Ed,
I will express to you what I interpret of the compx chart I am now viewing. As charts are the same to all who view them,
the differing viewpoints of those viewers can only be explained by different interpretations.
Firstly, the most obvious and glaring feature of the chart today is the obvious rupture of the lower up-channel line depicted by connecting the lows of 4/25, 5/14-16, 5/30-31, 6/12-13. Additionally, todays blast downwards resulted in a Black Marubozu candlestick, something no one who is long should ever like to see. It portends more downdraft to come.
Since todays close and low is only the 38% retrace of the rally from 4/4 to 5/22, targets of 1960 (50% retrace) and 1880 (62% retrace) must be therefore considered upcoming.
Additionally, the up gaps left open must also be considered as feasible and likely targets. Then there is the further consideration of retest of the 4/4 low, and furthermore, continuation of the larger downtrend which would point to even lower targets. When viewing charts like MSFT which look to have only just cracked today, not anywhere near their downside fib retrace targets or April lows, the possibility of very destructive and negative action to come is quite alarming.
Of technical note is the fact that stochastics on the daily compx has not even entered the oversold zone; given that stochastics can enter the oversold zone and stay there for prolonged periods, the possibility for some very nasty downside is only strengthened. ADX D- is shooting upwards and ADX itself is just turning upwards, supporting the downside action and that the move is accelerating.
On the weekly chart, a clear break of the uptrend can be seen, stochastics are JUST NOW crossing down from overbought zone, a very alarming and disturbing development which hints that the down action now beginning is just that: ONLY BEGINNING and likely to last for weeks to come. Drawing a downtrend line on the weekly, lopping off the heads of the 9/1, 9/8 weekly candles, it can be seen from the larger picture that there is a decided downtrend in effect unbroken from the March 2000 highs. I am guessing that lower lows than April are yet to come.
It was not exactly my intention to post what should rightly scare the pants off long investors, but to be honest I would be scared chitless if I were long right now anything that wasn't already in the cellar. Especially vulnerable will be any stocks that have appreciated considerably from the recent rally, as the rally's effect was to suck in long money and now I fear another fleecing of the general public. I do not consider myself a doom and gloomer and am usually careful to
choose my words well not to provoke ridicule and derision which I am have now left myself open to. At this point, I do not think I have much to worry about, the charts have spoken today, and very loudly.
That is my opinion at this point and is probably as negative a post on the market as I have read on this thread or any of the many threads I currently follow. So be it.
I agree is essence to your vivid description of blood and red to come. I do not consider a specific time horizon, only that the chart is now very negative and only a fool or unfortunately ignorant individual would ignore the warning given.
I will amend my expectations only after the chart indicates a bottom, wherever it falls, has occurred.
Best of luck to all in the current market,
Best Regards,
Eichler |
