Houston 6 - Bear Market Rally may now be over?

Hi all,
Just to add to the Doom and Gloom, this rally may well be over according to this newsletter I received this morning.


"Technically, the markets are at a very large inflection point with a triple convergence of resistance:

* Cyclical Bear Market downtrend line (RED)
* 200 Day Moving Average (DMA)
* Horizontal Resistance dating back to November

This 2-year chart of the SPX gives a good view from a helicopter of the intent of this ‘Jo,’ but lets take a closer look. For this we turn to the third youngest sister, the Nasdaq. We believe the market has already broken the secondary bull move and is transitioning back to a bear".

http://www.tuttleassetmanagement.com...r_market_rally

If this does go below 8000 in the next week and stays there , then a retesting of the March lows may well happen....

David

 

Well when central bank of the US would struggle to forecast what day comes after Monday, eventually the market is going to be disappointed that the green shoots you spoke of were just another figment of central bank and government's imagination that were just attempts to inflate the balloon of their very confidence based system.

These jokers are telling the world that the US unemployment rate will only reach 9.2% - 9.6% this year. The reality is unemployment is probably already at 9.2% given May will almost certainly be another 500,000+ month of increases in unemployment (given the latest data) taking the US employment rate to 9.3% and you'd think unless something radical changed 9.6% would be odds on to be reached sometime in June.

The idea that the US will not have unemployment over 10% and that there will be a recovery by the end of the year is just a fantasy that the optimists are hanging onto and it's part of the reason the markets rallied, but the market is obviously waking up to smell the roses - the world is still not getting any better AND nor will it for quite some time, and the longer the world stays in recession the more likely the negative feedback loop of negative future expectations will begin to play out.

Even the FEDs forecast on growth is amazingly optimistic. The US contracted at 6.1% in Q1, and no one is forecasting positive growth in Q2, if GDP only contracted around 2% - 4% it'd be considered good and would give the US a first half GDP contraction of somewhere between 4 - 5%, so to hit the FED's estimates of even a 2% contraction we'd have to so some phenomenal growth in the Q4 because most economist and realists would think that 0% growth in Q3 would be an amazing result for the US (of which very few are forecasting mind you) then leaving the US needing to grow at least 4 - 6% in the Q4 to even reach the "bottom" estimate!

How long can the FED keep lying before people just stop listening. The RBA isn't much better either.

The only thing that is going to save the US is inflation and the debasement of their currency (which seems to have started) and this time around I don't think the flight to safety will be largely into US Treasuries.

 

Perky,

I can't open your link !!!

 

Try in here...
Morning Cup of Jo / Research & Analysis / Company Profile - Tuttle Asset Management

 

Haha....Nothing new here...That's what bull trap is all about.
So, just in case...do not leave you home without a stop loss button.

 

Just in time for the end to the short selling ban --- yippee!

 

Looks like the DOW will test resistance tonight.

At what point do we say the bear is dead long live the bull?

 

When Tropo and Chris C turn bullish lol

 

I like to think of myself as a permabear! Permanently bearish!



I'm just not into the whole irrational exuberance thing...

As for when things will turn bullish again, it will simply be when the majority of people are confident again and it could be awhile before that will happen.

That said I'm starting to get a little bullish on some of the emerging markets again...

 

I

You know what they say, a broken clock is still right twice a day.

 

Bundy,

How long is a piece of string?
Above 9000 I would be more optimistic...
In “Houston 5” you’ll find long term levels on DOW.

 

9000 would be about a 7% rise from Fridays close? Bets on a V or W recovery or an extended W patern?

Localy a rise above 4000 would be a good sign by June 30.

 

I would say a combination of W&sideways move, if DOW hits 9090/94.
Locally (XJO), there are few possible ‘bus’ stops: 3920, 3970, 4172, 4345/50, 4388...

 

I dont like being bearish - but at some point soon we will have some kind of correction to this rally. Just how far it comes back is anyones guess.

 

VIX Climbs Past a Key Level, Signaling Trouble for Stocks

VIX Climbs Past a Key Level, Signaling Trouble for Stocks

The Chicago Board Options Exchange Volatility Index, or VIX, moved past 30, a mark it hasn't closed above since June 4. A VIX [VIX 30.74 2.59 (+9.2%) ] reading of better than 30 generally indicates high volatility that usually accompanies stock market drops.
Following suit, stocks lost more than 1 percent.
The joint moves in the VIX and stocks come just a few days after a big investor bet on the VIX caused tremors in the options market.

One trader on Thursday bought 20,000 July VIX calls at the 45 strike and sold 55 strike calls for an overall premium of 42.5 cents in a trade that cost about $850,000 to execute.
The net impact is that the VIX would have to beat the 45.42 level by the July expiration for the investor to make money. The VIX hasn't been past 40 since April 21.
"The last few weeks we've come under 30 and we've been under 30 as investors became more sanguine in their approach," said Andrew Wilkinson, senior strategist at Interactive Brokers.
"This was a standout trade that went against the grain."

VIX Climbs Past Key Level, Signaling Trouble for Stocks - Markets * US * News * Story - CNBC.com

 

Do You think at some point this becomes self fulfilling? i.e. the reports say that when this does xyz the market will drop, so the nervous nellies read that, see it go to over 30 , panic and start selling CAUSING the price to drop.

I think the media plays a bigger part in this than anyone gives them credit for.
My opinion only.

 

The self fullling prophecies have been going both ways, and I think to date the media and general opions has been overly optimistic, when the only real positve in the last 3 months being that this crisis isn't going to end teh world as we know it.

Other than that things are still quite bad and prospects are not looking much better for the medium term, and I think many may be preparing for what will be some very sub par quarterly results.

 

A lot of people believe in all sort of ‘prophecies’.
Current rally is orchestrated by ‘Men in Black’ (not by nervous mums/dads).
Professionals do not give a pink elephant about any prophecy. The only ‘religion’ they follow is money.
Media do influence amateurs, but not big guys.
Duration of the current run surprised a lot of market participants, and some of them claim that pull back is well overdue.

 

I'm guessing Inverse Head and Shoulders...

Cheers,

Dan

PS I have no idea.