Dow

[ananda77]

I hope you dont turn LONG TERM BULLISH at the top

...aware the market is close to a top and the Bear will strike in a truly spectacular fashion, just as spectacular as the whole rally has been so far

but unless I see first indications of trouble like:

-SPX 500 *968/*959 taken down on a Close
-support line taken out on a Close (see Hoop's and my posts earlier on the Dow and SPX 500 respectively)

the market is in for another top;

...bearish or bullish are limitations which may distort your ability to act in markets accordingly, so I try to trade the markets objectively

Kind Regards

[Footsie]

fair enough Ananda... but your posts always seem to have a bearish tone.

I too agree that this is a secular bear market. but there are great minor bull markets to ride, which seems to last anywhere from 18months to 4 years.

[ananda77]

fair enough Ananda... but your posts always seem to have a bearish tone.

...if the posts seem to always have a bearish tone, then it is most likely that they are tilting to the bearish side;

Kind Regards

[ananda77]

..SPX 500 encountered the first taste of overhead resistance of the Oct 17 High *1044 and subsequently turned lower at the beginning of a new trading week;

...test to affirm *1018 seems likely, but there is potential that the overall strength of the advance could propel the index towards *1050/*1072 before *1018 will be undergoing a thorough testing

...a *1018 successful defense would open the *1100 (+) target

Trading Strategy: sideline (safest)

-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: neutral to short bias with equity exposure; minimum 50% short at *1100

Long Term: THE BEAR

_no guarantees and trading strategies are just ideas_

Kind Regards

[ananda77]

...SPX 500 stayed above August 7 Peak *1018 but has not made it yet to the Oct 17 High *1044 (+), which leaves the potential *1044/*1050/*1072 targets still open for the taking, before a thorough testing of *1018

...a *1018 successful defense would open the *1100 (+) target

Trading Strategy: sideline (safest)

-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: neutral to short bias with equity exposure; minimum 50% short at *1100

Long Term: THE BEAR

_no guarantees and trading strategies are just ideas_

Kind Regards

[ananda77]

...the market may stay bullish for a while longer but indications are mounting that support the notion of 'Long Term: THE BEAR'... (long term may be understood as any lenghth of indeterminable time)

History may or may not repeat, but here is an interesting Chart (see DJIA 1929 - 1932)

Thanks to Elliot Wave International -The chart shows the last deflationary bear market, the decline from 1929 to 1932 when the DJIA lost 89 percent of its value. Observe the bear market rallies during the nearly three-year long stock debacle. Save for the first rise that occurred from November 1929 to April 1930, each time the Dow violated the support line drawn beneath the bear market rally, the next leg down was confirmed underway. I’ve listed the percentage declines that ensued, as well as how many weeks the market fell prior to the start of the next bear market rally. Some trendline breaks caught the start of the next leg early and some occurred a bit after. But this simple technical method was quite effective in identifying when the Dow was in the next phase of collapse.

The risk of a double-dip recession is rising
By Nouriel Roubini
http://www.ft.com/cms/s/0/90227fdc-9...nclick_check=1

Mr. Kellner (marketwatch.com) on the money supply: (see chart -Money Supply Growth)

“Guess what? The Federal Reserve has not only stopped depositing copious amounts of liquidity into the economy -- it now appears to be in the process of making a sizable withdrawal. A close look at quantitative measures of monetary policy reveals a sudden change in trend. After growing at unprecedented rates for well over a year, these aggregates stopped rising several months ago and have since declined, according to data provided by the Federal Reserve Bank of St. Louis.

For example, the monetary base -- the raw material for the money supply -- has fallen at a seasonally adjusted annual rate of 8% from early April of this year through mid-August, after soaring at a 187% pace during the previous eight months. And after ballooning from $100 billion to nearly $1 trillion between September 2008 and mid-May, adjusted reserves have since declined at a 43% clip, to just over $800 billion. As a result, the Fed's two measures of the money supply, M2 and MZM, have begun to contract. M2 has shrunk at a 3% pace since the middle of June, while MZM, the St. Louis Fed's measure of liquid money, is down by 2% over the same period. Both had been rising by rates as much as 15% earlier this year. These are sharp enough changes over a long enough period to suggest that our central bankers are more concerned about inflation developing down the road than you might think, judging by their public statements.

And with good reason. As I pointed out in my column of Dec. 28, 2008, the Fed can't wait for all the stars to align or for the umpire of the business cycle, the National Bureau of Economic Research, to make the official call that the recession has ended. It must act long before if it is to prevent another burst of inflation.

The markets are already concerned about inflation. The yield curve has steepened over the past few months, while the spread between the plain vanilla 10-year Treasury note and its TIPS (Treasury Inflation Protected Security) counterpart has jumped from zero at the beginning of this year to 2 percentage points today.

To be sure, no one expects the Fed to hike interest rates anytime soon. But some forecasters think that by the second quarter of 2010, the effects of these reductions in liquidity will result in the federal funds rate rising above the top of the central bank's current target range.

This will mark the beginning of what could be a rather aggressive tightening of monetary policy. After all, it would follow a period of aggressive easing. This V-shaped configuration for monetary policy is why I think the recovery will look like a W. It is also a good reason to take some profits from the recent run up in stocks -- along with the fact that the two worst months for equities, September and October, are just around the corner.”


Thanks to Stocktiming: Interesting Developments on the Interest Rate Front (see chart -US TNX 10 Year Yields)

-So, what's in the future for interest rates?

Something big is around the corner ... a large move in the interest rates. At least, that is what the 10 year yield chart is telling us now.

Take a moment to look at the (TNX) 10 year yield chart. A very large triangular formation has occurred. It started in May and it is now working its way to its apex where a breakout will occur.
From a technical projection standpoint, a 9 point move should occur from the breakout point ... up or down. That is a very large move and it will have an impact on housing, automobiles, and anything requiring a loan. And yes ... it will also have an impact on the stock market. The question is whether the breakout will be up or down?

For the past few months, the Fed has been actively engaged in the market and buying down rates in an effort to feed/nurse an economic recovery. But, this week, Bernanke announced that the Fed would stop their interest rate buy down program by the end of October.
If this market influence is removed, it would seem reasonable to expect interest rates to rise without that dampening influence. If rising interest rates is the direction that could happen, then the affect on the housing market and large financed purchases will be very negative because of the projected magnitude of the interest rate rise.

Kind Regards

[ananda77]

- U.S. durable goods orders surged 4.9% in Jul, above median 3.0% vs -1.3%
-U.S. MBA mortgage market index rose 7.5%, purchases +1.0%, refis +12.7%
-U.S. new home sales surged 9.6% to 433k in Jul, above median 390k vs 395k
-Fed's Fisher: Great Recession is over, but jobs recovery will be painfully slow
-Fed's Lockhart: past worst of downturn, but high unemployment seen protracted

...the SPX 500, failed to achieve the new High *1044/*1050 and despite the positive data out in the US, slipped down the slope for a possible test of the Aug 7 High *1,018 at least

...risk lingers to go lower to affirm the midpoint Aug 17-25 rally *1,008, but bullish potential *1044/*1050/*1072 targets still open for the taking

......a *1008/*1018 successful defense would open the *1100 (+) target

Trading Strategy: sideline (safest)

-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: neutral to short bias with equity exposure; minimum 50% short at *1100

Long Term: THE BEAR

_no guarantees and trading strategies are just ideas_

Kind Regards

[ananda77]

...after a profit taking shake-out, the Dow *9459 successfully defended Aug 7th High *9438 and surged higher to intraday *9610 to a Close *9581;
...the SPX 500 suffered the same fate earlier in the trading day but additionally displayed weakness by penetrating *1018 to a intraday Low*1016, before surging higher to a *1031 Close

...as a consequence, risk still lingers to affirm the midpoint Aug 17-25 rally *1,008 (-);

Trading Strategy: sideline (safest)

-hedge: neutral to bullish bias to *1018/*1044/*1100; no equity exposure;
-hedge: neutral to short bias with equity exposure; minimum 50% short at *1100

Long Term: THE BEAR

_no guarantees and trading strategies are just ideas_

Kind Regards

[Dr_Who]

Ananda, what do you mean by ... Long Term: THE BEAR?

[Footsie]

it means he/she is a "perma bear"

constantly bearish regardless of market direction.

at least thats what i think......