Tuesday, April 3, 2012

Under the hood of the market....not a pretty picture

The market has now risen over 32% from its October 2011 low of SPX 1074.77 to an intraday high of SPX 1422.38. The Transports are diverging with the DOW. The Transports have not confirmed the DOW's rise above its May 2011 high. We have potential divergence setting up on a monthly basis. Volume has been declining since the rally began last October. In addition, the entire rise since March 2009 looks like a rising wedge, and we have a more pronounced rising wedge since October 2011. This bear market rally has now gone on for over three years, and it looks like its about to come to an abrupt end. The end of this cycle wave B Bear Market Rally and the return of the larger bear market that began in October 2007 should be imminent. Very few believe it is a bear market rally anymore. This is to be expected at the top of a cycle B wave.


  1. We are getting very close Chris. Media are reporting the end of the Greek crisis; economists are discussing the encouraging growth figures of the US and Jean Claude Trichet called the EURO a great success last week. We are very close to an inflection point in the markets. It's time to get afraid especially when you are in euros in the EU banking system. People think they are safe in these structured financial products with a constant return. They have no fear in losing the principal or even the debtor going broke. Its very hard to warn people. They say you are too pessimistic or even call you an idiot. It's so sad ... And the beauty part of it is that if I get this completely wrong, the only thing I can loose is a lousy 1% interest that I get from the bank. Get your money out while you still can; while it's still calm, while the bank is still open ...

  2. Frnak,

    Couldn't agree more. The Risk/Reward ratio associated with keeping your money in the bank is way out of sync....there is no point in doing it. Its best to stay in the safest possible cash equivalents in the safest possible institutions until the bear market is over. All of those "optimistic" things you mentioned were not being talked about in March of 2009. Everybody knew why the world was heading into depression. I am warning people at a time when people are optimistic after a three year rally. Most analysts will not see this next leg down coming and most money managers will be panicking on the way down. That's why its important to warn people now while things are still relatively stable.