Switching to BOT Short at the AM on the sp500 Open

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I am switching back to BOT short signal on the sp500 right now in the afterhours or from the open tomorrow.  The tape looks too weak and I am making the conclusion now that the 5 to 7 day super mega rally we had a couple weeks ago was a massive bear market rally.

I think that bear market rally was the beginning of a big unraveling and we are about to see all of it retraced to the downside which will be very bearish.

The two monthly hanging man candlesticks seem to be correctly forecasting the direction of the current market.

The MONTHLY time frame continues to look very bearish and from the monthly time frame chart of the sp500 and some other indices I can say with much less doubt now that we will enter the most destructive price action in SEPTEMBER or OCTOBER of this year 2011.  That is how the monthly chart projects from my view.  We should continue to see weak tape action leading into that time frame and it will continue to get weaker and weaker as time progresses towards that target time frame.

I would not be surprised to see 1180 or 1050 in the sp500 by October 2011 this year.

You have probably heard it said elsewhere that ‘tops take longer to form than bottoms’.   And this time appears to be no exception.  This top has been a process, not a one time event.  It has the flavor of distribution and a transfer of shares.  So soon I think we will see the eventual result of that which is a change in trend from up to down on more longer term basis.

The sp500 should break down through 1250 decisively and we should see some real fireworks to the downside going into October of this year.

The SMH  (semi conductor ETF) and the XLF (financials ETF) look HORRIBLE and will suffer equal devastation going into September October 2011.

4 thoughts on “Switching to BOT Short at the AM on the sp500 Open”

  1. Somehow, I think you are going out on a limb. I simply do not see the deterioration that would be needed for such an extreme scenario.
    I think we will be going into a market of stocks rather than a stock market. With plenty of room for some good calls.
    The EW is still looking for a new highs. The McClellan Oscillators and Summation indexes still indicate there is a lot of room for the upside.
    I still don’t get into the fundamental argument regarding the EU market. I simply do not understand why the PIGS moving out of the EU is such a disaster. It is like the situation in Chile, where the IMF kept demanding austerity which led to riots in the street.
    Finally, Chile dropped the draconian measures and low and behold the economy flourished.
    As two Nobel Laureates have written (Stieglitz and Krugman), the argument regarding the confidence fairy has never ever worked out in actuality.
    Look to what happened in Brittan with its misguided austerity programs, the call for belt tightening with a still weak economy simply does not work. Look at the U.S. in 1936.
    Cooler heads such as Bernanke will prevail, we will muddle through and the stock market will reach new highs sooner rather than later.
    But as I have said on many other occasions all will be revealed in the fullness of time.
    And yes I am still quite happy with VICL!

  2. as a bear, i take ZERO solace in this blogs latest post calling for a down market. this blog’s record is horrendous.

    this blog bot long at 1296, rode the market up to 1357 and now down again to 1317, so with the bot short effective immediately, this blog has made a profit of 21 S & P points. but, in June this blog over a succession of trades lost a whopping 87 S&P pts within the short span of about 3 wks.

    i think the market could “swoosh” lower at any time. perhaps an almost immediate haircut of 10% or so will set up for a final rally that the EW folks are talking about.

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