SPY

[Stocky2000]

ugly

[David Randolph]

My take is the FED cut interest rates by just a quarter of a percentage point, instead of the half a point many hoped for, because the FED is looking ahead, not through the review mirror.

The FED already cut interest rates a full percentage point and they currently stand at 4.25%. This is less than what rates were in the 1990-91 recession we've talked earlier on this thread:



Perhaps, if the US economy enters a cyclical recession and I think it will, the FED lowers rates another half a point during the course of 2008 and that's it.

I've already shown you what the stock market did while the 1990-91 recession was still ongoing:



It just took off, as the long term Bull Market continued.

I believe the outcome will be similar this time. The causes for this recession are cyclical and normal. Home builders and banks got greedy, had very fat profits while the party went on, but now they're paying the price of being reckless and greedy. They lent money to people they shouldn't have and now have these huge write downs in assets to make. And they are making them, they're feeling the pain and paying the price. The economy is functioning well.

In the meantime the World economy is growing and united like never before. We have the emergence of economic powerhouses where before nothing relevant in economic terms existed. The BRIC countries will, in my opinion and within a decade, bring 3 billion new consumers with purchasing power to the world market. People often downplay the inequalities the World has. People in these countries are 20 times poorer than the average American, if they rise to be just 10 times poorer, that's a double. And if they rise to be just 5 times poorer, that's a quadruple.

I've heard yesterday on CNBC that now more than half of the S&P 500 companies' revenues come from outside of the United States. More than half. So the S&P 500 is now more dependent on the World economy than the US economy.

The 1 million or 2 million Americans defaulting on their home payments or credit card payments is nothing compared to the World economy strength and what that means for the stock market's future.

I've a 700 pages book here called "The Wealth and Poverty of Nations" which explains why countries got richer or poorer throughout the centuries and I can assure you we're living an unprecedented time. Never in its history the World has been so open and everybody is using the same economic model (finally), the model that made the US what it is today. Capitalism is at work throughout the whole World now (with a few small exceptions) and it should work elsewhere the same way it worked in the US.

I think investors have plenty of reasons to be optimistic for the next decade. Sometime down the line everybody will rush in to buy shares and will drive valuations to stratospheric and unsustainable levels and then the S&P 500 will have a 50% hair cut, just like it happened in the 2000-2003 period.

My take is the S&P 500 will reach 6,000 points sometime between now and 2018 and then it will fall back down to 3,000 points The march towards 2,000 points will be the slowest, then it will take 5 years or more to move from 2,000 to 4,000. The final 2,000 points, especially the final 1,000, will be made rather quickly, as the usual speculative bubble at the top progresses and then it blows out.

We're not at the top now, the market is in a prolonged trading range before it makes a bullish breakout to new all time highs. Be bearish or a weak hand and risk missing your way to a small fortune, depending on your initial capital.

I'll just hold on to my holdings throughout the storm and I expect to be paid handsomely for my patience. Anyway, the Main Portfolio is up 22% this year, I wish all years were like this, but I expect better results going forward, as the general market will probably help the stockpicker's job.

[Stocky2000]

I am very bearish on the market now...after the fed decision and failed rally a day after....bull running out of power...the index shows a deadcross coming MA 50 moves into MA 200. And the highs getting lower. Bothe MA are now heavy resistence.

So the chance for a 1520 breakout is at 30 % for me...

[Stocky2000]

i stole david r. pictures and painted some future graphic in case we drop under 1400. A possible scenario:)

a long term ascending triangle. The funny thing is...the more i watch this picture the more i think it s gonna happen...

[pinoleropuro]

I've been reading another post and this is what this guy said Friday.

Our trading range remains between 1460-1490, we break above 1490 and a lot of shorts will cover... we break 1460 and a lot of shorts will hammer the market down. Always keep your eye on GS. The way GS goes so does the market.

I have only been following him this past month and he has been making short term predictions and he has been right on the money with every single one just in this past month. when he talks to his people he also reminds them of how right he has been this year even with the big drops.

and he like me totally hates Cramer but I digress. 

He also mentioned this;

The banking index $BKX has been butt ugly and closed in negative territory for 3 straight days and dropped 8% of it's value, its time for a short term rally in this group because short players know the value stock players and they will come and buys this group.

[Stocky2000]

I've been reading another post and this is what this guy said Friday.

Our trading range remains between 1460-1490, we break above 1490 and a lot of shorts will cover... we break 1460 and a lot of shorts will hammer the market down. Always keep your eye on GS. The way GS goes so does the market.

I have only been following him this past month and he has been making short term predictions and he has been right on the money with every single one just in this past month. when he talks to his people he also reminds them of how right he has been this year even with the big drops.

and he like me totally hates Cramer but I digress. 

He also mentioned this;

The banking index $BKX has been butt ugly and closed in negative territory for 3 straight days and dropped 8% of it's value, its time for a short term rally in this group because short players know the value stock players and they will come and buys this group.

I agree under 1460 it will go down fast to test 1407 lows....longs shoud be careful....and be ready to short...some stocks are still really high.

[Stocky2000]

a bearfriend wrote this:

Like the permabull said to his girlfriend............this is going to be quick.

Well, not that quick. Because I want to get across at least one important thought: the week that just ended was terribly important - - and valuable - -for the bears.

It's not because it's the first down week we've had. There have been plenty of those in the prior five months. What's crucially important, and probably makes it the most important week of the entire year, is that the Paulson/Bernanke crooks tried not once but twice to save their stupid bull butt-buddies, and they failed. It is my belief that the government has shown it is powerless to stop the unfolding financial catastrophe. And, as I've said all along, it is my general goal to profit from the misery and chaos. I cannot say if the bear market has arrived yet. But I think all but the most idiotic momentum players would have to agree that at least we're not in a clear bull market anymore.

I've tinted in yellow this week on the Dow. I won't rehash it, because I've done something like 30 posts or more this week. Anyway, take note of the red trendline for two reasons. First, obviously, because it was broken. But second - and much cooler to my eyes - is the fact that yet again the price perfectly kissed the underbelly of the broken line (and I took full advantage of that bull trap by buying puts early Wednesday).

[David Randolph]

The SPY went down further than I thought on a reaction to what the FED has been doing. From what I've been reading I guess the final punch in sentiment is coming from a disbelief in the FED.

It usually happens like this. Remember 2001? "We're bad, but the FED is cutting rates and that will save the stock market". And 2002? "There's nothing the FED can do, we're going lower."

The Nasdaq made its low in 2002.

I think we're witnessing a similar phenomenon, but on a much smaller scale. Even though it took a 50% fall on the Nasdaq to make the bears confident back in 2001/02, now just a 10% correction was enough. 

Anyway, I don't have a clue if we'll go down to close the gap at $143.23 or not. I'm unsure about the short term.

Longer term I remain confident we're in a bull market and there's going to be a bullish breakout to new all time highs over the next 6 months.

[Stocky2000]

comments for 1st picture: we broke 1490 support where i bought QID and reduced my longs.

comments for 2nd picture: deadcross ma 50 moves into ma 200....lower highs....if 1460 doesnt hold i add shorts.

[Stocky2000]

as expected a fall through 1460

Diamand top reversal

A technical analysis reversal pattern that is used to signal the end of an uptrend. This relatively uncommon pattern is found by identifying a period in which the price trend of an asset starts to widen and then starts to narrow. This pattern is called a diamond because of the shape it creates on a chart. 
 
Since technical traders use this pattern to predict a reversal of an uptrend, a short position is taken when the price falls below the lower ascending trendline. In general, price targets are usually set to be equal to the entry price minus the distance between the top and the bottom of the pattern.   

[Stocky2000]

see you there

[422fwhp]

So you're shorting this?


edit:  Very nice analysis

[David Randolph]

Despite all the negative news on the economic front, the SPY is still within its trading range. Maybe we'll even break the range slightly to the downside, just to really throw all weak hands out of the market before a surprising rally to new all time highs unfolds.

This is my view, anyway, of course, I can be wrong. Insiders seem to agree with my view, according to the following article:

Executive suite not afraid of bears yet
Commentary: Corporate insiders continue to be bullish on their firms' stock

[Stocky2000]

Despite all the negative news on the economic front, the SPY is still within its trading range. Maybe we'll even break the range slightly to the downside, just to really throw all weak hands out of the market before a surprising rally to new all time highs unfolds.

This is my view, anyway, of course, I can be wrong. Insiders seem to agree with my view, according to the following article:

Executive suite not afraid of bears yet
Commentary: Corporate insiders continue to be bullish on their firms' stock

looks really bearish out there...i would be carefull with your longs...index technicals are broken. Why not playing what your seeing....i cant count on hope...like for a possible new breakout...sure everone sees it different....

[Stocky2000]

So you're shorting this?


edit:  Very nice analysis

hey thanks 422fwhp....i shorted some in an out like Qid, dxd....today i made good cash with crox, isis, sigm...on daytrades...now 100% cash overnight.....so my mind can think clear:)