What I will be watching this week

I am still currently flat. I just have not been convinced either way here to actually pull the trigger. Like Index Trader I am eyein the $SPX (cash) 1417 and 1427 areas to possibly start a short position. I will be on vacation starting Tuesday next week in San Fran/Napa Valley but I will take a short position at those levels if I see several things:

1. If I see a sentiment bullish spike on a move from 1400 to those levels (I bet we will)
2. If a recognizable topping pattern (ED or H&S, etc)
3. Internals continue to diverge
4. Momentum continues to diverge
5. $VIX holds above 16.50
6. 10 Day Trin below 1.31

First here is why 1415/1427

One thing I have learned from SemiBizz is these high volume daily/weekly candles are heavily watched and often attract/reject prices. You can see from the weekly chart below the two highest volume weeks have important levels approaching. I am not a Semi clone just incorporating something I picked up from him. (Take the best from each trader and put it in your arsenal)

http://stockcharts.com/c-sc/sc?s=$SPX&p=W&yr=1&mn=9&dy=0&i=p20674228401&a=137116340&r=2979..png

I also want to show the daily chart because it has a high volume spike from August with a top in the same area at 1415. On top of this chart I also show the fib levels becauase the 50% retrace level also comes in at the 1417 level. Matter of fact if overlaps my horizontal line showing the high of the high volume bar in august so I had to box in the 50% level in order for you to see it..

http://stockcharts.com/c-sc/sc?s=$SPX&p=D&yr=0&mn=9&dy=0&i=p64182856166&a=137115930&r=5681.png

On a move to the 1415-1427 level, along with those other things listed above, I need to see a spike in $CPCE to below .50 area. You can see that on previous spikes outside the trendlines shown below marked trend changes. Also the spikes happend over a short period so I can see the scenario of everyone getting bullish on a breakout of the current "range" and Inverse H&S pattern...

http://stockcharts.com/c-sc/sc?s=$CPCE&p=D&yr=0&mn=10&dy=0&i=p65384679063&a=136659178&r=6065.png

This must continue to diverge as prices move to those levels

http://stockcharts.com/c-sc/sc?s=$NAAD&p=D&yr=1&mn=0&dy=0&i=p45013326552&a=122728492&r=3961.png

Would like to see $VIX stay above 16.50 area....

http://stockcharts.com/c-sc/sc?s=$VIX&p=W&yr=10&mn=11&dy=0&i=p81608171284&a=136670375&r=3242.png

Not only all of that but if the $SPX has set up somewhat of a cup with handle the last few days it measures to right inbetween 1417 and 1423..

http://stockcharts.com/c-sc/sc?s=$SPX&p=15&yr=0&mn=0&dy=10&i=p22535789900&a=133232154&r=5792.png

Comments welcome... Thanks SL

Beautiful weather here in San Francisco today, low 80s, and I can see Napa out my window, all clear there. We'll probably have some fog roll in in the next day or two to cool off around the Bay, but it should stay nice and warm in the wine country... Try Mustard's Grill for a delightful lunch.

http://www.mustardsgrill.com/

I highly recommend the Ahi Tuna Sandwich...

Enjoy...

It is a convenient week to get drunk actually!

Technically, the first long term cycle which became left translated was Bob's 4.5 yr top in Oct. We are seeing or have seen the 2 yr cycle bottom; if the indices overshoot to 68% retracement around 1440-1445 this week, you know that the 2 yr cycle is also getting left translated with a rally too soon, too much with the poor internals...

Looking back, there was apparently very little reason to stay bullish around last Oct with the massive divergences when the prices made new highs. Why stay bullish this time if the Fed is now basically getting stuck and nearing the floor in Fed fund rates?

My thinking is, if a rally over 1400 can spark a massive institutional bear raid, another rally of 40-45 SPX points is not too much of an extension for a corrective wave. Just speculating, there is very little technical basis to this post, but from the cyclical perspective, there is also really little reason to stay bearish beyond June for the remainder of 2008 until early 2009 --many IT to 2 yr cycles will be helping there, yet many reasons to stay bearish due to the longer term picture (4-9 yr cycle harmonics, credit environment etc)...

I see the IT cycle top coming here, I just can not buy much with the internal deterioration I said over and over here, my models will not allow me, but I just respect to the bear market rallies, if this is one, and the price action knocking the door at 1400 for the 3rd time, it will break above it one way or another it seems, so I stay out of position shorts at this time...

Honestly, I can sense an imminent urge among many participants to pile on the bull side this time, just accept the mistake of being a bear, respect the Fed and just buy, buy, buy without any regard to the technicals, internals, cycles, fundamentals whatever, just play the cash is trash with the Fed this time!!!

Interesting...

Beautiful weather here in San Francisco today, low 80s, and I can see Napa out my window, all clear there. We'll probably have some fog roll in in the next day or two to cool off around the Bay, but it should stay nice and warm in the wine country... Try Mustard's Grill for a delightful lunch.

http://www.mustardsgrill.com/

I highly recommend the Ahi Tuna Sandwich...

Enjoy...

Thanks Semi.....Will definitely do that....My wife an and I love Ahi Tuna.....

Interesting...

There is definitely something funny here, I've rarely seen so much bullish publicity showing up all of a sudden and all over the place with the worst sector being publicized as the better sector to buy, the earnings coming out with a lot of lipstick while the guidance is so foggy. Am I cynical? You bet. Are my thoughts cyclical? More so...

Interesting...

There is definitely something funny here, I've rarely seen so much bullish publicity showing up all of a sudden and all over the place with the worst sector being publicized as the better sector to buy, the earnings coming out with a lot of lipstick while the guidance is so foggy. Am I cynical? You bet. Are my thoughts cyclical? More so...

AND NOW, FOR SOME GOOD NEWS: THE OTHER SHOE isn't going to drop. After a winter of discontent marked by massive write-offs on Wall Street and a wilting economy on Main, America's portfolio managers have declared that the worst is over. More than half of the institutional investors participating in our latest Big Money poll say they're bullish or very bullish about the prospects for stocks through the end of 2008. Their forecasts suggest they're even more upbeat about the first half of 2009.

They've arrived just like I said they would.
Right on schedule.
I don't even disagree with them except for one important thing....
This run up isn't going to make past April 2009. Then the real trap door opens only it won't open like a regular trap door. It will be more like the gymnasium floor opening under Jimmy Stewart and Donna Reed's feet to the pool as they danced the Charleston in "It's A Wonderful Life."

Edited by milbank, 27 April 2008 - 05:16 PM.

mil, what happens in April of 2009? U.F.O.

Give or take a couple of weeks, April of 2009 is when the deepest drop of the bear begins.