Market Timing

What is the SP500 Index Going to Decide from Here?

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sp50020091203

I would be completely remiss if I did not point out once again the important juncture the market finds itself in right now.  The chart above is one which I believe LOTS of people are focusing in on right now.  Why?

Well because the chart above (by the way, it is the weekly price chart) helps to summarize the market in a nutshell and defines some very important parameters that could be very key going forward.

First, it shows the entire extended bear market leg from 2007 into 2008 and then the current massive retracement higher right up to the red colored down trend line that defines this bear market.  So we know that the market at least as defined by the SP500 is perched right under long term resistance.  We also know that this is the THIRD attempt back up to the red down trendline.  The fact that it is the third attempt can be important because usually you will get a successful breakout on third attempts.

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Another 5 to 7% Drop for the Dollar or 5 to 7% Rise for the Euro

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There was a great article by Kathy Lien over at moneyshow.com where she makes the forecast and argument that the US dollar could drop another 5 to 7% and that the Euro could conversely rise another 5 to 7%.

The reason this article is important is because the almost perpetual and persistent advance in the SP500 has derived a lot of it’s energy from a slow and gradual falling dollar.  Gold and commodities have also benefitted from this trend especially in the current near term time frame as it appears the gold price is moving into the parabolic stage.

But the main point of the article that I find key is the perspective that currency moves tend to be quite persistent and not that likely to change direction once a firm trend is in place.

She identifies this 5 to 7% range of advance (in the case of the Euro) and 5 to 7% decline in the case of the US Dollar Index and it is interesting to note that those levels correspond to the Euro hitting the resistance level near its previous major high and the US dollar hitting the support level of its all time low.

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SP500 Setting up for Another Bearish Weekly Close going into End of Week

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Today was yet another interesting day in the market.  I went short the XLF near the close with a bunch of put options and also went long the TZA again.  The bears in my opinion won the day.  We continue to see a market that keeps doling out positive news and yet the market continues … Read more

US Dollar Leopard versus The Wildebeest Herd Complacency Trade

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Did you ever use to watch those nature shows on PBS where they showed massive herds of animals in Africa?  I used to watch those shows as a kid and it was always somewhat fascinating to see those large herds of animals feeding there but then suddenly get spooked and almost ALL at ONCE start … Read more