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Tuesday, December 1, 2009

Bulls/Bears and some musings

Natural gas is perhaps due for at least another wave up and a 38% Fib hit.
This post talks about how the Nikkei/Dow seem to have a relationship at tops.

If the 2007 top scenario played, out the the Nikkei would be tracing a wave (2) and the DOW making a new high at about the same peaks.

The chart below would show that potential continuing relationship:
There is nothing particularly bearish on this e-mini chart. In fact one could say its working on overhead resistance and sports solid layers of support.
I suppose there are some good reasons to continue having a bullish (or at least neutral) stance. First, the trend is still clearly up as the DOW made a new high today. The DOW weekly RSI also made a new high today so there is no weakness or negative divergence to speak of. The final month of December and the New Year typically supports a rally in there somewhere. At the very least, if big money refuses to sell prior to the new year, where will the volume come from to drive it under support?

The bears, including me, keep sighting the non-confirmation in the indexes. Eventually this will "bear" out and prove to be meaningful, but for now the blinders seem to be on.

Also dollar watching has become a huge sport. What I hate about the dollar chart is that it has a very well developed positive divergence which is actually bullish. So in that sense, there are still enough dollar bulls to keep the selling going and when they get decide to sit out, other bulls come in a bit. So there is still sellers! Which is why the dollar keeps sinking.

We need extreme bearishness amongst dollar traders. And to do that, I think it needs to break down technically some to the point where the traders see no technical reason to keep buying the dips. We need a dollar PANIC LOL! And if it makes new lows? That wouldn't surprise me.

But the dollar is a sideshow. Right now its all about drawing in the public and what better way than to push the DOW up well above 10K?. And its seems to be working, at least by my informal surveys at work and such.

Technically, the SPX finished the month way above its monthly 20 MA which is a long term bullish signal by many.

About the best the bears can hang on is that it appears to be a narrowing rally. However if it pushes soon again over 1113 resistance, that will not be the case so much. But the rally can keep narrowing and eventually some stocks may be viewed as laggards and make a renewed push later on. Its a constant danger for bears.

There is also the "wall of worry" that people like Mark Hulbert of Marketwatch talks about on many occasions. And he has been more right lately than other contrarian followers. (yes I do follow his articles)

The bears had golden opportunities to break down this market in total and it refused so far to break particularly the key index which seems to be the DOW. Even today the bears couldn't produce a reversal at big resistance after a big open chart gap up on the SPX index. Not that it won't be filled soon (I think it may) but just that it seems to prove the bulls still exert control over things.

And to the grumpy conspiratorial bears is it all PPT induced? Well then, who is buying the European markets? Is GS buying the world? India? Latin America? China? Who just reversed the Nikkei?

I propose that the PPT and GS are merely inside players and take full advantage of that position. Yes its immoral and illegal. And yes there are many conspiracies and illegal activities going on! (Madoff, etc) But the FED cannot induce riskiness. They can set up a banquet of food but if the people aren't hungry they'll barf on it. Hence the 900 point market drop. Finally the people are hungry and now greed is drowning out all the warning signs. Its the way it works and it has always worked this way.

The perfect EW time relationship would be for P2 to end in about mid to late January 2010. So in that regard, things have yet to get out of count or expectations.

So again, there are bearish technicals to be sure. The weekly qqqq's are not as bullish and sports negative divergences yet it hasn't broken down yet. There are bear plays to be sure just not across the board type. Hit and run so far has been the best bet.

I have patience. Sentiment is moving to where one would expect a market to top. If it goes even higher, and it very well may, and the VIX breaks down a bit more under 20 finally, then it will be even better.

It will top. The "Dubai Crisis" has been declared "contained". And when have you heard that before? How about subprime in the summer of 2007 yes? So perhaps we had our summer 2007 moment I think.

The wave count would work perfectly if it worked itself up in v minute waves to a C wave peak to form a triple zigzag. Rare yes but so is a P2 bull rally. There are other counts to be sure.

So yet again the DOW makes a new high and its down count is reset yet again LOL. And again we look for 5 waves of Minuette degree lower to form a Minute [i] down. Don't take this as the author has gone bullish, take this as the reality of the current wave count and state of the markets. Until these situations resolve themselves, what else can a bear do...

At least we have a pretty decent count to explain 5 Minute waves to P2 peak if it happens.

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