I have been waitiung for the market to begin its decline and below are the important numbers:
- The current uptrend support is now at 868 S&P. Any close below that mark spells long term trouble for this market.
- This market has spent 35 days above its 50 day MA. The last major downturn in May 2008 lasted 41 days above the 50 day MA before it started a serious downturn. The turn to this market could happen at any time.
- The big decline last year started in May just after a strong counter rally that lasted around two months - very similiar to today's market which has rallied for two months also.
- The key sign last year to strong the market was when the upward trendline was broken. Bulls quickly sold their positions to lock in rare profits at the first sign of trouble. Just how many Bulls will be willing to hold stocks if the market starts to fall again - my guess is not many.
All the same factors are in place as last May. Just wait for the break. RIght now, if we break 900 S&P we should test the support at the upward trendline at 868. Any close below 868 should be shorted. Do not believe this rally. The banks are selling shares for a reason. The consumer is not opening up their wallet. Most important of all, the market is expecting a "V" shape recovery and is unprepared for a "L" shape recovery which eventually will dip even lower!