for the 17th. Doubt the market goes fown much in front of Uncle Sam getting some $$$ and the brokers making some $$$.
ReplyDeleteThoughts on could the market extend higher after expected null echo low, before 40 year cycle takes hold? I like these comments from the Mad Hedge fund trader (recommend following him) and also signing up for long-short timing and their intermediate market turn signs to go long or short the market: http://long-short-timing.com/Equitytiming.aspx
ReplyDeleteAlso read John Hussman's article from this morning:
http://www.hussmanfunds.com/wmc/wmc101108.htm
From Mad Hedge Fund Trader
3) What the Election Means for the Markets. Who really won this election? I did! It is setting up trends in the global financial markets that will be easy to identify and cash in on. If you want to jump on my bandwagon and get a peak at some market timing, then keep reading this letter.
While voters may be enthralled with empty promises, platitudes, spin, and sound bites, markets clearly aren’t. Like a huge, dumb animal, they respect only the remorseless mathematics of supply and demand. QEII is still the principal driver, the first $600 million of which we got today. This promises to lift all boats, especially the yachts, to year end, and possible through Q1, 2011 (click here for “Contemplations on Risk”). When it ends, the full impact of this election will bite. This will be the outcome:
1) There will be a major sell off next year, not just in stocks, but in all asset classes. The election results increase the certainty and the severity of this event. Volatility (VIX) will rise across the board.
2) The deficit will rise faster. The debt markets’ breaking point will be reached sooner. This means we will get a collapse in bond prices, no matter how much liquidity floods the system. Whether this happens with the national debt at $15 trillion, $18 trillion, or $20 trillion is anyone’s guess. We are headed towards all of those numbers trapped in a runaway Toyota with the accelerator stuck on the floor.
With the administration and congress gridlocked, the Federal Reserve is the sole functioning branch of government, and creating inflation is virtually the only thing they know how to do well. This nicely sets up my (TBT) trade, one of my core shorts for the coming decade.
3) A flight to safety will trigger an extended period of dollar strength. This is bad for stocks, commodities, emerging markets. Flip the “RISK OFF” button. This sets up the crash in the yen, my other core short of the decade, and bodes well for the (YCS).
4) Since many conservatives believe that global warming is a leftist hoax, you can expect more favorable policies and tax treatment for oil, natural gas, and coal. Expect dependence on foreign energy sources to rise and crude prices to rocket. The congressman who apologized to BP for it harsh treatment is now the chairman of the House energy committee. The Bush administration took oil from $20/barrel to $150. Expect something similar going forward. The giant target on our backs in the Middle East stays there. Buy your electric car now.
Sorry, guys, but read it and weep. As with a World Series umpire, I call them as I see them. This is the letter where hard data and facts trump uninformed opinion every day of the week. There are thousands of letters out there whose primary goal is to make you feel better. This isn’t one of them.
The global stock market is likely to be one reason the US market stumbles. With groth stories around the globe it makes more sense to allocate more cash to places like India, China, Brazil and emerging market economies. I want to give caution as well on the US Markets. While symmetry calls for a top it may not be the top. I am doing some other research that is looking at different topping dates. longer range cycles do not agree with the bull market ending here. End of current rally phase maybe but end of overall bullishnes unlikely. Nothing frin to report yet but I am saying just as the August 27th topping date became a low do not look for the time symmetry to be the end all. Be prepared to act but only when market action dictates that action.
ReplyDeleteSteve Cabana is just advertisement. I run three different websites and never have to mention any. This is a chat board not your personal promotion page.
ReplyDeleteThanks for the heads up, Jeff.
ReplyDelete