Thursday, April 02, 2009

Giddy-up?

The market is about done working off its extreme oversold condition from the first week of March. If this chart isn't enough to convince, the giddiness on CNBC today should say it all.



The marked gapped up today and then struggled all day to gain any additional traction. The horizontal blue bar below represents strong resistance, hit early then and repelled prices repeatedly all day. The Wave Count below is five waves up into resistance and suggests at a minimum an ABC counter-trend reaction. The the big drop begins, this is how it will look.


The next big trade will be to the downside. The more the S&P rallies, the harder, faster and further it will fall. Once news-driven short-covering is over, whether it be a day, a week or another month (unlikely), the bull-trap will spring.

A

13 comments:

Wayne said...

Hey Allan,

how much do you think the "uptick rule" will affect market sentiment? I know that last year's selective short-selling ban gave some brief momentum ... thinking the uptick rule will be equally fleeting.

Always enjoy your insights, keep 'em coming!

Thanks,
Wayne

Allan said...

Wayne,

I have a more poignant issue for your consideration: How much of the nastiness of the past 12 months could have been avoided if they changed the mark-to-market accounting standards a year ago, instead of today? How many financial institutions would not have gone belly-up? How much less would the treasury and taxpayers be on the hook for and would the acronym TARP be even in existence?

Anonymous said...

Allan , what do u propose for the comming decline(if any) to take?
serge

Anonymous said...

Changing the mark-to-market rule is another example of how our government is trying to white-wash the long-term debt problem. It will make the ultimate decline worse and the recovery slower, because no one will trust the balance sheets of corporate america.

The wave count off the low is unclear, and when that is the case, I don't try to force it.

Using other methods, I suspect we'll rally into the 8108 to 8349 resistance area. I'm going to sell out my 1/3 401k position there, and look to re-invest at lower levels. Likely, we'll get a good sized correction from there.

Alex

Anonymous said...

MY GOD......You've been calling for this massive sell off since December. Give it up.

If we get just a slightly improved jobs report this morning you can throw your charts out the window.
Why fight it?? Anyone who followed any of your "Crash Warnings" has had their asses handed to them over the last 4 months.

Anonymous said...

Anonymous...I don't know what blog you've been reading there Chief, but it clearly has not been Allan's. Your comment is just inaccurate and quite frankly stupid.

Anyone...what index is Allan showing in the last 2 charts?

Thanks,
Mike

Anonymous said...

looks like the QQQQ

Allan said...

Re: Charts - Yes, the index is the QQQQ;


Re: Mark-to-market - Alex is right, it perpetuates a fraud upon the taxpayers of the country and ultimately the piper has to be paid. It would be too, too, ironic if the change in mark-to-market standards accompanied the top of an Intermediate counter-trend rally and brought into being the beginning of the next leg down. My trend models are beginning to flip red (down) again after being mostly blue (up) for the past three weeks.

Anonymous said...

Anonymous,

I have to agree with the comments here. When the market was trading in the 8,000 and 9,000's Alan and others on this blog were calling for a decline to the 6,000 to 6,500 area.

Myself, I didn't believe it, having a target of 7187 to 6800.

I planned to buy it there, but when momentum surged, I got scared, watched it go to 6469, and when I finally got the guts, bought it (7289) as it was going up.

Their bearish call was a good one.

I do think we'll have a lower low in the Dow, but it won't be for a year or two.

I tend to look at the fundamentals and wrote something about that at www.pickenspolitics.com.

You may want to read it.

Alex

Anonymous said...

It takes big time guts to make the calls Allan does here. He puts himself out there on a limb and it's very easy for people to take shots from a distance. Take a look at the headline dates for some of his recent (last 6 months) calls. Forget the banter, just look at a DOW chart and the dates.

Some VERY IMPRESSIVE predictions on market moves that proved extremely accurate.

My hat's off to you Allan.

Pete

David said...

A couple of months ago, after reading that Armstrong paper, I penciled in a potential top on April 20. I'll have to go back and confirm it.

That's about all I have to go on right now, feeling pretty confused. My TA seems to be giving more conflicting signals than usual such that I don't feel comfortable trading off it.

Allan, what's your short term outlook on gold? It's been looking more and more like a short to me. The potential H&S top formation may have broken down today.

Anonymous said...

Jim Cramer says he can make the call this move is for real. hehe!

mlomker said...

One thing is for sure, someone is going to crushed soon. Prechter believes that Primary 3 up is around that corner...

I personally don't like the lack of visibility.