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The 'Buy Anything' Market

FEAR of being left behind turning into PANIC buying?

Those are the opposites of August/September 2008 when fear of economic implosion turned into panic selling.

This ongoing 2 days rally is attributed to the daily 50ma support which was at 1020 at the time and the supportive role of August 9 high of 1018 or 9439 for Dow Jones. They formed a confluence zone of supports very hard for technical traders to not go long and buy the run down.

This could be the last chance to get long after a long long wait for a reasonably deep pullback that never came as we survive more on shallow pullback diets since March 2009.

That is good.

Regular shallow pullbacks keep us trim and healthy instead of getting obese with time during deep and prolonged pullbacks that tend to end up to the downside as more traders and investors bail out of the markets due to prolonged digestion of time with no rally.

We rally a little at a time and take appropriate price corrections and time consolidations until we are ready for the big one. Meanwhile, we keep ourselves lean and mean by not getting obese with excessive time consumptions going nowhere that usually means corrective or bear rally rather than a bull run - and thus results in further run downs most of the time.

Are we ready for the big one?

Projected target for this run is 1090 to 1110 for SnP 500 before we go for either 2 to 4 months correction similar to what happened in early May high to early July low.

Or, we go into a massive meltdown lasting 5 to 9 months towards 767 to 680 usual target range for a capitulation selloff.

Or, we go into a massive time consuming A-B-C corrective pattern that can last 8 to 21 months that should break below 827 but less likely to break below the last low of 667.

But I prefer the current potential setup of a Running Triangle on the daily chart that has formed since August 9 and has completed last Friday or Oct 2.

This triangle is a rare occurence and is a virtual unknown to most technical analysts.

But it has a potential to giddy up the markets toward 1165 or even toward 1260 minimum if market participants started a panic buying spree off the coming earnings season.

So watch out; maximum allowed rally for this run is 1110 based on usual Elliott Wave counts of 1-2-3-4-5 up from the July low of 870 using the daily chart.

BUT - if we break 1110 with force in the coming weeks, the next target will be 1165 before we get a hang-over and go down as fast as we go up from the daily 50ma support.

OR - if the 1165 got broken again with force; then expect 1260 the next minimum target and the quick and dirty target will be 1318 before we require a major correction that should last 2 to 4 months.

The last scenario is the best scenario for the bulls in order to achieve sustainable recovery rate of the Oct 2007 high of 1576 for SnP500 on or after September 2013 with 2014 limit time run. The longer it takes to recover toward 1576, the more time will be consumed and the more obese the market participants will be consuming massive time with lethargic actions or rallies.

Lethargy is the enemy of a bull run. A healthy rally followed by a healthy correction and appropriate time consolidation is what makes bull runs healthy in the long run.

Excessive rallies with no healthy corrections and also excessive corrections with no healthy rallies are what destroys a healthy market.


Those are the potential scenarios that has developed from the minor rallies and corrections off the March low of 667 and that of July low of 870.

The markets seldom give us only one choice; there are almost always many potential scenarios most of the time and very few of them happens to be the highest probability scenarios.

In that order, the highest probability scenario is a rally toward 1090 target then a 2 to 4 months correction.

Followed by the Running Triangle scenario that can catapult SnP toward 1165 but would also result in a vertical drop back to 1020 if the bulls cannot muster better than 1165 run.