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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Investor2 who wrote (70193)	9/24/2006 1:20:27 AM
From: Rarebird	Read Replies (1) \| Respond to of 110194

1994 Chart of the SPX: stockcharts.com 2006 Chart of the SPX: stockcharts.com If you look at the two charts, you'll see a one month lag at critical junctures. I don't see a top quite yet; for weakness in the Nasdaq 100 has preceded all tops and that index has held up quite well against the S@P. The ideal time to go short for the steep decline I'm expecting is October 9. How low will it go? It can retest the May/June lows and perhaps go lower. But that will represent a great buying opportunity if you are in the right sectors. I expect Gold, for instance, to rocket to new all time highs. But that's the subject of another post after the October/November decline. A Brief Word on the Utilities: The Utility sector topped out on September 5. That's significant because the Utility Sector tops out approximately 9 months before the rest of the stock market. So, I don't see a secular bear beginning before June 2007. This topping out process of the Utilities also tends to precede tops in the bond market, by the way, by a variable lag time. The rise in 10 year bond yields in October is going to cause stocks lots of problems. But once the Fed starts lowering rates, the yield curve will begin to uninvert. Money will come out of bonds and go into stocks. If I was a bond trader, I'd go short the 10 year and long the 2 year note.