US equities started the week on a positive note, but last week saw some notable damage to the multi-week up wave from sp'1737. Equity bears just need to hold the market from breaking new highs (>1883), and break under the recent low of 1834, then the fun can begin.
sp'weekly7b
Summary
The above scenario remains a particularly attractive one, but it is just one of a number of outlooks I am keeping in mind.
I'm seeking not just a multi-week cycle peak..but a multi-month peak - stretching back all the way back to Oct'2011. Even if sp'1883 was a key high, we won't likely know for at least 6-8 weeks, and that would require both a break <1737, along with a subsequent lower high <1883.
In theory we could be in the 1600s, and still not really have any justification to call a top via standard chart theory. That is of course the problem with much of this chart stuff, if waiting for a clear break, by the time there is a clear move...half of the drop (or rally) will probably have already occurred!
Needing a monthly close <10 MA
The following is a simple chart, but I think it does highlight how the 10MA sure is an important MA of support/resistance.
sp'monthly'3, rainbow
Equity bears need a March close under the 10MA - currently 1751, to break the grand up wave from Oct'2011. With 10 trading days left of the month, I find it difficult to believe we'll drop 107pts, although that is only 5.7% lower.
Looking ahead
We have CPI and housing starts, and if those come in 'reasonable'..market should be able to break into the 1860s..if not also a brief break into the 1870s.
*next sig' QE-pomo is not until Thursday
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Just a few more days to wait.
Having decided to throw in the towel, wave the white flag - or whatever you want to call it, last summer, I'm finally now open to shorting the market, once the next FOMC announcement is out of the way.
If we have a simple H/S (see hourly index cycle), then we shouldn't break into the 1880s again. For those who do decide to short any FOMC bounce/spike, trading short-stops are pretty clear - in the 1875/85 zone.
If we see the 1890s..then clearly the 1900s are coming, and equity bears would again have to bail and reassess.
At T-2 days..and counting...this is your resident permabear...
Goodnight from London
