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Thursday, November 12, 2009

Thursday Updates

Good possibility that the MO has turned, and is heading lower!!
Interesting chart, not always 100% accurate, but the SPX has dropped out of the Bullish fan. It is not good to go by this chart alone, but by using it with other charts it can help build a case for a trend change taking place.

That was an interesting day, SPX made a lower low this afternoon, and could be signaling a trend change is taken place. If there is follow-thru tomorrow, we would be back in a bearish trend down. It would be quite fitting for the SPX to have finished up by making a double top, just as the Russell did earlier. I have mixed signs if a new trend has already taken place, and will wait for tomorrows action to confirm if a new trend has taken place. After Stockcharts updates their daily charts, maybe they will have some more clues!!
Breadth was 3.8:1, with decliners over advancers, but the volume was light.
Also the DOW transports have yet to make a new high, to confirm a new bullish trend.
The Omen, 102 new highs, and 5 new lows.

Here are some of the reasons I believe that there might be a couple of days of upside left, before a sell-off begins, and more reasons why I am not Bullish!!

People keep asking why I am Bearish, even though the trend is Bullish?
I hate to disagree, but in my mind the trend is not bullish, The Russell, which has been the leading index is NOT in a bullish trend.
Where has the Russell gone in the last two months?
Down 5%, since making its high. The Russell is a very important index to watch, it is composed of the small cap, high beta stocks that investors love to buy when the risk/reward is on their side. Investors have been selling out of the risker stocks looking for cover in the blue chips because the reward is no longer worth the risk, that is why the DOW and then the SPX have made new highs, investors looking for safety. This is not the sign of a healthy Bull market when major indexes are out of sync and investors are running to safety.
Right now the only way to make money in this market is to trade it, and that is not much better then just sitting in cash and waiting for the market to give a CLEAR signal of the long-term trend.
For me, going long at this point is not the brightest thing to do. The market has no rewards (where has it gone in the last two months?), and way to much risk to be Bullish.
I see more downside potential, then upside, at this point, the Bulls are unable to keep pushing it higher as evidenced by declining volume, and lack of any meaningful upwards price action in the last two months. Sooner or later the bears will get the momentum to push it down.
So if you want to be Bullish, that is fine with me.
I still see a couple more days of up trend possible, before it starts selling off again.
The Elliott wave counts are so out of whack, I am not even spending much time on trying to figure them out, they will become clearer as the markets come together after completing this topping process.
FWIW, long TZA(and in the green)


  1. FWIW, long TZA(and in the green)

    LOL! Beautiful! Same here :)

  2. Excellent! Sometimes it is nice that you step back and say screw the counts.....look what is happening, couldn't agree more.

    Thanks for your hard work and effort. it is a great service to others and I hope it is rewarding for you.

  3. Thanks for your hard work from me as well.

    I believe the rise since mid March has been "asset priced inflation". I've noted that every time more money is "printed" (QE) prices go up- of most things. I note prices of food have gone up( where I live in Sydney between 20% and 50%), govt charges, train/bus tickets, someone said there is deflation if you leave out food, oil, govt charges,electricity,stocks, housing (around where I live way over 10% per year even in last year)...
    Each QE should have less and less effect as to the strength of the rises (2nd derivative flattening if you like to put it that way), with "corrections" in stocks and bonds at appropriate time.

    Black Friday seems an appropriate day to start the decline, closest Friday 13th to Halloween for the US as well.
    Jan (in Australia)

  4. update of my chart.

  5. thanks michael... your charts help me very much.thanks again.