T+20 today
Crash scenario is gaining support from market action and recognition from top players. Nobody says SPX 900 yet, but SI most respectable traders (Groud Zero and Donald Sew) are talking very bearish, both looking at the vicinity of Oct '99 low. Donald Sew also said that the next rally should be sold and has 2/18 as Fib turning point.
European markets today join in after behaving very strong last week. I expect them to get in phase by Wednesday, when they join the correction up. Next week is money time, if the markets break down again (which I believe they would), the loss of confidence will be complete and the atmosphere for BK all set. Still looking at Monday 2/14 as classic BK, with low on the following Thursday, and expiration Friday strong up to begin the bear market rally of 2-4 months.
Wednesday 2/9 is the day to short with the trend.
Abby Cohen saying SPX has finally reached fair value brings to memory 1929 Fisher "We have reached a plateau" saying just before the crash.
All the fundamentals point to long Euro against USD, but hedge funds closed long Euro positions and drove it down under 1.00 . This IMO signals the end of the trend. The USD will fall with the stock market, as foreign investors pull their money (tens of Billions) out.
This is not 1987. The world's economy is depending on the American consumer, which in the last three years spent a little more then its income, relying on capital gains from the stock market. When the market crashes, the American consumer will have to abruptly decrease spending, and a big depression will begin.
ATG |
