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WHERE DO WE GO FROM HERE?
You have probably heard
good arguments for both a bullish outlook and a bearish outlook. I'm still waiting until one of my two targets gets hit. From a fundamental standpoint, it is easy to be bullish after the earnings reports that we've had over the last two weeks. From a technical stand point (the charts), things still look bearish. If you look at a few of the major blowout earnings reports recently...AAPL, INTC, and MS all gapped up at the open and ended up selling off at the end of the day. Even with a big rally today, none of those stocks managed to get above their recent highs. This could just be a post earnings let down, but it should concern you if your bullish. If your bearish, you really don't want the market to move above the 7/13/10 high (about 1100 on the S&P 500). It isn't the 1131 area I mentioned in past postings, but it could mean that we could rally up close to that area. For those that have had the ABC patterns class, it looks like we are either in a wave C of a bearish ABC pattern, or that we are still in wave B of that bearish ABC pattern. If we are still in wave B, then we are close to getting a wave C (o
f wave B) that would bring the market down close to the 1040 area on the S&P 500. Then we would likely have one more rally up to perhaps the 1120 to 1125 area before going much lower. This trading environment feels a lot like the summer of 2008. We chopped around sideways for several weeks and even moved above the 50 day MA. During that earnings season, there were many analysts that thought we were recovering from the market drop that occurred during the first part of that year. By September, we had the worst financial collapse since the Great Depression. Many top companies went out of business or were financially crippled for years to come. Today we have some similarities in the charts and in the overall sentiment...but we're not talking about companies going bankrupt this time, we are talking about COUNTRIES going bankrupt or becoming financially crippled for years to come! I hope that scenario doesn't play out, but I'm not going to drink the Koo
l-Aid from those same analysts that said things were getting better back in 2008. We saw how fast and far the markets can drop when the snowball starts rolling. I don't mind turning bullish, but I want the trend going in that direction first. My advice is to sit out the market for a few days if you are nervous or unsure. If you are playing the market (bullish or bearish), make sure you have identified your key exit points in case things don't go your way.
good arguments for both a bullish outlook and a bearish outlook. I'm still waiting until one of my two targets gets hit. From a fundamental standpoint, it is easy to be bullish after the earnings reports that we've had over the last two weeks. From a technical stand point (the charts), things still look bearish. If you look at a few of the major blowout earnings reports recently...AAPL, INTC, and MS all gapped up at the open and ended up selling off at the end of the day. Even with a big rally today, none of those stocks managed to get above their recent highs. This could just be a post earnings let down, but it should concern you if your bullish. If your bearish, you really don't want the market to move above the 7/13/10 high (about 1100 on the S&P 500). It isn't the 1131 area I mentioned in past postings, but it could mean that we could rally up close to that area. For those that have had the ABC patterns class, it looks like we are either in a wave C of a bearish ABC pattern, or that we are still in wave B of that bearish ABC pattern. If we are still in wave B, then we are close to getting a wave C (o
f wave B) that would bring the market down close to the 1040 area on the S&P 500. Then we would likely have one more rally up to perhaps the 1120 to 1125 area before going much lower. This trading environment feels a lot like the summer of 2008. We chopped around sideways for several weeks and even moved above the 50 day MA. During that earnings season, there were many analysts that thought we were recovering from the market drop that occurred during the first part of that year. By September, we had the worst financial collapse since the Great Depression. Many top companies went out of business or were financially crippled for years to come. Today we have some similarities in the charts and in the overall sentiment...but we're not talking about companies going bankrupt this time, we are talking about COUNTRIES going bankrupt or becoming financially crippled for years to come! I hope that scenario doesn't play out, but I'm not going to drink the Koo
l-Aid from those same analysts that said things were getting better back in 2008. We saw how fast and far the markets can drop when the snowball starts rolling. I don't mind turning bullish, but I want the trend going in that direction first. My advice is to sit out the market for a few days if you are nervous or unsure. If you are playing the market (bullish or bearish), make sure you have identified your key exit points in case things don't go your way.
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