Friday 6 April 2012

Critical Time Ahead.

The futures are down big time. With the markets showing weakness already, is this the infliction point we have been waiting for all these days? I somehow think this is not yet the time even when the market goes down on coming Monday.  The following is SPX weekly chart.
On the chart we see that this rise from January is not the longest one. The one immediately before was during the QE2 as on the right side of the chart. The index broke the trend line, then went back to re-test the highs few more times, before rolling over.

Why it should be any different this time?

It is certain that the market will drop on Monday. It is a question of how much. The drop on Monday will be the 4th consecutive red day. I will borrow a chart from Cobra which shows that it will be a good buying opportunity, short term.

It has been a strong up trending market for over three months now and I doubt if it will turn on a dime. I do not want to jump the gun and start shorting it, just to get another head fake. I would rather follow a confirmed trend. End of the day, Monday will give us more clear picture about the immediate future.

Till then, enjoy the long weekend. Thank you for reading . Please forward it to your friends and join me in Twitter for live market commentary. (@BBFinanceblog). 


  1. Or - 4 or more days in a row counter to a long intermediate trend is often confirmation of a trend change. I agree we must wait and see, but I have been buying HDGE during this rally. Cost are higher, but no slippage and the HDGE team seems pretty good. Holding only a 10% position in HDGE and I always enjoy reading your comments.

  2. Link and video about HDGE.

  3. Traders who are biased to optimism get absolutely killed because they have a habit of remaining bullish or adding longs well after the the conditions and trends indicating optimism have deteriorated. The extended rally bolstered excess enthusiasm and engendered the greed for additional gains that is typical of many market tops. Many are claiming 1450-60 must be the top in SPX, try to ignore what has become consensus.
    The top is in, IMO, as I mentioned in the comments in your previous blog. Fortunately for me I have built a substantial short position over the past several weeks and will have much stronger hands on Monday morning.

    Good Fortunes All


  4. Buying more TNA today/tomorrow. Loving this opportunity.

  5. Apple is barely .25% below it's all-time high, not seeing any real damage to the charts, so far just a retracement that would not be unusual were it not for the rally being so relentless. So, I agree BB, think we are still going to power a little higher before mid-april, then perhaps our first (healthy)correction of the year.

  6. Just one of my many charts saying, "Go long, son."$RUT:$SPX&p=W&b=2&g=0&id=p99231677792&a=246602289