Well, its been a while, but I am back at blogging on the market. Sounds a little funny. I am not trading right now, but will be soon. I will give you comments on what I see going on in the Index’s.
The Dow and S&P are moving up nicely. The price action is nothing I did not forecast or expect. In fact it is going exactly as I thought it would. I have noticed the level of bullishness increase to the 50 % area over the last few weeks and it is something to really watch. Investors and news-letter writers are becoming a lot more bullish over the past few weeks. We are not at a tipping point as of yet, but do keep an eye on the sentiment. It more than likely will come back into play and become a very reliable indicator for calling the market top. I will keep you posted.
The price action today was a little strange, because I think after today, most of the trade volume will come into the next contract month of December “Z”. So your new symbols should be esz09.
Back to the markets and the economy. This big rally will be an opportunity for those who could not get out at a good price to salvage some of their portfolio in the coming weeks/months. We are approaching the famous September/October sell off months that have so often been the case. In my opinion everyone should exercise caution. I would love to believe that over the next year or so that we are going to continue to climb back up, but I don’t think so. There is a lot of money that is being thrown into the economy right now by various means and all I believe it will do is skew the numbers to the upside but only for a short while. This is not real growth, but artificial growth to get the public to come back into the stock market for another shearing. People are still shell shocked and job losses are continue to mount. The higher earnings are coming in from cost cutting and stretching the american worker to do more for less pay. I would call that a double portion for the bottom line. There is only so much cost cutting and squeezing that can take place across America to help increase profit. Eventually, you will have to grow sales to have the increases Wall Street has gotten used to seeing. All this is supposed to happen when people are spending less and credit is not widely available. In addition the banks are still in real trouble. I will expand on that maybe in my next post, but things on that front have been glossed over to help set the stage for the new legislation the president wants passed, namely “Health Care Reform”. In fact, things may stay afloat until we see some passage of this, but that is just a guess.
The price action will ultimately tell us what to do and what it is saying since 3-6-09 is, BUY. That was the bottom on March 6th of this year. Where will the top be, right now, no one knows. I do see a little more upside back to the middle of the range, around 1100 on the S&P. The high was around 1550 and the low, 666, the middle around 1100. This is what happened back in 1929 after the initial crash, a move back to the middle. Then 400 on the Dow was the high, the first big drop was took it to 200 and the recovery brought it back to 300, a 50% retracement. I would expect something similar this go around as well. What happened after that? Not Good. Let’s not think about that right now and follow the price action, it will tell the whole story. There are currently no major violations to the up-trend or as I put it in my title for todays post, “Recovery Bubble”.
Below I have a chart of a few trades that my method put out. This is in a tick chart of 233 tick per bar and as I said the volume was very light and such, not many bars were posted for the day.
Untill tomorrow,
Vince
http://www.screencast.com/t/SeTVsnaAPoWo Tick Chart of today’s action
Related posts:
- Trading Recovery Day
- Called the Stock Market Bottom!
- Stock Market Pressure is building on both sides !
- Stock Market puts in Reversal Day
- Key Stock Market Turning Points
Tags: Recovery Bubble
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