I wrote a long war and peace novel on what I saw but had a power
interruption that wiped it out so the second draft won't probably be as good
but..... My short term picture is unclear but my longer term picture is
getting clearer. We are for some real trouble up ahead.
The ever increasing narrowness of the rallies is reaching a make or break
point that still may not come for a while but it IS coming. More
later on that. Short term, my cycles did not climb as fast as I had hoped
so this rally could last a week or more instead of the few days I originally
was looking for. The NDX is up against a resistance line that has held for
numerous rallies and always held, I don't think it will this time giving
credence to Heinz's call for a blow off rally before the end comes. This is
one of the things that has me worried about the long term outlook. I read
around SI and the bulls are back, thinking we are over sold and need to
rally back even though the pullback was relatively small and did not even
hardly touch the biggest names. There was no capitulation selling, volume
or any other signs of a genuine bottom other than some nice bounces off
support fork tines on the daily charts. The chance of having a blow off top
here and squeezing the bears that jumped on board for this last pullback
could happen now although as I said, the short term is unclear to me here.
Longer term, there are serious danger signs. I have weekly over bought
readings on almost every stock that I would call the biggest, strongest
stocks that have been the ones that masked the selling of the rest of the
market. These are the ones that have made the indexes look great when the
rest of the market was falling apart. My weekly signals show what is ahead
and are lousy for timing so no telling when it will come, but it will come
and it won't be pretty. If it does wait a while, there will be no X-mas in
who-ville this year. I have signals on GE, MSFT, SUNW, AAPL, DELL, EMC,
CSCO, CTXS, BGEN and a slew of other stocks that have been doing great and
have made the indexes look like there are no problems. I also have signals
on the DOT and IIX internets indexes, the CWX software index, XCI computer
hardware index, TXX technology among others. To add credence to these
signals, I have over sold readings on the XAU and my TYX Bond interest chart
shows we are finishing a weekly short term cycle up which should allow rates
to ease slightly but the mid term cycle is almost bottomed so in a few
months, the bond should get hit again pushing rates much much higher near
the end of this year.
As I scanned through folders I rarely have time to look at, there have been
tons of stocks with non eventful charts suddenly just cascading off of
cliffs. Trannies are as you all know falling apart, airlines, FDX's
admission that gas prices are hurting them, rising commodities, although the
dollar really isn't falling except against the yen, it is serious enough to
prompt a meeting between Japan and the US and if unsuccessful in the
defense, could lead to a faster pulling of foreign assets from US markets to
Asian markets all are not good but we have already covered all that here.
This is one of the things that is bothering me. What will be the straw that
breaks the back of the market. Most of the bad news is out. Will we rally
into the October FOMC meeting and AG having a bad day chastises the market
sternly and raises the rate more than expected? Foreign money just flees
the US causing the drop???????? I am at a loss to explain what could allow
a rally then a drop. Maybe we don't have the blow off and stay in your
trading range but the daily charts aren't pointing to that scenario from
what I see so far.
That is another item of concern. My daily and weekly charts are more
disjointed than ever. The daily charts, that are better for timing, are
fairly bullish. My weekly charts look like Armageddon is just around the
corner. The weekly charts are also in agreement with each other so I doubt
they are off. A rising TYX and XAU go well with large caps getting slammed
and index charts dropping another 15% or more.
It is early here in nowheresville Idaho so I may find more out as the
weekend progresses but as I said, the short term is clouded and we could go
up, stay flat or drop <GGG> actually I think up for a week but then the
longer term says we are about to have one heck of a correction. To borrow
Frank's line, "Feel free to make comments, throw stones..."
PS - My site is updated with the first draftfor the weekend
Good Luck,
Lee |
