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When The Music Stops, Will You Have A Chair?

 

When the music stops, will you have a chair to sit on? What we mean by that is the market can't keep going up like this forever. At some point in time we will get a correction -- quite possibly a meaningful correction. And when we do, will you be prepared?

In the weekend newsletter we pointed out a lot of extended names that needed to come back down to earth. That would be in line with the 5th wave needing some work. When we said it needed work we mean that it's got 3 waves up but yet no clear 4 or 5 (SPX daily chart below).
 
We suspect that IF we pullback in this 5th wave (everything since the Feb lows mind you) we pullback to those green new support levels for the 4th wave, then we bounce and PUT IN A TOP. At least that's what we'd be on the lookout for IF that is the route we go. If so? Then Negative RS Divergence ought to really show up in the daily charts.







Notice the MACD at the bottom of each chart? It is rolling over just like in January. We don't use MACD too much here in this space as too many cooks spoil the broth as they say but when you see the same thing with every index out there have to take notice.

Bottom line we are close, very close to a trend change. Sure some in wave land will tell you that here comes a retest of the March 09 lows over time and ok we get that, however we'll take it one step at a time. They don't know.

The bullish side of the equation is that there is a 61.8% Fib level on the S&P 500 at 1228 and that is where we are going. Ok sure we get that. But they too don't know.

Speaking of that has anyone seen the BROAD BASED WILSHIRE 5000 Index in a weekly time frame? Sporting Negative divergence and hit the 61.8% fib level.



With everything we are showing you how can you possibly be a bull over the medium term and especially the long term, that is unless you still trust Wall Street to do you right this time around. That's the big social issue that we as a society are meant to get. And that is trust. Can you trust them? Can you trust traditional Wall St.? Can you trust Washington? Can you trust any of them to take care of you? The days of being a drive by informational investor are over. This is YOUR TIME, YOUR TIME TO TAKE CONTROL BACK OVER OF YOUR FINANCIAL DESTINY. It's what we try to instil in you all the time.

We've just had a run of historical nature as far as bear market rallies go yet the markets haven't gone anywhere in 10 yrs! What possibly makes you think that we are back to peaches and cream again? GDP? What a joke, back out the Government spending and GDP grew how much? Basically nothing. That is not the stuff LASTING bull markets are made of.

So what does this all mean to you? How do you use this to your advantage?

Simple understand that some point, sooner rather than later most likely we will go into a correction. When that happens there will be names that will fall 2-3 times what the market does. That's what we are always vigil about -- scanning for change in trends patterns and bringing them to your attention. On your most extended issues keep raising your stops.

When putting new money to work which is the riskiest point in time anyway as you have no gains to manage just initial stops with no guarantees they are going to work you need to really stay on the ball. Expect to get chopped around.

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Disclosure: No positions