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Thursday, July 23, 2009

Bullish Sentiment Update

Bullishness is still diverging. I found a small example on the last wave 2 rally of significance, the Intermediate (2) in Spring 2008. Its instructive I think.

The continued divergence, portends even higher prices to come (eventually). The market is due of course for some kind of consolidation first. A consolidation move (the B wave pullback I am looking for) would have the effect of also consolidating bullishness as long as prices maintain support levels more or less. What levels? I suppose 950 was a key resistance battleground area so the market will attempt to maintain this major level.

I used to think a dip to the 930 - 934 support area would occur (and it still of course may - its certainly not out of the question) but now since the market ranged high above 950, I think they aim to basically keep the price retrace extreme above or near 950 support. What was major resistance, becomes major support. So more consolidation at or above 950 would allow the final run to 1000 and above in a final C wave move.

If it dips lower than 950, it might be quick. There are a lot of shorts I imagine still trapped and/or doubled or even tripled down and getting nervous.

Anyways that's my current thoughts at the moment.

15 comments:

  1. good data dan, though consider the BYNYA which is much more broad than the BPSPX and is hitting, now as we speak, a common topping value that was topping point for the Jan 09, Oct 08 and 02 highs in bullishness. as i said, i have a lot of conflicting signals, though most are more alarming to the down side

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  2. JB, price action and technicals paint a picture that prices (after a consolidation) will indeed move higher. You can bet they want 1000 and above.

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  3. they want 1000 or higher but that waits until september. this rally is over. the question is how far down.

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  4. In your chart 61.8% retrace from the bottom does come out to be in 1200s SnP.
    Do you think it can get there?

    I put my novice count on SPY seeing the whole P2 as a big ZZ in which case it can get there. Here is my chart. I know you don't agree and I too doubt the 5 count in A wave.. Here it is anyways

    http://www.screencast.com/users/rbharol/folders/Jing/media/516ba78e-9c4e-4569-8064-b80cc9619bf8

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  5. RB your count actually works and kenny has propsoed that several times, even now.

    It does have merit and obviously if the market heads above 1044 (thats about my max high) then it may prove correct.

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  6. Think of all those poor (and I mean soon to be really poor) people that jump in long mid-August just coming back from vacation thinking a new bull market has begun!

    Regarding the bottom...think about it. Probably near 650 so to give the illusion of a double-bottom and then the cycle will repeat!

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  7. it's going to be ugly except Dan states October and his chart is for October.

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  8. Does this comport with your thoughts on bullishnes? I'm not a big CPC guy but CPC looks generally inversely related to the market and appears more bullish now than in August 2008.

    http://stockcharts.com/h-sc/ui?s=$SPX&p=60&yr=3&mn=0&dy=10&id=p73919345274&a=172907756&listNum=7&listNum=7

    Just a thought, not much time in it.

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  9. Nailing the retracement level to a 4 point range is kinda silly, no offense. It will probably retrace to 900-950 before the final thrust to 1050.

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  10. Dan-
    Quick Q about your comment in Green Box on "Bullish Sentiment Update".
    You state: "It diverged here after initial pop above resistance."

    You then draw two lines with down slope on earlier comparison graph and up slope on the more recent activity.

    As I follow the graphs, I see from the left anchor points a drop in both graphs with a steeper drop to the bottom. The lower graph has a cut that is much narrower than the upper graph.

    Now: When I follow the sharp ascent on both graphs, there appear to be "resting points" on both graphs. You connect your upper anchor point to this resting point on the upper graph but not on the lower of the 2 graphs. The upper graph takes longer to get to its next peak but the peaks conform, both before and after.

    Should your connection to the anchor point on the lower graph been at the ~ 1360 resting point?

    Not that it matters but...

    CW

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  11. Mark,
    There are people I know, at work, who are invested in stocks in 401Ks.. Lost more than half in P1 and now they think that was the worst and now it has nowhere to go but up and are still putting money in.

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  12. RB,
    I moved my wifes to bonds back in june when we hit 956. she's up 4% since then which is about this gain here. so it's a wash. i sleep better knowing she is protected. once we have the correction i will go long for the next leg up. then back into bonds for the ride down. she should do ok.

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  13. Dan - Good post. I agree with you that 950 is probably as far down as we go. Of course, I would like to see us dip even further before we resume this run. By your count, any chance you see us dip below 930? I personally can't see it given too buyers lurking, but wanted to see what you think. Thanks.

    -Toastmaster
    http://tradingwithtoastmaster.blogspot.com/

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  14. interestingly Kenny is calling for more upside today. I guess we shall see soon.
    should be fun or not.

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  15. Dan,
    do you expect more upside today ?

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