Do Or Die Time For The Bears

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What's it going to be, a new rally or a sell off?


I see a sell off, but Jim Cramer is now bullish.  Of course I'm not being paid for my promotions (err... opinions) like he is, so I'll let you come to your own conclusions there.  Regardless, the charts tell me that a sell off is coming.  This rising wedge has too break soon, as nothing goes straight up... especially if there's no more stimulus money to support it.

The bears need to gap this thing down below support tomorrow morning, or the bulls are going to stage another massive murder of them.  Maybe Cramer is right?  He doesn't always make the wrong calls... even if he's paid too do so.  He has to "save face" every now and then.  Of course that little comment in his video about breaking the 500,000 mark on the job data could be his escape... should the market sell off as I expect it too, instead of rally.

Moving on...

I'm sticking with my call that we are going to break down from this rising wedge and head lower toward the end of the week.  How low... I don't know?  Again, we still have that FP of 105.39 spy that will eventually be met... the "when" part is always the toughest one to figure out.

We also have the ritual side of this, which is the fact that the Legatus Pilgrimage is over now, and the market should reverse the direction it was going into the meeting... which was UP.  Let's not forget the release of the new Wallstreet movie too this week.

I'm not buying into this bullishness.  I still believe the market is 95%-100% done with this rally.  Tomorrow needs to break down out of this wedge, if the bears stand any chance.  If not, then we could be looking at a slow grind higher into the November elections.

Maybe we are going up to the DIA 118.16 FP first?  It's times like these that have me questioning my thoughts on the market.  Just when I'm thinking that maybe the bear case is dead, and this rally is for real... that the market finally reverses and heads lower.  I'm at that point now, so I know a top is close.

Will it start tomorrow, or wait for Thursday or Friday?  It should start tomorrow, but again... this bull just doesn't want too die just yet.  But, I'm a patient man and one more day doesn't matter to me...  I know a turn is coming soon.

Red

48 COMMENTS

  1. IWM rsi 69.5 is the top I’m looking for. or QQQQ rsi 78, whichever comes first. July earnings, remember those? They were good enough to repeat the April high’s. Oct earnings are rumored to be just as good as July.
    That’s where all the money is coming from…Corporate Profits, plus, Congress passed laws, so that the corporations can put unlimited money into campaigns. ( Alexander Hamilton is spinning in his grave with Joy) Was he a slave owner?

  2. Wasn’t most all of the presidents back before the civil war slave owners? Maybe not all, but a good portion of them were. Sad part of our history. But today, we are all slaves… black and white alike. We’ve come a long way since then… LOL

  3. The economist reaction to the fed today was dismal. futures are now fairly positive.

    The sell off will not happen this week

  4. Hey Red, Good article on Drudge concerning A Vatican Bank being investigated for money laundering. Maybe there is something to that Legatus story…….Futures and bonds rallying. Sucking everyone in before the correction…….

  5. okie dokie Red!
    QE2 probably won’t begin in NOV, because that will look bad for the politicians. That means Dec. expect more QE2. The plan is to buy a 1/2 trillion treasuries, also, look for the Fed to start buying mortgage backed securities…( I guess the Fed is too big to fail, scary thought, they will be buying MBS’s)

  6. (the mike was accidentally left on)
    Ben Bernanke, said, And I’m paraphrasing, “ we at the FOMC, are prepared to drop cash money from helicopters onto the general population as part of our QE2 efforts.”

  7. We’re getting very close to that area where all bears, even the diehard bears like myself… throw in the towel. (I’m not there yet though).

    I still think we will sell off before this week ends, and I think the top is in right now. But it’s not looking good for the bears right now, I must admit that.

  8. This is exactly what the bears want.. /if the Dow hits 10900 on capitulation buying I will go all in short.. I’m 10% short as of Monday..

  9. Red,
    I just started reading your blog a week or so ago – the very fact that you are questioning your bearishness today makes me more bearish! Thanks for the insight!

  10. By the way, I really doubt there’s any chance of this rally going beyond EOQ. I don’t have institutional information available, but with the bank/brokerage trading volume being what it is, I believe a lot of traders will be pressured to show some profits by Sep 30.

    Also, the best way to guarantee profits is what they’re doing right now…laddering the market up and creating well-defined sell points, and using the element of surprise to sucker-punch retail investors into a really, really painful world of hurt.

  11. Everything went as planned today. I don’t get all bearish like capitulation commentary. Breadth was nearly 2-1 negative despite the positive Dow close and small declines elsewhere. Check out today’s bar and compare it to the April 26 bar. My once money turn date cycle came into play today. The last time it worked was the summer solstice high which is 90degrees ago today. I found another esoteric cycle that was connected to Sept 20…ie to the July 8,2009 low which is 1 year 2months and 12 days ago or 1212 or the exact closing high for the stock market on April 23. On that day there was a fakeout break below the neckline of an apparent and widely discussed head and shoulders pattern. Yesterday and today there has been an apparent breakout of an inverse head and shoulders that the bulls are going gaga over.
    I also have been seeing a lot of 711s in the stock market over the last few days and I remember what it represents. Also the SP has been bounicg around the 1136 level. In fact I saw a print of 1136.9 (an imbedded 911 with the Heat number) number yesterday. Anthony Allen has a screen shot from 11:18 am 111+6#3 yesterday with these numbers (plus Dow at 10711.1).
    Cobra also has very interesting info on the $tick number and small range days or (negative days).

  12. A 10,900 level on the Dow would be about equal to the 525 OEX level that Atilla has been calling for since last month. Maybe we really will go there first… and then fall off a cliff. If so, then today should be another up day… not down.

  13. Are we going to have a doji day? That could be bullish or bearish? It’s looking choppy to me. Maybe another pause day, while they wait for Thursday’s claims numbers to come out.

  14. The dollar broke the double bottom support and is still going down, yet the market isn’t rising that much. Something has to give here, as the dollar is now coming into major support from December of last year.

    Gold and the VIX are also up, while JPM and GS are down. I’m not buying this rally going any higher unless those all reverse.

  15. Yes, it is an older link which I saved to compare notes at a later date/time.  Looks like some trends are falling in to place as predicted, we shall see?

  16. Red,

    Thank you for the interesting link!
    I don’t know what to make of it since we’ve already run out of all solar eclipses this year. The next lunar eclipse is on 12/21/2010 (calling Geccko23 to the rescue…)

    Maybe it’s could be of help to know that tonight-tomorrow morning (~9am) is the full moon. It’s also the Autumn equinox — these celestial events do have some influence on the planet and us. What actual event will they transpire into?

  17. I haven’t been paying any attention to the eclipses. The big ones were last year and the one year anniversary in August. The next major eclipse formation is July 2011 when there are 2 solar eclipses surrounding a total lunar eclipse which is extremely rare and going back to 1900 I found only one other instance in July 2000 right at the peak of the secular bull market. 2011 is also 666 years from the collapse of the Florentine banking system one of the greatest banking collapses ever and helped to usher in the miserable conditions that led to the Black plague in 1349. Martin Armstrong is supposedly writing a book in prison and will go into detail about the forgotten depression years of the 1340s. Of course, he is due to be released from prison after his Pi cycle low.

  18. Hi Geccko,

    nice hearing from you!
    I mentioned your moniker because of the beautiful date of the next lunar eclipse: 12/21/2010. I know you pay a lot of attention, among multitude of other things, to numbers, dates, and cycles. So this near solstice, palindrome of a date: 12/21 eclipse could be a good mark for something of importance. What do you think?
    Always enjoy your posts.

  19. Well, it looks good as a key date but I haven’t really looked that far out yet. I am focusing on mid to late November as a key date, most likely a low and for a top right now. Web bot guys think things are going to awry in November and Helge has it as a key cycle time when inflationary stocks could be a good buy so the Fed might unleash QE 2 after the elections. There are some other cycles then that I can’t really discuss since I didn’t come up with them. But once we get to that time I will look at those Dec and Jan dates ie 1-11.

  20. McClellan Oscillator is barely above the o line now and I expect it will drop below the O line tomorrow as well as do a bear flip. Today is the typical routine; hold up the averages or at least the name big cap ones until Wednesday so the AAII respondents can register a bullish sentiment reading and then collapse the market on Thursday. I’d like to see the II reading also. Tomorrow is the 23 which is a key number linked to both my moniker and the April high and the autumnal equinox as well as the 10-23 that appeared in the Cramer code which linked to 1929 was the crash date in 1929 although I never saw a 9-23 in the Code. Of course crashes don’t really occur at the start of declines but we could see a considerable drop tomorrow.

  21. Of course the Cramer Code appeared on the background of stock market highlights for May 20th which is 4 months from September 20 and there were 4s in front of every number in the sequence. The final number featured was 4:20:xx(a very large number difficult to interpret).

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