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Is the 2007 Market Top in the SP500 trying to tell us something now ?

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 spx20102007

There app ears to be a pretty solid chart pattern similarity between the 2007 sp500 market top and the current 2010 market structure.  The 2007 top was a slow grinding top and almost seemed like it happened in slow motion.

The current 2010 price action seems to have the same flavor with slow trickle up price action on generally weak volumes.  It is this slow and meandering price action that seems to lull a lot of people into complacency and forget that this market still has the potential to turn on a dime and transition into fast and furious downward price action.

But actually it would be incorrect to call the price action after the final high in 2007 as ‘fast and furious’.   It was still labored price action that marked the early stages of a much longer term decline.

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iShares Lehman 20+ Year Treas.Bond Looks Extremely Bearish on Monthly Chart

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tlt20100325

The iShares Lehman 20+ Year Treas.Bond monthly price chart looks very bearish to me right now and seems to be telling us that higher interest rates are coming in the months/year ahead.

The iShares Lehman 20+ Year Treas.Bond is showing a very large descending triangle pattern on the monthly chart after being stuck in a messy trading range for the last 10 months.  The last two days down volume was extremely heavy and in the near term is a telling sign of a possible continuation move as we go into the second quarter time frame.

We all know that the broad market averages do not like higher rates so this chart if eventually confirmed paints a picture of eventual pressure on stock prices.

It also seems to be saying that the US dollar Index will extend its northward move in the weeks/month ahead.

It seems like the whole world already knows about the US of A debt problems and the degree to which we are over extended in terms of our current borrowing and our ability to borrow any more.  But up until now it just seems that no one has had to pay the price for those excesses.  It seems as if no penalty or real crisis has evolved into something tangible yet.

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Went long the TZA Direxion Daily Small Cp Bear 3X Shs 7.50 April Call Options

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Today’s reversal candle was pretty nasty looking and serious enough for me to jump into the TZA Direxion Daily Small Cp Bear 3X Shs 7.50 April Call Options.  I will probably go long the TZA directly or some other inverse bear ETFS tomorrow.

This looks like an important top, but it is way too early for me to be talking about it being ‘the top’.  It could just be a swing trading type of top, but it looks serious. 

In addition the Mcclellan Oscillator looks very ominous as I see a double top in price of the New York Stock Exchange and an oscillator that looks ready for a steep decline.  Price usually follows the oscillator down.

mclellan20100325

It remains to be seen how well some of the stocks behave in the coming correction.  I just got done talking about how great LVS Las Vegas Sands looks, but if the market as a whole falls apart, LVS is going to have to the 20 level, otherwise a more complex correction could ensue and it would have created a false breakout.

Its funny how yesterday I was talking about not shorting this market until the 50 day crosses negatively down through the 200 day moving average… but then only a day later I am trying to be a hero calling a market top.  I guess it is just too tempting to try to nail an exact top because most of the ‘juice’ of the decline seems to happen in the first 20th percentile.

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The Gold Price is Behaving Badly Again and May Turn Very Bearish

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gld20100324

The Gold Price is not inspiring that much confidence right now.  The US Dollar Index got a huge breakout going and gold seems to be shying away from the recent range.

I indicated in my previous post on gold that a move above 114 was critical for me to start jumping up and down and get on the gold train again.  Otherwise there would be risk of bouncing around in a tiring dangerous trading range.  That appears to be the case now and it is important for the GLD ETF to hold 105 level as it would help to create a clean looking head and shoulders bottom formation.

If it breaks the 105 then there is a risk that the GLD wants to continue to break down in a confirmed A-B-C down taking us to perhaps the 100 level.

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Not Short Selling until 50 day moving average crosses 200 day moving average

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SP50020100324

My mindset right now is to absolutely refuse even thinking about shorting this market with inverse ETFS or any other means, until and if the 50 day moving average of the SP500 crosses over bearishly the 200 day moving average.

Now you might say I am ‘slow’ or chicken to attempt to short this market until I get such a long term signal, but I would rather be a slow chicken that takes his time to get on the right side of a trend than super index trading expert hero that feels the need to try to pick the exact top.

For all I know this market may trade all the way back up to the old all time highs in a year or two.  In fact that situation has a decent chance of happening based on simple oscillating stock and index theory alone.

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Las Vegas Sands Corp. (LVS) is behaving like a Champ

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Marina_Bay_Sands_model_1 Las Vegas Sands Corp. (LVS) which I first mentioned as a possible breakout candidate here is behaving extremely well and right now is one of my favorite stock charts to focus on.

There are a number of reasons why LVS is worth keeping as a permanent watchlist stock for short term and long term tracking.

  1. Liquidity -  Las Vegas Sands Corp. is an extremely liquid stock and it moves nicely and seems to trend smoothly, not to mention the fact that it has a very clean chart from a short term, and long term perspective.
  2. Smooth Trending – I already said that, but I say it again because it is a great thing to have in any stock.  In fact if you did not tell me the stock symbol LVS before looking at the LVS chart, I would almost think it was a currency price chart as they also tend to move in more reliable trends.
  3. Options Liquidity – It has heavy options volume and plenty of liquidity in that department as well
  4. Its Cheap! – Relatively speaking LVS is still a lower priced stock and can still make some big moves. 
  5. It is a nice way to play the contraction and expansion of the economy as discretionary income levels contract or expand.  Got a little extra cash? Well then of course! Lets go blow it all off at the casino and see if we can win big!
  6. The Marina Bay Sands Casino in Singapore (pictured above) is scheduled to have its grand opening on April 27, 2010 after Las Vegas Sands Corp invested 3.895 billion dollars on it.
  7. It is a proven business and not a China Stock that is just starting operations an unproven.  Don’t get me wrong, I like all the little China Stocks, but many of them recently have plunged 30% in a few days time because of ‘accounting problems’ and other crazy reasons.  China Stocks can move big but a lot of them are still unproven business models and still highly speculative.
  8. They have a ‘sky garden’ on top of the Marina Bay Sands Corp Casino! Man would I like to hang out in that park on top of those three large buildings! Totally AWESOME 🙂 If there ever was a place to take a woman out on a ‘first date’ that would be it !

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Another Long Term Chart of Natural Gas

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sc 

This chart was sent to me by ‘Michael’ and is a nice piece of chart work on on the natural gas contract so I thought I would repost it here and let it basically speak for itself.

When I look at this chart it has me thinking that the bottom in Natural Gas may be sooner than I realize because when I look at the pattern of 2009 and 2010 and then compare it to the pattern of 2001 and 2002, one could make the argument that we have ALREADY made a W Bottom and now we are simple making a similar ‘handle’ as we saw in the 2002 time period.

Also significant is that we are right now near the 61.8 fibonnaci retracement level near the 4 range.  That 61.8 fibo level may provide some significant support to the natural gas contract as we close out the month of March.

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The UNG Natural Gas ETF is Going into a Death Spiral

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This may be one of the most important posts I ever write.  Well, actually scratch that… this may be one of the most important precursor posts I ever write to the eventual ‘signal’ post that I do on the UNG natural gas ETF.

As of the date of this post, it is clear to me that the current most recent trend is down in natural gas futures.  The recent natural gas inventory report that came out last Thursday at 10 am helped to kick off another bearish leg down in this all to abundant element.  But my take is that there is a lot more to the story than that.  There is a larger chart structure that may provide some significant clues as to what natural gas will do in the future.  More on that in a moment…

But first I just think it is really fascinating how Natural Gas Futures have been behaving for the last year.  It seems to have a completely independent mind of its own and could not care less what oil, gold, or the stock market is doing.  This is an important fact and one of the reasons why I like to keep track of what it is doing.

Why? Because it can provide a potentially completely different and much better risk reward setup when most other securities and indexes are all doing pretty much the same thing.  That trading dynamic is my favorite one because it potentially allows you to participate in a brand new trend that is in a completely different trading cycle than everything else.  It allows you to completely separate from what 90% of what everyone else is doing.

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