Thursday, January 19, 2012

Huge Bull Trap Setting up

While the major indexes are closing in on their 52-week highs.... and are likely to exceed them as we await this cyclical setup identified by Tim Wood as occurring at EVERY major top since 1896...the bears are all but disappearing. The following chart by Sentimentrader shows how few bears there are left.




Meanwhile, as I have stated before, Tim Wood's cyclical DNA marker setup will mark the top of this bear market rally that started in March 2009. Despite all the bulls that are coming out saying its a new bull market....its still just a bear market rally that will serve to trap the bulls in that buy on a "breakout". the Nasdaq 100 index (NDX) has broken out to a new 52-week high today, and the other indexes are likely to follow shortly....but once we get this setup....its game over. I do not see the S&P getting much higher than 1440-1462. One thing I can say with certainty is the higher this bear market rally goes, the more people it is going to fool.....and the more pain will ultimately be felt as the next leg of this bear market takes hold and deflation collapses asset prices. If people think 2008 was something....this next leg of the bear market is going to make 2008 look like a Sunday School Picnic.

4 comments:

  1. Hi Chris,

    I'm afraid I have to agree with you. I know T Wood for a long time and have been there when he made some very famous and correct calls in the past. This guy knows his stuff and past experiences tell me I have to stick to his story. Fundamentally nothing has changed here in Europe. Liquidity solutions don't solve a solvency problem. Everybody seems to think the lower Italian bond yields solve the solution but they forget that too much debt at low yields caused the problem. We are in a calm before the storm. And a hell of storm it is.

    Thanks for the post,
    Frank

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  2. Hi Frank-

    Thanks for the comment.

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  3. Agree with the chap above - calm before the storm is the best way to describe it. Fundamentally, NOTHING has changed in Europe. ECB brought some time with LTRO, but default by Greece and possibly Portugal is right around. Stay cautious on equities, wherever you are....

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