Monday, May 20, 2013
My system moved higher to +1275 last Tuesday, then higher to +1325, then higher to +1350, then higher to +1400, then higher today to +1425. My system is back at the peak level of January (and one of the most overbought readings ever). This is definitely surprising that my system got back up to those levels and while we may be very near a short-term top, there is no way this is the bull market top. Speaking of the short-term top, it is quite possible we hit it today at 1672 which is well within my 1667 +/- 20 points zone. Either today was it or we will have a slight 1-2 day dip followed by a marginal new high in the 1672-1687 area and then the start of the correction next week which should take us for a test into the 1575-1600 zone by next options expiration. After that we should rally all summer and we are going much higher and will near 1800 on the S&P 500 but may or may not hit it depending on where the current short-term top is and where the subsequent correction bottoms. Only a move below 1536 would question the bull thesis and a move under 1500 would solidify that the bull market has ended.
Monday, May 13, 2013
My system moved higher last Tuesday to +875, moved higher to +1025 on Wednesday which is an overbought buy signal, moved higher to +1125 on Thursday, moved higher to +1175 on Friday, and moved higher to +1200 today. As expected the market continued to move higher but should be near a short-term top probably coinciding with options expiration this Friday. While it's possible that today's high of 1636 will be the top, I don't think so and am looking for perhaps a small dip before a move into the 1647-1687 zone this week to mark a short-term top. Regardless we should test 1600 again whether it's now or over the next few weeks.
Monday, May 06, 2013
My system moved higher last Tuesday to +400, then lower to +350, then higher to +400, then higher to +575, and moved higher to +700 today. As expected, the market has moved higher since my call last week that the bulls would push this higher. Since my system has more room until +1000, the market should continue to move higher this week but the rally probably will top out towards the end of next week give or take a few days. And 1667 +/- 20 points remains the target so I think it unlikely we hit 1700 until there is a pullback that should test 1600 first sometime in June. As you may have noticed, I have been cutting back my posts and will be posting weekly going forward.
Monday, April 29, 2013
My system moved higher to -50 on Wednesday, moved higher to +150 on Thursday, moved higher to +200 on Friday, and then moved higher to +300 today. In my last post, I mentioned that if the momentum changed in my system we could easily get to 1650 in the market and that is exactly what is happening. There is plenty of room for the bulls to run again. I'm looking for a move to 1667 +/- 20 points in May, followed by a correction to 1595 +/-20 points in June, and then culminating with a final bull market rally to 1779 +/- 20 points in or around September. If this plays out, there is a substantial 10-12% rally from here left in the bull market that started in March 2009. Therefore, the bears are just too early here and should just sit tight until the summer is over. Only a move below 1485 will prevent the bulls from this intermediate term bullish scenario.
Tuesday, April 23, 2013
My system moved lower to -175 on Thursday, -200 on Friday, -250 yesterday, and then moved higher to -175 today. Of the rally that started in mid-November, my system hit a high point in late January which is the point at which uptrends were at their maximum level. My system hit a lower high in mid-March and since then my system has been almost straight down. In fact, more stocks are in downtrends than in uptrends even though the S&P 500 is about to hit a new all-time high. Could these stocks in downtrends change direction and cause a momentum swing to the upside? Certainly, and if they did we could easily get to the 1650 level. However, the longer this divergence plays out, the more suspect these new highs will be if they occur.
Wednesday, April 17, 2013
My system topped out at +625 on Friday and then started plummeting. It went lower to +375 on Monday, lower to +275 yesterday, and lower to +50 today. We are hovering just above the zero level. The negative divergences that were and are occurring have been warning about this move lower in my system. If price continues to a new high, it will likely be with fewer stocks powering the move which is a bad sign for bulls and will lead to a significant sell-off at some point down the road whether it is tomorrow or in the months ahead. The worst case scenario for Gold is a move to $600-700 and for Silver it is the $11-12. This would provide major bottoms to the metals but would confirm an extended correction period lasting years. I would be a major buyer down there. If Gold can hold above $1000, then there is scope for an extended corrective period but an upcoming final leg of the secular bull would be a lock.
Wednesday, April 10, 2013
All-Time Highs...Sort Of
My system moved lower on Friday to +400, lower to +375 on Monday, flatlined on Tuesday, and then moved higher to +475 today. Today the S&P 500 hit all-time nominal highs but of course, inflation-adjusted highs are still a ways away. The market needs to get up to around 1750 or so to surpass 2007's high and above 2000 to surpass the 2000 high. Of course, by the time it gets near there it will probably have to move a bit higher than that. In order to declare that a new secular bull market has started, the market will have to surpass a previous secondary peak but on an inflation adjusted basis. This means it will be a few years after a secular bottom before a new secular bull can be confirmed. The secular low in 1942 was confirmed around 1945 and the secular low in 1982 was confirmed around 1985. If a secular low occurred in 2009 then the confirmation shouldn't be too far away, I would say a move to 1800-1900 in the next 12 months would confirm it which is about 15% or so from here. If the secular low has been reached then the next secular high should get to around to the 9000-10000 area. Bottomline, there is a lot of time for investors to get into a secular bull even if they wait for 2000 to be hit first.