Saturday 24 March 2012

Monthly Meanderings

Seems like a quiet weekend on Planet Earth (am I tempting fate?), regardless, lets look at some more of those monthly charts (I will look at the world indexes next weekend).

IWM (representing the Rus'2000 small cap)

Still yet to break May 2011 highs. First target remains 86/87, then upper bol' of 89/90. The Fib' extension- equivalent to sp'1550 would take IWM to around 100 by late summer.


The Dow is comfortably above its summer 2011 high, and if this past week was a successful test of support, we can soon expect dow to hit the upper bol' of 13500. The Dow will doubtless be the next main index to make a challenge of the 2007 high by early summer.

NYSE Composite

Still almost 10% below the 2011 high - and is arguably the last real evidence for the original bearish case.


The SP' is due to test the semi-important April'2008 (pre-wave'3 stage'1) spike-high at 1440. What happens then will be important for the broader market. Right now, the trend is very steady, and an attempt to 1550 looks very viable.


The 'old leader', a very narrow sector to follow, but still, if the March low is in, then April should see a move above the 2011 highs. That would suggest at least a further 10% up move, probably equivalent to at least another 5% on SP' - so, the SP' would get to 1460/70 - which in itself would likely open the door to 1550.

Wilshire 5000

Quite comfortably above the 2011 high, and seemingly on a steady move to test the 2007 high. A very bullish sign for the broader market.

In Closing

There is very little left to support the notion that further upside is not likely in the very near term. The Dow has broken above key levels, and the huge Wilshire 5000 index is also above last years May high.

Certainly, there will be some significant resistance in the months to come, notably sp'1440, but if we do see SP' in the 1450s/'d seem almost a guarantee that we'll see the market continue to melt upward to around 1550 by mid/late summer.

It would be very pleasing to see the market fail to break sp'1440 in the coming weeks, and a multi-month fall back down to the channel line of 1150 by early Autumn, but right now, that is merely a 'hope', and the scary reality is that right now...the primary trend IS up.

SP'1440...or 1550?

Good morning! Here is something to initially dwell on this weekend....

SP'monthly..the bullish scenario

Near term, a move to  1435/40 still seems highly probable.

Most interesting of all...the fib' extension (I think I've done it right), is roughly the 1550 zone by June-August period. That would very nicely fit in with the expanding asecending wedge we're currently in. A challenge to the 2007 bubble highs of 1576 looks feasible.

Across even longer term charts, a move to 1550 looks even more logical.

For the bears, such considerations are obviously sickening, and sheer heresy. There sure won't be many permabears left if sp' gets to 1550 within the next 3-6 months.

Trading this nonsense

I'd argue its pretty simple for those with 'serious money' to trade this scenario/key threshold.

If we see a few closes in the 1450s, then another 100pts up is free money - via low vol' melt up.
If we get stuck at the next up cycle, around 1435/45, with lots of candle failed spikes, then we have a good chance for a nice 6 month decline to around 1150 by early Autumn.

Stops -for both long/short positions at the 1430/50 zone will be very important to have.

More later.