Tom,
Here's why I've turned so negative so 'suddenly,'
although my turn was really gradual over the past
several weeks as I've observed the following
phenomena develop:
1) When it was time for the markets to rally, I
didn't see any back to back up days.
2) The advance declines still continued to
deteriorate as the indexes rallied, and accelerated
negatively most recently.
3) Rates have bottomed in the cash market and I
see a run to 5.65% in the long bond, at least.
Brazil raised their rates to attract investors back
to their country. It seems to be working, but this
will put further pressure on U.S. fixed rate
instruments.
4) The equities market rallies were weak and
lacked confidence.
5) The NAZ financial group gave outside key
reversals at all time highs just this past week.
6) The NAZ banking group has been in a clear down
trend now for weeks without any sign of immediate
recovery. This group has not made a new high in
weeks.
7) The NAZ continuous on balance advance declines
are about to break below last October's lows.
8) Inversely, the time for a rally has past and
it's now time for a sell off, a market cycle low.
9) Even though the recent rallies were only in the indexes, and I did see a 1340 or higher measured
move, and the broader market as measured by the advance declines was not participating in that rally, the groups within the indexes themselves are now also beginning to fail. (See 5 and 6.)
10) What I outlined in 5 and 6 also applies to the NYSE and the groups that comprise the SP's.
11) The operative fork pattern is already trending lower.
12) A key day is Monday or Tuesday for a major
break according to the fork pattern I'm watching,
although it's certainty is not a must, just a
window of opportunity for the market to respond.
13) The DOW chart pattern over the past several
weeks has finally developed into a bearish coil.
It's noteworthy to mention here that what first
appeared to be an inverted head and shoulder
pattern projecting a measured move to 1340 has
finally tailed off in the last two or three
days and developed into a five point bearish coil
ending (on time) in an almost unchanged day for the DOW just yesterday. These coils typically have
only five points, and the five point count of that
coil is now complete, finishing perfectly at the
tip of the tail at almost unchanged for the day.
These coil patterns are pretty reliable,
historically. A quick eye ball measurement of that coil suggests DOW 8500.
14) Fed sentiment has changed and the threat, real or otherwise, of a Fed tightening is talk on the
street because of recent economic indicators.
I could probably come up with a couple of other
points, but, off the top of my head, these are the
general reasons short of writing a thesis on the
subject.....
But, just in case.....if we see 84, I'll cover my
shorts and run.....<g>
GZ |
