Tuesday, 21 August 2012

Things the doomer bears need

Whilst the broad market continues its latest zero-volume rally since the June low of sp'1266, lets close today with highlighting the key trend changes the bears will need to see in the months to come.

sp, monthly, rainbow'3c

*don't get fixated on the forward price scenario, its just one of many outlooks.


So, lets start with what many of the doomers (across oh so many websites/blogs) these past few weeks are largely refusing to acknowledge - the trend is currently outright bullish for the sp'500. Sure, not all indexes are as bullish as the SP'500 or the Dow'30, but..the Sp'500 is arguably leading the way. Even the transports/Rus'2000 are starting to catch up this past week.

Things the bears need in the months ahead...

1. A closing monthly candle back under the 10MA...blue..or preferably red.

*as it is, I'd guess we will close August green, and we'll open Sept' green, it sure won't be easy to close Sept' with even a blue candle - whilst the 10MA rises to around 1360.

2. Take out the recent June low of 1266. I do still think this is very viable, although I think 1225/00 is the very best bear case right now - and that's assuming the market gets upset for 'some reason'.

3. Even if we can get down to 1200, its likely we'll see a multi-month bounce - especially leading into the Christmas period. Bears should look for a FAILED monthly close over the 10MA at some point in 2013 That is a critical aspect, and indeed it was a key warning of trouble in early 2008.

4. Take out the hugely important Oct'2011 low of 1074, and the 1010 low of July 2010.

Taking out those lows looks impossible right now, without some huge market upset - Euro members quitting in 2013? 

The next 4 weeks

It looks like we'll just continue to melt upward into mid-September. We certainly have a few events in the coming months, but for the moment, there seems no change of significant downside, certainly not below the recent important low of 1354.

There is certainly the possibility of a 'Sunday night event' in the coming months, and so I guess a few traders might like to buy a few VIX call blocks, or index put blocks (both way out of the money), but frankly...for most people, there is no point.

Sp'daily3 - news to come

For now, the primary monthly trend remains UP.

*Until volatility picks up (back above 20), updates will be less. I don't expect any significant volatility until mid September.

Goodnight from London