Pre-Market Brief

Good morning. Futures are a touch lower, the sp -1pt, we're set to open around 1385. This will probably be a very disappointing open for the bears, after the ratings downgrade of France last night.

Primary upside target is sp'1425, to be hit early next week.


sp'60min

sp'daily5

Summary

A downgrade of France, and the market is holding up fine. Yet, it is to be expected. Yesterday the was first major up day in a fair while, it will be difficult to reverse that level of momentum after just one day.

I will remain on the sidelines until next week, and will wait for a re-short in the low 1400s, which may occur as early as Monday.

*Bernanke speaks later today, bears should be very mindful of that.

It is very viable we'll hit sp'1400 late today, or certainly..during tomorrows session.

Good wishes for Tuesday trading!
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UPDATE..stock of the day (see fair value stocks at the close)..will have to be HPQ, which is -9% in pre-market, after lousy earnings, and talk of fraud.

As I wrote just last week, the company is an embaressment. Primary target is $10, and then I expect HPQ to be removed from the Dow in second half of 2013.

Waiting for the bounce to fully play out

After a nineteen day decline, we're now seeing a very natural bounce. Upside target zone is sp'1410/25, to conclude as early as next week. The mid-term target remains sp'1200/1175, which looks to be no later than early Spring 2013.


sp'weekly2

sp'monthly3b

Summary

The bounce from sp'1345 has been very pleasing to see, and instills a little more confidence in my general outlook for next year.

However, a single price hit does not count for much, and the bears - as a group, need to see four key aspects in the weeks and months ahead...


1. The first lower high. Anything <1474 will be enough, although it will take some some weeks/months to be sure that the 'lower high' was indeed the case.

2. Take out the June sp'1266 low. That will be a major event if/when it happens

3. Break into low 1200s..see a floor develop, and then a multi-month bounce higher - which I anticipate will take us into early summer 2013.

4. Put in a lower high on the monthly charts. Again, that will need to be <1474. Personally, I'd like to see a lower high in June/August 2013, no higher than around 1350/75.

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Only if those four things occur, would the bears have a chance at seeing some sort of collapse wave, in the style of autumn 2008. I will post much more on this outlook in the months ahead.
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Sitting it out

I can't stomach going long (most of the time), so I'm merely going to sit this entire up wave out, even though I'm pretty confident it will play out as projected.

At least I am not still hitting the short button, as I have sadly tended to do in the past.

As ever...the patient bear...is the good bear.

Goodnight from London

Daily Index Cycle update

The main market rallied by around 2% today. The gains were mostly all seized by 11am, at which point the market largely flat lined - the sort of nonsense we've seen so many times in the past few years. Volume was light, and most of the gains were probably due to short-covering - not least in stocks like AAPL.


Dow

Sp'daily5

Trans

Summary

I started the day very much open to re-shorting the market @ sp'1370/75, but the market was breaking 1375 before we even opened. With the market liking the housing data (as I feared), the gains just kept building, and a re-short became completely out of the question.

Clearly, the current down wave (however you want to count it) is over, and we're headed up.

The only issue is how far?

My original outlook was....1345, then 1400/25...and then low 1200s..possibly as early as December - not least if the fiscal cliff is not adequately delayed.

sp'daily4 - original outlook

The above chart is my 'best guess' for the weeks and next 2-4 months. I could be wildly wrong, we'll soon see.

Bears need to put in their first lower high <1474, rollover..and take out the June 1266 low. If that happens, then 2013 could be 'very interesting' indeed.

A little more later.