Post by ukarlewitz on Jul 18, 2010 17:45:05 GMT -5
There is no shortage of bears among the pundits. So, there's no point in elaborating further on the bear case, since that's the consensus. Read the comments below to get the bear case in detail.
For bulls, a few points.
- Mr Bond is rallying but TLT has made a third lower high for the time being. TNX (the rate) has made a higher low.
- Lord Vix moved up on the week but has made three lower highs since May. Its under both the 20 and 50dma and what's up with the high wick on the last two day's candles? Volatility is jumping but settling nearer the day's low on the close each day.
- Euro fear must be subsiding as the currency is in a strong uptrend, above rising 5, 20 and 50dmas. If there is an Event upcoming over there, the currency market is not interested.
- Spy: Hmm, brutal sell off on Friday, below declining 5, 20 and 50dmas. Hit the April channel top rail. Looks grim. But there is a positive divergence in CCI and Macd. Friday's close was also right on the 38% fib of the advance. A lower high is forming but we are far from a lower low. Please see these charts here as this set up has been seen before the market has moved higher.
fastopia.proboards.com/index.cgi?board=exchange&action=display&thread=944&page=27
- Nysi: long term breadth indicators are at the zero line and there is a very clear positive divergence, just as in other market bottoms. A strong up day or two and nysi will return to health and positive reading.
- CPCE ended the week with a strong up move. Perhaps its just opex. Normally, a strong up move (fear) to that level is a prelude to at least a s-t pause or bounce. See the chart.
- Sentiment: all strongly bearish. See Technical Take below. This is a good contrary indicator, most of the time.
- Fund flows: money has flowed out of most equities and into the safety of dividend payers and bond funds. Most investors are now perfectly positioned out of large caps and in safe vehicles, all set for a big bear market.
Here are the bear pundit comments:
Cobra - Bullish for Monday but very bearish otherwise.
- A little little little little bit bullish biased toward the next Monday because there’re 66% chances a green day after a Major Distribution Day (NYSE Down Volume to NYSE Up Volume ratio >= 9).
- If we see violent sell off the next week, be careful of a possible 3 of minor wave 3 of 1 of primary wave 3 bear.
Bulkowski - bear. On 7/16 the index started moving down on a thrust that I believe will continue. I can see the index dropping to at least 1025 by mid August, perhaps lower.
Technical Take - Without buyers stepping in, extremes in bearish sentiment will be just that - extremes in bearish sentiment. Prices not only ended the week on a big down note, but they also failed to close above resistance levels despite probing above those levels all week. This was just pure selling. The smart money and company insiders continue to show little buying interest as well. Even the Rydex market timers appear to be sitting on their hands. The lack of volume on up days and the increased volume on down days is a lack of sponsorship - plain and simple. Buying has yet to surface, and until the markets clear the near by resistance levels on a weekly closing basis (i.e., 107.58 on the SPY and 45.01 on the QQQQ), this market remains suspect.
- The "Dumb Money" indicator is now bearish for three weeks in a row.
- Rydex total bull to bear ratio: Currently, the value of the indicator is 42.88%. Values less than 50% are associated with market bottoms. This is the lowest value since July, 2009. However, as discussed in a recent Rydex research report, the persistence of selling or lack of buying (as seen in this indicator) is most likely a sign of price weakness over the coming week.
4.bp.blogspot.com/_KG80QXSP9Qw/TEMemnmgUQI/AAAAAAAADP0/bLNApeZoXo8/s1600/fig+4.jpg
Oscar - bear. Spx hit the top of the channel and sold off hard.
Alphatrends -bear. Watch his recent video. Recommends waiting for a s-t bounce to 107.5 before shorting the next leg down.
Merrill Lynch - bear. Merrill Lynch’s technical team is recommending investors sell into recent strength as they view the medium term risks remaining high. According to Merrill sentiment levels set the table for a summer rally that should fail heading into the third quarter. They believe the S&P could rally past 1100.
pragcap.com/merrill-lynch-summer-rally-is-here-but-fade-them
Caldaro - Bull. Support for the SPX is at 1058 and then 1041, with resistance at 1090 and then 1107. Short term momentum is currently oversold. The rally from SPX 1011 to SPX 1099 travelled 88 SPX points and triple topped between tues/wed/thurs. On friday, as you are aware, the market sold off dramatically during options expiration. This pullback appears to be Intermediate wave two of Major wave 1. The typical pullbacks following this rally would be: 38.2% at SPX 1065, 50.0% at SPX 1055, and 61.8% at SPX 1045. Since both the 38.2% and 50.0% retracements fall within the range of the OEW 1058 pivot, this should be support for Intermediate wave two. The internal wave structure of the rally also suggests important support at the OEW 1058 pivot. This was the exact low on July 8th.
For bulls, a few points.
- Mr Bond is rallying but TLT has made a third lower high for the time being. TNX (the rate) has made a higher low.
- Lord Vix moved up on the week but has made three lower highs since May. Its under both the 20 and 50dma and what's up with the high wick on the last two day's candles? Volatility is jumping but settling nearer the day's low on the close each day.
- Euro fear must be subsiding as the currency is in a strong uptrend, above rising 5, 20 and 50dmas. If there is an Event upcoming over there, the currency market is not interested.
- Spy: Hmm, brutal sell off on Friday, below declining 5, 20 and 50dmas. Hit the April channel top rail. Looks grim. But there is a positive divergence in CCI and Macd. Friday's close was also right on the 38% fib of the advance. A lower high is forming but we are far from a lower low. Please see these charts here as this set up has been seen before the market has moved higher.
fastopia.proboards.com/index.cgi?board=exchange&action=display&thread=944&page=27
- Nysi: long term breadth indicators are at the zero line and there is a very clear positive divergence, just as in other market bottoms. A strong up day or two and nysi will return to health and positive reading.
- CPCE ended the week with a strong up move. Perhaps its just opex. Normally, a strong up move (fear) to that level is a prelude to at least a s-t pause or bounce. See the chart.
- Sentiment: all strongly bearish. See Technical Take below. This is a good contrary indicator, most of the time.
- Fund flows: money has flowed out of most equities and into the safety of dividend payers and bond funds. Most investors are now perfectly positioned out of large caps and in safe vehicles, all set for a big bear market.
Here are the bear pundit comments:
Cobra - Bullish for Monday but very bearish otherwise.
- A little little little little bit bullish biased toward the next Monday because there’re 66% chances a green day after a Major Distribution Day (NYSE Down Volume to NYSE Up Volume ratio >= 9).
- If we see violent sell off the next week, be careful of a possible 3 of minor wave 3 of 1 of primary wave 3 bear.
Bulkowski - bear. On 7/16 the index started moving down on a thrust that I believe will continue. I can see the index dropping to at least 1025 by mid August, perhaps lower.
Technical Take - Without buyers stepping in, extremes in bearish sentiment will be just that - extremes in bearish sentiment. Prices not only ended the week on a big down note, but they also failed to close above resistance levels despite probing above those levels all week. This was just pure selling. The smart money and company insiders continue to show little buying interest as well. Even the Rydex market timers appear to be sitting on their hands. The lack of volume on up days and the increased volume on down days is a lack of sponsorship - plain and simple. Buying has yet to surface, and until the markets clear the near by resistance levels on a weekly closing basis (i.e., 107.58 on the SPY and 45.01 on the QQQQ), this market remains suspect.
- The "Dumb Money" indicator is now bearish for three weeks in a row.
- Rydex total bull to bear ratio: Currently, the value of the indicator is 42.88%. Values less than 50% are associated with market bottoms. This is the lowest value since July, 2009. However, as discussed in a recent Rydex research report, the persistence of selling or lack of buying (as seen in this indicator) is most likely a sign of price weakness over the coming week.
4.bp.blogspot.com/_KG80QXSP9Qw/TEMemnmgUQI/AAAAAAAADP0/bLNApeZoXo8/s1600/fig+4.jpg
Oscar - bear. Spx hit the top of the channel and sold off hard.
Alphatrends -bear. Watch his recent video. Recommends waiting for a s-t bounce to 107.5 before shorting the next leg down.
Merrill Lynch - bear. Merrill Lynch’s technical team is recommending investors sell into recent strength as they view the medium term risks remaining high. According to Merrill sentiment levels set the table for a summer rally that should fail heading into the third quarter. They believe the S&P could rally past 1100.
pragcap.com/merrill-lynch-summer-rally-is-here-but-fade-them
Caldaro - Bull. Support for the SPX is at 1058 and then 1041, with resistance at 1090 and then 1107. Short term momentum is currently oversold. The rally from SPX 1011 to SPX 1099 travelled 88 SPX points and triple topped between tues/wed/thurs. On friday, as you are aware, the market sold off dramatically during options expiration. This pullback appears to be Intermediate wave two of Major wave 1. The typical pullbacks following this rally would be: 38.2% at SPX 1065, 50.0% at SPX 1055, and 61.8% at SPX 1045. Since both the 38.2% and 50.0% retracements fall within the range of the OEW 1058 pivot, this should be support for Intermediate wave two. The internal wave structure of the rally also suggests important support at the OEW 1058 pivot. This was the exact low on July 8th.