It will be interesting to see if they put up some kind of fight the next couple days. There's 2 weak areas of support and 1 stronger line of support left. But we'll get to that.
Another point of interest and something I mentioned a long time ago. We have super confirmed death crosses in this market. The 50 is WAY below the 200 and the 100 has also crossed below the 200. ON TOP of that, the 200 is now sloping downwards and is no longer rising. That exact situation is what happened shortly before we had a decent rally back to the 200 and then the hefty market crash in 2008.
Could we still rally to the 200 before really selling off? Yes. In fact, I believe its almost necessary. The question is the EW count right now. Most EW bean counters believe we have 4 finished waves in the current pattern, meaning theres one more decent downmove to go. After that will come a somewhat powerful rally. THAT is probably what will get us back to the 200dma. And THAT touch is where the real plunge will begin.
That plunge will be EPIC. It will probably rank 1st or 2nd in percentage plunges in history. It will be one of those sell offs that will flush out many shorts along the way simply because they will believe the market must bounce at some point, yet it just keeps going lower with a few very violent and very short lived bounces inside to clear the bears. Bear markets screw bears and bulls. I'm sure some of you remember from last time. Fewer of you may remember from the 2000 bear. (which was my first bear market at the age of 20)
-------------------------
Key Levels
Upside -- 1175, 1204
Downside -- 1145, 1138, 1121, 1102
-------------------------
SPX Daily;
There's our last few lines of support. We have the bottom of the bollingers at 1145, we have the last trendline support at 1138. Both of those are mild support. Then we have stronger support at the closing low of 1121. And then again, more mild support which wont hold at 1102 which is intra-day low support.
If we get below 1121 again, it's all over for this range and we'll head to the low 1000's.
The low 1000's should complete this pattern and start a powerful bear market rally. Our first powerful bear market rally of this cycle. It will target a fake breakout over the 200dma. (wherever it happens to be at the time)
THAT point.. will be the short of the century. It will be where you want to go short and not look at your computer again until we print S&P 500-600. It will be difficult not to get scared out of your position. It will take nerves of steel.
Another bear rally will follow and then the final plunge of this cycle which I believe will finish between S&P 350 and 400.
At which that point will be THE BUY of the existence of the stock market. You dump 10 grand into stocks at that point when everything will look horrible and like the world is falling apart probably sometime in 2013 or 2014 and you will become a multi-millionaire.
It sounds easy but will not be. The plunge will be so dramatic, it will take nerves of steel to remain short and if you get pipped even once,.. it will be moving so fast to the downside that you'll never get back in.
At the bottom, it will seem so horrible that you may think nothing will ever recover. It will again take nerves of steel to put your money back in.
You have to remain calm and remember the market has given us a map ahead of time, just don't let it take it from you.
---------------------------
As for tomorrow.. The next 2 days is tough. I still would not be suprised by a real push to shore this up for EOQ. We could plunge though.. they are running out of time and may give up. Especially if their current positions are already hopeless as far as redemptions go or if there's bad news out of Euro land overnight.
GL
CJ
1 comment:
All we going the Rastani way!
Probably fast and furious.
Most of the MOMO(CMG,AMZN,AAPL) guys are down except NFLX. Can we create an index based on market cap held by hedge funds of these momo guys and track that as a forward indicator?
Thanks CJ for your effort.
Post a Comment