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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Real Man who wrote (89524)	8/8/2009 6:03:22 AM
From: GROUND ZERO™	Read Replies (1) \| Respond to of 94695

Why gap up and over on Monday for the rally to continue? TIA We could go sideways to lower for a couple of days and then rally again, I seriously doubt this rally is over...<g> GZ

To: Real Man who wrote (89524)	8/8/2009 5:54:52 PM
From: FJV	Respond to of 94695

Vi, I agree with your assessment. The weekly chart of the SPY below illustrates an interesting parallel between the current market and the bear which existed between 2000 and 2003. Two parameters are shown. One is the 75 week volume weighted simple moving average. The other is a fibo retracement, measuring a 38.2% retracement of the move from the high of the previous bull to the most recent low point indicated. Notice that in March of 2002, the retracement was halted at the convergence of the parameters indicated. The move failed, and the bear resumed with a vengeance. It took another year for the SPX to recover in earnest and the bull market from 2003 through 2007 was launched. Also notice that the 75 week volume weighted SMA has only been breached twice in the last 8 years by the weekly closing price of the SPY. Once was in early 2003, signalling the beginning of the bull and once at the end of 2007, signalling its end. As mentioned above, when the price approached from below in 2002, the result was dramatic to the downside when it failed. During the subsequent bull, you can see that it was tested to the downside on numerous occasions only to serve as support and further resumption of the bull - until the end of 2007, when it was emphatically breached and the current bear was born. In early 2008, the MA was approached from the downside during the first serious bear market rally for the bear. The weekly closing SPY price failed to penetrate and the worst price action since the 1930's ensued. Now we find ourselves at, IMHO, at an important focal point for this market. If the SPX can overcome the resistance of both the 75 VWSMA as well as the fibo retracement converging at this juncture, and give one weekly close above both, my suspicion would be that the current bear is dead. If, however, prices reverse next week and head south, we could see a devastating market for bulls over the next couple of months. My initial downside target would be the previous lows of early March. If 660 doesn't hold, we could easily see 550 on the downside before this bear finally dies. Has this been a false rally, like that of late 2001/ early 2002, or does this mark the end of the bear and beginning of a new bull market, as was the case in early 2003? It could go either way of course. What we see next week, however, should tell the tale one way or the other. BWTHDIK? BTW, as a lurker, I very much appreciate all of the valuable contributions that both you and GZ provide to this thread and others. If you find any of this diatribe of any value, please let me know. Even if you don't, I welcome questions, comments or criticisms. Thanks. Franco