Today we look at the trading day, as we got exactly the action we expected, a move to 107.30 on the SPY. We also look at the longer picture on the monthly charts, and explain why the month of January was the most bearish month since February of last year. We also look at other stocks like GLD, FCX, and BPI where we expect a bounce. We expect the month of February to have more downside, but in the short term monday-tuesday should be up.
http://www.cnbc.com/id/35143567 I just hope these suckers are wrong… no one wish for market to crash… long live America
American will live, but the markets are going to get hit hard… i’ve always thought so, and this guy just confirms my belief.
It is not good for the economy and market that the market just go straight up. Market needs correction and that is healthy for the market and economy. I have been waiting for at least 10~20% correction which could bring the S&P to 200MA and after that around 950.
A cheerful growl from another bear cave:
http://www.shadowtrader.net/videos/sunday100131st.html
He uses simple analysis based on broken uptrend lines and support levels, with the latter havng become resistance, He sees indices dropping to next previous support levels: S&P to 1035-1040, Dow to 9700, and NASDAQ ($COMPQ) to 2015-2020 over the next 2 – 3 days before likely bounces from support, with the dropping and bouncing repeating so as to complete a rounded top, constructing right shoulders for a complex multi-neckline H&S. He says the slow rounding of the top may frustrate impatient bears before the plunge picks up steam, but mentions that such topping action is usually rounded in this fashion.
Most of what he says seems okay, except for some missed support levels. I think he overlooked a significant Fib level, which resisted, then supported, for months (61.8% from 2326 to 2024 = 2139) just under $COMPQ’s Friday close at 2140. Two sets of Fibs also have influential levels near 2100 (76.4% from 2326 to 2024 = 2095 and 38.2% from 2326 to 1727 = 2097). Resistance to bounces above 2140 could come from strong Fibs at 2175 (50% from 2326 to 2024) and 2185 (23.6%% from 2326 to 1727), along with a couple of H&S necklines just above and below them.
Static chart image: http://i45.tinypic.com/icuu81.png
Similarly, $SPX has a Fibs at 1075 that we can’t really regard as broken yet, along with a clear horizontal S/R line at 1070, with bounces possibly resisted by Fibs at 1084 and 1090, with a couple of (somewhat far-fetched) H&S necklines that I did not bother to draw:
http://i48.tinypic.com/2qbgpib.png
The Dow looksmuch the same:
http://i46.tinypic.com/2aj1cli.png
Note especially the strong S/R zone at 9920 ish.
I have been enjoying the ride with TYH, but might have to wait out some consolidation beginnng a bit sooner than the video suggests.
Or mabe not:
Thus spake http://evilspeculator.com/?p=14411 (abridged):
“the bigger waves in a market move (down in this case) are more worthy of attention than the retracements (as in the counter-bounce we’re still waiting to see).
Corrections fall faster that advances rise (and with more energy).
Big moves in a market surprise nearly everyone in terms of magnitude.
… there has yet to be any serious crash-type panic or dramatic wash-out volume
the succession of down-only days is not bullish, nor indicative of am imminent bounce.
Participants have woken up to the fact that something is wrong, yet nearly everyone has focused more on -where a market might bounce
-where and what might be good to buy
-what higher level might be good to sell or short
Very few are calling for selling now (athough selling now has been working for several sessions in a row).
Bears (for months) now talk about why and where we should bounce. Somehow most priced themselves out of this move.
If you think sentiment is getting extreme and that means the market should bounce now on Monday…well, maybe it will…but understand that fresh moves downward which end the weekly badly have set up for dramatic down-Monday’s in the past.
Everyone turning negative suddenly, at this juncture in the move, is a negative in my book (the market can in fact sell-off when everyone is suddenly selling; shocking as that seems). This is a negative at the moment, not positive.
Monday’s have been by far the most positive day for the market since the March lows. Therefore, Monday next week should be a good chance for a bounce, right? Well, sure, . . . UNLESS SOMETHING HAS CHANGED now in the rally from the March lows. If something has changed, then Monday could teach us a little about drama (and impress upon us that nothing yet had been very dramatic). . . .
Repost from Friday …
Fritz – thanks for sharing
You mentioned upside tgts for all the stocks … however you also mentioned that you are expecting a rally possibly upto president’s dau, however for some stocks you mentioned that you will get out Feb 4th ..
Are you expecting 4 days of upside ie Feb 1-4 to reach those tgts ?
iE.g. VALE closed at 25.5 … you mentioned you bought calls through till 30 expecting them to become ITM …
Can you share how you are planning to unload the positions ? When they reach their tgt or by date or some other reasoning – specially since you are expecting upside to continue further in the month ?
Thanks
The reason I am asking is that Richard mentioned a turn date of Feb 4 (I am assuming that means bullish Feb 4 onwards) and Zee mentioned bullish first 2 weeks of Feb ….
So trying to understand the thought process for closing calls on Feb 4 …
Zee / Richard – pls add … since you also are following some kind of cycle theory
^ Calls could lose all it’s gains if you sell too late. You want to take advantage of this high volatility too IMO.
Because of the engineered Christmas rally I do not take my model seriously for these first 2 months but i put it out since it has been accurate these past few months. For discussions sake, February 1st is a minor cycle low–it is being confirmed by the fact that the $CPCE has been in 2 straight days of readings over 0.70. Too many ppl are protecting themselves. For this reason alone, the market will move in the opposite direction (which will not be sustained 5-7 weeks down the road.. unless of course we break 1110).
One interesting point, we broke support (1080) that is why the high probability factor is removed and is very risky.
If you are long, stops at 1060 guys.