Bulls have been unable to get much done, and almost all major indices have now broken through...


Bulls have been unable to get much done, and almost all major indices have now broken through key uptrend lines from Oct. 2011 lows. While it's still early to peg this as a major trend change, prices are likely to meander lower in the short term.

Comments (23)
  • barrry
    , contributor
    Comments (56) | Send Message
     
    "Meander" lower. Try "plummet" lower over the next 2-4 weeks. VIX headed to 25-30 no problem. Especially if Euro is devalued, to avoid austarity medicine for the Euro Zone, buckle up !!!
    12 May 2012, 04:42 PM Reply Like
  • jsiebel720
    , contributor
    Comments (236) | Send Message
     
    That's why they are called "bull" markets....
    12 May 2012, 05:04 PM Reply Like
  • untrusting investor
    , contributor
    Comments (9903) | Send Message
     
    An interesting article. The worst case scenario outlined would surely be meet with massive Fed and central bank worldwide interventions, thus attempting to prevent anything like 08/09.
    12 May 2012, 05:22 PM Reply Like
  • CautiousInvestor
    , contributor
    Comments (3090) | Send Message
     
    Interesting article.

     

    The author mentions 1340 as a critical level of support for the S&P and several days ago it hit 1342 and the buyers stepped in and reversed what could have been a disastrous day. If it breaches 1340 to 1342 in the near term the next landing spot will be in the area of 1265.

     

    Longer term, liquidity must be taken into account and one possibility is that while Europe is falling apart the Fed opens the dollar window and the ECB engages in unprecedented easing through bond purchases, reducing collateral requirements and other steps we could see some markets rise amidst a global meltdown.

     

    Weird.
    12 May 2012, 06:46 PM Reply Like
  • EMS
    , contributor
    Comments (586) | Send Message
     
    Good synopsis of what is going on here. Agree with the levels, although undercut lows are in style- this means 1340 can be breached in a seemingly convincing way, and trap bears as it lurches upward again. Most individual stock charts I follow are broken, as are the patterns of the financials (PPT). Thus favoring the downside. I would think the response to another Chinese easing on Monday would be telling, as they probably buy futures ahead of this action. Would be really nice to see them trapped in them...we will see.
    12 May 2012, 07:26 PM Reply Like
  • David Urban
    , contributor
    Comments (1031) | Send Message
     
    We have already broken lower on an ascending wedge and a head and shoulders top formation combined with a 3 Peaks and a Domed House pattern.

     

    Been a bear since mid-March.
    12 May 2012, 07:37 PM Reply Like
  • ThetaDecay
    , contributor
    Comments (103) | Send Message
     
    Yes, but where's the breakdown on the H&S?
    12 May 2012, 08:08 PM Reply Like
  • David Urban
    , contributor
    Comments (1031) | Send Message
     
    It happened a week ago when we fell below 1375.
    13 May 2012, 03:37 AM Reply Like
  • ThetaDecay
    , contributor
    Comments (103) | Send Message
     
    So the neckline's above the left shoulder? I think you're gonna find you have a busted pattern on your hands, but time will tell.
    13 May 2012, 03:56 AM Reply Like
  • David Urban
    , contributor
    Comments (1031) | Send Message
     
    Only because the neckline is sloping upward rather than flat.

     

    It also fits in with the resolution to a 3 Peaks and a Domed House pattern that I mentioned above.
    13 May 2012, 10:27 AM Reply Like
  • Tack
    , contributor
    Comments (16371) | Send Message
     
    All it takes is one notable event (http://bit.ly/HUd5zi) to bring out a host of new SA articles suggesting that a major calamity and/or trend change "may be" looming. Well, consider this:

     

    Despite all the recent new handwringing over French and Greek elections, supposed threats of nonpayment of Greek loans, predictions of new conflict between Germany and France, and, now, the surprise $2B loss by JPM (from the feared and hated banking sector), the S&P500 has managed to stage a sell-off of only 4.65% from its recent high, after a long run-up of over 25%. Hardly a suggestion of fear or even much nervousness about the economy or market valuations, this minor retreat looks like a typical "correction" and speaks of the surprising strength of the indices.

     

    If this behavior persists, we'll have a typical horizontal consolidation, lasting weeks (it's been six weeks already since the recent SPX high), where doubters persist in predicting a major downturn, but where, instead, corporate performances continue to advance, while share prices remain relatively stagnant, continuously improving the share-price value equation. Such horizontal consolidations are often broken by rapid upward advances.
    12 May 2012, 07:45 PM Reply Like
  • ThetaDecay
    , contributor
    Comments (103) | Send Message
     
    Exactly: prices in an uptrend can round out and form a top, yet continue higher after testing resistance. Prices in a downtrend, on the other hand, do not usually bottom out and then continue heading lower; they break lower in sharp movements, rarely staling before they break resistance.

     

    I am bullish about the coming week.
    12 May 2012, 08:01 PM Reply Like
  • Ray Merola
    , contributor
    Comments (6663) | Send Message
     
    Prognosticating the market short-term is always good for a few laughs, but I generally don't spend too much time fretting about it. Half the folks are right and the other half are wrong. Three months later they change hats. There are still people who maintain that the rally from the March 2009 lows is an illusion, a fake. I'm happy to make money and let someone else worry about being "right."

     

    Technical analysis has its place and should be studied carefully. However much of the chart watching is great rear-view mirror stuff. "If this level holds," and "if this ascending wedge pattern breaks down," etc. Many on S. A. understand the basics of technical analysis. Of value, yes. Are there real patterns to be seen, yes. But I'm not a "risk on, "risk off" every other week kind of guy.

     

    Lastly, some of the doom and gloom crowd make an underlying assumption to which I don't subscribe: no policy response. It this possible? Yes. Is it probable? No.

     

    While the Euro and some EU nations may fall (I concur it is a slow-motion fiasco), it isn't a Black Swan event. Everyone knows about the PIIGS, the Euro, and the associated banking collapse and global inter-connectedness. When the chips fall, it's been a drama, perhaps a calamity, but not a surprise. It's more like a tragic Italian opera than an nuclear explosion.

     

    Therefore, for the true disaster scenario, it seems one must assume that the global economic and banking community will just let it happen. No policy response, no deathbed conversions, no nothing. All the bankers and politicians just sit tight, buckle their chinstraps and pull the toilet bowl lever.
    12 May 2012, 09:03 PM Reply Like
  • brachiosaurus
    , contributor
    Comments (226) | Send Message
     
    technical analysis (aside from low frequency momentum) has little place in the investment discussion because it is all a silly fraud. there's a reason that nobody consistently makes money from it, and nobody is rich from it (aside from book writers). the chart industry was created and continues to be pushed by brokers, because it is a fantastic revenue source.
    12 May 2012, 09:42 PM Reply Like
  • Jason F
    , contributor
    Comments (224) | Send Message
     
    You miss the point completely. if you are not a believer, it doesn't matter. I am not here arguing whether TA works or not. But the fact that others do (lots and lots), means you can exploit other Technical Analysts. Its like a game of poker. Understand their game and be one move ahead of them.
    13 May 2012, 12:38 AM Reply Like
  • brachiosaurus
    , contributor
    Comments (226) | Send Message
     
    the easiest way to exploit other technical analysts is to write books or newsletters on the subject, or to write software with blinking lights and tools to investigate dark cloud cover, triangle formations, and head and shoulder patterns, and couple that with a trading platform.
    13 May 2012, 12:53 AM Reply Like
  • srspa77
    , contributor
    Comments (325) | Send Message
     
    Dow 15000!!!!!
    13 May 2012, 02:25 AM Reply Like
  • David Urban
    , contributor
    Comments (1031) | Send Message
     
    With all the bulls in this thread I feel much more secure in my bear call.
    13 May 2012, 03:42 AM Reply Like
  • Tack
    , contributor
    Comments (16371) | Send Message
     
    DU:

     

    I read lots of regular SA commenters who've been saying that since last October. In fact, some have been saying that since after early rallies following March 2009.
    13 May 2012, 07:23 AM Reply Like
  • David Urban
    , contributor
    Comments (1031) | Send Message
     
    You can choose to ride it down Tack.

     

    But the reality is that fundamentally profit and economic growth is slowing and we are entering one of the more difficult periods in the stock market.

     

    The rally from last October was led by bank stocks, many of which have very poor fundamentals, that alone is a sign of a top.
    13 May 2012, 10:30 AM Reply Like
  • Tack
    , contributor
    Comments (16371) | Send Message
     
    DU:

     

    Personally, I think the outlook for regional banks and other realty-related issues is excellent.
    13 May 2012, 10:38 AM Reply Like
  • bdarken
    , contributor
    Comments (649) | Send Message
     
    Funny that California reveals that its debt is about double what was previously announced, and it goes almost unnoticed.
    13 May 2012, 09:05 AM Reply Like
  • berniespear
    , contributor
    Comments (251) | Send Message
     
    Reading these comments is like watching a tennis match.
    14 May 2012, 02:36 AM Reply Like
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