On a website that's devoted to the over-arching importance of financial market pricing, what I'm about to say is heresy: the economy is the dog, and stocks are the tail. When market cap grows to point where it is twice the size of annual GDP (as it is today), the tail can and does wag the dog for extended periods of time. Because of the historic amount of highly leveraged (and now imploding) speculation in residential real estate (a market that is largely outside of the sphere of influence of Wall Street), the dominance of the economy over the financial markets is being reasserted. The $6.5 trillion MBS market is in the process of unwinding along with $20-30 trillion in credit default swaps. (That's trillion with a "T", and not a typo.) Because CDS pricing is largely proprietary, there is no opportunity for you to analyze it -- technically or otherwise. As a friend of mine likes to say "Information is power, which is why you don't get any." By the time the true significance of what is happening becomes readily apparent, the markets will have already hit the wall -- HARD.You will soon want to be very long.....
....and CLK...something very similar to what's going on happened in 94.
It's just going to feel a little worse... in percentage terms ...it will be very similar....and pattern will be just a little different.
http://stockcharts.com/c-sc/sc?s=$OEX...4425&r=1710
I've detailed my oex:spx ratio theory several times...won't bore you all again.
As always, JMHO.
I agree. TA is just a method to get some truth out of an otherwise immensely complex problem, but it is not the truth by itself. A good analogy would be that physicists often make linear approximation to get some understanding of a difficult problem. For example, to measure the distance from one end of a football field to another, linear approximation is used (i.e. ignore that the ground is curved). However, if one believes the linear approximation is the truth itself, then he ends up in the flat-earth society.