This is Thursday, November 18th and all is not well on Wall Street.
Wow, I did not post yesterday, but their is a lot to talk about right now. I don’t know where to begin. I few days back I mentioned I could see where the stock market was going to go over the short term and I was right as I called it. We dropped 20 points exactly on the close and a few points lower intra day, which is exactly where I said that we were going in the next few days. The thing is, it all came in one day.
Then, I said, you will be surprised to see this area as being strong support and a staging area for a counter move back up. My members all got the specific’s and the reasons why all of this happened and the next likely moves played out ahead of time before the fact.
So, in today’s market, we saw just that. I did mention that we may hover at yesterdays lows for a day or two, but it will hold and move back up smartly. Today, we did just that, with a nice counter move to all the selling that took place over the past days. So, far so good. OK, now what.
Before I get to that, one more piece. I called the market bottom at the end of August/beginning September, as I was very bullish, going against the crowd. The sentiment for a large drop then was very strong, but new that was not likely the way it was going to go. At that time the market was trading around the S&P 1040 and was calling for an extended run. Once we got confirmation the up move was under way at S&P 1060 I was looking for S&P 1220 target and we hit a closing high of 1222 on November 5th.
I am not making that up, you can go back and read my blog posts to see it is exactly as I write here today. In addition, virtually all the previous daily market moves were uncannily accurate as well. I don’t trade based off of daily charts, but the analysis of reading the market is the exact same as I apply it to my trading method. I know it may sound like I am tooting my horn and maybe in a small way I am, but my bigger point is, we have something brewing on Wall Street.
All of the past info is only relevant to point out, I do see what is happening and can see it ahead of time, before it actually happens. That is a great skill to have when applied to the intra day market action of which I do trade.
Now to the point, we are getting set up for a big market shift here very soon and it is now to the downside. The name of the game for long term money in 401k’s and IRA’s and such is, capital preservation. This is just my opinion and is and should not be considered investment advise. So, in my opinion, we will soon be looking at S&P 1140 and that may just be the start of something much bigger I am afraid. After a likely bounce off that area (1140), we will likely go to a touch above or around the S&P 11o0 area, where we would again, bounce up in a reaction rally. What the market does after that bounce, will be the moment of truth we will all be waiting on. The S&P 1100 area will be called the point of no return and again, in my opinion, that is what I think it could entail. I hope things will change when and if we get to the last area of support, but my fear is that it will give way to a Market Mega Shift. This is what I had called for in late April over 18 months ago. If you go back and read my blogs postings in that area, you will see I was calling for the market to rally all of what it did predominantly. My upside target back then was just a little lower in the S&P and can’t remember where exactly that was, but it was close to where we ended up. I gave many updates to more closely zero in on specific moves as they were occurring, but again, the bigger point was a long extended rally to where we are today. It did take longer than I thought to complete, but that is to all of our benefit as the party was extended.
We just had a big shift in market sentiment and that can not be taken lightly. The current numbers, as I so often report are +8% to a reading of 56.2% Bullish. One interesting thing, this is a poll that is taken at the close of Tuesdays close and that day we saw the market drop like 20 S&P points, the same call I mentioned above in the short term daily charts. So, in the face of a 180 point drop in the Dow and -20 points on the S&P’s these people turned supper Bullish overnight. Before that, we saw over two months of tiny increases and flat readings, but only when the market is really ready to go down does this crowd get bullish. The group I am referring to is the Investment Newsletter people.
The top newsletter writers in the country sent out to their subscribers (the public), that they are very Bullish on the Stock Market as of now. More so than when the rally began and as such, that is likely to turn out to be bad advise.
I won’t rule out a rally back up to the old highs or there about, but as stated, this will only exacerbate the coming drop. Personally, I would like to see the market rally back up to form a double top or so, but the market does not listen to me, we have to listen to it.
Technically, we are at heavy resistance at 1200 and will just have to wait and see how this plays out. Many times at import market tops, bullish sentiment will push to extended periods of time only adding to the move once it turns. So, all I am saying is, be careful and don’t be taken by surprise. I hope I was able to help you see the other side of this market.
The risk to stay long in the daily and weekly charts for long term money is Very Very high. Below is a chart of the Dow Jones Industrial in the 1930’s. I will point out where we could be in light of that chart and hope I am wrong about the rest of it. As day traders, we can trade in any market environment, so in the months and years to come, master your skills so you can be and remain insulated to what ever happens on Wall Street. Freedommmmmm !
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