The Bull got rescued today, (by the PPT of course). It seems that a bear slipped up on his last night while he was sleeping, and pushed him down a hole. Hurt and bruised up a little, the bull finally got his mojo back and charged higher into the close.
These bear attacks are becoming more frequent now, and the bull is getting tired and falling asleep while standing. The bull needs to be careful where he stands as a cliff is nearby his grazing area, and one missed step could result in a one steep fall.
At this point, the bulls are up against a whole lot of resistance from multiple trendlines, all intersecting about where we are now. A big move is coming soon, because it has too… The bulls must gap above all the overhead resistance and go make a new high, or give up and jump off the cliff.
It’s really that simple. Steep sell off down, or jump over the major resistance overhead. Everyone seems too be long here, as they all expect 1228 to be the next level the market is going too. That’s the 61.8% fib. retracement from the March, 2009 low to the 2007 high. But, you know the old saying… if everyone is expecting it to happen, it won’t happen.
So we are at a crossroads again. Either we must go above the current resistance, to trap the bears that will go short at the level, or sell off before reaching it, to trap the bulls that are waiting to sell at that level. Someone is going to get burnt… who will it be? The Bull or the Bear? (In the end, you know it will be BOTH!).
After Apple blew out earnings estimates on Tuesday evening, you would have expect a big rally on Wednesday. But, it didn’t happen, as this time the Apple was rotten. Apple clearly is the leader in the Nasdaq, and carries more weight then all the other stocks in the tech sector. But even with it’s overnight jump of 15-20 points, the overall market didn’t rally up huge like you would have expected it too.
Most people would have expected a 100-150 point Dow move up, with Apples’ great news. Since Apple carries so much weight in the market, this is clearly not a good sign for the Bulls. Who is left to rally the market now, if Apple couldn’t do it?
I’m really seeing more and more signs that this market is going to fall very soon. I’m not going to stay that the “Top” is in, but the odds are much higher now. Light volume is about all that can save this market from falling. If they can keep the volume light tomorrow and Friday, then they could take out the current high with some fake jobs numbers. That is something that they can easily fake, as earnings on all the various companies is a little tougher to alter.
Looking at the 60 minute chart, it sure looks like it is ready to fall. But light volume rules as the PPT can easily push up the market when there aren’t any sellers to stop them. This Goldman Sachs issue is about the only thing I can think of that could cause some serious selling.
Many people and large institutions are currently trying to get out of Goldman, as they don’t want to take a chance on whatever outcome may happen from their fraud charges. This will put constant downward pressure on any rally attempts that Goldman has. However, I think someone is going to hit the panic button if the rest of the market starts selling off.
I don’t know if it will happen this week or not, but you can just feel the tension in the market, as the tape struggled up some, down some, up less, and down more… all day today. Just like animals can smell fear, I think the traders are now smelling fear. I don’t think it’s going to be too many more days before the panic starts.
They will wait for the jobs tomorrow, and Microsoft’s earnings after the bell Thursday. If that data does show some real improvement in the economy, I think the serious selling will start asap. We could have a Black Friday? I don’t know how good or bad earnings will be for Microsoft, but I can tell you that most people will say that “Vista Sucks”, and Windows 7 is just Vista part 2.
And since Apple is their biggest competitor, who just blew out earnings, what’s the odds Microsoft will blow them out bigger then Apple? Remember, Apple couldn’t rally the market today. How is Microsoft going to rally the market… without any new gadgets like the iPad? Is Windows 7 as big or bigger of a money maker then Apple’s iPad? I don’t think so.
That leaves it up to the Jobs numbers to be outstanding, causing another rally. Everywhere I read, more and more people are stating that they don’t believe the numbers to be accurate as the government lies so much now. Nobody believe anything they say or do now. So, if the numbers are too good… will the market believe it? NO, of course not. And if the numbers are bad? Just another reason to sell off and take some profits.
You put together the NO Win Situation with the release of the Jobs data tomorrow, along with the high odds that Microsoft fails to beat estimates enough to justify a continued rally, and throw in the Goldman Sachs issue… and I’d say the odds are very strong for a sell off to occur.
And since Technical Analysis doesn’t seem to work too accurately by itself anymore, I’m leaning more heavily toward the “overall” feel of the market, and what news events are coming out first… then see if it matches up with the TA’s. Right now, they do match up. The TA’s have been showing overbought now for quite awhile. We have just been waiting for the right news event to trigger it. Will it be the jobs data and Microsoft? I think it’s the bears best shot.
It’s seem that the Goldman Sachs news has been completely forgotten by the market, as the Bulls pushed it higher again today. Even into afterhours the Bulls kept buying up Apple, after they blew out earnings. Once again we are back to more of the same bullish crack high that the Bulls have been snorting for months now.
When will the market come down to it’s senses and sell off to levels more reasonable… maybe never? Everyone is now expecting the 1228 spx level to be hit, before any pullback. The monthly 50ma is around 123.00 SPY, and the weekly 200ma is around 122.50 SPY. Those levels match up with the 61.8% fib at 1228 spx, which is what everyone is expecting now.
The question is… if everyone is expecting it, will it still happen? Remember, the market likes to take your money, not pay out money too you. That level is obvious to every trader out there, and that makes me believe that we will either fall short of it, and trap a lot of bulls, or pierce through it to a higher level, and trap all the bears that get short when 1228 is hit.
So which will it be? I don’t know, but these charts tell me that it should fall short of that target, as they clearly show the bulls losing steam. Unless they turn around quickly, they won’t have enough momentum left to get there.
Look at the top of the chart, and you can see that these last 2 days of rallying up has still produced negative Histogram Bars on the MACD. Notice at the bottom area, the volume still low, and dropping. Also, the bottom chart shows the bearish crossover already happened 3 days ago, and now both DI lines are below 80.
I know it feels like a bear trap, but it looks more like a bull trap too me. Many people will go short at the double top too, which makes it even tougher to go on up above the 122.50-123.00 level. Remember, it’s not likely that they will hit that level and then reverse. They have to either fall short, or go above to the next level.
Either trap the bulls by falling short, or trap the bears by going above it. Both bears and bulls will be looking to go short at 1228, and/or close out there longs. The market isn’t that giving. She wants to take everyone’s money, so tricks must be played. I think they just tricked the bears with the Goldman Sachs news on Friday, and today they are tricking the bulls with the Apple news afterhours.
Maybe it’s just my bias toward being bearish, or maybe I’m actually reading the charts correctly this time? I really don’t know, as I’ve been burnt too many times to believe anything I see in the charts. Maybe I’m just seeing what I want to see? Possibly?
Or maybe I should just throw the charts out the window and call up Jim Cramer and ask him to hook me up with one of his Goldman contacts, so I’ll really know what is going to happen next. Since he is so crooked and well connected with them, maybe we can use that too our advantage?
The last I heard, he was extremely bearish on Goldman, telling everyone to sell it. Why? I suspect that it’s because Goldman sold all their shares (and some that don’t exist too… you know “Phantom Shares”), and that they need to buy back those shares. So, if they push the market down hard, (or at least their stock), they can buy them back at a much cheaper price.
Now at some point, it will hit a level that Goldman will start buying them back at. Of course they will tell their puppet-man Cramer to continue telling everyone to sell it, so Goldman can continue loading up on every push down. Once they are fully loaded, and have bought back all the shares they want, they will pull Cramer’s strings, and he will become Bullish again.
Pretty simple to read really. So, that leads me to believe that a sell off is still coming… and very soon.
The bulls recaptured lost ground today, as the weekend allowed the media to spin the Goldman Sachs story as a non-event. We know differently, as where there is one roach… there’s always more! Nothing is ever easy in trading, and you can bet that this coming correction is going to be full of bounces along the way.
Looking at the 60 minute chart of the SPX, you can clearly see that we finally busted out of the trendline from the 1044.50 low. We are now in “backtest” mode, and will likely try to recapture the trendline tomorrow by closing inside it once again.
That doesn’t mean it’s over for the bears, as the daily chart tells a different story. Looking at it, you can see that the -DI line (in Red at the top of the chart) has clearly spiked higher from Friday’s sell off. The +DI (in Green) is also losing power and pointing down. You can see that the RSI has dropped out of the “above 70″ range, which means the up trend is losing steam. I’d like to see it fall below 50 for me to confirm that the bears are in control, but it’s a start at least.
So, at this point, I’m not going to say that we aren’t going back up and make a new high, as it still could happen, but the odds are slowly going down. We could have another sideways, wild swing, up and down movement similar to the November 9th to Mid-December time period.
I don’t think that will happen, but it is possible. It really depends on what the “powers that be” want to do at this point in time? Do they want to go straight down to the fake print around 10,000, or drag it out sideways, and run up to 11,816 first.
Personally, I believe that the release of the news on Goldman was just a start of the coming news to be released over the next few weeks. I can’t be sure, but if I recall what was “in the news” during that sideways chop fest in November and December… it wasn’t anything majorly negative.
That makes me lean more on a quick 3-4 week sell off, as they didn’t just release this news on Goldman for a one day event… at least I don’t think they did? I’m sure it’s possible, but usually they toss a bunch of negative news out there when they want to sell it off, and then pump positive news when they want to rally it up.
Bottom line here… it’s all about what news and earnings come out this week. If they make them positive, the market could chop sideways for weeks, until it finally pops out of the range and goes on up to 11,816. Or, they could dump all the bad news over these next few weeks, and cause the sell off.
I’m sure that Goldman wanted their stock to tank, so they could buy it back cheaper. Who knows how much phantom stock they sold to the public? If you read the story Matt Taibbi published, that I put up on yesterday’s post, you will see how they borrowed shares that didn’t exist, so they could bankrupt Lehman Brothers. I’m sure this is a common occurrence for them.
But, at some point, the phantom shares must be put back into the phantom vault. That’s probably why they tanked their own stock, so everyone holding shares of it would sell them at the “now heavily discounted” price.
In a way, it reminds me of a friend of mine that owned a “buy here, pay here” car lot. People would buy the car at over inflated prices, (because they had bad credit), and then pay higher then normal interest rates, with payments on a weekly basis, instead of monthly. Once they missed a payment, he would repossess the car, which would then be sold again to another sucker.
He got the car back at a discount, because the person did pay some of the weekly payments, and of course some type of a down payment. He could re-sale the same car multiple times, and do the same thing every time. Some cars he re-sold 7-8 times! He made a good living that way. Of course the difference between his business and what wall street does to the average investor, is that the people that buy the car do know the risks, and the late payment results. Wall Street lies, cheats, manipulates, and does flat out fraud to steal peoples’ money. Big difference there…
Anyway, I’m expecting an up day tomorrow… but hopefully not too far up.
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