Unfortunately, it will break the 9/21 low
The way I'm looking at things now, the question is only when it will take place. As people have been saying for quite some time, valuations are still high, the VXN is still low indicating there are still too many bulls presently, and the bullish benefit of last year's increased liquidity is slowing down.
So do we merely short and hold until then? It's never quite that easy. The bigger question is what will be supposedly be the catalysts for rallies between now and the time it breaches the low. If this year is anything like the last, these catalysts will seem to come out of nowhere, so to speak.
I've noticed in the past year that the catalysts for major moves have basically been unexpected. For example: (1) In January '01 the fed's surprise interest rate cut led to a four week rally (2) in early April '01 Dell said it would meet the next quarter's earnings, and that announcement lead to a six week rally (3) last October analysts suddenly decided that a 2Q-3Q recovery would take place and that led to a 10-13 week rally.
While many would prefer it to go straight down to a new low with no major rallies, the big boys just won't sit still for that scenario, so I'm sure they'll find something to put a spin on that will give the bull another chance to kick. The question is only what those issues will be, and how long the rallies will last before we inevitably breach the former low. If the big boys have it their way, and of course they will, it's probably going to be something out of nowhere, just like the others. |
